82
THE DECLINE IN THE RATE OF
INTEREST.
[January 30, 1896.
THE HONGKONG WEEKLY PRESS AND
investor finds that while his income remains the Red River and shipped direct to that undiminished (for dividends are not likely port. The construction of railways to sup to go down) his capital has been augmented. plement the water carriage is urged, and The late Lord BEACONSFIELD once referred the importance of promptitude in the to the chemical trade as a test of commercial inatter, because France is threatened with prosperity, and Mr. GLADSTONE on a certain being outflanked at Yunnanfu and fore The Chungking occasion recommended jam to the attention stalled at Chungking. of his hearers. Following these great minds route via Laokai, Yunnanfu, and Suifu, can, let us look at ice. Ten years ago a person it is contended, compete with the Yangtsze investing $1,000 in the stock of the Hong-route, and when it is exploited "it will be kong Ice Company, Limited, received a return of 860 per annum, while if he has kept his holding to the present time he has the satisfaction of receiving a return of more than $150 and knowing that if he wishes to realise he can get $2,200 for the $1,000 in- vested ten years ago. We do not think the investor has much to complain of in that position. But, Mr. SCHLOSS would say, in- vestment in ice shares is speculation and the professional man dare not speculate lest his daughters should starve.' There we come to a question of terms: where does in- vestment end and speculation begin? That would be a difficult question to answer, but it was never more true than in the present day that money makes money, provided its use is regulated by common sense and original adoption
liberal minded view. So much had "the country discretion. Those for whom
has been taxed for years in order been said of the importance of the Red to make them richer while they are River route that when the conquest of asleep" are in rather a bad way, but if Tonkin was completed it was deemed desir they choose to wake up and take an activeable to show to the world that there really was some trade upon it, also that trade part in the direction of their capital there is abundant room for its remunerative em- should be diverted from the West River
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impossible for the rivals of France to "exclude her from the markets of the south "and west of China." It may be re marked that there has never been any idea of excluding her from those markets as open to and all existing routes are her as to any other nation. The idea of exclusion is exclusively French, the great aim and object of our Gallic.neighbours being to shut out all trade but their own from the countries which fall under their administration. An exception, however, has been made in the case of the Red River route, on which the transit trade is to some extent encouraged for the time being. How long that policy will be continued it is impos- nor do we think its
In recent number of the Spectator appears an article replying to a letter by Mr. D. L. B. Semoss in the Investor's Review on the decline in the rate of interest and the hardship it brings to investors. Many residents in the Far East will feel a lively sympathy with the grievance exposed by Mr. SCHLOSS, for they are experiencing it in their own per- Less than thirty years ago anyone in thi-
part of the world might count upon Aiving twelve per cent. on his money with price security. To-day the Banks will only give him four per cent., and there are rams in the air of a further reduction Tumours which have an air of probability Seeing that the Banks all have more money one their hands than they know what to do with. The case of the home investors is stated as follows:-"The reduction in the “interest on good securities, which has been "ping on for thirty years, has excessively "Lassed and injured them, has, in fact, deprived them of all the benefit yielded
other classes by the reductions of “taxation, and of nearly all, if not quite all, "the advantage to be derived from the, gend fall in prices. They save and av; and as they save, the value of their *sevians is taken away from them by an toutoartie process which they can neither censure, In 1860, with a "larle unangement, an investor could obtain Hot the best security £500 a year for everyployment. If they succumb to the allure-route as far as possible. Just as France has
£10,000 he possessed; while at the present, in the same securities, he is lucky if he can *24 £275; and, indeed, he cannot get it wild running some risk. As the first et of saving in this country is to obtain ie dne, either for the investor or for those tyl, un he is hound to protect, the effect of ll of interest has been to reduce the d of thrift by one-half-a half which lucky investor cannot in any way The cause assigned for the el in the rate of interest is the paying of the national debt, which raises the ...icis, and as the latter act as the
i..
I'
kup
for
ter for all borrowers who have perfect to a roller, all gilt-edged securities rise pathy with them." Mr. Scutoss tthet for the benefit of investors the ment of the national debt should he d. The Spectator says Mr. SCHLOSS is Mag mousense; and the Spectator is right. Our contemporary has a good deal of yathy with the unfortunate investor, but lats nothing more valuable than sympathy to offer; there is nothing to be dona with national surpluses, it says, except to be honest and pay our debts with them, leaving investors to take care of themselves as best they can. "We entirely admit their grievance, which we have often pointed out for ourselves; but it cannot be re- medied, or even partially relieved, at the “expense of the nation." Nor is there any indication that the decline has nearly reached its limit. The national debt has ably shrunk from £838,000,000 to £660,000,000, and if the existing system continues it will within twenty years be reduced to £400,000,000 and be within measurable distance of total extinction. The large amount of capital being continu ally liberated from the national debt has to syck rehve tment elsewhere and must necessarily go on depressing rates.
But the lot of the investor is perhaps not quite so unfortunate as Mr. ScuLoss would represent it. For instance, the recent reduction in the rate of interest in the Far East has sent up the value of all good dividend paying stocks, so that the old
"
56
sible to say, Was due to any
used her protectorate over the Roman Ca- tholic missions in China as a means of poli- tical aggrandisement, although as a nation she herself is not imbued with any religious enthusiasm, so with regard to the trade routes to South-western China, having mo trade of her own, she is willing for the time being to encourage foreign trade in order to secure for herself a factitious commercial importance.
ments of speculations in gold mines and the like they will have to stand the risk, but there are plenty of sound investments to be had offering the prospect of increased dividends and an increase in capital value. No doubt there is an element of risk in all of them. Even consols themselves are not theoretically free from risk, ass shown by the fluctuations in their value caused by political disturbances; but practically speak- ing there are certain securities, with consols at their head, that are looked upon as absolute. On these the interest is likely to go on declining, and the investors who put their money in them will suffer propor-Hanoi Chamber of Commerce drew attention to the repeated and unnecessary examina tionately, but for those who are willing to incur the risk of employing their capital in tion of packages, damaging the contents and reproductive undertakings there was per- causing unnecessary delay. This complaint haps never a better field than at the present drew from the Customs authorities an official day; and wise legislation has already done contradiction, but we now find the Indépen- much, and may still do much more, to pro- dance supporting the complaint by facts and teet the investor in joint stock undertakings figures. fron fraud and mismanagement on the part
of the directorates.
THE, TONKIN TRANSIT TRADE.
The Tonkin papers are at present devoting a good deal of attention to the transit trade of the country, the possibilities of its de- velopment, and the onerous charges and Whatever harassments imposed upon it. the wealth of the country may be in itself, says the Indo-Chine Francaise, Tonkin should be considered above all as an admir able trade route giving access by the valley of the Mekong, and especially by that of the Red River, to Yunnan, which is itself an open door to the rich province of Szechuep and the Thibetan region. According to the Independance Tonkinoise, the principal object of the establishment of French dominion in Tonkin was to open to French trade the rich provinces of South China. The Indo- Chine dwells on what it considers the vast possibilities of the route and the prosperity which is to come to Marseilles when the valuable products of Yunnan, Szechuen, Kweichow, and Kwangsi are brought down
The declared policy of facilitating trade by the Red River route does not appear, however, to be very effectively carried A short time ago the out in practice:
(6
**
The grievance arising from the opening of zinc cases containing matches and tobacco, whose contents consequently suffered from exposure to the atmosphere, has it appears been removed, but our con- temporary says that is not all that is required, and goes on to deal with the question of charges, remarking that if these are heavy Actually, if trade will desert the route. "the information supplied to us is correct, "the land route by Kwangsi is hardly more 'costly than that by way of Tonkin, though 'it is much longer." As a sample of the charges imposed our contemporary takes a consignment of a hundred packages of tobacco. The transit duty is 2 per cent., or $14.55, but in addition it has to pay plombage duty at the rate of 19 cents per package, which gives $18.20 (the discrepancy of 80 cents is not accounted for), and other smaller charges, including dock and godown fees. $4 and statistics $3.64, the total of mis- cellaneous charges amounting to $28.26, or twice as much as the duty properly so called. When cases contain fragile articles which they the frequent handling to are subjected in observance of Customs formalities results in serious loss by breakage, lamps and
the course of the
$
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