The Recent Paris Conference:
Problem of China's Unsecured Debts 'A meeting of the Council of the China Consortium was held in Paris recently, at which were present Sir Charles Addis, Mr. Rene Thion de la Chaume, Mr, Thomas W. Lamont and Mr. Kanji Yano, representing the British, French, American and Japanese Groups respectively.
A discussion ensued on the proposed consolidation of China's unsecured obligations, and instructions were issued to the Group Representatives at Peking to examine, in' consultation with the four Ministers of their respective Governments, the existing floating debt of China, including all loans which are unsecured or of which the security seems likely to prove inadequate in the near future, with a view to formulating in duc course a comprehensive scheme of debt consolidation, The Counci] had next under consideration the general policy of the Consortium in China, a statement of which it was decided to publish inthe form of a separate report. This report now follows.
1. The Council of the China Consortium, having under review recent telegrams from their Representatives in Peking, as well as Press messages and comments bearing on the present economic and political situation in China, consider that a general statement of the policy of the Consortium may be at this time of interest to the public ™ 7 2. The policy of the Consortium, namely the substitution of international ce-operation for international competition in the economic and financial affairs of China, has been definitely affirmed and endorsed in a larger sense by China and the Powers im the Treaty signed at Washington on February 6,1922.
3. The Treaty is in effect undertaking by the Powers to respect the sovereign rights of China, to preserve her territorial integrity and to provide her with a free and unembarrassed opportunity to develop her economic resources and maintain for herself an effective and stable government.
4. The Consortium is an appropriate instrument for giving effect to this policy. It is not designed as a permanent organization, but rather as a temporary bridge by which China may be assisted to pass in comparative safety through the difficult period of transition from an unsettled to a settled state of government.
_5. What has already been accomplished: appears to justify the belief that the Consortium has been constructed on sound lines, and may reasonably be expected to fulfil the purpose for which it was designed with due regard to the natural susceptibilities of the Chinese on the one hand and the security of the foreign investor on the other.
6. Itis popularly supposed, and occasionally asserted, that the main object of the financial Groups composing the Consortium is to harvest undue profits reaped from loans forced upon China under the protection of their respective governments. This is not the case. On the contrary it has been by their consistently refraining from lending that their principal success has, been achieved in encouraging the utilization of native savings before recourse is had to foreign capital, and in arresting the protigate expenditure which was heading the country straight for bankruptey. It is not too much to say that the Consortium has helped to stimulate and foster a sane and independent public opinion in China, and, by putting a stop to the menace of financial penetration arising from indiseriminate and unproductive foreign borrowings, is helping to conserve the integrity of the country.
7. Much still remains to be done, and until their work has been accomplished the several Groups of the Consortium are convinced that they would not be justified in having regard merely to their own convenience by resuming their freedom of independent action. They are reinforced in this conviction by the consideration that the Consortium appears to form the chief barrier between: China and the policy of Spheres of Interest which prevailed during the last decade of the nineteenth century. It will be remembered that it was during that period, known as the "Battle of the Concessions," that definite claims to exercise preferential rights over specific geographical areas of China were advanced by different Powers. If these claims had been maintained the disintegration of -China must have followed. Any backward step towards the resumption of a similar policy might well be expected to produce similar results.
8. The pressure upon modern nations to discover and develop outlets for their trade is increasing, and China presents to-day by far the largest undeveloped field for commercial expansion. If the restraint at present exercised by the ce-operative action of the Consortium is removed, the resort to the pressure of individual agents in competition with each other would appear to be inevitable. From that it might be but a step to the intervention of foreign governments in order to protect the vested interests acquired by their nationals in different parts of China, and Spheres Interest, with consequences disastrous to China, would once more be established.
9. It is more in the inferents of China for the Powers to deal with her as a whole rather than separately, in ce-operation rather than in competition with one another. It is the aim of the Consortium to assist China in the building up of her credit until some day like other nations she can borrow for her requirements on the strength of her national credit, without the necessity of recourse to specific security or supervision of expenditure. When that day comes it will be time enough to talk of disbanding the Consortium. Until then the Consortium must remain -intact and, with the approval and support of the Governments, continue to perform with patience the functions assigned to it.
10. It is the settled policy of the Consortium to refrain from interference in the internal political affairs of China. The present political upheaval in that country precludes the immediate hope of giving practical effect to any Consortium proposals for an administrative loan. Conditions, however, change so rapidly that the Groups must always stand prepared for action in anticipation of the time when China shall have again attained to such degree of political peace and security as to afford a reasonable prospect of a stable government, li. Industrial Loans, in which railway loans are included, are in a_ different category. Provided adequate security can be chained there seems to be no reason why the further development of railway communication in China, in itself a potent means of political unification, should wait upon the solution of her administrative problem.
12. It is recognized that an essential part of any scheme for the financial -reorganization of China is the consolidation of the floating debt, and a scheme for such consolidation is at present under consideration by the Group Representatives in Pesing.
13. A certain portion of the Chinese public appears to be under the delusion' that in some way or other the object of the Consortium is to obtain contro] of China's finances and railways. If such a delusion really exists, it can only be due to a mistaken reading of every public announce ment which has been made on the part of the Groups.
14. It has repeatedly been state ed that interference with the domestic politics of China has no part in the programme of the Consortium, that the reorganiza-
Text read from the printed page and cleaned; old type leaves the occasional error.