The announcement by the Municipal Council that it will be necessary to secure the consent of the ratepayers at the next annual meeting to an increase in the general rate, special rate and the land tax of 50 per cent. has been received with mixed feelings. That was inevitable, and those addicted to criticism of the Shanghai Municipal Council whether justifiable or not, will seek to place responsibility for the need of this increase at the Council's door. That is not wholly fair, for the fact of the matter is that had it not been for the fall in exchange last year's budget would have balanced, and there is every reason to believe given the same state of affairs that this year's budget would also have done so. That substantial increases would have to be made in the rates has been realized ever since 1931, and it was only the profit on the sale of the electricity department which permitted of their being maintained at levels which are still very low as compared with those levied in other cities of similar size and importance in other parts of the world. It will be recalled that when it was first proposed to use the profits of that sale for the purpose first of reducing the rates temporarily, and afterwards for maintaining them. at a low level until the last year or so, the proposal was criticized, but the ratepayers took no action. Their failure to do so leaves the responsibility with them, and not with the present municipal council nor any of its predecessors. When the council of 1932 decided to make the arrangements it did, they were justified in believing that Shanghai would continue its normal rate of progress, which humanly speaking it had every right to expect They were justified by the growth of progress and prosperity which improved yearly until the catastrophe of 1937 fell upon the city, for it will be remembered that up to the time of the outbreak of hostilities around Shanghai this city was experiencing what would otherwise have proved to be a record year for trade.
The advent of those hostilities threw a large additional burden upon the revenues of the settlement, but even then there was not the slightest reason to doubt that as long as exchange remained where it was the needs of the community could be met and the budget properly balanced. From a dollar at 1s. 2d. there has been a constant fall until the rate is only about 30 per cent. of that sum, and the present tragic state of affairs is directly attributable to that reduction. It is an interesting fact, one which it is important to remember that, even if the rate had remained at 8d., last year's budget could have been balanced. Unfortunately it did not, and the time has come when it is imperatively necessary to put the International. Settlement's financial house in order.
That can only be done now by the raising of a loan, and in this connection it has to be. remembered that the lenders of money are not likely to be attracted to invest in a municipality which does not, or cannot balance its budget, for in the very fact of bal-oncing lies the investor's safest security. Added to that there is the further requirement that the municipality shall follow the policy of effecting every practicable economy. It is a pleasing feature of recent years that the Council has shown a greater readiness to investigate suggested economies than was apparent only a few years ago, and it is believed that a continuance of that/ policy will serve to maintain that confidence which is so necessary if investors are to be attracted towards giving that assistance which is now so necessary. During the next three weeks communiqués will be issued by the Council showing how as a result of vigorous pruning the reductions this year in the inevitable increases due to the fall in exchange will amount to approximately $1,800,000 sufficient evidence in itself that the Council has been exercising a prudent caution with regard to the future financial administration of the city. From these statements ratepayers will be able to form a fair idea of what is being done, and realize the! utmost necessity of doing their share towards the maintenance of the city's revenues in a condition permitting them to meet the heavy charges which result from factors entirely outside the control of the municipal council, or the ratepayers they serve.
While this increase of 50 per cent. in the rates does in fact seem to be a formidable one, it is necessary to bear in mind tnat even with this rise Shanghai rates are very low indeed compared with most cities of the same size and importance. Quite apart from those towns in Britain, where the policies of the parties controlling the administrations have led to very large rate increases, a survey of those run by no means extravagantly shows that a rate of 10/- in the pound is a very moderate one. Shanghai with the present suggested increase hardly attains to half that ratio, so that even now the International Settlement can be regarded with justice as a cheaply run municipality. It is unfortunate that so large an increase has to be swallowed in one gulp. There is much to be said for-the contention that a series of gradual increases would have been preferable, but it has already been pointed out that until the collapse of exchange there was no reason whatever to suppose that affairs would take the turn they have. It is consequently no more than an exhibition of ex post facto wisdom now to argue what the Council could, or should have done in anticipation of the disasters which have befallen the port and affords no weightly contribution towards the solving of the very serious problems with which it is now confronted. The fact of the necessity of this increase should be no ground for pessimism. The manner in which Shanghai has stood up under the heavy blows of the present decade, the recovery which it made after the 1932 troubles and the manner in which it has carried on during the past two-and-a-half years are amply demonstrative of the resiliency of the place. There is no reason whatever to suppose that the proposed increase will in any way diminish Shanghai's recuperative powers, but every possible ground for believing that once this storm has been weathered Shanghai will again be able to grow, prosper and expand in such a manner that it will be worthy of that enormous credit which it has enjoyed in the past and which it should enjoy again in the future. In the circumstances the decision of the Council to ask for this increase is a wise and prudent one, for, obviously, if matters were allowed to worsen the task of recovery would become all the more difficult.
Text read from the printed page and cleaned; old type leaves the occasional error.