'Do you mean to say, gentlemen, that you yourselves are prepared to press the oil?' I exclaimed dubiously.
They were terribly offended, and were shaking with indignation.
'The very idea of it, sir!' exclaimed their spokesman. 'Of course not! We have enough workmen to do that for us.'
I made a very long pause, slowly sipping my wine. Then I spoke slowly and with infinite politeness.
'Gentlemen, the idea of this worthy co-operative society is beyond praise.' Again I paused, and then continued, 'I am rather worried about the amount you require. We never recommend to the bank to grant such large loans without referring the matter to our headquarters in Chungking, possibly to Dr Kung himself.' They listened respectfully. They were greatly impressed by the exalted name.
'I will report the matter to my headquarters at once. As soon as I have a reply I shall be glad to inform you,' I said, bowing. We slowly filed out of the room.
Of course, I never bothered Chungking with such matters. But that was one of the correct ways of saying 'No.' I do not think these elders really expected any reply. They knew that I saw through their game, but there was no harm in trying. I do not think they were even angry with me: it was a legitimate gamble, a trial of wits. They had lost the first round, but hoped they might win the next.
When I first came to Likiang there was but one bank there and a very modest one at that. It was the Provincial Cooperative Treasury. As there were no co-operatives of any kind prior to my arrival, it had nothing to finance and, therefore, it seldom had any funds in its coffers. The cost of a remittance from Kunming to Likiang was, at least, 10 per cent; and to lose ten dollars on a hundred was a lot of money. Moreover, as Likiang used nothing but silver dollars, the problem of transporting and storing funds was acute. People either brought the money in their baggage by caravan or, if they had the connections, made transfers through the local merchants who had plenty of silver dollars (Whenever I refer to transactions in dollars it means silver half-dollars or pangkais, not paper currency.) both at Kunming and Likiang, and so a loan of thirty thousand dollars, for instance, as the clever elders had desired, would have required quite a sizable caravan, as thirty horses would have been needed to carry the money, quite apart from the small army that would have been necessary as an escort from Hsiakwan. The bandits were no fools, and they had their own sources of information. They would mobilize all their friends and connections to make a concerted bid for so rich a prize.
Keeping such a precious cargo in the living-rooms of a wooden house, with no safes available, was another problem. Likiang had been plundered several times before by large groups of bandits, and a few hundred local militiamen provided doubtful protection. It was for this reason that the Co-operative Treasury held little capital and the local merchants tried to keep their hoards of silver coin down to a minimum. So there was always a shortage of ready money in Likiang and the purchase value of the dollar was, therefore, abnormally high. The interest on loans was fantastic: 10 per cent per month was considered a reasonable interest, and the 4.5 or 5 per cent charged by the treasury was regarded as extremely low and were much sought after.
As I had brought with me only a small sum of silver dollars, and as there were no other government banks but the Cooperative Treasury, our Kunming Headquarters probably thought that this shortage of dollars would be a major stumbling-block in the development of my industrial co-operatives, even if I did manage to get a foothold in Likiang. They did not reckon on my powerful connections with the headquarters of the Provincial Co-operative Treasury and with certain Yunnan provincial banks. My first Wool Spinning and Weaving Society, for instance, received a loan from the Provincial Co-operative Treasury in about a fortnight after their first constitutional meeting. As soon as other societies had been formed, they also obtained loans, though they were very small compared with the standards not only of European countries but even of such places as Kunming and Chungking, where values were inflated. The first loan was only for 300 dollars and the subsequent loans ranged from 200 to 500 dollars and they were all granted for a period of one year only. The loans were not needed for salaries or wages or any such unproductive purposes, for the co-operators lived in their own houses, ate their own products and carried on their duties without salaries or wages. They received their remuneration, according to the work done, when the profits were divided at the end of the year. With a few hundred dollars they could buy a lot of raw wool and make a number of looms and spinning-wheels. Their products were sold like hot cakes and there was no difficulty in making enough profit during the year to pay off the loan. I never had any trouble about loan repayments from the Nakhi people. The poorer they were, the more conscientious and particular they were about their financial obligations. Nor did I ever lose any personal loan I made to friends.
Luck was clearly with me. Something else soon happened which greatly stabilized and strengthened my position, and gave my work additional prestige. I received a telegram from the Bank of China in Kunming requesting me to meet and render assistance to their people who were proceeding to Likiang by chartered plane to open a branch of the bank there. This was great news indeed. I must mention in this connection that the bank's general manager in Kunming was a friend of mine and I also knew very well the secretary-general of the bank's headquarters in Chungking. I found at once a small temple for accommodating the bank's staff on their arrival. Then I assisted them in securing a good house for the exclusive use of the bank, which was so difficult in Likiang. The Kunming and Chungking branches were very grateful and gave a free hand in negotiating loans for my co-operatives at the incredibly low rate of interest of only 3.5 per cent per month. Unfortunately for the bank, however, all the loans made by them were in paper currency, which the recipients were at liberty to convert into materials or silver dollars. As the paper dollar was depreciating month by month, the societies had not the slightest difficulty in repaying even large loans when they matured. They made huge profits, as what they were repaying at the end of the year was in many cases less than a half of what they had originally received. It did not affect the individual branch bank itself as it was doing only its duty within the law. It was an overall disaster of a national magnitude with which even the Government was unable to cope. Only the silver dollar remained steady and, with this in circulation, life in Likiang remained stable and cheap.
The Bank of China stayed in Likiang only until VJ-Day and then the branch was withdrawn. But by that time all my co-operatives had become the favourite children of the Cooperative Treasury and of several other provincial commercial banks which had hastily opened branches in Likiang, attracted by the rich caravan trade with Lhasa. Also, by that time, we had begun to receive some capital direct from our headquarters in Chungking.