(Prom the "Times Commercial Supplement)
In the event of the Nationalists wanting to borrow money, as seems not unlikely, what considerations, Additional to. those already dealt With, have to be borne in mind? So far examination of China's. financial position has been restricted to the conditions under. which her!
Principal security, the Custom:
is used for the service ut whic on te Outen veene tat ampere a din fe att even ary to, provide for ait exiting SES Sich Sat aig obligations and tom brief reference to her salt revenue. It is proposed in this article to deal with the salt revenue more fully the one an 112 one wath ant ise tind. to describe the. problem—of China's unsecured debts.
Foreign bondholders first became interested inthe salt revenue 1898, when certain salt taxes paras fee Ral Bin tht oases the Provinces of Mapeh and Anhui were made part of the security for the Anglo-German loan referred (0 inthe first article of this ries, collection of the taxes being trusted to the Customs administration. Then in 1901 the salt.
SHE the Gatans Mono wheel ie tie pic San, ad gore S25 Ta nat venue became a thi payment of the Hoxer Indemnity, Whils later on it was made security for the following' loa Loans SecuRED on SALT
Lo ona" esoe0000 £2730,000 way. 011 6,000,000 6277,780 Five per cent, Team 1912" 5,000,000 4,638,600
Up to this time collection of the salt revenue, except the portions referred to above, was in the hoods of native authorities, But wh.n in April, 1913, the revenue became security for th: Re-organization Loan of £25,000,000 the Chinese Government undertook 20 asso: foreign with Chinese inspectors in collecting it, and also pom that release of salt revenue against payment of dues in any distri would only be made under their Joint signatures. The revenue so. collected was to be lodged by the inspectors in a "Chinese Government Salt Revenue Account" with the banks which were parties to {the loan agreement—namely, the Hongkong and Shanghai Bank, the Deutsch" Asiatische—Bank:, " the Banque de T'Indo-Chine, the Russo Asiatic Bank, and the Yokohama Specie Bank.
The work of reorganizing the collectorates was entrusted by the Chinese Government to Sir Richard Dance, K.c.i2 previously In-sector-General of Excise and Sal: in India. By the end of 1915 his reforms had resulted ina int ment into the foreign hake 369,000,000, or approximately (000,000, whereas under a purely natly migime met revenue was about $18,000,000. In 1
"strong man," Yuan died and the prov jearsert control over the salt revenue. In that year out of a total revenue of approximately 000 about $1,366,009 was not mitted as it should have been, Five years later the amount retained hal risen to owr $4,000,000; by 1922 it had increased' to $20,000,000, and by 1925 to $33,000,000. By middle of 1926 not a single salt met in except what known as the Changlu district, near Tientsin, and districts in the province of Shantung, were pai anything whatever into the Peking Salt Revenus account with the foreign banks, while in consequence of interferond> several district spectors had been obliged t their offices and withdraw, Sino then the value of the salt Fevenue as a security has been still further diminished through the action (reported in "The Times" by its Peking Correspondent on July of the Nationalist Minister of Finance in compelling the Bank of China at Tzntsin to transfer to the credit of the Nanking Government_money Lying to the credit of the Foreign end Chinese Salt Administration inspectors.
Fortunately, service of the Reorganization Loan became charge-foreign and Chinese. ofciais in Joint. sponsib ity. In the second Place, it shows that a8 long a8 the Polltcal outlook remains uncertain no expedient can provide entirely satisfactory form of custodianship, ons, that is to say, free both from' the risk of complications "connected with Chinese Tntcrfennce with native banks arty politics and from danger of
Chinese: officials. If money standing to the credit of depositor A in a Chinese bank can be transferred without his consent to B by order of Chinese officials, as happened in the ease of salt revenues in July, ho system of custodianship involve ing the use of Chinese banks provides a satisfactory degree of safety.
The vains of the proposed arrangements has to be judged in relation to this fact. Incidentally it should be pointed out that, while the proposals referred to are a hopeful indication of a growing tense of responsibility, they are nevertiwless an arbitrary departure from the rms of the Re-organization Loan agreement, The exclusion of Chinese banks from any share in the collection of Chinese revenue at any point is impracticable, No foreign bank thas Dranches in all the points wiiers fustomns and the salt revemucy are collected, and the only alternative at a great many places to piseing the revenue as collected in a Chinese bank, to be remitbd thence to a foreign bank in due course, would be to dispatch it to the nearest foreign bank in notes for coin, which would often mean tourney under escort of many hundreds of miles. Tt is only necessary to ask the question "Who jo the escort?" to possibility of any such system obvious.
The general conclusion to which these facts point is that until money can be lent to China on the same terms as to Chips say, or the Argentine, it had better not be lent at all. 'This conclusion, however, contains no practical suggestion' regarding China's unsecured foreign obligations, which consist of loans additional to those already mentioned and money owing for goods. If om were attempting to present a complete statement <f China's finances it would be necessary to go into these various transactions in detail, At the Present moment that is not worth while, particularly as there are no agreed figures of China's unsecured fonign und domestic indebtedness As regards her foreign indebledness the rarest approach to agree: ment was made daring the Peking. tariff conference 1925-26, when, after many months of _investigation' by experts, some of them of the first rank, the—following figures, taking exchange at $10=£1, were reached:—
Text read from the printed page and cleaned; old type leaves the occasional error.