A88
PEI-TAI-HO AND CHINWANGTAO
!
enforced withdrawal of customs preventive vessels from the waters of the so called "demilitarised zone" in September 1935, smuggling had been diverted from the land route via the Great Wall to the sea route, goods being transported from Dairen and Korea by "puff puff" boat and steamer direct to the shores of Eastern Hopeh. During the first three months of 1936 the severe ice conditions prevented vessels, fron reaching the coast, but on the breaking of the pack ice in March an orgy of un- precendented snuggling began, reaching its apex in May, when west-bound trains from Chinwangtao alone carried some 133,366 packages of smuggled goods. Due to the fact that such colosal quantities of goods could not immediately be absorbed, sinuggling decreased temporarily, only to increase again in the latter months of the year when new connexions in the north had been made and the stocks accumulated during the early part of the year had been partially absorbed. The great difficulties to be contended with by the Customs Preventive Service were still further enhanced by the establishment in March by the bogus government of East Hopeh of a so-called "Customs" of its own, duties approximating only one-forth of the legal amounts being levied on smuggled goods. Such duty payments are, of course, not recognised by the Central Government. These conditions, added to the virtual recognition by the Japanese Authorities of the validity of such "duty payments," resulted in pre- ventive control in the Chinwangtao area becoming merely nominal. While sugar, kerosene oil, artificial silk, and piece goods predominated, the list of smuggled goods covered practically every type of commodity, and traffic in contraband goods was also active. In fact, the whole of the so-called "demilitarised zone" as far westwards as it is served by the Peiping-Liaoning Railway has virtually become a duty-free area for every kind of commodity that can conveniently be carried by rail. The normal trade of the port, dependent almost entirely upon the requirements of the Kainan Mining Administration and Yao Hua Glass Works, the coal trade and the groundnut crop, was not directly affected by smuggling, and the trade statistics for the year for Chinwangtao and district were as follows: direct foreign imports $3.5 million as against $2.1 million in the preceding year; direct exportations to foreign countries, $7.1 million as against $5.9 million; coast wise importations of Chinese produce, $4.8 million as against $3.9 milli n; and coastwise exportations of Chinese produce, $13.4 million as against $15.4 million. The increase in the import trade is accounted for by the importation by rail from Dairen of 24 railway cars valued at $1.4 million for the use of the Pei-Ning Railway The marked increase of $1.2 million in the value of direct exportations abroad was due to increased purchases of coal by foreign coun tries, some 862,000 metric tons having been shipped as against 616,000 metric tons in 1935. The increased foreign demand was not, however, sufficient to offset the de- creased demand from Chinese ports, at which smuggling through this area has been responsible for decreased output or closing-down of factories, and a consequent decreased consumption of coal. The total of coal exports receded from 2.6 million tons in 1935 to 2.4 million tons. Of other staple exports, groundnuts declined from some 100,000 quintals in 1935 to only 54,000 quintals owing to the failure of the crops; common window glass receded from 2,549,390 to 2,195,720 square metres, other varieties increasing by 26 per cent; while bricks, tiles, and fireclay advanced from $270,701 in 1935 to $413,867. During October Japanese interests bought over the "B" shares of the Yao Hua Mechanical Glass Company, the Company becoming a Sino-Japanese concern. With this sale it is expected that the business of the company will be greatly improved, as competition by the Shoko products in China and the Asahi products in the South Sea Islands is expected to cease.
F
191
H
JL