1931-02-28 — Page 3

EXTRA

THE HONGKONG TELEGRAPH. SATURDAY, FEBRUARY 28, 1931.

TO-DAY'S BANK MEETING.

IMPOSSIBLE TO CHAIRMAN STATES IT IS

SAY HOW LOW DOLLAR WILL FALL.

QUESTION.

A

COMPREHENSIVE REVIEW OF

CHINA'S

COLONY'S CURRENCY

POLITICAL & TRADE SITUATION.

In his references to the calamitous fall in the price of silver. Mr. J. A. Plummer, who presided at to-day's annual meeting of the Hongkong and Shanghai Banking Corporation, sinted that it was impossible to state how low the dollar would go. Dealing fully with the silver situation, he pointed out how an

Excers

af production had led to the collapse and, in spenking of remedies, stressed the need for all interests to hear their share of the cost of rehabilitation,

The bulk of the sperch was devoted to a review of the political and trade situation in China of the hopes of permanent peace and of the serious "Red" ne- ivities which were the natural outcome of misery wrought to the people by militarism and war.

A tribute was paid to the efforts of China's Finance Minister to put the finances of the country on a sound basis-but, in the matter of extraterritoriality a warning was sounded that it would be against the interests of Chinn and the Powers to proceed too quickly.

BRITISH BUSINESS METHODS.

The Chairion, Mr. 2. A. Plunger, | the currency question of the Colony, id:-Ladies and Gentlemen, The bat though the report has put so far of Account boven mandu public, it is doubtful if any Report and Statement having been in your hands for suite useful discoveries were made, the time I will, with your permission, original cause of the committed's up- pointment, viz: the alve-mentioned take them in rend,

high premium on our exchange, hav- mug soon been lost night of in the heavy full in sterling quotations which followod each other with alarm- g capidity. The question which took a place "how law enn the dollar gut Rb of course impossible for me to answer.

After making full provision for Lounos and contingencies the nel pro- fite for the year amount to $20,726,- 730, or some six and a half million dollars more than in 1929, while ex- pressed in gold they show only a de crease of abnut £16,000 in spite of the fact that the conversion rate of Exchange has dropped by 32.69 por cunt.

The nubeinntist increase in the ilver revenus is, of course, largely dae to the conversion of our gold ournings at the low rate of 1/1.1/8; it would have been ever greater but for the fact that owing to adverse cir enmstances we have not had the as- of our gold- from came slatauco carning Branches which we might rea- wonably have expected.

I may with little fear of contradir-

In commencing my survey at the past your as usual, with a review of the allver market, I am canscious of dealing with a subject which, from being the field of the specialist, hag Italy become a matter of universal interest and concern. This state of Affairs is due to the fact that the rapid decline, and still more, the con stant uncertainty, in the sterling valur of silver, bus gravely dislocated that section of the world's, trade which is

tion that the past your proved italibused on asi exchange between silver

the

and gold currencies and so has add- ed materially to the present causes of Peral customile depression,

Calamitous Fall of Silver.

to be one of the most difficult in the annals of banking not only b Far East but throughout the world. Int Hongkong and Ching not only were wo fucxd with the catastrophic chilapse of silver but also with dif Iculties of very greal moment arising from exottonical, or political rauses. Thental It, therefore, gives me the greatest natisfaction to be able to come before you today with surb an excellent showing. reflecting as it does the highest credit upon our Chief Mars" tor. Manager and Agents.

Dividend Problems, Although fally warranted by the Agures befor you, 7 may any that es view of the all critical state of the world's trade and the inany dan gor and difficulties which still con- Troni 18, we considered very carefully as to whether we were justified in re- commanding the same shividend and We retain, how- lonus as last year. ever, utileient degree of conflee in the future and I trust that you will OGT Tecommendation. Murove of

here that our in- Let me mention creased investments stand in our books at a very cutsiderable margin under market prices.

think we have every reston ta congratulate ourselves upon the choice which we nule some twelve months go in appointing Mr. Grayburn, uel- jg Chief Manager. He has already bravo la exceptional capacity for the post and we had no hesitation in confirming him in his expointment

Some six months ago.

As shown in the Profit and Loa Account, the amount available, after deducting the interim dividend and Directors remuneration, is $16,091,- 950.52, which it is proposed to deal with as follows:-

shured,

let us glance first at the funda

facts. Silver Bus fallen nearly 10 per vent. in prive during the past twelve months and remains on the down-grade. Regarded as part of a general price movement in | which all the metals have

this decline is nothing extraordinary. and, other things' being equal,, yo mischt count on a varresponding reses tion when commodity prices improve. But silver is not merely a commilly; it is also a medium of exchange, and Tooked at in this light its prosper els tre les reassuring. The silver-using countries luve rapidly diminislný in mmmber and now Chhia remains the

a silver-cur only important une so zeney lasts. Still the outlook is not so disperate if the exchange vahe of silver yon regain a degree of stability. Experience uppity shows that ad- justments to price variation are made with greater CO by oriental countries Chan by the highly developed eñuntries of thre West. 1 is alu comforting to remember that trade is, in the last analysis, barter and is bound in the long run to recover its equilibrium, whatever the level of monetary exchange. We may find consolation in the fact Out China's real purchas- ing pawer rowities not in lue silver, but in her surplus merchandise-ber tea, silk, cotton, hides and other ex- portable produeta.

in the country and sy necessitating an

xpansion of China's

currency,

offers a strong pillue of support to the silver market.

measures position

ron.

Government and our congratulations are due to the Minister of Finance whose skilful handling of the situa tion made them possible. Our Cor puration participated as one of the inuing banka in the London flotation which met with great muEcoRs. The credit of the Japanese Government is reflected in the fact that these bonds now stand at a 4 per cent, premium.

The Colony's Trade.

The monotonous stery of lack of markets for raw material exportet and lack of purchasing power for im- ported goods, which repented itself in india, Malayn, the Philippines and Japan, applied also with the further burden of a disorganised Ex- change to the case of China, and was reflected in the trade of Hong- kung. Our lead merchants, it is true, Found some compensating advantage from the drop in exchange which, by putting up silver values, assisted those who had stocks to liquidate, and the trade of the Colony as a whole survived the adverse conditions of the year with good measure of

Chinn, n the other hand, MULTURA, especially in the northern provinces- hi to cope with an additional hind. rance to trade in the form of civit war and all its attendani evlls.

Judged by the Custome revenue Intals for the year, there was a fur. ther tecilne in the gold value, if not in the bulk, of China's exports and imports, though of no very serious proportions. The British piece goods Trade for the year in cottons and Woollens through Shanghai largely consisted in the liquidation of stocks, -the divergence between homme manu. Ineturing costs and the prices obtáin. able for the finished goods in Chlum being such as to disenurako replace- 排加を補助 With the demand for cheap- priced materials, British manufac. Turers are feeling over mare keenly the expetition from Japan and from native mills.

Chinn's Trade Prospects,

In engineering products there has been a certain demant. for textile and electrical equipment, in the supply of which British manufacturers appear. 1 am glad i say, to be holding their These are some of what may bean, in spite of the difficulty of meet- called the natural forces in opern- ing foreign prices. Industrial de tum in regard to the price of silver velopment a whole receiving Governmental action is also, of course close attention in Chinn in both officini a very bortant factor. As to his and private circles, and I think it in fast,

only we can

hope that the safe to say that, given the beneilts of obvious damage to the world a peare, it will go ahead rapidly, carry- whole enused by the collapse of silver ing with it a steady demand for in- will induce the Governments

pated, machinery and equipment. cerned to stay their hand fram any The same applies to the railways calculated to make the which are crying out for rehabßita- WOTHC. Of the various lion of the existing lines and for selmmes for international

action to constructional

I shall progress. stabilize the market, of which we have refer shortly to the plans for devot- heard so much lately, none woukl af- ing the British Boxer Indemnity funds par to have renched

to this purpose. Aviation, meanwhile, substantial is progressing and number of aeroplanes for both civil and milltury use were imparted in The Shang- the course of the year.

services hai-Nanking and-Hankow have functioned regularly and plans are said to be complete for the opers. tion of an air line to Berlin, via Siberin, under Sino-German manage. ment. In the supply of alreraft, as af matorcars, American firms. retain #decided lead.

a yet, the

practical stage. All such schemes in- volve a sacriflee to node in the Keneral interest und present a dimeult problem in finding how to provide for

fair apportionment of loss among the countries concerned and to avoki that any one sectional interest should obtain the lion's share of the prol.

Excess Production.

I will now give a few estimated figures showing the silver situation for 1930. On the production side we fuul 244 million ne vunces of new output, 29 million ounces from sales

by the ndian Government, 22 million from sales by France of demonetized con, and 20 million ounces similar sales by Indo-China. This gives a grand total of about 315

from

million line ounces put onto the market. On the consumption side. Indin impuri U milliun aaners,

the

The expert trude from the Yangtze,

from instead of thriving

showed แก exchange, favourable

This was

exceptionally bud recup partly owing to civil disturbance and, purtly, to the decline in selling values Abroad which outstripped the fall in exchange. The Manchurian bean crop was found to be almost unsaleable and silk fell by almost half its value in spite of a poor harvest.

i

was

establish ita supremacy, Experience of ed, but a, dtep in the right direction the past makes ono slow to accept the was taken by the Minister of Finance who published a general financial latter view too undeservedly, but I think there is more room for optimism statement carly in the year. A series than for some years past and fair rea of reports by the Kemmerer Mission aun to hope that the lifting of the has been publlahed, containing schemer clouds is more than temporary. There inter olin for the adoption of a gold is no need to burden you with a detall. standard for China's currency. An ed account of last year's struggle initial move in this direction which, though on a larger seal, re-made in the month of January when sembled the previous trials of atrength the collection of import duties was between Nanking and the provinces placed on a gold basis. This arrange-,

ment furnishes the Government with At one period of the fighting the re bellious leaders were successful substantial gold credits of great value in present conditions for meuting their that China appeared likely to aplit in

aversens debts. two and plans were actually rande for setting up a rival government in the el capital. By September, however, the tide had turned and soon the wa

inter- was brought to an end by vention of Marshal Chang auch liang, the Manchurian ruler, who des cended on Peking (or Pelping na I should now call it) and forced the allies to retire. Generals Yen and Feng quickly gave up the struggle and their troops are being disbanded or Incorporated Inte forces.

the "antional"

The Cost of War.

At this point let me interpolate a remark concerning a certain which I not infrequently rev repeșted in the press. It is to the effect that foreigners exaggerate the impor tance of wars in China which, it in alleged, are really not so vitally im

frw portant because they affect n provinces at a time and only a small minority of the total population, This in a view with which I find it quite impossible to agree. The pro- portion of China's millions directly touched by the clash of contending armies may be comparatively small but that in only part of the story. What must be remembered, is that vastly greater numbers are ruined by the indirect consequences of the war the crushing military taxation, wrecked communications, the stimulus given to banditry and the destruction of confidence generally. More than this, the reconstruction of the country is held up by the diverting to purposes of war of the Government's resources and enervies and by the check jmposeil an all pablie enterprises.

To return to the situation:

RUON

23

WIL war

144

over

vinit-

the Marshnd Chang Hauch-lang Ext Nanking where A

Keberni agreement was effected between him and the National Government. A run! understanding between Nanking and Mukden is the best guarantee against the renewal of civil war on the North

18

side of the Yangtze. Whether the agreement will stand. the present strain inherent in such compacts, particularly on the inamin side, it somewhat early to say, but the signs on the whole are favourable and, if China survives this spring without a fresh, breach of the prace we my hope that the corner is turned and that the phase of civil warfare which i

desadre now lasted for two whole will at last be at an end.

Confidener Strengthened."

Such confidence is strengthened by the results of the Plenary Session of the Kuomintang Central Executive which met at Nanking last Autumn. It was there decided Le convoke a National Convention to meet.on-May 5th.

The calling of thist Convention (ur People's Conference as it is also called) answers the charge made by their opponents against the Nanking Party of monopolising power and of

in honestly carried out it shuntd sig popular control. If the de- do much to remove the causes of fri tion and jeniousy which have kept tionalist China inn stale

instale of diension during the past two years.

There remains a formidable problem calling for all the energy and deter mination which President Chiang Kai- shek has shown himself to punxess la ample measure. I refer to the Com- munist mennee. For the last two or three years Inrgo pacis of Central and Southern China have beca ruvig- ed and held in terror by-so-called "red" armies, consisting of bandits, disbanded Boldiery: And ruined and desperate peasants

-

ganised more or less under com- munist Jendership. Im certain areas the Civil Government is said to have been superseded by Soviet, organs which have set up their own system and even estubilähed, schools nad banks on the communist pattern. The movement reuched its height Inst summer when Changsha was neited and looted, and Hankow seriously threatened. The cessation of civil way having freed the hands of the Government, military acasares are now on foot, the outcome of which we await wlth considorable anxiety. Eurly reports of the success of the operations have not been tos eneourng- ing.

and China and Hongkông 180 millions (showing an increase over the pre-

British Economic Mission. vious year of 20 million ounces in. the case of India and a decrease at The trade depression at home has 13 millions in the case of

the trading China).

centred attention on The total excess of produellon for the possibilities of China. This, combin your muy he estimated at 26 million! ed with the special distress in the bunces, amply sufficient--when taken Lancashire cotton trade, led to the in conjunction with trade depression despatch of an Economic Mission sent and falling commodity prices-tu ne- by the British Government to enquire count for the phenomenit wenknass of

in the Far into trailing conditions the metal. The measure of this East and the best means of advancing weakness is given by the more or less the British share. After four months Slendy drop during the course of the of most thorough and painstaking Ernest Thompson year from a maximum Bgure of 21.6/8 investigation, Bir more

pence per diner 14 1/2 pence an and his colleagues are at present in ounce, fall of 7.1/8 pence. The this Colony engaged in preparing Shanghai exchange declined cor- their report. We welcome the Min- | respondingly from 2/1.1/4 to the inel sion's visit, firstly. because of the to 1/43/4, these being, it is curious valuable personal contact between to note, delunlly the first and last British merchants in the Far East and official rates quoted in the year. these representatives of the manufuc

Turning now to Eastern trading | turing interests, including both man- condition during the past year, it is agement and labour; and, secondly, be- superfluous to mention that the coun- cause it is leading to a thorough re- tries with which we are connected survey of the machinery of produc have shared without exception in the Lion and distribution of British goods Keneral world depression besides for China, and will, no doubt, bring having, in some cases, experienced to light whatever weak points the particular troubles of their own of present system eqntains both at hone à political or economic nature which || and in the East, Foreign trade with To pay a fat dividend

have placed an nditional 'check on China, after having proceeded on of por share with a

trade and enterprise. In these cir- somewhat stereotyped lines during the bonus of £1 per share

cumstances, I do not propose to dwell past century, is now experiencing (gubfort to Income

on the Individual misfortunes of the

rapidly changing conditions. There- Tax doduction)

* Encouraging Factors."

various markets, In India, course, is a call for adaptation. all, along Transfor Le Bank Pre-

the economie situation has been large- the line to meet these new conditions.

butcome of the misery wrought on the 1,000,000.00 mface Acconat ....

This being no, merchants are ly overshadowed by political develop and to cope with the daily incrensing people by militarism and war. Insofar Transfer to Bilyar re-

naturally asking what is the outlook.ments. Of these, I will only say that competition with which we are faced.

his is the case, the, only effective 500,000.00 heat in regard to the allver Ox- I think we shouli and our valee to In these circumstances, ‚n”, general, cure les in bettering local conditions

·Balance carried for

́chungy. It is difficult, an I have the tribute paid to the work of the overhaul of the position should greatly by the establishment of peace, and ward to the now n/c3,429,083.38 | already intimated, oven to hazard a Round Table Conference, I sincerely assist. Efforts are, we know, being good government. If these should not be forthecoming there is ground for $18,031,060.58 Rues, but let us examinen fow of hope that the conciliatory spirit which made at home to rationalize export

The more encouraging, factors in the came to the fore in the delegates' dia. † industries

the gravest fears as to what may and I trust that the prosent situation. The low price of cussions will find a reflection in India Mission's report will, antong other

eventually happen. When my predecessor addressed you, silver must tend to increase the con- and provide, the foundation for a things, lend impetus to this

very Jast year there was much ducusion

friendly and lasting solution of the desirable process. We shall await about the premium which then exist-umptive demand since, it stands to.

problem India's future govern- with much interest. od on our exchange over the laying rason that when a currency falls in

ment. value greater amount is required down cost of Beltish dollars. This

to meet current requirements. This premium, I am glad to say, has now fact has already made itself visible disappeared, but the process of gut.

it the large incronse in the circulation ting rid of it was somewhat protract.

of bank-notes in China and, to a still ed hy roon of the weakness in silver greater degree, in this Colony. Low and by an optimistic fealing among

rices must also, in course of time, importers that exchange musi rise.

discourage production. There is, lastly, the effect of restored peace In China, which, if it continues, in a factor in the upward direction, since, | by stimulating the movement of goods

.$11,702,857.14

Carrency Question.

In the early part of the year a Committer was appointed to look into

Such is the lang view. In the meantime we cannot disguise feath ourselves that during the past year the full of silver ions been a calamity for the Eastern trade. a calamity seriously enhanced by the simul- taneous decline of world commodity prices.

Political Bituation,

t

In regard to Japan, there are twa financial operations of constilerably moment to record--the return to n I will now review shortly the free gold basin of currency and the political situation in China. After an- floating, lost. May, of conversion bands other year of civil fighting, the coun- in London and New York to provide try is now enjoying a fresh period of for the Anal redemption of the 1990 4 peace. This welcome state of affairs per cent. loan, which maturel on is interpreted by some as merely a January 1st last. The successful ac- lull between stortas, by others complishment of these two operations marking the culminating point of the redounds to the credit of the Japanese Nationni Government's struggle

SA

to

Outcome of Minery.,

and almílur purposes. This solution- providing, as It doos, for China's most urgent needs on both physical and Intellectual planes, while at the same.

own country in time helping our dealing with unemployment-deserves to be warmly welcomed in both the 1 will only add countries concerned. a word of congratulation to our Hong- kong University on recolving a grant of £205,000 from that part of the ac .cumulated fund which is being ap;

plied objects,

forthwith to. educational

Canton-Hankow Railway. The Maritime Customs duties, now

The portion Investable in railways greatly augmented under the, now

In likely to be devoted—we are givòn tariff, continue provide the main

to understand-to the linking up of The in-

the Conton-Hankow source of national revenue.

railway. "The terents alike of the Government and of completion of this trunk line, of great benoit to China on political, no leas

than economic, grounds, will bring to fruition the plans taken in hand more than twenty years ago by our Bank

Beituro

Commerce and shipping are closely bound up with the integrity of the Customs service and the gravest mis givings were caused by the last summer of the Tientsin Customs by the Northern faction in whose hands it remained for four months. Happily Marshal Chang, on obtaining control in Tientsin, restored the central Gus- toms nuthority,

an

Customs on Gold. The Customs collection for 19:30 of Haikwan Tavla 180,000,000 shows an allora uver of increase

18 represents 1920. This per cent. Increase, though, translated ints terms of gold, the value of tho collections was 12 per cent, less than To the increas in the previous year. ed revenue the port of Shanghai con- triluted 17 million tacks, and Canton 3% millions. Tientsin, on the other hand, showed a decrease of 2 millions, while Hankow and Dairen also regis tered a decline.

Although falling outside the period under

I must make mention of the introduction on the first day of the current year of a new Customs tarif replacing the provisional schedule which itself had succeeded to the fint per cunt. The new tari!-- which I may mention is calculated to of produce an increase of revenue some 100 millian taels--has been on the whole net unfavourably received Simultane- by mercantile interests, ourly with the change of tariff, the Government has ordered the abolition of likin and other irregular taxes. The new substitute, taxes should at least have the advantage for mer- chants of being a Axed and determin- able charge.

the

Praise for Mr. Seung.

in

The Salt evenze has now in main returned to the control of the Central authorities from whose hands it had almost entirely escaped a fow years ago. Last year it approached $160,000,000, making a good second to the Customs. Deficiencies quotes remitted by the Districts for the service of foreign loans accured on the Salt Revenue have been inado up and the liquidation of accumulated Arrents has proceeded in punctual observance of the Finance Minister's plan.

due to Mr. Recognition

China's Soong, whose concern for foreign credit-and, if one may ven- ture to add, able tenure of his very difficult oflice--have earned high opinions in financial circies abroad.

In contrast to the Customs and Salt obligations, the defaults on the rail- way loans continue to mount up, the Anunt overdue on three loans alone Great Issued wholly or partly in Britain amounting now to almost £6% millions Private foreign creditora for uliway material are also stili awaiting the payments due to them, but we are glad to learn from a recent statement In the House connexion with the remission of the British Boxer Indemnity that our Government have received a promise from the Chinese Government that the outstanding debis due to British mer. chutte for railway material will be settled at an early date.

Debt Settlement.

Commons la

Debt settlement as a whole is coming to the fure. In November the Govern- munt invited representatives of the foreign Governments concerned to a preliminary cunterence. I understand that little has yet been proposed in the way of a definite plan, but the British Legution has taken

band

the collection of British statements of claiths and it is some satisfaction to know that the Chinese authorities. have at last made a start in tackling the problem. I trust that they will Roon and the oceanion to prove the sincerity of their intentions. 'or course, the settlement of their over- duo obligations on terms acceptable to the creditors must depend on peace In China and on the degree of the | Government's success in reordering

the national finances, a task in dealing. with which Mr. Soong and his collen- geen have our sincerest good wishes.

The

and its association In the Hukuang Railways Loan. Un- fortunately, the part of the country through which the line must run is. in the heart of the communist trouble and little can be accomplished until the latter has been dealt with and the districts restored to order,

Looking at things as a whole, if China can now maintain peace and political stability, she should soon bo able, with international assistance, to tackle effectively hor three major, and Interrelated problems: the consolida tion of debt, the disbandment excess soldiery, and the reconstruc- tion of enliways and other means of transport. The " hinges not a little on the outcome of the forth- coming People's¿Conference.

Extrality.

of

come

I must now pass on to the suofect of the abolition of extraterritorial rights. This vital subject has for several years past been faced fully and frankly in speeches from this Chair and I shall follow the precedent Bet by my predecessors; to burke discussion of the question on account of its manifold dimealties is, I think, n mistake. Our general attitude to war is abolition was defined by your Chairman last year and I need not repent his remarks. The past twelve months have brought us, however, much closer to the Issue. Negotia tions between China and the principal foreign Governments are proceeding. the Chinese Government have dee- lared their intention of settling the question in the early part of this year And there is not a little reason to expect that the matter may to head before the date of the People's Conference in May. The need for revision of the treaties and the determination of the Chinese people to see it effected are facts which we recognise, and the problem froin our paint of view is one of securing fair and reasonable safe- guards to curry foreign firms and of the nationals over the dangers transitional period when Juridiction and administrative control are pass- ing into Chinese hands. There are. sections in Ching Impatient for an abrunt termination of all special privileges and rights. Tho demand for this was answered by the apokos- man of H. M. Government at the last, annual dinner of the, China Associa-. tion and I cannot do better than quote the words then used... J'Foreign. Jurisdiction," the speaker said, “was always an anomaly but un anomaly corresponding to an anomalous state of affairs, and its sudden removal would be a worse and more dangerous anomaly still both for the Chinese and for British subjects in China," The ultimate goal, he remarked, lo complete reciprocity-China protect ing our nationals and assuring them justice equally full and complota as that given by the Brilish Govern ment to Chinese citizen; under their jurisdiction,, But, he added, this can unly come by a process of evolution and the immediate task is to discover a progressive solution of the problem which can be embarked on without de lay with mutual goodwill and ratie. fiction to both parties.

The Moment's Need.

The need of the moment is, as those words imply, to bridge over the time while the Chinese Government is still engaged in consolidating its control throughout the provinces of China and 15! establishing #7 unquestioned authority which will justify it in na- suming the full responsibilities of a sovereign Government towards forely. nere living in its territorios. It will grently help to reduce to a minimum

The movement is largely a natural whehabilitation of the railways, marked a further stage in China's

With the fall in silver and the world alump in prices, nddod to the internal dissensions of which I have been spanking, any radical improvement In the finances and economle state of the country has naturally been impossible. As regards the national exchequer. the current needs of the Government

required the issue during the year of now loans on the security chiefly of the Customs-mounting to 3174 millions and making a net increase in the national debt of slightly over $90,000,000. The introduction of a budgeting system is still being awnit-

the risks of International Irletion- a matter surely of equal interest to both parties-If Nanking will take a similar view to that quoted above and will shupe their demands accordingly, The Fondition of Wei-hai-wolon October, Int. of last year and the agreement for handing back. the British Concession at Amoy

recovery of foreign-controlled tarxi- tories. A demand is reported to be. on foot for the rendition of the remaining foreign concessions at Hankow. regard the supreme. question of the status of Shanghai, the only event to record-is the addition) of twn more Chinois members to the Municipal Council of the International- Settlement, teringing their numbers' from three to five. The report under preparation by Mr. Justice Feetham, who has devoted the past year tó his study of the conditions, will noʻdoubt: greatlył nanląt the Council in attack- 'ing the serious problems which - the rapid growth of Bhanghát” and the political developments of the last few years have brought Into bèlrig and will also, wo muy hono, help-in bring- ing into accord Chinose and foreign views. I think that I should not be wrong in saying that during the last year or so, the state of feeling haa **(Continued Overleaf),

the Chinese Government have rightly put, In the forefront of their programmes of national reconstruc-already tion, advanced little under the condi tians prevalling last year. Noweon struction wits confined to the plancer Iines in Manchuria which are boing alowly but steadily pushed forward. As regards the depleted rolling-block; replacements have, probably at most kept pace with the wastage due to military usage. The British Boxer Indemnity settlement promises, how- ever, substantial benefits to China's railways. According to the terms of the Bil sonie £7 millena-half of It rendy money-will be spent in the United Kingdom for the purchase mainly of railway material while most of the balance of £4-militon will by free to be used for railways and other public works, though the whole amount is regarded as an investmont eventually recoverable from profits to be used and fund for education: