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CHINA REPORT
Government may decide to invest half of all future instalments of the indemnity.*
rehabilitated rail-
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It seems to be generally assumed that if the ways are unable to pay interest on the indemnity funds lent to the Purchasing Commission in London, the Chinese Government will itself pay the interest out of its own resources, and it has even been stated that the interest is to be fixed at 5 per cent.
If this arrange- ment be adopted, all indemnity monies handed over to the Commission will in effect be loans to the Government of China, not investments in an industrial undertaking. However this may be, no steps appear to have been taken as yet for the issue of Government bonds or other securities to the Board of Trustees; and if the impoverished state of the national Treasury at any time rendered the payment of the stipulated interest difficult or impossible, the Board would have no obvious remedy, and the educational enterprises on which it might have embarked would have to be abandoned for want of money. Moreover, if the monies coming into the hands of the Board of Trustees are really paid out of the ordinary revenue of the State and are not the actual earnings of the Board's invested funds, neither China nor Great Britain will be entitled to look upon the educational work, which the Board may succeed in carrying out, as a gift (which the returned Boxer indemnity money actually is) from the British tax- payer to the people of China. (On this point reference may be made
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* As an example of the productive enterprises" which are contemplated, may be cited the Whampoa Deep-water Harbour scheme. The following account of it is taken from The Times of December 31st, 1931-
"The plans for a deep-water barbour at Whampoa are perhaps the most ambitious of Canton's dreams. The port will cost $45,000,000 and take ten years to build. It will be 35 ft. deep and accommodate the largest ocean steamers, though it is twenty miles up river. There will be nine wharves 700 ft. long and 150 ft. wide, with all the most modern equip- ment. The most expensive part of the work is to be the dredging of the river, which alone will cost nearly $25,000,000. Political troubles have delayed the scheme, but it is now announced that a beginning is to be made. When the survey has been completed, the first part of the work will be carried out at a cost of $3,000,000, which, according to the Canton newspapers, will be made available from the British Boxer Indemnity Fund.
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A significant point, not referred to in this announcement, is that the Chinese hope and intend to make Whampoa the successful rival of Hong Kong as a great port, and thus to make Canton economically independent of the British colony. The scheme first took shape when the anti- British agitation and boycott of a few years ago were at their height, and was openly advocated in Chinese circles as a means of ruining the shipping business of Hong Kong, which is entirely dependent for its prosperity on its shipping facilities and its trade with Canton and South China. It is therefore pertinent to ask how the Whampoa scheme can be regarded as coming within the category of "'
projects equally beneficial to China and Great Britain" (see Mr. Henderson's Memorandum, p. 6).
As a means for the profitable investment of British indemnity funds, the Whampoa scheme may or may not prove in the long run to be a sound one; but it may be noted that the port will take ten years to construct, and perhaps the enterprise may not become a remunerative one for a much longer period. Meanwhile it will be of interest to observe what (if any) arrangements are to be made for the payment of interest to the Board of Trustees.
SITUATION CREATED BY EXCHANGE OF NOTES
to the Report of the Advisory Committee, pp. 157-159.) Such work will be carried on out of the revenue of the Republic, whereas the re- mitted indemnity money will be devoted to carrying out projects of railway "rehabilitation" for the purposes (1) of giving employment to British workmen (for it is stipulated that all the money is to be spent in the United Kingdom), and (2) of reconditioning the railways, etc., so that they may be able, sooner or later, to pay off old debts due to British bondholders. That at least is what may be said, with some show of justice, by the Chinese.
The outstanding difference between the investment proposal put forward by the Willingdon Delegation and that substituted for it in the recent Exchange of Notes, is that, according to the first, the endowment plan was looked upon as a safe and lucrative means to an end-the real end being the educational projects dealt with in the Report; whereas, according to the second, the interests of education and culture are wholly subordinated to the main purpose of re- habilitating the railways. The Willingdon Report would reject any endowment scheme that did not give security and a fair promise of a profitable return to be applied to cultural purposes; the Lampson- Wang agreement says nothing about a safe and profitable form of investment but merely assigns for educational and cultural work the hypothetical profits of an industrial undertaking which is at present in a state of insolvency.
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Complaints regarding the turbulence, insubordination and anti- foreign rancour of the students of China have been frequently heard during the past few years, and the alleged remark of a retired Chinese statesman to a member of the Willingdon Delegation-"Don't spend the money on students-the fewer of them we have the better words to that effect is often quoted with approval. Nevertheless, it is not less education that Young China wants, but more and better education. No one can seriously maintain that Tsing Hua University, the magnificent National Library at Peiping and the varied activities of the China Foundation for the Encouragement of Education and Culture, all of which may be traced to the wise and far-seeing policy of the American Government in dealing with their share of the Boxer indemnity, have damaged the interests of either China or the United States; nor will any intelligent person suppose that the establishment of a great Science Institute such as that which constituted perhaps the most important item in the educational programme of the Willing- don delegation, and which was to have been the most enduring monument of British goodwill to China in connection with the return of the British share of the indemnity, would be likely to increase the
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