The Public Health Department, always on the job, is vaccinating the thousands of Chinese refugees streaming' into the Settlement from the Lower Yangtze ports. one of the Bund pontoons, culties which were encountered. In spite of the fact that no foreign loan quotas have been received by" the Chinese National Government from portg under Jupanese control, payments due on Customs leans were maintained throughout the year 1938. In "January, 1939, however, the Chinese Government issued a de-aration that since 80 per cent, of the Customs revenue was out of their hands they could no, longer undertake to meet all loan requirements, The railway situation continued to deteriorate from the point of view of foreign bondholders who were prohibited the right of inspection and control of their own property; the majority of the railways are in use by the Japanese and commercial trame has been resumed over them to a very large extent. Certain of the' railways with the help of Japan ese equipment are doing satisfactory business with all trains overcrowded with passengers. These railways have been built by third-party Powers, and financed by foreign loans which are still outstanding, and are now being operated by Japanese without any payments whatsoever to the share and bond. holders.
Chinese Dollar The financial situation gave much cause for anxiety during the year, ticularly as to the future Chinese National currency and_the Introduction of Federal Reserve Banke notes. The Chinese Government sold freely at the oMeial rate of %, Yd. until" March, 1938, since when al though the Central "Bank has con: tinued to make special allotments the Government rate to merchants inst goods Imported prior to 1st january, 1938, the weekly amounts.
allotted have steadily dwindled to an almost negligible quantity. There fore, merchants and others have had to depend on the open market which, although subject to slight fluctuation dependent on politics and local ruincurs has Kept remarkably steady between W9. to 64d. The panic Nights from the currency which occurred periodically during the first. three Quarters of 1938 ceased towards the id of the year and in fact a fair amount of repatriation of funds took place in the closing months. On March 10, 1999, the currency in North China was divorced entirely from that of the rest of the country. Re gulations issued by the "Provisional Government" in Peiping fixed the value of the F.RB, dollar at ted. and it was stated that exports from North China will not be. permitted unless covered by a certificate of the Federal Reserve Bank testifying that foreign exchange of the goods about to be shipped out was acquired at the oficial rate of 2d at a bank designated bythe Government. Both imports and exports from and to Central and South China are to be handled in the same manner as those coming from or destined to abroad. All foreign exchange acquired by exchange banks designated as such by the "Provisional Government" will be. concentrated in the Federal Reserve Banik under the terms of the new re-
Reports are being received constantly regarding shipping dim-culties at Tientsin, Chafoo and Tsingtao, particularly with regard to the discriminatory regulations in favour of Japanese "vessels and Japanese trade.
Dealing with Shanghai. in parti cular, I feel that attention must again be drawn to the difficulties which are still being encountered in the Yangtszepoo area as the result of the restrletions which have continued in force, thus adding to already existing. difieulties others—connected with "labour and transportation. Furthermore, there can be no return of confidence in this stea until it is Yhrown open for the free and unre+
Here are seen P.W.D, nurses at work on stricted movement of persons and merchandise, The restrictions posed in this and other areas and the Continued closing of others has resulted in serious congestion in the International Settlement and French Concession including extra-Seitlement areas, Factories are springing up in the Western district of a construction and under conditions which can only be regarded as constituting a serious danger from several points of view, viz: fire hazard, health, etc. Industrialists will not return to the outlying areas where they had their plants formerly until such time as something nearer normal conditions exist,
Text read from the printed page and cleaned; old type leaves the occasional error.