ance, would produce unlooked-for
results. Large imported sums of capital in hard cash are not wanted and
would involve considerable risk. First of all, stands the danger of the
depreciation of capital by the fall in silver and the gradual rise in
exchange due to the excess of imports over exports. Then comes the
narrowness of the Persian markets which renders the return of large sums
in cash an extremely long and difficult operation; and last but not
least, the serious fact that capital is generally imported at a loss,
inasmuch as the intrinsic value of the kran is much below its exchange
value.

The ideal situation of an English Bank trading with the East,[2] is when
its capital remains in gold, whilst its operations are conducted in
silver by means of its deposits. This, because of the instability in the
price of silver as compared with that of gold, and the risks which follow
upon holding a metal fluctuating in value almost daily. The situation in
Persia, partly owing to the constant appreciation of the Persian
currency, due to the great dearth of silver produced by hoarding as well
as by the export of coin to Central Asia, is quite suitable to the system
of banking indicated above.

The difference between the intrinsic and the exchange value of the kran,
notwithstanding the constant demand for exchange, is quite worthy of
note. Political preoccupation is the principal cause of the hoarding
system in Government circles, and in the masses the absence of banking
organisations in which the natives have sufficient confidence to deposit
their savings. Slowly but surely the Persian is beginning to feel the
good effects of depositing his money in a European-managed Bank offering
sound guarantees, and it is certain that in time all the money required
for trade purposes will be found in Persia itself.

When better communication between the various commercial centres has been
established, the distribution of the funds as required, now a matter of
great difficulty and risk, will be greatly facilitated. When the
despatching of sums from one city to another instead of taking minutes
by telegraph or hours by post occupy, under normal circumstances, days,
weeks, a month or even more, because the payments are made in solid
silver which has to travel by caravan, it is easy to understand how the
dangerous system of hoarding comes to be practised with impunity and
facility all over Persia.

[Illustration: A Typical Persian Window.