Interference with administration and sequestration of revenue has reduced nearly all the Chinese Go: sinment railways to a state of partial or complete default on their toan services and other obligations. An even more serious matter, how-to destroy the hope, s0 long cherished by the holders of railway loan bonds, that with a return to normal egnditions the railways would soon recover their earning power and clear off these accumulated debts.
It is well known that the maintenance in a state of efficiency of any railway necessitates the current expenditure of considerable portion of the earned revenue for the upkeep of the permanent way and rolling stock and a hundred and but the Chinese military and civil authorities into whose hands the control of railways has passed have so far entirely ignored this fundamental principle, Intent only on extract ing as much money as possible, have starved the railways of even the most urgent requirements, In such circumstances the rate of deterioration rapidly gathers pace, and it is to be feared that if some settlement of China's political disputes is not shortly reached and the Fevenues restored to the railway Administrations, some of the lines will before long become unworkable and will need the expenditure of many millions of dollars before they can again be rendered fit for regular traffic.
'AS regards the salt revenue, I will not burden you by repeating. the wearisome tale of illegal seize tures and disorganization. Receipts fare now reduced to a negligible figure, the reserve of funds held by the Group Banks is practically exhhawsted and unless a marked im-
Provement occurs the whole of thi loans dependent on Salt Revenu:
doomed to fall, into default, 1 understand that a heavy reduction of local revenues has resulted from the suppression of foreign employees of the Chinese Government Salt Administration in Nationalist territory and T sincerely hope tha? the larier authorities are correctly reported to be inclining towards the re-instatement of the inspectors and the re-establishment of the legal The Customs Ouilook The Customs revenue, although 0 seriously diminished, has sufficed to meet in full its foreign obligations as well as the interest charges of the Consolidated Domestic Loans, the shortage of funds which led to temporary suspension of payment on the 1896 Anglo-German loan in the early part of the year being nothing more than a legacy from the time of China's rupture with Germany during the Great War and having nothing directly to do with the current state of affairs. The continued integrity of the Maritime Customs service and its relative immunity from the political and military interference which has befallen other national services (including now the Posts) with such disastrous effects, must be reckoned to China's credit.' It implies, at the same time, a tribute to the energy, patience and tact of the members of the staff both foreign and Chi-
The Nationalist Government showed scanty respect for international treaties in their attempt last summer to impose a heavy inerence of the conventional duties without the semblance of reference to the foreign Governments concerned. They have, nevertheless, apparently recognized the fact that to sacrifice the magnificent organization of the Chinese Customs to political motives would be a fatal mistake. The position of the Customs
Text read from the printed page and cleaned; old type leaves the occasional error.