Jan. 9.
In a review of the Customs figures for last year, "Finance & Commerce" divulges some interesting information showing that while the revenue expressed in dollars shows con~ siderable increase over the previous twelve months, there has, owing to-the depreciation of the chinese National dollar, been a. very substantial decrease of income when express~ ed in terms of sterling, For 1940 there was fa drop of 6 per cent. in sterling values, and no less than 59 per cent. as compared with 1936, the last complete year before the out~ break of hostilities. It will be remembered that in May, 1938, an arrangement was come to between Great Britain and Japan whereby the Customs revenue collected in ports occupied by the Japanese should be placed: ina special fund, and that' due proportion' should be {aken from it, and, added to similar contributions from the' revenues of ports in Chinese control, used for the purpose of ser-vieing' the foreign loans secured upon Customs reveinie, "this plan involved no sacrifice of Chins sovereignty, and in fact was, os it was expressly stated intended to be of purely tem~ porary nature, and a practical way out of the, difficulties created by abnormal conditions avising out of the hostilities. Considering'that the Japanese never hold securi~ ties of other countries inthe same sense that other nationals invest ju theirs, Japanese consent to this scheme was an important gesture on their part, and was undoubtedly inspired by an eminent desire to be fair! and honourable, It is a regrettable fact that] the Chinese National Government rejected the scheme on the ground: that it involved an Impairment of Chinese sovereignty, a contention with which there cannot be the slightest agreement, for it merely recognized an' unusual state of affairs, protecting the in-revests of the Chinese Government on the one hand, and the foreign bondholders on the other, The result of this rejection is that while domestic bonds secured upon Customs surpluses are met in wei-wah in full, the bonds which are first and direct charge upon Customs revenue itself still go unpaid. it is true that these funds are accumulating and will, as.it is at present understood, be ultimately used for the purpose of discharging the obligations which remain unmet. But with the depreciation of the dollar, and the reduction of trade, not all of which is due to the Sino-Japanese hostilities, it is clear that the- rate of accumulation will not be maintained. The effect of holding up the servicing of the foreign loans directly secured upon the Customs revenue has been to inflict very serious hardship upon those who have invested in them. Moreover they find that in servicing the domestic loans out of Customs surpluses, and other sources of revenue the Chinese National Government is in fact discerlminating against those who have extended it such considerable assistance in the past, and whose Governments even now are supplying it with yet moxo funds, 'The conclusion to be drawn is that the Chinese 'National Government will accept everything it can obtain, but is reluctant to take a step which would' relieve it of the odium of fafling fo meet commitments which under the plan' of 1938 it would have been perfectly able, to do, There can be no doubt about, it; the situation is highly unsatisfactory, and does the Chinese Government no-credit whatever. Tt is not a fact that it is unable to carry out {ls obligations to the foreign bondholders. Rather is it true that because of a mere quibble "concerning China's sovereignty, Which has no real basis, the Chungking Government is defaulting. It may be said that it is only a temporary default, and that eventually. all just claims will be met. 'That is but cold comfort to those foreign bondholders who realize' that the money {s avail~ able for. the payment of what is due to them, and who have embarked upon commitments which: they may "have found Impossible to fulfil owing to non-payment. At this junc~ {ure it {snot easy {o suggest a remedy. Tt is problematical whether the considerations which permitted the fashioning of the 1938 plan would now apply as completely as they did then, but it surely is for the Chinese Government at any rate to revise the stand it then took, and do something towards relieving the "hardship which the {rrational. contention on the point of sovereignty hes created.
Text read from the printed page and cleaned; old type leaves the occasional error.