e 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:--

Present conditions in China are aptly illustrated by what is
happening in one of the great salt revenue stations on the
Yangtsze, near Chinkiang. That portion of the Chinese fleet
faithful to the Central Government--the better half went over to