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CHAPTER XIIL—INDEBTEDNESS. 
The Burden of Debt. 
Among the causes responsible for the low standard of living of 
the worker, indebtedness must be given a high place. Here, as elsewhere, 
we are confronted with an absence of reliable statistics, but there is 
general agreement as to the main fact, and we are satisfied that the 
majority of industrial workers are in debt for the greater part of their 
working lives. Many, indeed, are born in debt and it evokes both ad- 
miration and regret to find how commonly a son assumes responsibility 
for his father’s debt, an obligation which rests on religious and social but 
seldom on legal sanctions. Many come to industry because they are in 
debt ; some are enabled by industry to clear themselves and a few then 
become money-lenders instead of money-borrowers. More often the debts 
remain and fresh obligations are incurred. It is estimated that, in most 
industrial centres, the proportion of families or individuals who are in 
debt is not less than two-thirds of the whole. We believe that, in the 
great majority of cases, the amount of debt exceeds three months’ wages 
and is often far in excess of this amount. We are not including in 
debt, for the purpose of these calculations, the amounts owing for the 
ordinary purchases of the month, which are generally made on credit. 
Interest Rates. 
A debt of even one quarter of a year’s wages is a heavy burden, 
particularly to a man whose income is little more than sufficient for bare 
necessities. But the burden is aggravated out of all proportion by the 
rate of interest which has to be paid. A common rate is “ one anna in 
the rupee”, 4.c., one anna per month on every rupee borrowed, and this 
was a rate frequently cited to us in our tours. This is 75 per cent per 
annum, without allowing for the effect of compound interest. For 
the man who is only three months’ wages in debt, the “ anna in the rupee ” 
rate involves a monthly charge of nearly 20 per cent of wages, on 
account of interest, apart from the usual obligation of repaying instal- 
ments of the capital. Lower rates are frequent, particularly on loans 
with security, but they are often associated with stringent conditions as 
to the repayment of the instalments. Much higher rates are also 
charged, 150 per cent or more per annum being by no means uncommon. 
Frequently the nominal rate is not the real one. For example, money 
may be borrowed with an addition to the debt of 25 per cent for the 
year’s interest, on an agreement that capital and interest will be paid off 
in twelve equal monthly instalments during the year ; here the actual rate 
of interest is nearly double the apparent rate. We add a few illustra- 
tions of these from various sources. The Bombay Labour Office, in its 
report on working class budgets in Ahmedabad, observes “The Ahmed- 
abad worker is heavily indebted. The amount of debt varies from a few 
rupees to many times the monthly income. The money is borrowed at 
heavy rates of interest which in the majority of cases vary from 12 to 
24 per cent. But higher rates of interest are not uncommon, and in