At the same time, there are grave infringements of Chinese independence in the present position of the Customs, apart altogether from the fact that the tariff is fixed by treaty for ever.  Much of the revenue derivable from customs is mortgaged for various loans and indemnities, so that the Customs cannot be dealt with from the point of view of Chinese interests alone.  Moreover, in the present state of anarchy, the Customs administration can exercise considerable control over Chinese politics by recognizing or not recognizing a given de facto Government. (There is no Government de jure, at any rate in the North.) At present, the Customs Revenue is withheld in the South, and an artificial bankruptcy is being engineered.  In view of the reactionary instincts of diplomats, this constitutes a terrible obstacle to internal reform.  It means that no Government which is in earnest in attempting to introduce radical improvements can hope to enjoy the Customs revenue, which interposes a formidable fiscal barrier in the way of reconstruction.

There is a similar situation as regards the salt tax.  This also was accepted as security for various foreign loans, and in order to make the security acceptable the foreign Powers concerned insisted upon the employment of foreigners in the principal posts.  As in the case of the Customs, the foreign inspectors are appointed by the Chinese Government, and the situation is in all respects similar to that existing as regards the Customs.

The Customs and the salt tax form the security for various loans to China.  This, together with foreign administration, gives opportunities of interference by the Powers which they show no inclination to neglect.  The way in which the situation is utilized may be illustrated by three telegrams in The Times which appeared during January of this year.

On January 14, 1922, The Times published the following in a telegram from its Peking correspondent: 

It is curious to reflect that this country (China) could be rendered completely solvent and the Government provided with a substantial income almost by a stroke of the foreigner’s pen, while without that stroke there must be bankruptcy, pure and simple.  Despite constant civil war and political chaos, the Customs revenue consistently grows, and last year exceeded all records by L1,000,000.  The increased duties sanctioned by the Washington Conference will provide sufficient revenue to liquidate the whole foreign and domestic floating debt in a very few years, leaving the splendid salt surplus unencumbered for the Government.  The difficulty is not to provide money, but to find a Government to which to entrust it.  Nor is there any visible prospect of the removal of this difficulty.

I venture to think The Times would regard the difficulty as removed if the Manchu Empire were restored.

As to the “splendid salt surplus,” there are two telegrams from the Peking correspondent to The Times (of January 12th and 23rd, respectively) showing what we gain by making the Peking Government artificially bankrupt.  The first telegram (sent on January 10th) is as follows:—­