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(debased) coins just issued from the mint. But when the Imperial Government is urged, in its own interest and for the sake of its own credit, to take currency reform in hand, it is able to retort that its credit is evidently good since the nations are disputing for the privilege of lending it money.
Debased coinage and paper money are no new experiences to the Chinese. It was multiple experience probably that led them to fall back on pure silver (sycee) by weight as a commercial medium. But such issues have ended more than once in disaster; and it was reserved for the present generation to debase even sycec lately at Tien-tsin.
International rivalry tends probably to make more difficult the exaction of precautions. The association cannot but regret the more, for that reason, the weakening of agreements which might have obviated the competition. German influence appears, for instance, to be mainly responsible for lessening the stringency of the conditions which it was desired to impose on a loan now under negotiation for extending the Peking-Hankow line to Canton; but participation by Germany in railways south of the Yang-tsze appears inconsistent with the Anglo-German agree- ment of September 1898 (No. 1 of 1899, p. 214). It was understood, moreover, that British interests in the Hankow-Canton line were further assured by a promise that British finance should have prior consideration when the time came. The language
of Chang Chi-tung's letter to that effect may be lacking in precision, but it was commonly understood that such a promise was intended as a quid pro quo for the Hong Kong loan, and the association would regret to infer that an official agreement designed to safeguard British interests can admissibly be set aside in deference to those of private finance. The pledge was given not to a financial group, but to His Majesty's Government; and it cannot be admitted that the Chinese authorities were at liberty to evade it because certain financiers declined its terms.
A similar reflection suggests itself in connection with the proposed Hankow- Szechuan line. It is understood that a pledge was given by Prince Ching to His Majesty's Minister at Peking in 1903, that recourse should be had to British and American finance for the construction of that line to the frontier of Szechuan. Yet that agreement appears to have been also overridden in deference to financial interests which do not necessarily coincide with British interests or with international obligations.
The association would be glad to learn that it has been misinformed, and that the agreements in question are still in force. The existence of certain contrary arrangements has, however, been indicated with so much precision that the committee feel constrained to state apprehensions which are generally entertained.
It is suggested, moreover, that the repeated pledges of li-kin to the service of loans are incongruous in other respects. The association has consistently deprecated inland taxation as strangling the movement of commerce and as being detrimental in every respect.
Acceptance as security with one hand of a tax whose abolition we demand with the other seems contradictory to declared policy. Nor is it the first time that objection has been urged. Answer has been made that the arrangement is provisional, that the Chinese Government is pledged to substitute some other security in case of the abolition of li-kin; but that proposition conflicts with the Shanghae Treaty, which exacts (Annexe (B)) a pledge that the surtaxes designed by article 8, although available in substitution för h-kin already pledged, shall not be pledged as security for any subsequent foreign loans.
It used to be affirmed that railways would kill li-kin, as trains could not be stopped for taxation, like porters or river-boats; but this is China, and it would seem from recent experience on the Shanghae-Nanking line that li-kin is tending to throttle the railway. A recent article in the "Times adduced, moreover, an instance in which certain cargo, designed for transportation from Mukden to Hankow by rail, via Peking, was assessed to -kin so heavily at Shanhaikwan that the owner took it back and shipped it preferably by water via Shanghae.
It would be difficult enough to kill li-kin in any case; it seems regrettable that we should supply the Chinese Government with a plea that its maintenance is rendered necessary by its pledge as security for loans. Nor can any confi- dence be felt that if the time ever comes for making the Shanghae Treaty operative the same taxes will not be levied under guise of consumption tax and (or) terminal taxation.
The situation appears to be much as in 1896, when China asked for an increase of customs dues to help her pay the Japanese indemnity. The association admitted the
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reasonableness of the demand in principle on condition, inter alia, of "guarantees for the immunity of merchandise from any further inland charge beyond the 24 per-cent. transit duty established by article 28 of the Treaty of Tien-tsin "; but it was remarked also "that any increase of maritime dues would be regarded with dismay, unless it be accompanied by relief from the exactions which oppress commerce inland." These exactions appear so far, however, to have been aggravated rather than diminished.
I have, &c.
C. T. DUDGEON, Chairman.
se
June