CO129-470 - Public Offices - 1921 — Page 296

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there is an interest charge alone of $16,000,000 on silver loans, practically unsecured, amounting to about $265,000,000. Then there are interest and amortisation charges of $26,000,000 on the so called "Anfu" gold loans from Japan, which amount to $140,000,000. By borrowing at exorbitant rates of interest Minister of Finance has managed payment of interest up to the end of the year, but he can not carry on any longer, so though China herself is not, Chinese Government is bankrupt. Inspector General of Customs thinks that if Minister of Finance would accept his suggestion of a reconstructed loan service comprising Customs, salt, and wine and tobacco monopoly, Chinese Bankers would approve of it, as the only method of maintaining solvency of Government and their credit both

abroad and in the country. The greatest danger Inspector General of Customs considers to be gold debt to Japan and

Chinese bankers fully realize this. It is fairly obvious that administrative expenses cannot be met from the present

revenues.

There are so many unpaid soldiers all over the country and

the system of Military Governors is so thoroughly bad that

everything points to a financial crisis and nothing towards

any hope of lasting improvement; indeed people openly discuss

prospect of disorder and disappearance of the present

Government.

I think that only after, not before, this has happened,

help from Consortium might be practicable.

Repeated to Tokyo.