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firms or corporations to finance concessions, railways, mines, &c., in China; and perhaps it might extend its operations to the East generally. Broadly speaking, it would undertake financial operations which may be considered to be outside the sphere of ordinary banking transactions.
The Board of Trade might appoint a small committee to report upon the advisability of establishing such an institution, or, in the alternative, to suggest means by which British subjects may be better equipped for competition with their German rivals, by establishing closer connection between banks and manufacturers on the German system.
(b) Loans. It has been customary when loans have been floated in France, Germany and other countries to stipulate that if any portion of the loan were spent on materials, the products of the lending country should have a preference over those of other countries. It might be advisable to make similar stipulations in favour of British industry when loans are floated on the London market in future.
(c) Control of Foreign Institutions in British Crown Colonies.-There are a number of German banks and German insurance companies flourishing in British Crown Colonies without any restrictions whatever, although foreign banks in Germany have, it is said, to pay a heavy licence fee and are restricted to exchange operations only. Foreign insurance companies in Germany, Japan and elsewhere have to deposit certain securities. It is recommended that the same conditions should be made to apply to foreign companies operating in British Colonies, and they should be required to deposit specified British or Colonial securities. Further, out of the large amount of premia annually remitted to their head offices, they should be required to pay the equivalent of the Income Tax which the British companies have to pay.
(d) Co-operation by British Manufacturer and Merchant in China. It is suggested that the Board of Trade should impress upon British manu- facturers the necessity of giving more liberal support to merchants in the Far East in their efforts to develop new branches of trade; they should show more enterprise by co-operating with and sharing the expense of pioneer or what may be called missionary work. A practical way of carrying out this suggestion would be for non-competitive manufacturers, who are represented by the same merchant in China, to share the expenses of this nature; being more liberal in supplying catalogues and advertising matter in the language, weights and measure- ments of the Chinese; by quoting standard prices for all articles which could be adjusted to market fluctuations by percentages up or down; and by contributing towards the expenses of travellers with technical knowledge and with a knowledge of Chinese, who would visit the important centres of trade in the interior.
The British Engineers' Association.—The recommendations of the association are grouped under three heads :-
(1) Development of a Government Organisation for Trade Purposes. They recommend that H.M. Government should establish an active commercial department in connection with the Legation, staffed by men of commercial experience, having among them men who speak Chinese fluently.
The new department should be in a position to insist on the co-opera- tion of consuls, and in localities where consuls were, owing to the pressure of other work, unable themselves to act as efficient correspondents, the necessary technical assistance should be provided forthwith.
A com- mercial attaché is totally insufficient. There must be a responsible Trade Commissioner at the head of the official trade organisation."
It is also suggested that there should be closer co-operation by H.M. Government with the Association, in view of the fact that it is a repre- sentative organisation to which every bouê-fide British manufacturing engineer has a right to belong.
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(2) A Means of Financing Contracts.-Two methode are adumbrated:-
The one would be for the Government to take the initiative in creating one or more financial organisations for the
and the purpose, other would be for the Government to encourage other bodies to do so.
"As far as engineering interests are concerned, the British Engineers' Association is prepared forthwith to resuscitate its scheme for a British Engineers' Trust which would accomplish this end. The question was studied and worked out during a period of eight months prior to the war by a competent committee under the advice of financial experts and men who understood the Chinese trade thoroughly. This scheme was about to be launched when the war broke out. It had received the approval of certain joint stock banks, and it had been reported on extremely favourably by a director of the Bank of England. It has also been seen and favourably regarded by a Treasury official.
"It was a scheme whereby, without interfering with ordinary British banking methods, security was furnished by means of the collective guarantee of British engineering firms which would enable the Trust to borrow the necessary money from British banks. In other words, its policy was to divert, for the purpose of fostering British industries, some of the money which these same banks had been in the habit of lending to Germany.
"The Association is prepared forthwith to place full particulars of this scheme before the Board of Trade, and in the event of the Board and the Treasury giving it their approval and support, to launch it."
(3) Co-operation of Allies to take German Trade.-It is suggested that this should
be effected by :-
(a) An agreement that no financial aid should be given to China by any of the Allies unless the Chinese agreed to make no use whatever of German or Austrian financial assistance.
(b) The Allies to take a concerted action for the abolition of all Treaty Port concessions hitherto granted by China to Germany. The territories in question to be disposed of as decided by the Allies.
(c) The permanent prohibition against Germans residing or carrying on business in China,
(NOTE. The recommendations under this last heading would be impossible to carry out even if they were considered to be desirable objects to attain. They are, however, included as they apparently represent the strong views of the Association.)
B.
My own personal opinions have been expressed at considerable length in the Report upon the Conditions and Prospects of British Trade in China, pages 1-21. Although this report was written exactly a year ago, the main conclusions still hold good. They will be found summarised on pages 20-21 in the four vital requirements for trade expansion, viz. :---
(1) Closer co-operation between manufacturer and merchant based on mutual recognition of each other's aims and sphere of activity, so that their efforts may be co-ordinated to the common end of securing the trade of the
future.
(2) Greater financial facilities for the purpose of financing deferred payments on large Chinese Government and private contracts for plant, machinery, and other supplies.
(3) A wider knowledge on the part of our mercantile assistants and travellers of the country and its people, their language, traits of character, business methods, and mode of life.
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(4) A revision by the British merchant houses in China of their existing system and organisation, bearing in mind the changing conditions in the country, and the many facts with regard to the methods of our competitors which
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