426
Finance
XII.
on the fall of Tsingtau. The contract for the bridge work was placed with a German firm by the old Native Company before the line came into British hauds, and the materials, presumably being unpaid for, would remain German property until delivery, which was never made.
The outbreak of war created a severe financial crisis all over the world, during which international banking transactions were practically suspended. As an illustration of the dislocation of business it may be noted that transactions between New York and London were negotiated at the rate of $5.27 to the £, which meant that in the greatest neutral market in At the the world exchange on London fell as much as 8 per cent. same time silver declined over 15 %, and for the time being it was It was not until the impossible to remit money from China to Europe. end of October that normal conditions were re-established in the money markets of the world. The war adversely affected the foreign trade of China; both imports and exports fell off to a considerable extent, and the depression lasted until the end of the year. Under these circumstances it is not surprising that the Customs Receipts fell off from Tls. 43,969,000 (£6,700,000) in 1913 to Tls. 38,907,000 (£5,300,000) in 1914. decrease of Tls. 5,000,000, however, represented a falling off in sterling of £1,400,000 owing to an average decline in exchange of fully 10 %. Throughout this period of financial stress and difficulty China has paid the interest on her national debt, as well as the sinking fund of the Boxer indemnity. No information is available as to the Treasury Bills and short term notes outstanding, but liabilities of this nature are in a different category from the recognised national debt. The way in which the Chinese Government has met its obligations throughout the trying period of the last four
years is satisfactory evidence of the recuperative power of the country, and inspires confidence in the maintenance of China's long record of national probity.
The
Under the able management of Sir Richard Dane, the Salt Gabelle is reported to have yielded a net revenue of Tis. 42,000,000 which is more than the revenue received from the Maritime Customs. It is understood that a re- organisation of the Land Tax is to be taken in hand at an early date; and when the necessary reforms have been carried out, it is estimated that this source will yield an annual revenue of close upon £20,000,000.
XIII.
As far as information is available to the public the total debt of China approximately amounts to £170,000,000.
Which involves an annual charge of about
To which must be added for amortization of loans
Making a total of about
£8,500,000
1,500,000 £10,000,000
A new departure in finance may be noted in the successful flotation of an internal loan of $16,000,000; the amount being over applied for, it was subsequently decided to increase the total to $24,000,000. A further loan As
for a similar amount to be issued this year is now under consideration. evidence of increased confidence of the Chinese people in their Government, this new departure is significant, and if the Treasury is wise it will carefully protect the interests of the investors. During the year the Central Govern- ment redeemed, in Canton, local notes to the extent of $32,000,000; although these notes were retired at a considerable discount, the general] effect of the operation was salutary, especially as it was carried out expediti- ously and in a businesslike manner, It is estimated that there are still out- standing about $130,000,000 of provincial notes throughout the country.
Viewed from a European standpoint the liabilities of the Chinese Government, in comparison with the extent and resources of the country, are by no means heavy, These resources are capable of much greater development; the strength of the country lies in the industry and enterprise of the great mass of the population, its weakness in the atmosphere of mistrust and intrigue surrounding its governing classes which has for so long been characteristic of official life.
Writing on the subject of leakage in the collection of taxes, and the swarm of officials through whose hands the revenue passes, the Peking correspondent of the North China Daily News says:—
"It has been asserted that if the Government could only secure 'fifty per cent. of the actual amount collected from the people throughout "the country in the form of taxation it would be able comfortably to "liquidate its national debt and keep its administration financially
lubricated without necessity for appeals to foreign financial markets.”
China has for many years been urged to foster the mining industry Mining. and encourage both ber own people and foreigners to develop the
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