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issued at irregular intervals by the Government since the establish- ment of the republic, have no demonstrable relation to the facts of the situation, and no good purpose would therefore be served by quoting their respective figures, or by attempting to draw any con- clusions from them. It will be sufficient, as an example, to show the sources of revenue and headings of expenditure recorded in the budget for the fiscal year July 1916-] une 1917 (which balance to a tael) as follows :

EXPENDITURE

I. Ordinary.

Foreign Affairs S 4,446,548 Interfor. . 42,570,109 Finance. . 61,792,970 War. . Marine. _. Justice

7. Education

8. Agriculture and Commerce.

9. Communica- tions

10. Mongolia and Tibet.

REVENUE I. Ordinary. Land Tax. .$ 90,105,784

I.

2. Customs

3. Salt Gabelle.

4. Tax on Com- modities includ- ing Likin

5. Regular and Miscellaneous Taxes.

6. Regular and Miscellaneous Duties.

7. Income from Investments

8. Miscellaneous Income of Prov- inces

9. income of Cen- tral Administra- tion

IO. Income direct- ly received by Central Govern- ment.

73,056,663 96,767,010

42,719,194 34,768,432

5,448,686 2,083,401

5,101,531 1,374,648

36.584,311 $388,009,660

I.

2.

3- 4- 5- 6.

156,606.047 7,304,135 9-337,156 4,433,893

2,734,790 i,533- 6 6

1,044,216

$291,803,470

//. Extraordinary.

1. Land Tax. .$

2. Customs.

3. Tax on Com- modities

4. Regular and Miscellaneous Duties.

5. Income from Government In- vestments.

6. Miscellaneous Income of Prov- inces

7. Income of Cen- tral Administra- tion

8. Income direct- ly received by Central Govern- ment

9. Miscellaneous Income of Cen- tral Government

10. Loans

11. Advances from Banks

5,751.464 706,885

21,025

8,351

91,610

2,248,438

23-510,969

77. Extraordinary. Foreign Affairs $ 1,846,786

Interior

Finance.

War.

Marine

Justice

Education

Agriculture and Commerce 9. Communica- tions.

IO. Mongolia and Tibet.

3,"7,770

162,397,633

10,711-333

847,434

28,610

594,943

1,279,496

"6,833

94,2/6

8,100,000 24,291,468

16,187,305 84.828,924 Total Revenue $472,838,584

181,035,114 Total Expenditure $472,838,584

No budget was issued for the year July 1917-June 1918, a ministerial order having announced that the figures for the previous year would serve again. It is to be noted that the expenditure estimated under the heading of " Finance " includes the sum of $142,244,888 allocated for the service and amortization of loans; also, that the receipts and expenditure under the heading of " Com- munications " do not include the returns of Government railways or posts and telegraphs.

Customs Revenue. The revenues collected by the Maritime Cus- toms for the years 1916-20 were as follows:

Hk. Taels Sterling Average Exchange

1916 37,764,311 6,193,347 3s. 3Jd.

1917 38,189,429 8,244,541 4 3!

1918 36,345-045 9,606,828 5 3!

1919 46,009,160 14,566,000 6 4

1920 49,500,000 16,809,000 5 7!

By an agreement concluded between the Allied Powers and China in the autumn of 1918, the import tariff was revised and new duties fixed at specific rates, calculated to produce an effective 5%

ad valorem levy. The Boxer indemnity payments were also sus- pended for a period of five years dating from Dec. I, 1917.

The revenues reported to have been obtained from certain new taxes and dues, imposed by the Government since 1912, and in- cluded in the 1916-7 budget under the heading " Income directly received by Central Government," were as follows:

Stamp Dues

Tobacco and Wine Licence Dues. Tobacco and Wine Tax Income from Tobacco and Wine Sale Mining Dues

. $ 5,864,400 2,012,852 14,350,456 12,134,986 2,221,617

$36,584-3"

Salt Gabelle. The steady growth of the revenue collected and paid into the Consortium banks by the salt gabelle, reorganized under foreign supervision, is shown by the following figures:

1914, $60,409,676; 1917, $70,627,249; 1918, $71,589,603; 1919, $80,636,503.

In May 1921, however, the Times correspondent at Peking re- ported that in several provinces the military governors, unable to extract funds from Peking for the upkeep of their troops, were commandeering the local salt revenues, thereby greatly reducing the surpluses heretofore available for the use of the central Government. Whatever value the returns of provincial collections and re- mittances may have possessed under Yuan's dictatorship, as bases for future estimates, was completely nullified by the chaotic fiscal conditions which became chronic after 1916. Thereafter, the revenue of the central Government became confined to the surpluses of the Maritime Customs and salt gabelle, the profits of certain railways, and to loans ; the last-named source of income consequently became that upon which the administration chiefly relied to main- tain itself in power. From most of the provinces, none of the usual remittances to Peking were forthcoming; those Tuchuns of the North who still professed allegiance to the Government withheld their quota, generally on the ground that the disturbed condition of the country compelled them to devote all available revenues to the maintenance of their armed forces; in many cases they even de- manded subsidies from the central Government as the price of their continued loyalty. Under these circumstances, the Govern- ment contrived to maintain its position by means of loans of all descriptions, most of them advanced by Japanese banks and in- dustrial syndicates under conditions which have been severely criticized in China and abroad. At the end of 1918, the Japanese Government announced that, as further financial assistance to China would " add to the complications of her internal situation," no further loans by Japanese capitalists would be sanctioned. In 1919 and 1920, the financial difficulties of the Government became acute, in spite of the increased revenues of the customs and salt gabelle and the suspension of the Boxer indemnities ; they were met by desperate measures, such as the sale to local banks of Internal Loan (1912) bonds at almost any price, the rapid issue of large blocks of Treasury bills, and short-term loans of every kind. In July 1918, recognizing the necessities of the situation, and desiring to " strengthen China and fit her for a more active part in the war against the Central European Powers," the U.S. Government took the initiative of organizing a new Four-Power Consortium, for the purpose of making loans to China. After protracted negotiations, the Consortium was established (Oct. 1920) by the British, French, American and Japanese financial groups, for the purpose of " pro- curing for the Chinese Government the capital necessary for a programme of economic reconstruction and improved communica- tions " ; but inasmuch as the disbandment of the greater part of the Tuchuns' military forces had been recognized as a preliminary condition, essential to the undertaking of this programme, no im- mediate solution of the problem from this quarter was to be ex- pected. In Feb. 1921, at the " Chinese New Year " annual settle- ment of debts, the Peking administration only avoided a disastrous climax of insolvency by yielding to a demand by the associated Chinese banks for the consolidation of the Government's internal liabilities of loans, short-term debts and Treasury bills. The ar- rangement demanded by the banks involved the reorganization of certain revenues of the wine and tobacco monopoly, under foreign supervision and subject to the control of the inspector-general of customs, so as to provide for the regular service of the internal loans upon which amortization had been neglected. By virtue of this com- pact, the admhiistration was enabled to meet its most urgent liabilities, but inasmuch as its ordinary income was henceforward diminished by the amount of the funds thus allocated, it was evident that, failing means to restore normal fiscal relations between Peking and the provinces, the situation must remain fraught with serious danger. The nature of this danger, and of the disorganization pre- vailing, was significantly manifested by the terms dictated to the President of the republic and to the Ministry of Finance, in May 1921, by the three most powerful Tuchuns of the North, involving the allocation of certain railway revenues for the maintenance of their increased and increasing forces.

China's Indebtedness. At the end of 1916, the amount required to meet the service of China's officially stated foreign debts was