For two years China has been without the annual report of the Finance Minister. Exigencies of various kinds prevented the ap~ pearance of that document last year, Now, Dr. H. H. Kung is making up the arrears by present ing together the accounts for the years ended June 30, 1993, and 1934, respectively. Circumstances have brought the, financial condition of the country so sharply into prommence that it is unnecessary to subject these figures to any particular analysis. The report concludes its general observations with the remark "The acute monetary situation now dominates. the scene, and the Government is giving constant attention to means: whereby it may be ameliorated". That brings current financial history very much up-to-date. The Finance Minister, as in duty bound, notes the "unprecedented drain of silver from China" last year follow~ ing the passing of the American Silver Purchase Act. Sufficient attention has been paid to the effect of American policy on the already weakened monetary system of China, Little remains to be said fon that score. Those who seem to imagine that America is being'
Itis, therefore li the more credit able that Dr. Kung and Dr. Soong, before him, have been able to achieve so much. "Deflation has! been forced on China in. cireum=
Stances of peculiar difficulty, Acute tineasiness has been communicated to the nerve centres of her finanetal system; yet there has been actually 2 healthy. improvement in her, credit. Although much remains to be done, an advance has been made. in tackling the problem of outstanding oilway loans. These. efforts should be continued. On them: depends the further development of confidence in China's financial integrity. Attention might specially paid to the arrears due' on the Tientsin-Pukow railway loans, the neglect of which, in view of the present prosperity of that line, to fay nothing of the debt reductions effected elsewhere, is distinctly mystifying. General Chiang Kale thek's operations in. Kiangst have helped to solve part of the Com= munist problem. They are being Supplemented "by his present campaign in the West. As he Seems to realize that "the most effective operations are less military than reformative, there is all the more ground. for the belief that Dr. Kung's hope of a reduction in the military budget may be ful-! filled. Much will depend on the, United ability of Nanking and Can ton to compose their differences. White both are making admirable progress in civil reconstruction, they. are imposing on. themselves unnecessary handicaps by a failure to' pool their' military" resources, The military liaison established between the Generalissimo and is not possible—or even necessary—to ascertain. No one with the slightest claim to commonsense or, decency would stigmatize a whole community on account of unmerited, economic misfortune. It is per 'V.|tinent to say that if the kingdom of Utopia, tom by a violent revolution, expelled wholesale from. its dominions large classes f its inhabitants and forced them to pick up the threads of a new life in the highly competitive surroundings of an alien country, the inexorable working of the cruel economic forces, which human imperfections have not been able to overcome, would expose the less well-equipped of the Utopian femigrés to the same desperate shifts for economic existence as have so sorely shattered the morale fof a section of the Russian ccmmunity here. Therefore it is highly important that "Russian organiza tions which are disposed to assist whatever international effort may be made should not prejudice re~ lief by sacrificing frankness to a mistaken sense of amour propre. They can be assured that other nationals in ministering to the solution of the problem are prepared to treat it exclusively as an. Veconomic and not a moral issue, The International Committee at Geneva would do well to take note of the local situation before definitely proceeds to frame proposals. It has, no doubt, to remind Itself that the general question of the protection of women does not begin and end with foreigners in the Far East. The traffic affecting. Chinese women is of sinister di mansions and, sooner or later, with the ce-operation of the Chinese Government will have to be taken. in hand. In the meantime this Russien problem directly arises from the universal upheaval out of fees noted in the Controller's report.. This new schedule gives definite relief to the large users on whom the burden of the message rate is designedly intended to rest. It makes reductions which should appreciably mitigate the effect of the revision generally. By far the most important—disclosure turns on the controversy ver, the Company's estimate that the introduction of the message rate will involve a call reduction of 50 per cent. which, in other quarters, nas been thought too high. The Company has backed its own opinion, by undertaking to credit the Tariff Revision Account if at happens that the call reduction is "sufficiently below 37% per cent. to produce a return in excess of 10 per cent. on its capital." It has further pointed out that even after eliminating the Items under reserved treatment by pending arbitration, it estimates the return on its capital to be 9.22 per cent. assuming that its original call reduction figure of 80 per cent. turns out after all to be correct.
This is sufficient to show that the Company has really gone to great lengths to meet criticism. Admittedly it is actuated by a desire introduce to Shanghai the message rate which experience elsewhere proves to be equitable and efficient as a basis of computation in a large syster~ At the same time it is only fair to point out that the revision of the original proposals and the extended examination given to the matter by the Public Utilities Committee con~ stitute developments, knowledge of which might have radically altered the view taken at the Ratepayers' Meeting last month. The Company has evidently made its firm bedrock offer. It is entitled to stand on its legal rights under the franchise made a scapegoat would do well to study the actual course of silver movements here in conjunction with certain definite developments in the United States Government's silver programme. The facts are patent,.but, at the same time, criticism of the American Government can be overdone. To begin with, it has displayed no greater selfishness than any other administration, The gravamen of the charge which might be brought against Washington is that in at tempting to serve national interests and incidentally dislocating finan= cial conditions elsewhere—it has endangered those interests for the sake of a dubious political advantage.
Dr. Kung's report frankly rec-agnizes the main cause of China's financial difficulties. Efforts to create financial stability have been handicapped by a series of natural and political misadventures, Thus, while reforms have been effected in many directions, such as the abolition of the tael, the consolidation of taxation, the strengthening of the preventive service to cope with the increase in smuggling due to the high tariffs, the Government's military requirements have tended to neutralize retrenchment of expenditure in other departments. This is, as Dr. Kung points out, a legacy inherited by the National Government from its predecessors. The old tu-chun system may have disappeared, but some of its least satisfactory features persist in the presence throughout the country of troops owing allegiance less to the Central Government than to personal or provincial leaders. For the defence of the country against external aggression, China's military needs are small since she has yet to acquire an army which is capable of performing that function against a modern power. The heavy military expenditure figuring in the national accounts is really due to the Government's reliance on armed force to assert its ascendancy over potential political opponents. The annual total military expenditure in the Central Government alone is nearly $400 million. If another $100 million be added to cover the South-West defences and certain provincial armies be taken into account, the price which China has to pay for disunity is plainly perceived to be heavy indeed. So long as distrust and suspicion compel Nanking and Canton to treat their military programmes on competitive lines and prevent the Central Government from throwing the full strength of its forces into the field against the Reds—for fear lest its political Generat Chen Chi-tang and Genera which the League itself was born. and, especially in view of the re-Li Tsung-jen should ive a work-The interplay of political currents markable transformation which it able basis for eventually eliminate and other fissiparous _influe: has effected in Shanghai's teleing competition which constitutes within the Russian community Phone system, it may expect the a sad dissipation of national itself makes it difficult to impose Councils to approach the problem Tesources.. Perhaps the course of on that community the sole respon-In a spirit of equity and tusinessevents in Yunnan and Xweichow sibility for protecting its women Uke despatch. The Council and the may facilitate this desirable jand children. The solutions de-Ratepayers have been entangled, mand development of educational not in telephone wires, but in facilities and other machinery for the awkwardness of their municipal social reform. The guidance of the Procedure. The report of the Public
Text read from the printed page and cleaned; old type leaves the occasional error.