CONQUEST BY FINANCE.

Taranaki Daily News, Volume LV, Issue 77, 17 August 1912, Page 2 (Supplement)

CONQUEST BY FINANCE.

WHAT IS GOIXG OX IX OlllXA. Is it realised in England that a movement is on foot, started by great iinaneial syndicates, hacked by our own Foreign Olliee among others, which, if it is not checked, must assuredly bring about the breakup of China? asks a writer in an exchange.

When the Chinese Revolution began and the country lapsed into anarchy, tax-collecting fell into partial obeyance. The need for financial aid from outside soon became apparent. Small loans were talked of at first, and a little money was advanced. Then came a project for a loan of £42,000,000, afterwards increased to £60,000,000. Within the last few days the loan proposals have swelled to £200,000,000; but I believe the scheme which will be submitted to the public will be £60,000,000 at once and another £200,000,000 after a' very brief interval. The brains that are formulating these loan proposals are in Berlin and New York, but the bulk of the money will be obtained in England and France. The six Powers behind the syndicates are Great Britain, France, Germany, the United States, Russia and Japan. How can Russia and Japan lend money? Very simply. They borrow at a comparatively low rate in England and France and lend to China at a higher rate. On the operations as a whole the bankers get the profits and the six Governments get the responsibility. For be it understood that these are not really private loans, except when it comes to sharing flotation and other profits. The Powers, in effect, undertake to see that interest and sinking fund are paid. If China comes to grief they will have to intervene. It is not my intention to abuse the international financiers, either in Pekin or in the great capitals. They are out for business. They are handsome pickings for everybody concerned. The banks get their 5 per cent, on flotation and the handling of the loan transactions afterwards. But the business of some of us who are not money-lenders is to point out whither this extraordinary project may lead the Powers, and Great Britain most of all. If China were a stable State with a sound Government the proposed vast loan might not be considered excessive. She has huge untapped resources. Undoubtedly a wise expenditure of greats sums might develop her prosperity and enable her to face far more than her present liabilities. But the fact is that at the end of 1911 she owed £138,000,000, with another £10,000,000 to come, and hejr dependable securities were pledged up to the hilt. Much of the money advanced has been wasted, but a substantial proportion of it represents the Boxer indemnity.

What is the condition of China today? A great part of the Empire is in chaos, owning no allegiance to anybody. Two rival'generals, Yuan-Chang-hsun at Nanking, and Li Hung at Hankod, seem disposed to fight for their own hand. President Yuan's most trusted troops were recently in revolt and sacked portions of Pekin. The revolutionary army on the Yang-tse has repeatedly mutinied in sections. Some of the provinces show a strong inclination to repudiate the authority of the central Government. The n«w Ministry carries little weight and' is torn asunder by factious differences. Sun-yat-sen, who was never able to keep even Nanking in order, has gone into retirement to preach thee ruder forms of Socialism. The last six months have witnessed constant upheavals and frequent massacres. The loan negotiations at Pekin has been conducted almost within sight of burning villages and a ravaged peasantry.

is it not madness that at such a time the only remedy the Powers can press upon China is that she should treble her National Debt at a higher rate of interest? Is it fair to European investors that their Governments should so mislead them? The Chinese Administration is a hollow shell which may collapse at any moment. When the Japanese revolted they fought to establish the authority of their Emperor, but the whole essence of the Chinese Revolution is really repudiation of any central authority. The outer provinces are already dropping away. China should not be taught to replace her vanished revenue by loans. There is no guarantee that the money will he fruitfully expended. In the competition to thrust money on China' even the pretence of seeking guarantees has been steadily relaxed. Much of certain recent loans —I will not name, them—has been deliberately squandered. Some pretence may now be made at devising guarantees of economical expenditure. Men are sitting in Pekin now waiting for fat billets as overlookers. Their posts will be shams. It may be laid down as inevitable that any large sums lent to China in her present state will mostly vanish into the pockets of her own officials.

And after? lam coming to that. When China sinks under her load of indebtedness, or when the last vestiges of orderly government disappear, there will be a cry for intervention, and intervention will mean administration. It will be the case of Egypt over again. Europe poured money into tlie hands of Ismail while he was misgoverning a naturally rich country. When the liabilities became overwhelming, someone else had to step in and govern, and Ismail vanished, as the Chinese Ministry will vanish.

That is what the most far-seeing minds at the back of this movement are aiming at. They do not want to help China, but to smash her up; and the surest way to smash up China is to lend her vast sums which she cannot repay. We see at work in the Fast East the very newest form of conquest, that of conquest by finance. There will be a general scramble for territory. There will probably also be war over the spoils. A dual control failed in Egypt. How can six Powers control the internal administration of China? Six European Powers cannot even agree about the affairs of Crete.

There is only one rational course for the Western world to pursue regarding China, and that is to lend her only the monev she requires to pay her troops, and for other urgent necessities, until she has found some way of political salvation, established a stable Government, and got her tax-collecting machinery at work again. What has England to gain from acting as a cat's-paw in a subtle scheme for the ruin of China? Why should we find the money for China's undoing? We cannot control a large slice of China. We have neither the men nor the strength to spare. Our sole interests lie in the preservation of some form of independent government in China, and to that end we should do our utmost to prevent her from plunging into hopeless debt. The British and American peoples do not, want to see China broken up. and could stop this thine if they realised whither their Foreign Offices were dragging them.

If China passes under foreign control the chief nri7.es will fall to her nextdoor neighbor*. We shall have done the paying.