AGRARIAN DISTRESS IN INDIA.
[TO THE EDITOR OF TUB "SPECTATOR."] SIR,—May I trespass on your space with a few remarks on the important problem of providing relief for the in- debted peasant proprietary of the Deccan ? In your re-
view of the news of last week, you write,—" The exactions of the native usurers, who, as was shown by a recent Commission of Inquiry, have gradually enslaved the peasantry by loans, partly real, partly fictitious, at exorbitant interest." I am quite ready to admit that in all fictitious, that is, in all fraudulent, transactions the rates of accommodation are usurious and excessive. For such cases the Indian Legislatures are bound to provide relief, not by the introduction of usury Laws, but by measures which shall protect the simple ryot against the frauds of the astute Marwari Sowkar. But in the more numerous cases—in the bond fide " real " loan transactions —the rates of interest are not, I believe, exorbitant. There is a general impression that the Hindu Shylocks always realise ex- travagant profits, and in reviewing an article in the current Quarterly _Review, the Economist of April 26th expressed an opinion that a limitation of the legal rate of interest might be desirable. It is because I believe that such a remedy would fail to staunch the flow of agrarian disorder in India, that I venture to offer the following remarks on the subject.
The Commission inquired into many cases of debt, and the conclusions at which they arrived are given in paragraphs 83-86 of their report. It is impossible," they write, "to say that these rates are unfair or usurious." Again, "Our reply to the ques- tion proposed is that there is no evidence before us to prove that the Sowkar's profits are extravagant." The value of agri- cultural credit is very difficult to estimate, and in Dorsetshire I have met with transactions which are far more usurious than the worst cases recorded by the Commission. But even if the rates charged by the Marwaiis were excessive, a law of usury would fail to reduce them, and by professing to apply a remedy which would not relieve the ryots, would only aggravate their discontent at the failure of the Government to redeem its pledges. The usual method of the money-lender's business is as follows : —A ryot borrows and receives 100 rupees, passing a bond for the same, in which the terms of interest and repayment are specified. He then, in accordance with a prior agreement, returns to the lender ten or twenty per cent. of the loan advanced. If the rate of interest fixed by law is less than the terms, which the Sowkar would, under the circum- stances, insist upon, the difference would be made good, with the full consent of the borrower, by increasing the deduction to be made from the nominal loan of 100 rupees. There is no fraud here, and unless the trade of the Sowkar is to be stopped altogether, it would be impossible to prevent him exacting his own terms. It is only twenty years since usury- laws were abolished in India, and their strongest advocates can claim for them no practical advantage. They only induced parties to transact their business in secret instead of openly, and familiarised the subject races of India with the spectacle of a statute enjoined by the law of the land, but habitually dis- regarded in practice.—I am, Sir, &c.,
Cambridge, May 27th. WILLIAM LEE-WARNER.
[We did not propose usury laws. We want the Courts to disallow any bond not signed in presence of a registrar, to abolish any right of imprisonment for debt, and to reduce the right of mortgage to the owner's life-tie.—En. Spectator.]
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