All kinds of produce and manufactured articles command cash returns. Credits of record, mortgages, &c., are very prevalent, and among all classes.

When a person has failed in business he can resume at any moment that he is able to do so, and there are no obstacles to such resumption. Bankruptcy is frequent, particularly among Jew traders.

As to relief acts in bankruptcy, nothing of the kind is known. Fortunes are seldom made in this country, and the general effects of credit, so far as that term applies to this city and province, are prejudicial to real prosperity.

SELAH MERRILL,

Consul.

Jerusalem, November 29, 1883.

UNITED STATES CONSULATE,

CEYLON.

REPORT BY CONSUL MOREY, OF COLOMBO.

Department instructions per circulars of 15th and 21st May, respectively, have been received. I append hereto answers to the interroga. tories contained in the former, trusting they are what is desired.

1. Does credit stimulate trade?

Yes.

2. Are people averse to contracting debts?

No.

3. Are there any sumptuary laws or regulations concerning credits? None.

4. To what extent does credit prevail in proportion to the volume of business?

Six-tenths at least of the business is done on credit.

5. To what extent do losses incidental to business prevail? They are incalculable.

6. Do tradesmen extend credit to mechanics and laborers readily? No. Native mechanics earn, on an average, 30 cents per diem, and common laborers earn 13 cents per diem; therefore, if they were given credit (which they are not), it would necessarily be for such a small amount as would be imperceptible in the trade system at large. Most of such people are, however, in debt to usurers for small sums of borrowed money.

7. What advantage have cash buyers?

Ten to forty per cent.

8. Is interest demanded on time accounts?

Yes.

9. With what classes are the evils of credit most conspicuous? Planters, bankers, merchants, and minor civil servants.

10. What kind of produce or manufactured articles command cash returns?

All products of the island exported.

11. Are credits of record (mortgages, judgments, &c.) prevalent; and, if so, among what classes?

Fully six-tenths of the real estate in Ceylon belonging to private parties is mortgaged for more than its value.

12. When a person in business has once failed, or has been discredited, can he resume, and what are the obstacles to such resumption?

He may resume after going through the bankruptcy court and get ting a certificate.

13. Is bankruptcy frequent?

Yes.

14. To what extent do relief acts in bankruptcy prevail?

On general principles, provided creditors and debtors understand each other well, have confidence in each other, and the securities are good, I think it does, if moderately and discreetly given. A good deal depends on the conditions upon which credit is given. Where heavy rates of interest and securities are exacted, which in case of inability to meet a debt when due, in whole or in part, sap a trader's property and existence, I think it does not only not stimulate trade, but retards and injures it; and, in like manner, if a debtor absconds, makes away with his property in a fraudulent manner, or gives securities which he knows to be poor or worthless, taking advantage of the confidence of a creditor, especially when the latter advanced him money or goods on easy terms. On the whole, I think it would be better for trade, generally, if it could be carried on with as little credit-giving as possible, though without any credit at all trade is impossible. But when trade depends largely upon planting enterprises, mining, and coastwise navigation, including ship-building, to bring the trade from countries, islands, and places where "civilized and speedy navigation" has not existed, as is the case in the ports of this colony, I think that credit, judiciously given, stimulates trade greatly. For the colony of the Straits Settlements, then, it may safely be said, it does stimulate trade.

CONTRACTING DEBTS.

2. Are people averse to contracting debts?

Some are and some are not. In this colony, I may say, the majority is not, and this majority consists chiefly of Chinese traders, shipowners, planters, miners, and mechanics, who are not at all particular about contracting debts, but not often blindly.

3. Are there any sumptuary laws or regulations concerning credits! I submitted this question to the colonial secretary, who referred it to the registrar of the supreme court, and received the following reply, viz: I don't quite understand this interrogatory.* If the consul wishes to know whether there are sumptuary laws according to the ordinary meaning of the term, I can an

I referred it as I received it.

swer there are not. Neither are there any regulations against giving credits, except as regards minors, and in their case only for articles not necessaries.

I believe that this is the correct answer. The general trade, on the whole, is allowed to regulate itself.

PREVALENCE OF CREDIT.

4. To what extent does credit prevail in proportion to the volume of business?

It is utterly impossible to answer this question for the colony and provinces within my consular jurisdiction, as no record of this is, or can be, kept, owing to the nature and force of circumstances; but I may safely say, "to a great extent"; and again I may say the Chinese are chiefly the debtors. And as this is a matter of great interest, I will explain as briefly as possible.

The European firms in this colony are, with few exceptions, importers, exporters, and commission merchants, all in one; and some of them also the agents of steamship companies, bankers, or the agents of banks, bankers, discount, loan, and insurance companies, &c. They import the goods that find a market here, or in this part of the world, and in turu export the products of this part of the world, best known under the name of "Straits produce." To obtain the latter they sell or exchange the former, or make cash advances, or buy with ready cash; and to be successful in this (but not always) they have their "middle traders." The latter are chiefly Chinese, and also Arabs, Klings (from the Coromandel coast), a few Malays, and other natives of Asia. But as the latter are less important factors, a few Arabs excepted, I will confine myself, for my illustration, to the former-the Chinese-because the rest are only a sort of "adjutants." Now, these Chinese middle traders fall into several classes, and as each, as a rule, heads an enterprise of his own (and has a firm name, called here "chop," which means the firm's seal and signature, with the name or names of the persons constituting the firm engraved on it in Chinese characters), he is called a "towkay," which means the "chief" or "boss." There are,

Firstly, the "towkays" who own steamers and sailing vessels, and have trading stations on the coast and the remote places of the Peninsula of Malacca, in British, Malayan, and Siamese territories, in Sumatra, Borneo, and other islands-and they have their ramifications and stations wherever it is possible to go, so long as they find any profit in bringing out the products-send their small steamers and sailing crafts laden with goods to sell and to barter for the produce of the jungle, the plantation, and the mine, ascending rivers as far as they safely can go; and from those points, generally having depots there, they send smaller boats, rowed with paddles, to the native settlements, to where the rivers are no longer navigable, having agents of some kind everywhere, who receive the goods and return the produce accumulated since the last call. Some of these "towkays" have hundreds of people in their employ, chiefly Chinese for business and labor, and Malays to row the boats and to go among the natives in and near their settlements to do or effect trade.

Secondly, there is the "planting towkay," generally a heavy land

*I have seen some of these depots, or trading stations, in the interior of the peninsula of Malacca, far up the rivers, and they were very creditable institutions-large, roomy, strong buildings (sheds, rather), filled with goods to barter and products exchanged, inclosed with strong stockades, and facing the river, all attended by smart young Chinamen.

owner, who either is a planter himself (employing a large number of coolies) of tapioca, or makes advances to Chinese laborers to plant gambier and pepper (chiefly), &c., for him. He furnishes them with a small money advance and an outfit of clothes, food, implements, and opium (for such as use the drug), &c., on condition that they deliver to him, and no one else, at a stipulated (generally) price their products. Thirdly, there is the "mining towkay," who, having secured tin-bearing land from the Government, makes advances in about the same manner and upon the same or similar terms as the "planting towkay" to Chinese laborers to mine tin for him.

Now all these "towkays" (middle traders), except where cash transactions take place, have open accounts with European firms. They buy what goods they want and have them charged, and agree to deliver, from time to time, a lot or lots at a certain time, and at stipulated prices, gambier, pepper, rattans, tin, gums, hides, &c. But as they have an open account and are trusted, they come and get what goods they want, and are often enough in debt for thousands of dollars.

The native bazaar men, Chinese, Klings, Arabs, Hindoos, Malays, &c., after they have proved fair customers, receive credit from European merchants to more or less extent, often for considerable sums and on long terms (paying on account). And there are the small traders, hawkers, mechanics, small contractors (buildings, &c.), small farmers, hack-owners, boatmen, &c., who receive loans at very exorbitant rates from Chinese, Arab, and Hindoo capitalists, the last mentioned, known as "chitties," being the worst, most merciless, detestably exacting, and the most numerous. And European firms receive at times loans from the banks, or agents of banks (occasionally heavy loans), but only upon strong collaterals-documents or produce, or both. European retail traders, after being fairly established and bearing a good reputation, are allowed to overdraw, moderately, at some of the banks.

LOSSES IN BUSINESS.

5. To what extent do losses incidental to business occur? That question cannot, any more than the preceding one, be answered very satisfactorily or reliably. When a European firm loses in consequence of miscalculations or unfortunate speculations it is very apt to keep the loss or losses as secret as possible, to prevent its credit becoming injured. But when a Chinese middle trader, a "towkay," or the keeper of a bazaar, fails, one is apt to hear something about it, all the more as it occurs spasmodically or periodically, a few generally going by the board together. I have noticed that these failures occur about every third year, and that one failing firm or "chop" generally leaves several firms in the lurch, and for goodly sums, too, all the way, per firm, from $1,000 to $50,000. I have heard of firms that lost at such periods, some $1,000 to $5,000; others, again, as high as $30,000, and even as high as $50,000. These heavy failures occurred during the first seven or eight years of my residence here, and the firms came to an agreement together to adopt mutually such rules, secure themselves in such a manner, as to make such failures impossible. But it seems that some of them, the result of false representations made to them, and of competition, more than anything else, relaxed; and, as a consequence, failures occurred again from time to time, but not to the same extent and volume as for merly. A very few failures also occurred, since I have been here among the Europeau firms, either the results of mismanagement, over

reaching themselves, or by engaging in too many schemes and enterprises, to and after which they did or could not look or bestow the necessary attention and care.

The most numerous failures occur among the native small traders (hawkers and shopkeepers), mechanics, or, better said, small contractors, owners of lighters, boats, hack carriages, and bullock carts; also among the half-caste ("Eurasian") clerks, &c., employed by firms, the Government, and sundry enterprises, who, as a rule, are poorly or very badly paid, and in their endeavors or attempts to live after the manner and style of Europeans, have a hard time to make both ends meet. The great majority of the classes named are in the hands of the rapacious "chitties" (a Hindoo caste), above alluded to, borrowing from them sums equal to about onethird or one-half of the value of the property (mostly movable chattels) they assign in or with their promissory notes, and this at most exorbitant rates of interest, all the way from 18 to 30 per cent., and even more, interest, as a rule, payable monthly on the whole sum of principal until the latter is paid, and a monthly installment or part payment of the principal to be paid also, in addition to the interest. It is safe to say that their earnings or profits of the business, after affording them a scant living, are in a great many cases not sufficient to meet their terms of payment or only a part thereof, if at all. The "chitty" (lender) may for a while be content taking all the interest he can get (or, better said, all he does get,*) if it does not fall very short of the amount due, and extend the terms of payment. But just so soon as he finds relaxation taking place, sees signs of probable failure, he goes and seizes the property assigned as security, if no opposition is made, or prosecutes the debtor before the court of requests, if the debt claimed as due amounts to less than $50, and before the high court, if it amounts to more than $50. The court of requests does not give decrees of bankruptcy, and only after hearing both sides orders payment, on peril of imprisonment, in small installments at sufficiently long intervals. While there is, to the best of my knowledge, no law against usury, the "chitties," I am glad to say, are not allowed to have their own way before the court of requests, and must be content with such sums as the court orders the defendant to pay. But since, as a rule, they had already secured the "lion's share" of the poor man's property, or of his income from any source, they can easily afford to be content with the payment of a reduced balance on long terms. The high court, however, issues decrees of bankruptcy, and appoints trustees, &c. But, in many cases, before it comes to that, rather than to allow it to go that far, and to avoid litigation, the lender and the borrower effect some settlement out of court. The great misfortune for the native business man of small means is that he cannot borrow money at the banks or from European capitalists at the usual rates of interest of from 8 to 12 per cent., and is forced to borrow from the native usurer, who can discount his notes (or collaterals of notes by being indorser) at the rate of interest just alluded to (about 9 or 10 per cent.) at any time. This is not only a misfortune for the small trader, or natives of the laboring classes, but for trade and commerce generally. There are many here who hold the same view. On the other hand it must be admitted that the banks and European capitalists have little or no opportunity of finding the standing or financial ability of the lower order of business men, while the native lender has it fully, because he lives among them and is a shrewd, careful observer.

*And the licensed (by Government) pawnbrokers do a thriving business in trinkets, objects of value, jewelry, clothing, &c., at the same time, at most exorbitant rates.