The total revenue collected by the Chinese Maritime Customs Administration amounted to 331 million dollars in the year 1939, But in fact roughly 83 per cent. of this revenue was collected in ports under Japanese control, and we estimate that at the end of the year some 380 million dollars of Customs funds should have been lying in the Yokohama Specie Bank awaiting the outcome of the Sino-Japanese conflict. It is clear, therefore, that responsibility for failure to meet the service of the Customs Loans does not for the time being rest on the Chinese Government.
The Customs Foreign Trade figures for 1939 must again be interpreted with great caution owing to the fact that their method of presentation, the fluctuating exchange rates, trade controls and other complications, make comparisons very unreliable.
However, an examination of these figures makes it clear that, compared with any of the last three years, import values increased appreciably (and this omits war munitions), whilst export values were lower. The growth in the adverse balance of trade, which was particularly pronounced in the first half of the year, caused a strain which fell almost entirely on the Shanghai exchange market. This was so, because trade through the Chinese controlled ports was kept fairly well balanced by the measures of resttiction adopted by the Chinese Govérnment, but in North and Central China conditions were such, as I will show later, as to encourage a demand for goods. while exports suffered from the situation prevailing in the hinterland. Later on in the year the fall in exchange checked the import demand and the rise in prices consequent on the European war resulted in an improvement in the export position.
Trade Difficulties In connection with the movement of trade, what stands out above everything else is the fact that in spite of transportation difficulties, military interference and other hindrances, goods continue to flow inwards and outwards in an astonishing volume considering the circumstances. So long as crops are grown and essential manufactured goods are available, so long will they keep moving in China. The sheer persistence and enterprise of individuals have been responsible for much of this, but the Chinese Government have themselves taken a very active part in fostering the outflow of exports. Naturally the Government's difficulties are now greater than ever before as a result of the loss of Nanning and the bombing of the Yunnan Railway.
Shanghai merchants, both Chinese and foreign, have also played a prominent part in keeping the wheels of trade moving, and last year they managed to overcome many of the obstructions which existed in 1998.
A remarkable fact is that the tonnage of vessels which cleared from Shanghai for foreign countries was in 1939 only 6 per cent. lower than in 1936, the last normal year, and the port of Shanghai thus shows that it will in due course have no difficulty in recovering its position as one of the first half-dozen ports in the world.
Shanghai Industries out the year so stances that it is China's currency stood unsatisfactory situation in regard to the Federal Reserve Bank note issue in North China further deteriorated after March 10, when the use of Chinese legal tender notes was officially banned by the Provisional Government at Peking. This enhanced a tendency to seek safety in commodities or foreign currencies. In May came the inauguration in Central China of the Hua Hsing Bank armed with authority to make another new issue of notes. These actions were in themselves sufficient to undermine confidence. Moreover, to the existing keen merchant requirements for exchange to cover imports, as already mentioned, was added further pressure in the early summer by even more vigorous demand for import goods, and particularly for raw cotton, This was in turn followed, as so often happens, by rumours and speculative demands for exchange. As a result the rate could not be held at the higher levels." Eventually. after falling as low as 3%d., the outbreak of the European war brought a repulsion of feeling and, with a better export outlook, the end of the year showed a steadier trend. The existence of the Stabilization Fund remains a powerful factor in the background and there is every reason to expect that it will serve its purpose.
Text read from the printed page and cleaned; old type leaves the occasional error.