When Mr. Padoux, in his memorandum dealing with the proposed consolidation of the unsecured debt, gives us to understand that China's financial problem is really a constitutional and political problem, he is voicing an opinion with which we must "li agree. As he sees clearly, financial reconstruction depends upon the restoration, of some sort of a system of mutual accountability between the Central Government and the provinces. Wu Pei-fu has voiced precisely the same opinion when he has said, as he often does say when visitors bring him elaborate financial schemes, "'the financial problem in China is no problem at all; it is simply a matter of balancing accounts."
While all this is very true, it happens that if you turned Mr. Padoux's pronouncement end for end, it would be almost equally as sound. You could adduce as many arguments and as much evidence to prove that the solution of China's political muddle is not a political problem at all, but a financial problem. If Wu Pei-fu were to say that China's political problem is no problem at all, but simply a matter of balancing accounts, it would be an equally happy aphorism. It is at least easy to prove that gorging Peking with loans has made possible the appropriation of all provincial revenues by provincial authorities and that out of this financial independence of the provinces have grown many of the worst political traditions of the Republican era in China. From this it would be equally easy and logical to prove that any foreign financial policy in China which would again gorge Peking with loans, or which would not force Peking and the provinces to be mutually dependent upon one another, would postpone the solution of the political problem and as Mr. Padoux, Wu Pei-fu and most other sound authorities would agree, would therefore postpone the fundamental solution of the financial problem. In short the financial and political problems in China are so inextricably interwoven, that the solution neither one can be a fundamental or permanent solution unless it is a solution of both.
Text read from the printed page and cleaned; old type leaves the occasional error.