Coll 30/9 'Persian Gulf: Administration Reports 1926-1938' [‎260v] (525/1028)

more profitable to keep out of the way the smugglers’ risks are reduced to a
minimum. The smugglers are, however, experiencing difficulty in establishing
friendly relations with the Navy and in the meantime additional care is being
exercised.
The trade monopoly law of 25th February 1931, which, with its effect on the
trade of the country, was fully dealt with in the last Administration Report, has
'reduced the country to a pitiable state from which progress is not promising.
The scheme is undoubtedly workable but only as a cumbersome and freak ex
periment which could hardly hope ever to prove a panacea for the grave
economic illness with which the country is afflicted.
An export system which encourages the disposal of the country’s produce
at a loss and depends on the sale of export certificates for its profit can only
increase the burden on the people. The importer is obviously compelled to add
the price of the export certificate (which he has purchased in order to obtain
permission to import), to the cost of the goods he imports^ In these circuim
stances the trade of the country is as gloomy in prospect as in retrospect.
Owing to the tightness of money and the consequent inability of merchants
to take up documents, large stocks of goods accumulated in the customs sheds,
which have been practically full throughout the year. The cost of import per.
mits, increased customs dues and road tax added to the cost, c. i. f. Bushire, of
foreign-made products so enhance the price at which they must be sold that the
people vffio formerly purchased them are now unable to. afford them. In view
of the retrenchment which the general and prolonged crisis has imposed on all
classes it is doubtful if these goods could now be disposed of even at their former
price.
Terms of business .—The general terms at present offered to Persian merch.
ants by foreign suppliers are not indicative of much confidence. A percentage,
up to twenty-five, is required with the order and the balance is payable against
shipping documents in Bushire. In very fev T exceptional cases are documents
released against acceptance of bills at sixty or ninety days but there is probably
no merchant in Bushire to whom such terms would at present be justifiable. It
is, however, customary for Bushire merchants to despatch goods to the interior
against bills drawn on the consignees on arranged terms, varying between thirty
and one hundred and fifty days after sight of the goods, the terms being
dependent on the nature of marketability of the merchandize.
Banks .—There are three banks in Bushire. The Imperial Bank of Persia,
the National Bank and the Russian Bank. The National Bank is reported to
have had a successful year and to have extended its business to the detriment of
the Imperial Bank. The Persian public is said to be recovering from the fear
of governmental scrutiny of accounts kept at the National Bank although it
cannot escape from the belief that its funds may be applied at any time to
finance (jovernment projects.
In order to attract business the Russian Bank, which was opened in April,
offered 1 per cent, interest on current accounts, 3 per cent, on deposit accounts
of at least one year, and 5 per cent, on deposits for three years. It was further
intimated that only merchants with current accounts at the Bank would be
allowed to do business with the Russian Trading Company. A number of the
smaller merchants opened nominal accounts but only one or two of the more
important traders, with existing commitments, were induced to transfer funds
to the bank.
The absence of a crop of bankrupt firms is more an indication of the con-
servation of resources than the result of healthy business as merchants are said
to be living on capital rather than trading with it and every opportunity is
taken to accumulate funds abroad.
Communications.
Beads .—The perennial problem of laying a permanent track across the
low-lying land between Bushire and the mainland remains unsolved despite
repeated efforts and the expenditure of large sums of money—mostly on un
suitable material. The incidence of rain never fails to close the road to wheeled
traffic. Other parts of the Bushire-Shiraz road have, however, b^en consider
ably improved by widening at certain points arid by the erection of low parapets
along the edge at the most dangerous stretches. Although the surface is. more
level than for some years the strewing of shale has not improved the grip for
motors.