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general. The service has become in fact, as well as in theory, a subordinate department of the Ministry of Finance, and the authority of which the inspector- general has been shorn has passed automatically into the hands of the head of Customs Board and the Minister of Finance. This development is generally accepted as having been inevitable and as having led to the greatly improved relations now existing between the Chinese and foreign staff. I should add that Mr. Maze himself makes no attempt to conceal the altered status of the service, and, apart from the service of the loans secured on the old 5 per cent. tariff, does not profess to have any responsibilities except towards the Government whose servant he is and the service of which he is the head.
3. As regards the attitude of the British commercial community, I have little to add to the views expressed by Mr. Garstin in his despatch No. 307, which are much the same as those which I have formed since I have been at Shanghai. Their confidence in the service was severely shaken when Mr. Maze was appointed to succeed Mr. Edwardes; they believed that he had obtained his appointment by showing an altogether unnecessary and humiliating servility to his Chinese masters, and they feared, and still do, though to a much lesser extent, that sooner or later he may be called upon to pay the price of his appointment by abandoning authority which might otherwise have been retained. The hostile feeling against him personally, until recently amounting almost to complete ostracism, has somewhat diminished with the passage of time, and the fact that he is seldom seen at social functions is now probably as much due to his disinclination to mix with people whom he suspects may be antagonistic towards him and to the fact that he is naturally not of a sociable disposition, as to any strong desire on the part of the British community to avoid his company.
4. Without in the least wishing to underrate the difficulties of Mr. Maze's task or to detract in any way from the credit that is properly due to him, it must, I think, be recognised that his position has in many ways been a far less difficult one than that of his two immediate predecessors, the march of events during his short tenure of office having undoubtedly tended in his favour. In the first place there has been until quite recently a virtual cessation of the civil war and the country has been more or less unified under a Government recognised both by the provinces and by the foreign Powers. Secondly, the conclusion of the Sino-foreign tariff treaties, which paved the way for the abolition of the Washington Surtax Bureau, synchronised with his assumption of office; and thirdly, he has had the advantage of the continuance in office not only of Mr. Chang Fu-yun, a very practical and level- headed man, but of the Minister of Finance whose energy, business capacity and recognition of the necessity of restoring China's credit have greatly facilitated Mr. Maze's task. The abolition of the Surtax Bureaux was of course principally Mr. Soong's achievement, brought about by his adroit handling of the provinces and inspired, one must suppose, at least as much by his desire to obtain funds formerly retained locally as by any thoughts of consolidating the revenue-collecting machinery. Equally the prospect of the control of the administration of native customs and extra 50 li native customs being transferred to the inspectorate-general is not perhaps so much an indication of the growing strength and security of the service, as of the firm determination of Mr. Soong to lay hands on all available sources of revenue in order to meet his immediate financial requirements. In this connexion the present position of the Salt Gabelle affords a somewhat interesting parallel; and, if Mr. Maze is to receive the credit for the Minister of Finance's decision to extend the scope of the customs machinery, Mr. Hussey-Freke of the post-Reorganisation Loan Agreement period must equally, in view of the fact that he is now charged with the collection of certain salt surtaxes and anticipates the collection of revenue amounting to 150 million dollars, be regarded as having scored a personal triumph which Mr. Hussey-Freke of Peking days was wholly incapable of. In this connexion it is interesting to note that Mr. Hussey-Freke in his conversation with you on the 11th October sounded a note of warning, his apprehension being based on the possible reaction of the provinces or vested interests to the increasing centralisation of revenues in the hands of the Government. For the same reason it is perhaps question- able whether the remarkable success which has attended Mr. Soong's efforts to secure control of the entire customs revenue is calculated in the long run to strengthen the position of the Maritime Customs. There are those who hold that it may have exactly the reverse effect unless the political situation becomes stabilised, and unless some definite plan is carried into effect whereby the provinces can be assured of funds being remitted to them regularly in order adequately to compensate them for
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the loss of customs revenues collected locally. Precisely what the present system is regarding financial appropriations from the Central Government to the provinces Lave been unable to discover despite the fact that I have questioned Mr. Soong. Mr. Maze, members of the Kemmerer Commission and others on the subject. My enquiries have, however, elicited some information which is not without interest.
A few months ago I asked the Minister of Finance how he had succeeded in abolishing the Surtax Bureaux, as it were, by a stroke of the pen. He replied that the problem had required delicate handling and admitted that he was not only gratified, but somewhat surprised, at the success he had met with. He had proceeded. he said, on the line that, whatever the immediate cost in the form of compensation to be paid, the entire customs receipts from all ports must become a national revenue, collected by the customs and (with the exception of the old 5 per cent. duties required for loan service) paid directly into the account of the Minister of Finance. As an example of how he had achieved his purpose he mentioned that, in order to obtain control over the Wuhan customs revenues, he had been obliged to pay some four lakhs a month from the national exchequer, which was precisely the same amount as he received by taking over the customs collections of that area. Gradually, as his own authority extended, he had been able to reduce the amount of compensation, so that by the time that the Kwangsi faction had been driven from Hankow and his own nominees installed, he had ceased to make any remittance whilst still receiving the total customs revenues. Presumably, a similar procedure has been adopted elsewhere, the amount of the quid pro quo varying in accordance with the degree of control and authority exercised by the Central Government over the province or area in question.
6. In the course of a conversation with Mr. Maze on the 13th November. I enquired how he accounted for the surprising passivity the provinces had shown when the Surtax Bureaux were abolished and funds hitherto retained locally had been transferred to the coffers of Nanking. He replied that the matter was not within his province and that he had no knowledge of the arrangements which Mr. Soong had made in order to induce the local authorities to part with these revenues. He shared my view, however, of the danger to the customs latent in the present haphazard arrangements and, as an illustration, mentioned in strictest confidence that only recently the Fukien authorities had telegraphed to him direct urging him to bring pressure on the Government to remit the sum due to them (some 70,000 dollars per month), and threatening, unless it were forthcoming, to seize the customs revenue. It would be interesting to know what course the Minister of Finance would adopt in the case of customs revenue-collecting provinces in open revolt against the Central Government. If he withheld the appropriations due to them it would seem inevitable that, sooner or later, the revenues in question would be retained locally or, failing that, surtaxes would be levied and collected by extra customs machinery. Even assuming a prolonged period of internal peace, there is a risk that the provinces will show in some practical manner, inimicable to the Maritime Customs Service, their dissatisfaction with the present system whereby all surplus customs funds are controlled by the Minister of Finance, who issuec no kind of budgetary statement showing what are his total receipts from this source or how they are expended. Mr. Maze informs me, however, that at the present time there is no indication, apart from the case of Fukien, to which he attaches little importance, of any threat of open revolt on the part of the provinces against existing arrangements, and that the entire customs revenues continue to come in uninterruptedly from all parts of the country.
The
7. In the course of our recent discussion on customs affairs, I asked Mr. Maze why the inspectorate-general did not publish the figures of the total revenue instead of issuing periodical statements which merely covered a portion of the revenue collected, namely, that calculated on the basis of the old statutory tariff. impression created, I added. was that there was some definite purpose in thus withholding what should be public information, with the result that confidence in the Minister of Finance would tend to be alienated. He replied that, whilst he shared my view and had argued accordingly with Mr. Soong, the latter insisted on secrecy being maintained. Mr. Maze was good enough, however, to show me, confidentially, tables giving the receipts collected at Shanghai over varying periods. and from a cursory examination of these figures it appeared that the total Shanghai receipts under the present tariff are, roughly speaking, approximately double those collected under the old 5 per cent. tariff. Mr. Maze added, also in confidence, that the free revenue flowing into the account of the Minister of Finance that is to say, the mount not required for the service of loans for which the inspector-general is
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