In a country where money is only obtainable at such an exorbitant rate
of interest as in China, it is but natural that some attempt should be
made to obviate the necessity of appealing to a professional
money-lender. Three per cent. per month is the maximum rate permitted by
Chinese law, which cannot be regarded as excessive if the full risk of
the lender is taken into consideration. He has the security of one or
more "middlemen," generally shopkeepers whose solvency is
unimpeachable; but these gentlemen may, and often do, repudiate their
liability without deigning to explain either why or wherefore. His
course is then not so plain as it ought to be under a system of
government which has had some two thousand years to mature. Creditors
as well as debtors shun the painted portals of the magistrate's
yamen[*] as they would the gates of hell. Above them is traced the
same desperate legend that frightened the soul of Dante when he stood
before the entrance to the infernal regions. Truly there is no hope
for those who enter here. Both sides are _squeezed_ by the gate-keeper
--a very lucrative post in all yamens--before they are allowed to
present their petitions. It then becomes necessary for plaintiff and
defendant alike to go through the process of (in Peking slang) "making
a slit," i.e., making a present of money to the magistrate and his
subordinates proportionate to the interests involved. In many yamens
there is a regular scale of charges, answering to our Table of Fees,
but this is almost always exceeded in practice. The case is then
heard: occasionally, on its merits. We say occasionally, because nine
times out of ten one of the parties bids privately for the benefit of
his honour's good opinions. Sometimes both suitors do this, and then
judgment is knocked down to the highest bidder. The loser departs
incontinently cursing the law and its myrmidons to the very top of his
bent, and perhaps meditating an appeal to a higher court, from which
he is only deterred by prospects of further expense and repeated
failure. As to the successful litigant, he would go on his way
rejoicing, but that he has a duty to perform before which he is not a
free man. The "slit" he made on entering the yamen needs to be
repaired, and on him devolves the necessity of "sewing it up." The
case is then at an end, and the prophecy fulfilled, which says:--
"The yamen doors are open wide
To those with _money_ on their side."
[*] Official and private residence, all in one.
Wiser and more determined creditors take the law into their own hands.
With a tea-pot, a pipe, and a mattress, they proceed to the shop of
the recalcitrant debtor or security as circumstances may dictate, and
there take up their abode until the amount is paid. If inability to
meet the debt has been pleaded, then this self-made bailiff will
insist on taking so much per cent. out of the daily receipts; if it is
a mere case of obstinacy, a desire to shirk a just responsibility, the
place is made so hot for its owner that he is glad to get rid of his
visitor at any price whatever. Were manual violence resorted to, the
interference of the local officials would be absolutely necessary; and
in all cases where personal injuries are an element, their action is
not characterised by the same tyranny and corruption as where only
property is at stake. The chances are that the aggressor would come
off worst.
To protect themselves, however, from such a prohibitive rate of usury
as that mentioned above, Chinese merchants are in the habit of
combining together and forming what are called Loan Societies for the
mutual benefit of all concerned. Such a society may be started in the
first instance by a deposit of so much per member, which sum, in the
absence of a volunteer, is handed over to a manager, elected by a
throw of dice, whose business it is to lay out the money during the
ensuing month to the best possible advantage. Frequently one of the
members, being himself in want of funds, will undertake the job; and
he, in common with all managers, is held responsible for the safety of
the loan. At the end of the month there is a meeting at which the past
manager is bound to produce the entire sum entrusted to his charge,
together with any profits that may have accrued meanwhile. Another
member volunteers, or is elected manager, and so the thing goes on, a
running fund from which any member may borrow, paying interest at a
very low rate indeed. Dividends are never declared, and consequently
some of these clubs are enormously rich; but any member is at liberty
to withdraw whenever he likes, and he takes with him his share of all
moneys in the hands of the Society at the moment of his retirement. To
outsiders, the market rate of interest is charged, or perhaps a trifle
less, but loans are only made upon the very best securities.