110 



CHINA. 



pean money markets. In 1894 a loan of 1,635,- 

 000 was contracted at 7 per cent.; in 1895, one 

 of 3,000,000 at 6 per cent.; in 1895 one of 

 1.000,000 at 6 per cent, and one of 15,820,- 

 000 at 4 per cent.; 16,000,000 were borrowed at 

 5 per cent, in 1896 and 16.000,000 more at 4 per 

 cent, in 1898 to pay the last instalment of the 

 Japanese war indemnity. The whole war loan 

 was secured on the maritime customs. In 1899 

 a railroad loan of '2,300,000 was contracted, to 

 pay which the earnings of the railroad were 

 pledged. The Boxer uprising and consequent in- 

 vasion of Pechili by the powers resulted in more 

 than doubling China's liabilities. An indemnity 

 to be divided among the powers for the expenses 

 of the occupation and damage done to foreign 

 property and injury to foreigners from acts of 

 the Boxers was agreed upon on May 29, 1901. 

 China promised to pay the sum of 450,000,000 

 taels, which amounts to 64,000,000. It is a 

 gold debt payable in 39 annual instalments on 

 Jan. 1 of each year, with interest reckoned at 4 

 per cent. The interest and sinking-fund average 

 37,659,000 taels, or 5,120,000 per annum. The 

 portion of the maritime customs not appropri- 

 ated for other debts are pledged as security, and 

 the pow r ers agreed that these should be increased 

 to 5 per cent, ad valorem, ultimately to be con- 

 verted in specific duties. The native customs 

 that are administered by the Maritime Customs, 

 namely, the likin or transit duty within 16 miles 

 of any of the open ports, are included in the 

 guarantee, and also the salt gabel not other- 

 wise appropriated. A commission at Shanghai 

 receives the assigned revenues each month. The 

 annual amount to be handed over for the pay- 

 ment of debts out of the proceeds of the mari- 

 time customs is 5,770,000. The indemnity debt 

 is payable in gold at the exchange rate of 3s. to 

 the tael. It is divided into 5 series: A, 75,000,000 

 taels, paying from 1902 interest and sinking-fund 

 amounting to 3,829,500 taels; B, 60,000,000 taels, 

 paying 2,400,000 taels interest and from 1911 till 

 1940 a sinking-fund which increases the annual 

 payment to 3,469,800 taels; C, 150,000,000 taels, 

 paying 6,000,000 taels interest, increased by a 

 sinking-fund from 1915 to 9,384,000 taels; D, 50,- 

 000,000 taels, paying 2,000,000 taels interest, in- 

 creased from 1916 to 3,200,500 taels; E, 115,000,- 

 000 taels, paying 4,600,000 taels interest and a 

 sinking-fund from 1932 which increases the an- 

 nual payment to 15,466,350 taels. For the first 

 nine years the annual payments on all the series 

 amount to 18,829,500 taels per annum; for the 

 next four years, 19,899.300 taels; for the next 

 year, 23.283,300 taels; for the next sixteen years, 

 24,483,800 taels; for the last nine years, 35,350,150 

 taels. The payments were so adjusted that the 

 gold debt payments of China would be evenly dis- 

 tributed over the whole period of thirty-nine years, 

 varying little from year to year. The debts in- 

 curred before the indemnity debt and secured on 

 the imperial customs and likin required for 1902 

 the remittance of 23,600,000 taels, making with 

 the indemnity debt a total payment of 42,429,500 

 taels. The payment of interest and sinking- 

 fund on the existing debt decreases to 22,800,000 

 taels in 1811, to 19.400,000 taels in 1915, io 

 18.500,000 taels in 1916, to 7,500.000 taels H 

 1932. and will be 5,900.000 taels in 1940, when i":s 

 last instalment of the indemnity is paid. The 

 total annual charge for foreign debt in that year 

 will be 41.250,150 taels. In no year does it 

 reach 43.000,000 taels. This scheme was pre- 

 sented by the Chinese at the peace conference 

 as the easiest for China to bear, and was accepted 

 by the ministers of the allied powers. The ways 



and means of finding gold for the payment of 

 nearly 19,000,000 taels in addition to between 

 23,000,000 and 24,000,000 taels required each year 

 for the existing debt the ministers did not sug- 

 gest, except that in the commercial treaties to 

 be concluded a revision of the tariff was prom- 

 ised. They insisted that the indemnity should 

 be reckoned in gold at the current rate of 3s. to 

 the tael. The immediate increase in the mari- 

 time customs duties under the treaty to an ef- 

 fective 5-per-cent. ad valorem was calculated by 

 experts to give an increase of 2,500,000 taels in 

 the yield. The salt gabel and the native cus- 

 toms, duties to be collected from the junk trade, 

 were considered uncertain resources, capable of 

 producing 11,000,000 taels a year if it could be 

 collected. The provincial treasuries, however, 

 would be deprived of a large proportion of their 

 accustomed revenues, and the result would be 

 either increased levies by the mandarins or reduced 

 remittances to Pekin. The Chinese Government 

 notified the viceroys that till 1911 they would 

 have to send additional annual remittances, dis- 

 tributed in fixed sums among the provinces, 

 amounting to 18,700,000 taels a year. How these 

 additional sums are to be obtained w r as not sug- 

 gested. The Yangtse viceroys memorialised the 

 throne, stating that their existing revenues were 

 insufficient to meet the demands and asking for 

 instructions as to fresh taxation. Chang-Chih- 

 Tung requested a reduction of 30 per cent, in his 

 quota, pointing out the unreasonableness of re- 

 requiring the provinces to bear the entire burden 

 of the new debt, inasmuch as part is provided 

 for by increased import duties and the transfer 

 of native customs to the imperial Maritime Cus- 

 toms. The Government resorted to sales of 

 official rank throughout the empire as the 

 readiest means of obtaining an immediate addi- 

 tion to the revenue, and efforts were made to col- 

 lect arrears of the grain tax. Various schemes 

 of taxation were discussed, but an increase of the 

 foreign customs to 10 or 15 per cent, offered the 

 only hope of ultimate relief. Meanwhile the 

 viceroys and governors endeavored to screw ad- 

 ditional revenues out of the provinces to satisfy 

 the fresh demands, producing misery and discon- 

 tent, encountering resistance and evasion, and 

 provoking revolt. The immediate effect of the 

 increased foreign debt was to cause a fall of 10 

 per cent, in the price of silver, increasing in that 

 proportion the amount of the entire foreign debt 

 and diminishing the normal means of paying it 

 by checking foreign trade. There has been a 

 steady balance of trade against China for a 

 series of years, ranging from 10,000,000 to 35,000,- 

 000 taels, notwithstanding which the influx of 

 silver bullion has been constantly going on at 

 the rate of about 2,500,000 taels a year. Before 

 the Japanese war a much larger amount of sil- 

 ver sycee was absorbed every year. The annual 

 export of gold from China, according to official 

 reports, is 7,000,000 or 8,000.000 taels. The ex- 

 port trade was depressed, rather than stimulated 

 by the drop in silver. The cotton industry at 

 the treaty ports collapsed. The disturbance of 

 trade and exchange created alarm among inter- 

 national bankers and financiers. If the first 

 pressure of the indemnity debt stopped imports, 

 China would have to ship silver to pay the in- 

 stalments. The silver market was unaccounta- 

 bly disturbed before such a movement had taken 

 place, and when it did the effect would be disas- 

 trous. 



Production and Industry. The value of the 

 imports for consumption in 1899 was reported by 

 the Maritime Customs at 264,748,456 haikwan 



