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