1926

538
CHINA
Sterling loan Quotations
Keorganisation 1913—5 percent.:—
British Issue
French Issue
German Issue
Russian Issue
Grisp Loan, 1912—5 per cent.
. 70|
. 67
. 67
This chapter on finance would be incomplete without a reference to the preposterous-
currency reform promulgated in August, 1918, which contemplated the establishment
of a gold currency with the Yuan or dollar as basis. A gold note issue was to follow,,
the reserve for which was to be furnished by Japanese notes held in the banks.
All this was to be accomplished by the decree promulgating the scheme. Naturally,
the Group Banks protested, and the scheme was dropped. It is hoped that the erection
of the National Mint at. Shanghai may be a step in the direction of currency reform.
Budget, Statements in China have' yet to become the precise documents that
they are in other countries. During the autumn of 1919 Parliament framed a Budget
which showed a deficit of $ 120,000,000. To meet this it was proposed to reduce
military expenditure by $20,000,000 and to introduce reforms in the collection of taxes-
which would yield another $20,000,000. For the balance a loan was to be raised. The
corruption that has marked Peking finance for the last few years was demonstrated in
the spring of 1922, when Tung Kang, then acting Minister of Justice, published the
conclusions of a Loan Commission which had been appointed by the Government and
of which he was chairman. As the result of these disclosures, Mr. Tung was appointed
Minister of Finance, but, there being no money in the exchequer, he was as
unsuccessful as his predecessors. Hence, another commission was formed, known as
the Commission for the Study of Financial Problems, over which Dr. Wellington Koo
presided, for the discussion of ways and means whereby a fundamental re-organisation
of China’s finances could be effected.
To date the most complete statement of China’s financial position is contained in ;
the report by Dr. Lo Wen-kan prepared at the end of 1922. According to that report,. ;
which accompanied the Twelfth year Budget, the domestic loans as they stood in i
September, 1922, were $208,400,000 with security, and $249,000,000 without security; ]
while the foreign loans amounted to $1,029,000,000 secured and $240,000,000 unsecured, ,j
making a total of $1,726,400,000. The combined Chinese and foreign debts unsecured, '
the repayment of which is now due, amount to $180,000,000. The task of the :
Government to provide funds for their redemption is not an easy one. The unpaid
military and civil expenses have accumulated to the sum of $180,000,000 and it is next
to an impossibility to meet both obligations even partially at the present.
Against this national indebtedness—which appears huge in the Chinese eyes but to
the Americans or Europeans who are accustomed to deal with a matter of ten figures
means little or nothing—the Government can count as its monthly income a little over {
two hundred thousand dollars. Between January and September, 1922, it received, to ;
be exact, altogether $2,087,105, or $231,000 per month. The money came from the ;
mining, stamp, wine and tobacco and income taxes, and it may be noted that not a
cent was available from the Customs or Salt surplus, which had long been earmarked
for other purposes. Leaving alone for the moment the question of paying off the
heavy indebtedness, the monthly income of two hundred and thirty thousand dollars is-
far from sufficient even to meet the current expenses to maintain a semblance of
government and feed the soldiers.
The monthly current expenses of the Chinese Government are $9,200,000 according
to the latest budget, and, if strenuous efforts are made to reduce them to, say, $4,000,000,
it will still be hard to raise the deficit.
As the Government’s financial credit is very bad at home and partially abroad, even
to conduct a Ministry of Loans sucessfully is an impossible task. Whenever the Govern¬
ment is on the money market for loans, the market instantly becomes tight. In such
circumstances none cares to be Minister of Finance. Can the governmental credit be
restored This will rest with the military leaders. The Chinese people have money,
and if they can be made to have confidence in the promise of their rulers, ready cash to-
any amount, and even to the extent of paying off the national debt of China at one time,,
might be forthcoming.