'Report on the British Indian Commercial Mission to South-Eastern Persia during 1904-1905. By A H Gleadowe-Newcomen.' [‎13r] (30/176)

MISSION TO SOUTH-EASTERN PERSIA EOR 1904-1905.
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introduced by the State-assisted Russian traders, through, to some extent, the
Banque d’ Escompte, which is a branch of or at any rate closely connected with
the Russian State Bank. These will be considered in their proper places, under
the head of “ Russian Competition.”
So far as Southern Persia and the Indian manufacturers are concerned, the
bulk of the import trade is conducted on the basis of “ Cash against documents.”
This trade is almost entirely in the hands of Hindus and Parsis,—very few
Moslem traders, except at Bushire, doing import and export business of any
importance. The long credit system, so much advertised and feared by
importers and manufacturers alike, hardly affects the wholesale import trade.
Of course the Persian’s ignorance of business methods has some influence
on affairs. This cannot but be the case when a man considers that a document
drawn at 90 days’ sight ought to carry on for 180, and when he also regards any
attempt to charge interest for the excess time in the light of an imposition.
In the Kerman region the large importers sell to retail dealers, or more
properly middlemen, who, in turn, sell to the small retail dealers, mostly
Parsis and Persians, goods being paid for half in cash, and credit being given
for half, at a rate of interest from 24 per cent, to 120 per cent., credit being
allowed, as a rule, for from four to ten months.
These retail dealers, some of whom own shops in the chief towns, sell
their goods in small quantities to petty dealers or pedlars, who in turn sell in
out-lying villages .and occasionally peddle their goods to Nomads. Their
methods are very like those of their fellows in other parts of the world. Sales
are, as a rule, for cash, though sometimes credit is given for a month to
approved customers, this credit being often turned into a running account,
the traders collecting a portion of the whole of the amount at the end of the
month. Payments to village traders are sometimes made in kind, and barter
is common. The Nomads, as a rule, buy what they want in biggish lots in the
spring and early autumn.
Commercial customs in Central Persia are somewhat different from those
obtaining in Kerman and the South-Eastern region. Sales in Yezd and Ispahan
are made, when wholesale, on the basis of a fixed price, with long credits, which
are shortened or lengthened according as the prices of commodities rise or fall.
In all sale contracts provision is generally made for payment of the debt at the
end of about three months, and compound interest, at the rate of 1 per cent,
per month, is allowed to the purchaser on the unexpired period of the credit
given. These payments are sometimes made in instalments, a portion of the
debt being cleared off at regular periods, generally monthly. In this case the
affair resolves itself into one of a running account.
To give an example of how the method works '.—Tea is selling at a fixed
price of krs. 50 per man. “A” buys tea when credit is 24 months. He
pays his debt at the end of the stipulated three months. He gets discount
for 21 months, calculated at the rate of 1 per cent, per month compound
interest. Tea increases in price before “A” makes his next purchase. He
has now to buy at the rate of krs. 50 per man at a credit of 12 months. He
pays at the end of three months and gets discount at the rate of 1 per cent, per
month for nine months. He again buys tea when it is very much reduced in
price, and is now selling at krs. 50 per man with 36 months credit. As before,
he pays his debt at the end of three months. He now gets discount at the rate of
1 per cent, per month for 33 months. It is seen from this that credit is in reality
a discount, and the lengthening or shortening of credits only^ represents the
change in price. This method of doing business also obtains in Tehran,
Tabriz and Shiraz, though in a somewhat less pronounced manner, in as much
as fixed prices are frequently changed.
The great drawback to trade, apart, of course, from the state of the country
and communications, is the absence, or, rather, the primitive state, of commercial
law in Persia. Eor the term law may be read custom, assisted by the Koran and
complicated by bribery and corruption. The payment of accepted bills can
not be enforced, and bankruptcies, many of them fraudulent, are common amongst
the smaller fry of traders, who on very slight provocation take refuge m the
Sanctuaries or refuges called Basts, which abound in the country. Such bank-