LITMIR.BIZ

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hand; he is sure to have some pecuniary motive for drifting down-stream. A Bania will start an auction in a desert. If a Bania’s son tumbles down he is sure to pick up something. He uses light weights and swears that the scales tip up of themselves; he keeps his accounts in a character that no one but God can read; if you borrow from him your debt mounts up like a refuse-heap or gallops like a horse; if he talks to a customer he debits the conversation in his accounts; and when his own credit is shaky he writes up his transactions on the wall so that they can easily be rubbed out.”131

      20. His virtues.

      Nevertheless there is a good deal to be said on the other side, and the Bania’s faults are probably to a large extent produced by his environment, like other people’s. One of the Bania’s virtues is that he will lend on security which neither the Government nor the banks would look at, or on none at all. Then he will always wait a long time for his money, especially if the interest is paid. No doubt this is no loss to him, as he keeps his money out at good interest; but it is a great convenience to a client that his debt can be postponed in a bad year, and that he can pay as much as he likes in a good one. The village moneylender is indispensable to its economy when the tenants are like school-boys in that money burns a hole in their pocket; and Sir Denzil Ibbetson states that it is surprising how much reasonableness and honesty there is in his dealings with the people, so long as he can keep his transactions out of a court of justice.132 Similarly, Sir Reginald Craddock writes: “The village Bania is a much-abused individual, but he is as a rule a quiet, peaceable man, a necessary factor in the village economy. He is generally most forbearing with his clients and customers, and is not the person most responsible for the indebtedness of the ryot. It is the casual moneylender with little or no capital who lives by his wits, or the large firms with shops and agents scattered over the face of the country who work the serious mischief. These latter encourage the people to take loans and discourage repayment until the debt has increased by accumulation of interest to a sum from which the borrower cannot easily free himself.”133

      21. The moneylender changed for the worse.

      The progress of administration, bringing with it easy and safe transit all over the country; the institution of a complete system of civil justice and the stringent enforcement of contracts through the courts; the introduction of cash coinage as the basis of all transactions; and the grant of proprietary and transferable rights in land, appear to have at the same time enhanced the Bania’s prosperity and increased the harshness and rapacity of his dealings. When the moneylender lived in the village he had an interest in the solvency of the tenants who constituted his clientèle and was also amenable to public opinion, even though not of his own caste. For it would clearly be an impossibly unpleasant position for him to meet no one but bitter enemies whenever he set foot outside his house, and to go to bed in nightly fear of being dacoited and murdered by a combination of his next-door neighbours. He therefore probably adopted the motto of live and let live, and conducted his transactions on a basis of custom, like the other traders and artisans who lived among the village community. But with the rise of the large banking-houses whose dealings are conducted through agents over considerable tracts of country, public opinion can no longer act. The agent looks mainly to his principal, and the latter has no interest in or regard for the cultivators of distant villages. He cares only for his profit, and his business is conducted with a single view to that end. He himself has no public opinion to face, as he lives in a town among a community of his caste-fellows, and here absolutely no discredit is attached to grinding the faces of the poor, but on the contrary the honour and consideration accruing to him are in direct proportion to his wealth. The agent may have some compunction, but his first aim is to please his principal, and as he is often a sojourner liable to early transfer he cares little what may be said or thought about him locally.

      22. The enforcement of contracts.

      Again the introduction of the English law of contract and transfer of property, and the increase in the habit of litigation have greatly altered the character of the money-lending business for the worse. The debtor signs a bond sometimes not even knowing the conditions, more often having heard them but without any clear idea of their effect or of the consequences to himself, and as readily allows it to be registered. When it comes into court the witnesses, who are the moneylender’s creatures, easily prove that it was a genuine and bona fide transaction, and the debtor is too ignorant and stupid to be able to show that he did not understand the bargain or that it was unconscionable. In any case the court has little or no power to go behind a properly executed contract without any actual evidence of fraud, and has no option but to decree it in terms of the deed. This evil is likely to be remedied very shortly, as the Government of India have announced a proposal to introduce the recent English Act and allow the courts the discretion to go behind contracts, and to refuse to decree exorbitant interest or other hard bargains. This urgently needed reform will, it may be hoped, greatly improve the character of the civil administration by encouraging the courts to realise that it is their business to do justice between litigants, and not merely to administer the letter of the law; and at the same time it should have the result, as in England, of quickening the public conscience and that of the moneylenders themselves, which has indeed already been to some extent awakened by other Government measures, including the example set by the Government itself as a creditor.

      23. Cash coinage and the rate of interest.

      Again the free circulation of metal currency and its adoption as a medium for all transactions has hitherto been to the disadvantage of the debtors. Interest on money was probably little in vogue among pastoral peoples, and was looked upon with disfavour, being prohibited by both the Mosaic and Muhammadan codes. The reason was perhaps that in a pastoral community there existed no means of making a profit on a loan by which interest could be paid, and hence the result of usury was that the debtor ultimately became enslaved to his creditor; and the enslavement of freemen on any considerable scale was against the public interest. With the introduction of agriculture a system of loans on interest became a necessary and useful part of the public economy, as a cultivator could borrow grain to sow land and support himself and his family until the crop ripened, out of which the loan, principal and interest, could be repaid. If, as seems likely, this was the first occasion for the introduction of the system of loan-giving on a large scale, it would follow that the rate of interest would be based largely on the return yielded by the earth to the seed. Support is afforded to this conjecture by the fact that in the case of grain loans in the Central Provinces the interest on loans of grain of the crops which yield a comparatively small return, such as wheat, is twenty-five to fifty per cent, while in the case of those which yield a large return, such as juāri and kodon, it is one hundred per cent. These high rates of interest were not of much importance so long as the transaction was in grain. The grain was much less valuable at harvest than at seed time, and in addition the lender had the expense of storing and protecting his stock of grain through the year. It is probable that a rate of twenty-five per cent on grain loans does not yield more than a reasonable profit to the lender. But when in recent times cash came to be substituted for grain it would appear that there was no proportionate reduction in the interest. The borrower would lose by having to sell his grain for the payment of his debt at the most unfavourable rate after harvest, and since the transaction was by a regular deed the lender no longer took any share of the risk of a bad harvest, as it is probable that he was formerly accustomed to do. The rates of interest for cash loans afforded a disproportionate profit to the lender, who was put to no substantial expense in keeping money as he had formerly been in the case of grain. It is thus probable that rates for cash loans were for a considerable period unduly severe in proportion to the risk, and involved unmerited loss to the borrower. This is now being remedied by competition, by Government loans given on a large scale in time of scarcity, and by the introduction of co-operative credit. But it has probably contributed to expedite the transfer of land from the cultivating to the moneylending classes.

      24. Proprietary and transferable rights in land.

      Lastly the grant of proprietary and transferable right to land has afforded a new incentive and reward to the successful moneylender. Prior to this measure it is probable that no considerable transfers of

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