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responsible amounted to approximately 5 million dollars a month, a sum which was, he said, greatly in excess of that already pledged in respect to internal loans raised by the National Government and secured on the customs surplus.
8. As regards the present procedure in respect to the collection, remittance and banking of customs receipts, which is more or less uniform throughout the country, the position, Mr. Maze has informed me, is as follows: Commissioners of Customs pay their collections daily into a local bank designated by the Ministry of Finance. This sum, after the deduction of administration expenses, is remitted weekly (in the case of small ports periodically) to the inspector-general's accounts in the Hong Kong and Shanghai Bank and the Central Bank at Shanghai. That portion paid into the former bank, as custodian bank, is the amount represented by receipts based on the old 5 per cent. tariff. and is destined to meet the service of foreign and domestic loans for which the inspector-general has inherited responsibility. The remainder, which represents the increased revenue flowing from the new tariff, is paid into the Central Bank, where it is transferred from the account of Mr. Maze to that of Mr. Soong. The position as explained to me by Mr. Maze and as stated above is,. I have since ascertained, not wholly accurate. From casual conversations with Chinese bankers I had reason to suppose that this was the case, and in a talk last night with the most experienced and reliable member of Mr. Maze's staff, I learned that. in addition to the inherited" loans, Mr. Maze had assumed indirect - responsibility for the service of certain domestic loans raised by the National Government. The position in this matter is, according to information furnished me by Mr. Li Ming, managing director of the Chekiang Industrial Bank and chairman of the Supervisory Committee of the Central Bauk, as follows: The service and amortisation of all loans issued by the National Government and secured on the customs surplus is administered by what is known as the 2 per cent. Surtax Sinking Fund Committee. This committee. presided over by Mr. Li Ming himself and consisting of some ten representatives of Chinese commercial and banking interests, was, it will be recalled. established in May 1927, when it was made responsible for the administration of loaus secured on the Washington surtaxes. According to Mr. Li Ming the Sinking Fund Committee is paid direct by the inspector-general from his account in the Central Bank the funds required for the first and second issues of the 23 per cent, Surtax Bonds and of the Rehabilitation Bonds, whilst for the service of subsequent loans raised by the National Government, the procedure is substantially, the same. Mr. Maze making out cheques to the Central Bank in favour of the committee. It would, therefore, appear that the difference between the security of the inherited loans and that of those raised by the National Government on the customs surtaxes and surplus is one of priority and degree only, the fact that the Minister of Finance personally controls the affairs of the Central Bank rendering the inspector-general's funds deposited therein less inviolable than his funds deposited in the Custodian Bank.
9. Under the instructions of Mr. Soong, who, in order to obtain the Chinese bankers' co-operation was forced to concede their demands, Mr. Maze was
obliged to accept this additional responsibility and thus to follow, willy-nilly, if not the same path. at all events a parallel one to that of Sir Francis Aglen. I should perhaps add that whilst, as explained above, the customs funds in the Central Bank are only released to the Minister of Finance after deduction of the amounts required for the service of domestic loans, it is, I understand, a fact that, as Mr. Maze informed me. Mr. Soong is receiving as free money from the customs a sum of approximately 5 million dollars a month.
10. Mr. Maze having informed me that there was no indication of any inter- ference by the local authorities with Commissioners of Customs in the performance of their duties. I enquired whether there was any intention of abolishing the post of Superintendent of Customs, adding that, in a recent conversation I had had with Mr. Chang Fu-yun, we had discussed this point in connexion with the abolition of Commissioners for Foreign Affairs, who, in many cases, held concurrently the office of Superintendent of Customs. Mr. Maze replied that certain unfounded reports were current to the effect that Commissioners of Customs were now the subordinates of superintendents, from whom they were obliged to take instructions. Both officials, he said, held equal rank as in the past and, so far from commissioners having been deprived of their former status or having obstacles placed in their way by their Chinese colleagues, he had only recently expressed the opinion to Mr. Chang Fu-yun that it would be a great mistake to abolish the post of superintendent, the officials in question having, on the whole, proved of great assistance to the foreign staff in smoothing out difficulties with the local authorities.
11.
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Although not altogether relevant to the subject of this despatch, it is perhaps worth recording that Mr. Maze and members of the Kemmerer Commission he intimated in private conversations that, whilst there are not likely to be any radical alterations in the present tariff, certain items will be subjected to increased duties under the tariff which will enter into force in February next.
I have, &c.
A. FRANCIS AVELING.
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