CO129-426 - Public Offices - 1915 — Page 258

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but it is, perhaps, wiser to regard these more as an indication of the orderly working of the machinery of Government than as a symptom of acute rebel activity." Brigandage still continues, but the "White Wolf" hands have been greatly weakened. Various official and unofficial accounts of the leader's death have appeared, but in some quarters it is suggested that he is still alive, but pretending to be dead for the sake of the reward of 100,000 dollars placed on his head.

The only noteworthy fact reported from Ichang is the successful establishment of a steamship service between that port and Chunking; hitherto it had generally been held that the rapids would render a regular service impossible.

The following interesting paragraph occurs in the last quarterly report, from Chunking:--

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"In August a somewhat startling paragraph appeared in the North China Herald to the effect that the German gunboat Otter had attempted to tie up to the British and French gunboats at Chunking and that hostilities had only been averted by the prompt action of Mr. Yen Hsi-ching, the Chinese diplomatic officer, who had prevailed on the German gunboat to leave the port. What actually occuried is as follows: At the end of July H.M. ship Widgeon was the only gunboat at Chungking. The German gunboat was at Suifu and H.M. ship Teal' and the French gunboat were at Chiating. On the 3rd August the Otter returned to Chungking, and after the cominander had held a brief conversation with the German consul, steamed down the river, mooring some 10 miles below her usual tying up place, which is situated half a mile below the British anchorage and not, as reported in the paper, alongside H.M. ships. The same day, in compliance with an official request from the commander of H.M. ship Widgeon, acting under instructions from the commander- in-chief. I notified the Chinese officials that war was imminent with certain Powers and that H.M. ships on the Upper Yang-tsze had every desire to respect China's neutrality. I also communicated through a neutral channel with the commander of the 'otter' and enquired in guarded language whether he was equally desirous of respecting China's neutrality. His reply communicated to me on the 3rd August was as follows: If H.M. ships on the Upper Yang-tsze respect the neutrality of China I will do the same.' The German gunboat left for Ichaug the next day. The only moment when hostilities appeared at all likely was when the German gunboat, after passing H.M. ship Widgeon' on the 3rd August turned and repassed her. No demonstration was made on either side and the 'Otter eventually swung round and stemmed down river. The account in the North China Herald appears to have been inserted for the benefit of Mr. Yen Hsi-ch'ing, the Foreign Affairs delegate, and it is not founded on fact."

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Considerable credit seems to be due to His Majesty's consul and the commander of the "Widgeon" for the manner in which they dealt with a difficult and entirely novel situation. An interesting appreciation of the situation on the Thibetan border and of the views held locally is contained in the following letter from a member of the China Inland Mission to Mr. Brown :-

"The impression seemed to be very general among Chinese on the border, that the Lhassa troops were being supplied with the best modern guns from India and there were rumours that Ghurka soldiers were in the Thibetan army.

These rumours seemed to be causing some bad feeling among the Chinese troops against the British. While in the part of Eastern Thibet in which we were there was every appearance of Chinese supremacy and Thibetan subserviency and fear of the Chinese soldiery. There was, I gathered, a vague widespread feeling abroad that Lhassa troops would be able to drive back the Chinese and regain the supremacy of Eastern Thibet, and that in this way they have British influence behind them. I think in a general way the Thibetans are regarding Britain as a friend, while the Chinese view is of course the counterpart of that. I think it is quite possible that this vague general feeling may have been one of the factors in the desire that has been recently expressed in several districts to have British missionaries among them."

The province of Szechuan has been comparatively quiet during the past months, and there are indications that hostility to foreign enterprise, which has hitherto been more intense in this province than in any other part of China, is slowly breaking down. Otherwise the condition of the province continues to be unsatisfactory, and there is little hope of any material improvement until the radical reform of the currency has been undertaken. Szechuan is potentially one of the richest provinces of China, but

trade has been so hampered by a depreciated paper currency and the exceptional dishonesty of the officials that the provincial administration is on the verge of bankruptcy, and is unable to make any contribution to the national exchequer. As an instance of official peculation Mr. Fox states that during the revolution millions of dollars were made by the simple process of issuing bank notes with duplicated and even triplicated numbers. As regards the currency, "the following table," he says, "will give some idea of the hopeless muddle into which the currency of Chengtu and neighbourhood has been allowed to drift. Not counting the tael, there are five distinct units of currency in everyday use, each having a varying rate of exchange with the others :-

"1. The Szechuan silver dollar (Mexican dollars of other provinces not accepted, except at an exhorbitant discount) with subsidiary 50, 20, and 10 cent. pieces, whose rate of exchange with the dollar is constant. This dollar exchanges for 1,400 to 1,500 cash in paper dollars, 130 to 140 copper cents of any province, and 1,200 to 1,250 metal cash;

"2. The Szechuan military dollar note of 1,000 cash, with subsidiary 200 and 100 cush notes. This dollar exchanges for 83 to 86 copper cents and for 800 to 850 metal cash;

"3. The above-mentioned 200 and 100 cash notes, whose relation to the parent dollar is constant but whose value expressed in copper cents or cash is variable, with a steady downward tendency;

4. Copper cents of any province as long as the colour is good, but this coin has become comparatively rare in Chengtu; one copper cent equals 9 to 11 cash;

*5. The old metal cash, practically unobtainable in Chengtu, but in general use in the country."

The depreciation of the currency, coupled with increased taxation has exercised a most depressing effect on the sale of foreign goods, and the business of the British- American Tobacco Company, for instance, has been run at an actual loss, so much so that their representative at Chengtu has recommended a drastic reduction of the foreign staff until better conditions prevail.

In his report for the quarter ending the 30th June, His Majesty's consul at Tsinan-fu gives a striking instance of the "reckless manner in which the Oriental will mortgage the future." It had been decided to increase the tax on salt, and in order to allow the salt merchants to recoup themselves, to make a proportional increase in its price. A week's notice was, however, given of the impending change, during which time it was permitted to pay duty at the lower rate. There was naturally a rush to buy salt, and 1,600,000 dollars was paid in duty during that period, while the extra profit of the merchants was estimated at 1,000,000 dollars.

The last quarterly report from Chefu contains some interesting reference to the conduct of the Japanese troops on landing at Lungk'ou. His Majesty's consul has formed the opinion, based on several careful and impartial reports, "that the difficult operation of landing and accommodating troops was carried out with the least possible inconvenience to the natives, and that, except in one or two isolated cases, the men conducted themselves well in very trying circumstances" (very heavy rainstorm). The local Germans did all they could to create a panic among the Chinese, but no special success attended their efforts. A number of reports from other sources which have reached the legation tead to show that the conduct of the Japanese troops was quite good on the whole. Isolated instances of violence and rape occurred, but the latter crime especially was repressed with the utmost severity.

Enclosure 2 in No. 1.

Tsinan Intelligence Report, September Quarter, 1914.

Political Summary.

JULY of this year was more than usually uneventful, but with August came the war in Europe which affected Shantung in a special degree owing to the position within its borders of the German fortress of Tsingtao. All ordinary concerns were suddenly dwarfed and the provincial authorities found themselves faced at a moment's notice

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