It will, I hope, be evident from what I have said to night that the point of real i to the solvency of country hot the volume of either its exports or ite imy but the balance between the two, Ihave had word to say about "invisible exports." Let us now glance at the question of "invisible imports. Chief among theee—it is the only one I need touch upon at this late hour—are the annual payments of interest and instalments of principle on Chinese foreign Roughly speaking these loans amount to about £120,000,000 or. sar, six shillings per head of the population Compare New Zealand with £63 per head, or New South Wales with £48, or the Colony of Victoria with £42, and it will be seen at once that China's indebted-nees is relatively emall. It is only fair to say, however, that the comparison is ade with loans which to o large extent return ® revenue to the colony which contracted them, while the word " destruc. tive" rather than "productive" would better describe the purposes to which the bulk of Chinese borrowings have beer lied. But after all, national wealth ily destroyed, is as quickly created end I am inclined to think that the amount' of China's foreign indebtedness is not only relatively but absolutely small. It la sometimes argued that, since imports must be paid for by exports, these foreign ly be met by @ suding amount and that accordingly there is reason to fear' lest, pending the necessarily slow development of her natural resources, financial bankruptcy should result. argument seems to me to be founded upon fallacy. As already pointed out, the real crux of the question is not the volume but the balance of trade. All that is required, 80 far as solvency is concerned, is an adjustment of the balance of trade. The Payment may be made either by an increase in exports, or by a decrease in imports, or by both one and the other. As it takes time to develop the resources of @ country, it is probable that in the first instance, at least, the necessary adjustment will be made in China by Telative increase in exports and a relative decrease in imports. In this case, since the foreign trade of China is valued at, say, £60,000,000, while the annual payment on account of interest and £6,000,000, all that is required is an adjustment of not more than 10 per cent. If this view be correct, there would seem to be no reason to accept the gloomy fore-Bodings of those alarmists who record £120. as an intolerable burden on a lightly taxed country, historically free from any taint of repudiation and with a strong and industrious Bik the apprebentony of thoes wks are a cannot see how national bankruptcy is to be averted when a trade of over £60,000,000 per annum is called upon to suffer an adjustment of less than feel any panic if, as is possible, any delay in the adjustment of the balance of trade should lead to an export of silver. In Ohina, silver, as we have seen, is both a commodity and " currency. In the former case it is at the best a luxury which the country is no longer in & position to sup-'Burely it is no matter for regret fo sea it discorged from useless hoards and set free to perform its proper function in assisting, along with other commodities, to defray the national in-Gebtednesa. But suppose the silver ex-wae d withdrawn from circulation, there is still no cause for alarm. It is an miroly natural prores, the effect of which is to reduce prices to the level at which the export of other commodities will again take the place of silver. Nor need we have the slightest fear that the process will be more than temporary, or the effect delayed until the country is denuded of her silver, since every country must retain the quantity of currency required to maintain the normal level of prices. The continued export is a sign that the level is too high. Should it Become too low, silver must inevitably Soe hack wail the quantity in circula tion is again sufficient to maintain the normal level of prices.
Text read from the printed page and cleaned; old type leaves the occasional error.