CO129-491 - Public Offices - 1925 — Page 80

36

Senator Underwood wished in conclusion to say that, though he had no doubt that the two banks that had handled in the past the revenues of China had done so efficiently and in an honourable way and effectively, yet for the large amount of revenue collected for governmental purposes in China to continue to go through separate banking institutions, and all the other banks of China be deprived of deposits of that kind, would naturally lead to misunderstandings-not serious misunderstandings, but it did not appear to be an equal and fair distribution of the moneys involved, It gave undue power to certain institutions by reason of these Government deposits. Now, Senator Underwood did not think it would be wise for this conference to take any further action in the matter; but he thought he could say it was the sentiment of the sub-committee that in the reallocation of these additional funds there should be an opportunity for other solvent banks of the various nations sitting at this board to have a reasonable amount of the deposits derived from these revenues, So far as he understood it. he thought that that sentiment met with the approval of the representatives of the Chinese Government on the sub-committee, and he hoped it met with the entire approval of the Chinese delegation.

*

*

*

*K

*

MR. KOO asked if he might say a word in connection with the subject that had been brought up. He would try not to detain his colleagues any longer than was

necessary.

Concerning the question of the deposit of customs revenue in the foreign banks in China, he did not know that the subject might be brought up, so he did not have the papers with him; but, speaking from memory, he would like to point out to the cominittee the circumstances under which this question had arisen. Prior to the revolution of 1911 the customs revenue that was collected in the ports was all deposited in the so-called Chinese Customs Bank, under the supervision of Chinese authorities, and the customs administration itself did not have the handling of the money. They issued receipts, clearance only on the production by the merchant of the receipts issued by the Customs Bank certifying that the customs duties had been paid. As the time arrived, from month to month, for the payment and discharge of obligations incurred for the Boxer indemnity and also for the foreign debts. the money was paid over. That arrangement proved very satisfactory, and there was now the testimony of the Inspector-General of the Customs on record that that arrangement would work very satisfactorily, and that there never was a single instance in which there was any difficulty in meeting the foreign obligations promptly and on the day they were due.

In the course of the revolution of 1911 various disturbances broke out in various parts of China, and, lest there might be delays or interference with the discharging of the foreign obligations, it was proposed that the customs revenues should be deposited temporarily in certain foreign banks to which Senator Underwood made reference a little while ago. While that arrangement was intended to be merely provisional, however, the practice of depositing customs revenues in those designated foreign banks continued. It had this effect on the commercial and financial situation in the various cities of importance, that prior to the revolution, when money was deposited in the Chinese Customs Bank, of course, it flowed into the various channels of the market to meet commercial and industrial needs in each community, and in that way the money market was always more or less easy, and there were very few occasions when crises of a financial character arose. Since the new arrangement was introduced, however, of course, all the customs revenue went into the foreign banks and the money was now no longer quickly accessible to Chinese customers for legitimate purposes of commerce and trade as it had been heretofore, with the result that from time to time constant anxiety prevailed in the Chinese commerce and trading communities. because money was scarce and tight. Therefore, the Chinese bankers had made the suggestion more than once, and had drawn the attention of the Chinese Government to the fact that some steps should be taken to modify the present provisional arrangement. Mr. Koo therefore wished not only to associate himself with Senator Underwood in his suggestion, but to add that when the time came for considering the question on the reallocation, that, if in the opinion of the representatives at that time conditions were not yet such as to permit a complete reversion to the former practice, at least a part of the deposits should be allocated to those Chinese banks which were generally recognised as being sound and solvent.

BARON DE CARTIER said that, before the committee adjourned, he wished to express his agreement to the proposal of Senator Underwood.

37

ANNEX (J).

Board of Reference.

Extracts from Minutes of 20th Meeting of Committee on Pacific and Far Eastern Questions.

BARON SHIDEHARA said that it appeared that the constitution of the Board of Reference was to be framed by the special conference on Chinese customs duties. He knew that it was premature at this moment to discuss details of such organisation, but he would like to form a general idea of what that Board of Reference would be. Judging by the nature of the questions to be dealt with. Baron Shidehara presumed that each of the nine Governments would have to appoint, as members of the board, some of their ablest and broadest-minded jurists, upon whose judgment their own and the other interested Governments could rely. As the Board of Reference was to be of a permanent nature, these jurists would either have to stay in China indefinitely or they would have to be sent to China each time questions within the competence of the board came up for consideration and examination. Apart from the question of expense to the nine Governments for the maintenance of the board. it had occurred to Baron Shidehara that it might be difficult, from a practical standpoint, for these Governments to spare able and first-rate jurists who would accept the post in question under these conditions. If jurists of such qualification could not be spared the consequence would only be disappointing. He thought perhaps this practical side of the question had already been considered by the chairman, and he would be happy if the chairman would inform the committee of his views in regard to it.

SIR AUCKLAND GEDDES said that this question of the Board of Reference raised by Baron Shidehara was one which the British Empire delegation had thought over before he had ventured to suggest, two days before, that some form of machinery be established. The idea that the British Empire delegation had in mind about this machinery was something of this sort that the actual Board of Reference should be composed of jurists, but that it would not be necessary for all the Powers' representatives to attend all the meetings of the board. The British Empire delegation conceived of this machinery somewhat in this way that every Power should nominate to a panel jurists of eminence and distinction, and that from that panel there should be drawn two, three, four, whatever number was required, to form the board which was actually to consider any special case brought before it. For example, it might be possible for justices at Shanghai or Hong Kong to be on the panel of the Board of Reference as the British representatives. If an occasion in which Britiain was concerned arose, or one in which, under the adopted scheme. a British justice would sit upon the Board of Reference, one of these distinguished jurists would be called to take his turn on the board. He thought that possibly a scheme worked out by the conference, which was to be responsible for its preparation, might follow some such lines as these.

There would be this panel of jurists, and it might be arranged that any enquiry should be dealt with by a small board, say with a representative of each of the countries concerned, with perhaps a neutral chairman selected from the panel. It seemed to him that in some such way, without great expense, without keeping eininent and distinguished jurists in China for long periods, during which they might have nothing or perhaps little to do, it would be possible to get some such machinery set up in a cheap, simple and effective way.

These were ideas which had passed through his mind before he made public the suggestion that there might be some machinery devised. He did not know whether his ideas agreed with those of any of the other delegates at this conference; he had merely ventured to give them expression as a preliminary indication of one way in which the Board of Referees might be created. He was sure there were numerous equally good, if not better, plans possible. He merely wished to make it plain that there was no insuperable difficulty attaching to the proposal which had been brought before the committee.

18