i ■i I Cornell University Library The original of this book is in the Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924014005312 HJUU.LS"""""""'"^''''^"'""^ ';f"'I'3] and local finance in China; a sfu 3 1924 014 005 312 STUDIES IN HISTORY, ECONOMICS AND PUBLIC LAW EDITED BY THE FACULTY OF POLITICAL SCIENCE OF COLUMBIA UNIVERSITY Volume XCIX] [Number 2 Whole Number 226 CENTRAL AND LOCAL FINANCE IN CHINA A Study of the Fiscal Relations between the Central, the Provincial, and the Local Governments BY CHUAN SHIH LI, Ph.D. InstrucUyr of Economics in Futan College, Shanghai Nero ffiork COLUMBIA UNIVERSITY SELLING AGENTS New Yokk : Longmans, Green & Co. London : P. S. King & Son, Ltd. 1922 H J I 'I i 4 Copyright, 1922 BY The Faculty of Political Science of CoLVMBiA University, New York MY FATHER SHU LING LI WHO HAS SACRIFICED SO MUCH F0» THE EDUCATION OF HIS SON THIS BOOK IS AFFECTIONATELY DEDICATBD PREFACE Influenced by the wave of political democracy of the Occident, China is now in the throes of agitation for pro- vincial and local self-government, which is virtually un- attainable without separation of the sources of revenue be- tween the Central and the Provincial Governments on the one hand and between the Provincial and the Local Governments on the other. This monograph is the author's humble attempt to solve this urgent politico-fiscal problem which has been absorbing, the attention of his conscientious compatriots during the last decade or two. The monograph is divided into seven chapters. Chapter I deals with the general organization of the different grades of goverrmient in China with special emphasis on fiscal ad- ministration. Chapter II reviews the past and the present financial relations between the various units of the Chinese polity. Chapter III deals with the attempts at the separa- tion of the local finances from the national finances. Chapter IV reviews cursorily the systems of national and local finance in England, Germany, Japan, and the United States, with a view of adopting the excellencies, and avoid- ing the demerits, of each. Chapters V and VI constitute the author's views as to what ought to be some fundamental recommendations for the politico-fiscal readjustments be- tween the Central, the Provincial and the Local Govern- ments in China. The last chapter deals with the fiscal relations between the Central Government and the leased territories and the foreign settlements, showing the financial bondage imposed on China by the various treaties. 4'=9] 7 8 PREFACE [47° The author hereby gratefully acknowledges his deep in- debtedness to the various authors from whose works he has constantly drawn information and specially to Mr. S. Y. Chia, the chief Financial Advisor to the Chinese Delegation at the Washington Conference, whose work on the Financial History of the Republic is now the standard reference book on Chinese public finance in that language; to Pro- fessor Arthur E. Suffern, formerly of Beloit College, who first interested him in the study of Economics in general and that of Public Finance in particular; to Mrs. Arthur E. Suffern and Professor and Mrs. J. F. Crawford, also of Beloit College, who were kind enough to improve the literary quality of this monograph; to Professor Jacob Viner of the University of Chicago who first suggested the topic for the author's Master's dissertation in that institu- tion; and above all, to Professor Edwin R. A. Seligman, McVickar Professor of Political Economy in Columbia University, under whose constant guidance, encouragement, inspiration, and sound teaching, this monograph has been able to attain its present form and scientific quality. > The author also wishes to express his further gratitude to Professor Seligman for proof-reading. Chuan Shih Li. iCoLUMBiA Univeksity, 'May, igzz. CONTENTS PAGE CHAPTER I The General Organization of the Central, the Provincial and THE Local Governments in China Before and After 1912, with Special Emphasis on their Fiscal Features A. Before 1912: 1. General Organization of the Central Government; a. Before Reorganization : 1. The emperor l6 2. The Grand Council of State (5 members) 16 3. The Grand Secretariat (4 members) 17 4. The six boards 17 5. The Board of Revenue : a. Two Presidents and Four Vice-Presidents 18 b. The fourteen departments 18 c. Other offices and bureaus 21 d. Summary 22 6. Other organs — censorate 22 b. After reorganization : 1. Effects of foreign contact, 1842, l86o, 1895, 1900 23 2. Reorganization of 1906 : a. Other boards 24 b. The Board of Finance (10 bureaus and 8 offices and the Commission of Customs Control) 25 3. Reorganization of (911 — cabinet 28 4. Conclusion 29 2. General Organization of the Provincial and the Local Governments : a. Governor-General and Governor (10 bureaus) 31 b. Six departments 31 c. Provincial Treasurer or Civil Commissioner (functions) 32 d. Grain Commissioner 33 c. Minor civil divisions : 1. The circuit 33 2. The prefecture 34 3. The independent departments, etc 35 471] 9 10 CONTENTS [472 PAGE 4. The district — most important political unit 3° 5. Subdivisions of district (Sze, Hsiang, and village) 36 f . Conclusion 3° B. After 1912: 1. General Organization of the Central Government: a. Cabinet system — ministerial responsibility 3° b. The Ministry of Finance : 1. Powers of the Minister of Finance Z9 2. The five bureaus 4° 2. General Organization of the Provincial and the Local Governments : a. Dual chief executive — military and civil — functions 42 b. Organization of Civil Governor's office (5 bureaus) 42 c. Three independent commissioners responsible to the Central Government — Commissioner of Finance 43 d. Tao-yun (three bureaus) 43 e. District magistrate (three bureaus), functions 44 CHAPTER II The Past and Present Fiscal Relations Between the Central, THE Provincial and the Local Governments A. The Past Fiscal Relations : 1. The provincial tributes in kind 46 2. The provincial contributions in cash : a. To the Court of Imperial Household 48 b. To the Board ot War 48 c. To the Board of Revenue 4g d. To defray central administrative expenses of different boards, courts, offices, bureaus, etc ro e. To meet indemnity payments 50 f . To meet foreign debt charges e I 3. Inter-provincial aids under the command of the emperor 51 4. Summary and criticism c r B. The Recent Fiscal Relations : 1 . Remnants of the old system gQ 2. Minor changes effected — centralization g . 3. The Experimental Local Self-Government Act gc 4. Absence of municipal indebtedness gc 5. Central control over provincial loans : a. Over domestic loans — nil g_ b. Over foreign loans : I . Political ground for control g» z. Fiscal ground for control g,. 3. Administrative ground for control go 473 J CONTENTS H PACE CHAPTER III Attempts to Separate Local Finance from National Finance A. Attempts before 191 2: 1. Financial reforms in the program for a nine-years preparation for the adoption of a constitution 70 2. Establishment of the Committee for the Reorganization of the Fi- nances of the Empire — 12 subcommittees — reports — opinions on separation of revenue 70 3. The budget of 1910 — separation of local and central expenses 72 B. Attempts after 191 2: 1. The proposal of Mr. T. C. Cheng to separate local finance from national finance 72 2. Appointment of « Special Committee of Investigation to consider Mr. Cheng's proposal — its recommendations 73 3. Attempts to carry out the committee recommendations 74 4. Revenue Separation Bill of 1913 — provisions 75 5. Revenue Separation Bill of 1913 — execution 79 6. Tentative separation of expenditures in 1913 80 7. Why attempts have failed 82 8. Movement for federation of self-governing provinces : a. Adoption and proclamation of two provincial constitutions .... 85 b. Constitutional movement in other provinces 88 c. Local self-government in Kuangtung — budget of Canton 88 9. Conclusion 91 CHAPTER IV The Systems of National and Local Finance of the Leading Countries and what can China learn from them A. Central and Local Finance in France : 1. Administrative bureaucracy 92 2. Both administrative and legislative control of local finances 95 3. System of additional centimes 96 4. Departmental and communal sources of revenue 97 5. National court of accounts — auditing of local accounts 100 6. Caisse d'Amortissement et des dep6ts et Consignations loi 7. Control of local indebtedness 102 B. Central and Local Finance in Japan : I. Administrative bureaucracy 103 ^. Additional rates on national taxes 105 3. Local taxes 105 4. Central subventions and local contributions 106 5. Legal limit on additional rates 107 6. Central control of local indebtedness 107 12 CONTENTS [474 PAOH C. Central and Local Finance in Germany : 1. Administrative bureaucracy I°7 2. Old system of separation of revenue : a. Imperial revenue (matricular contributions and assignments)... 108 b. Prussia — local administration 109 t. Prussia — separation of revenue 112 d. Prussia — subvention for roads 112 c. Prussia — control of local indebtedness 112 f. Prussia — audit of local accounts 113 3. New system of unification of revenue (since 1919) 114 D. American National and Local Finance : 1. Federation and local self-government I17 2. Separation of revenue between nation and states 117 3. Introduction of federal grants-in-aid Iig 4. Partial separation of revenue between state and localities 122 E. English National and Local Finance : 1. Local self-government 124 2. Grants-in-aid to secure central control of local finances and other matters 126 3. Practically no separation of revenue between nation and localities . . 127 4. Central audit of local accounts 128 5. Central control of local indebtedness 129 r. Conclusion — What can China learn from each of the above five systems of national and local finance? 129 CHAPTER V Some Fundamental Recommendations for the Political Read- justment Between the Central, the Provincial and the Local Governments A. Granting of Provincial and Local Self-Government in the National Con- stitution; 1. Federation of provinces— desirability and possibility, arguments for and against j 2. Provincial and local self-government is desirable and should be the goal of the political life of any nation or people (six reasons) 135 3. Provincial and local self-government is the only alternative for China's political reorganization— nation too extended— devolution tendency in England and France. o 4. Village self-government should be extended as a means of political education 142 5. Provincial and local politics should be made attractive in order to avoid the crowding of the cream of the nation in Peking or else- where 142 475] CONTENTS 13 PACE 6. Political division of labor should be observed 143 B. The unit of the local governing-bodies should be three-fold only 144 C. Provinces to formulate their own constitutions, to charter cities, and to enact general local government acts 144 D. Provincial Government Board and Local Government Board as ad- visory organs 145 £. Popular election of important political officers and rigid civil service laws for provinces and localities 146 F. Theory and practice 147 CHAPTER VI Some Fundamental Recommendations for the Fiscal Readjust- ment Between the Central, the Provincial and the Local Governments A. Separation of revenue is necessary for the efficient working of the pro- vincial and the local self-government 150 B. Complete separation of sources of revenue between the Central and the Provincial Governments : 1. All indirect taxes, national in scope and character, should be national taxes 151 2. Business taxes and other direct taxes to be provincial 152 3. Administration of income and inheritance taxes by the Central Gov- ernment 153 4. Land tax should be a provincial and local tax : a. Self-governing provinces and localities need it wholly 156 b. It is more suited to be a local tax 157 c. Provincial and local governments are more competent in admin- istering the tax, because of familiarity with the local conditions. 158 5. Title-deeds tax to be provincial 158 6. Recapitulation 1 58 C. Partial separation of sources of revenue between the Provincial and the Local Governments : 1. Exclusive local taxes and other exclusive sources of local revenue. .. 160 2. Exclusive provincial taxes and other exclusive sources of provincial revenue 160 3. The land, the income, and the inheritance taxes to be held in common. 161 4. Grants-in-aid. a. National — two reasons for its adoption in China 162 b. Provincial — same reasons 163 c. Basis for determining the amount of grants-in-aid 163 d. General principles to govern grants-in-aid 164 14 CONTENTS [476 PAGE D. Constitutional, legislative, and semi-administrative controls of provincial and local finances : 1. Control of provincial finances by national constitution 165 2. Control of local finances by provincial constitution 166 3. Board of Provincial Finances """ 4. Board of Local Finances ' °7 5. Control of local finances by provincial legislatures 168 E. Theory and practice (four obstacles) '7° CHAPTER VII Fiscal Relations Between the Leased Terkitoriks, the Foreign Settlements and the Central Government A. The leased territories : 1. A brief history 172 2. Their fiscal relations with the Central Government at Pekin — China receives no rent and has no power of taxation therein 173 B. The " Concessions " or " Settlements " ■- 1. Their significance 173 2. China has no right of taxation or of tariff fixing therein 1 74 3. The protest of the Treaty Powers against the stamp tax on the bills of lading, etc., in 1914 174 C. China's attempt to resume full sovereignty; the result of the Washington Conference, 1921-1922 175 Appendices 177 Bibliography 182 CHAPTER I The General Organization of the Central, the Provincial and the Local Governments in ■China Before and After 1912, With Special Eaiphasis on Their Fiscal Features Government finance is inseparably connected with governmental structure and organization. In order to un- derstand the fiscal relations between the different governing bodies in China, their structure and organization must first be studied. Before 1912, the year of the establishment of the re- publican form of government, 'China had always been an absolute monarchy, autocratic and despotic; and it was supposed to be thoroughly centralized.^ The whole empire was divided into three dependencies and twenty-two pro- vinces. The former were Mongolia, Tibet, and Ching-Hai or Kokonor, the land of the Kalmuck Mongols. The latter included Manchuria or the Eastern Three Provinces, the province of Sinkiang or the Chinese Turkestan, and China Proper or the eighteen provinces. 1 This description of political lOhina before 1912 must not be construed too literally. For, like political Great Britian, the form of the then Chinese government was without a name. IMr. A. R. Colquhoun, the once famous correspondent of the London Times, has well said: " If we call it a despotism, we are confronted with facts which would show it to be the most democratic polity extant, and if we call the Empire a federation of independent states, we are met by the absolute power vested in the Throne to remove the provincial governors at pleasure." (_China in Transformation, 1899, p. 170.) 477] IS 1 6 CENTRAL AND LOCAL FINANCE IN CHINA [478 The Emperor was the chief executive of the nation, gov- erning- the Celestial Empire by the Divine Will. He was the Son of Heaven (Tien Tze) to whose hands was entrusted the titanic task of ministering to the general wel- fare of the teeming millions of the divine image. Imme- diately under him were two councils. The one was called the Chun Chi Ch'u or the Grand Council of State. It was virtually, though not technically, the highest central estab- lishment, being in charge of the government of the empire and was established out of the Grand Secretariat or Nei Ko about 1730 A. D. during the reign of Yung Chin^ (1722-1735). It was originally a Military Council (the Committee on National Defense or the Board of Strategy) in which the first Emperor of the Tsing Dynasty discussed state affairs. Having become the Privy Council of the Emperor, most decrees were issued from this establishment, as well as orders concerning state administration. Its members were usually five in number, all appointed by the Emperor. They were called Grand Councillors. Two were Manchus, two Chinese, and one of the Princes of the royal blood officiated as President. These Grand Coun- cillors were usually recruited from the ranks of officials of the grade of Minister of State or Vice-Minister of State and they usually held substantive posts other than in the Council. Their duties were described as being " to write imperial edicts and decisions, and to determine such things as are of importance to the army and nation, in order to aid the sovereign in regulating the machinery of affairs ". " At an hour in the morning when the capitals of Europe are wrapped in slumber, the members of the Chun Chi Ch'u meet in the Forbidden Palace and discuss in the presence of the Son of Heaven, all affairs of state, from the most important imperial concerns down to the promotion and degradation of mandarins of the lowest ranks. When a 479] THE GENERAL ORGANIZATION 17 matter of ordinary administration is decided, the minute embodying the decision is forwarded to the Nei Ko for promulgation, while others demanding secrecy are entrusted to the Board of War for execution." ^ As referred to above, the other council was Nei Ko, literally the Inner Cabinet, or the Grand Secretariat.. It was technically the highest government establishment, having been created in the Ming Dynasty ( 1 368-1644) . Before the establishment of the Grand Council of State, early in the eighteenth century, the duties of the Grand Secretariat in- cluded the preliminary examination of reports from the Provincial Authorities, the making of recommendations as to these before presentation to the Emperor, and the com- position and promulgation of imperial decrees. Since then, its duties have been, for the most part, of a purely negative character, consisting in promulgating edicts and in keeping state papers. This Imperial Chancery was composed of four Grand Secretaries or Ta Hsueh Shih, two being Manchus and two Chinese, and two Assistant Grand Secre- taries, one being Manchu and one Chinese, who were usually also members of the Council of State, Ministers of State or Assistant Ministers of State.^ Next in importance to the two councils were the six: boards : namely, the Board of Revenue,'' the Board of Rites, 1 R. K Douglas, Society in China, 1901, p. 42. 2 Cf. R. K. Douglas, op. cit., p. 42. 3 In Chinese it is called Hu-pu whose literary designation was Nung-pu or the Board of Agriculture and Ming-pu or the Board of People, for in ancient 'China, as elsewhere, the government revenue was insepar- ately connected with the land, and hence agriculture and people. In the Hsia and Yin Dynasties {zzcf;-i76!j, 1766-1122 ,B. C), its president was called Ta-shih-tu, and its vice-president, Shao-shih-tu. In the Chou Dynasty (1122-249 B. C.), the former was called Ti-kuan or the Land Official. (Brunnert, Present Political Organization of China, 1910, pp. 118-9.) l8 CENTRAL AND LOCAL FINANCE IN CHINA [480 the Board of Civil Service, the Board of Punishments, the Board of Works, and the Board of War. The detailed organization of the boards other than that of revenue is immaterial for our purpose here. The Board of Revenue was presided over by two presi- dents or Shangshu, one Chinese and one Manchu, each with the same authority. Under the presidents were four vice- presidents or Shih-lang, two Chinese and two Manchus. The board was divided into fourteen subordinate depart- ments named after the provinces and corresponding to the number of governors-general and governors, five of which had charge of more than one province, and each of which had two or three directors or Land-chung, from three to sixj sub-directors or Yuan-wai-lang and two or three assistants or Chou-shih to the sub-directors. These fourteen depart- ments attended to the receipt of the revenue from each of the provinces each department corresponding with the treas- ury department in its respective province. Since the revenue was paid in sundry ways and articles, such as money, grain, manufactures, etc., the receipt and distribution of the various articles required a large force of assistants.^ The offices of the directors, the sub-directors, and the assistants were also equally distributed among the Chinese and Man- chus with an occasional exception in favor of the Manchus. The fourteen departments, with their respective powers and duties, were as follows :^ I. The department of Kiangnan: (a) To audit the accounts of the land tax of the pro- vinces of Kiangsu and Anhui and the accounts of the government silk manufactories in the city of Nan- king and in the city of Soochow, and 1 S. W. Williams, The Middle Kingdom, revised edition, 1901, vol. i. P- 423- 2 S. K Oien, The System of Taxation in China in the Tsing Dynasty, pp. 16-19. 48i] THE GENERAL ORGANIZATION ig (b) To prepare the annual reports concerning the amount of the balance charge of the land tax in certain provinces due to the loss incurred in inaccurate weighing of the specie or the tax in kind and con- cerning the amount of the arrears of the land tax in all the provinces. 2. The department of Chekiang : (a) To audit the accounts of the land tax of the province of Chekiang and the accounts of the government silk manufactories in the city of Hangchow, and (b) To prepare annual reports concerning the population of the empire and the quantity of the grain produce in all the provinces. 3. The department of Kiangsi : (a) To audit the accounts of the land tax of the province of Kiangsi, and (b) To report on the inter-provincial support for their military expenses. 4. The department of Fukien : (a) To audit the accounts of the customs duties of the commodities carried in the native sailing vessels to the city of Tientsin, (b) To audit the accounts of the land tax of the provinces- of Fukien and Chihli, and (c) To audit the accounts of certain unpr escribed ex- penses drawn from the treasury of the Board of Revenue. 5. The department of Hu-kuang : (a) To audit the accounts of the land tax of the provinces;^ of Hupeh and Hunan, (b) To audit the accounts of the regular or inland cus- toms revenues from within the province of Hupeh, and (c) To audi t the accounts of the local surtaxes on land,, ^alt, and tea in all the provinces. 20 CENTRAL AND LOCAL FINANCE IN CHINA [482 6. The d^artment of Shantung : (a) To audit the accounts of the land tax of the pro- vince of Shantung and of the Eastern Three Pro- vinces (Fengtien, Kirin, and Heilungkiang) , i (b) To pay the bonus to the military officers of the " Eight-Banners," ^ and (c) To control the salt and ginsen monopolies. 7. The department of Shansi : (a) To audit the accounts of the land tax of the province of Shansi. 8. The department of Shensi: (a) To audit the accounts of the land tax of the pro- vinces of Shensi, Kangsu, and Sinkiang, (b) To control the tea monopoly, and (c) To care for the disbursements of the imperial ad- ministration. 9. The department of Honan : (a) To audit the accounts of the land tax of the pro- vince of Honan, (b) To audit the accounts of the military expenses of the city of Sahara in Mongolia, (c) To investigate any report as ordered by the em- peror, and (d) To urge revision of the provincial reports on any kind of outlay not accepted by the Board of Revenue. 10. The department of Szechuan : (a) To audit the accounts of the land tax and of the regular or inland customs duties of the province of Szechuan, and (b) To collect reports on the conditions of crops in all the provinces. 1 Meaning the Manchu soldiers classified into eight groups according to four colors (yellow, white, blue, and red), each color being differen- tiated into the pure and the mixed, thus making eight altogether. 483] THE GENERAL ORGANIZATION 2 1 11. The department of Kuangtung: (a) To audit the accounts of the land tax of the pro- vince of Kuangtung. 12. The department of Kuangsi : (a) To audit the accounts of the land tax and of the regular customs revenues of the province of Kuangsi, (b) To regulate mining enterprises, and (c) To regulate coinage. 13. The department of Yunnan: (a) To audit the accounts of the land tax of the pro- vince of Yunnan, (b) To report on the collection of the mining royalty in the same province, and (c) To care for the transportation of the grain tributes from certain provinces to Peking. 14. The department of Kweichow: (a) To audit the accounts of the land tax of the pro- vince of Kweichow, and (b) To supervise the administration of both the regular and the maritime customs in the empire. Beside the above mentioned fourteen departments, there were three treasuries, one for specie, one for satin, and the third for sundry articles, such as dye-stufifs and stationery; four mints; sixteen granaries; a committee of appropria- tion; and a committee of cash payment for the soldiers of the " Eight Banners ". A bureau of currency was in charge of the mints; and a bureau of grain tribute, of the sixteen granaries. The three treasuries composed another bureau which was called the " Great Ministers of the Three Treas- uries." ^ There was one superintendent for each granary. Fourteen granaries were in Peking; and two in Tungchow. * S. W. Williams, op. cit., p. 423- 22 CENTRAL AND LOCAL FINANCE IN CHINA [484 To summarize the functions of the Board of Revenue, it might ibe characterized by stating that it had supervision and control of revenues and expenditures of the whole empire, that it authorized the levy of taxes and duties, that it apportioned the levies among the provinces and among the districts within each province, that it authorized the measurement of all the lands in the empire, and that it con- trolled the receipts and disbursements of the granaries and the treasuries. The board was moreover a court of appeal on disputes respecting property and superintended the mint of each province. So much for the principal organs of the central admin- istration. The minor establishments, such as the Court of the Royal Household Affairs, the Court of Colonies or De- pendencies, the Court of Imperial Sacrifice, the Court of Ceremonies, the Court of Imperial Entertainment, the National Academy, etc., were many and insignificant. One establishment, however, deserves our attention, namely, the Censorate or the Court of Censors (Tu-cha Yuan). It performed the important function of restraining the un- scrupulous conduct of the high functionaries in Peking as well as in the provinces — nay, it even had the power of memorializing the emperor himself about his negligences as a supreme ruler.^ Thus some of the most important functions of the legislature, such as interpellation and im- peachment not infrequently exercised by the occidental parliament or congress, were performed by this institution. It was composed of a body of men, fifty-six in number, of whom forty-four were provincial censors the remainder being in charge either of the metropolitan district (Peking and its suburbs) or of the Manchurian district. No doubt they exercised a restraining influence in all the financial 1 The censorate institution in China could be traced back to the Chin Dynasty or two centuries B. C. (Brunnert, op. cit., p. 7^.) 485] TtiE GENERAL ORGANIZATION 23 transactions of the central as well as the provincial authori- ties. Had China not come into contact with the Western world with its tradition of change and innovation, the above out- lined general organization of the central administration of China might have remained unaltered up to the present. After the Opium War (July 7, 1839-August 29, 1842) and the war against England and France (1857-1860), China discovered that some sort of foreign office was necessary, and so the Tsung-li Yamen was created by an imperial decree in January, 1861. Realizing the increasing trade rela- tions between China and the foreign countries, a Superin- tendent of trade was installed in 1870. Lamenting the utter naval impotence of the Empire, Li Hung-chang, the well-known grand old man of Qiina, created and organized a navy under his own direction. In 1890 a Board of Ad- miralty was created in order to take the naval control out of the hands of the then suspected statesman. Being defeated by Japan in 1895, the wave for reform in China gained further strength; but was checked by the reaction of a powerful wing of the Manchu Royal family who were aroused by the so-called " battle of concessions " of 1898, waged on the soil of China among the greedy Euro- pean Powers. This reaction against reform and foreign aggression found its outlet in the famous Boxer Uprising in 1900. Tsung-li Yamen, being something like a subcom- mittee of the Grand Council of State, was no longer ade- quate to cope with the new situation in which China found herself after that regrettable event. So, in 1901, Tsung-li Yamen was abolished and instead, a Board of Foreign Affairs or Wai-wu Pu was instituted.^ In the same year, a Committee on Government Affairs 1 H. B. Morse, The Trade and Administration of the Chinese Empire, ZA ed., 1920, pp. 43-4. 24 CENTRAL AND LOCAL FINANCE IN CHINA [486 known as Cheng-wu Ch'u was created from among the two executive councils to examine the reports and memorials dealing with reforms, coming either from the officials or from the people. Through its recommendation, a Board of Commerce or Shang Pu was instituted in 1903, to take the place of the superintendent of trade. In the same year, realizing the importance of education in moulding the future destiny of the nation, a Board of Education or Hsueh Pu was also created. In 1905, the Committee on Government Affairs was re- organized and renamed the Committee of Ministers or Nei Ko Hui Yi Cheng Wu Ch'u whose members were composed of the Grand Secretaries, the Assistant Grand Secretaries, the President of the Council of State and the Ministers of the different boards, both old and new. Another committee of importance was simultaneously created to investigate the principles of modern politics and goverrmient and to draw up regulations for a constitutional government for China. This committee was known as the Committee on Investigation of Modern Politics and Government or Cheng-chih K'ou Cha Kuen. On November 6, 1906, an imperial edict on the reor- ganization of the central administration was issued. The edict retained the Council of State; left the Board ofi Foreign Affairs, the Board of Civil Service, and the Board of Education as they stood; amalgamated the Board of Army Reorganization, the Court of Imperial Stud, the Board of Admiralty, and the General Staff with the Board of War which was now renamed Lu-chun Pu or the Board of Army; renamed the Board of Punishments {Yin Pu) the Board of Justice {Fa Pu) ; renamed the the Grand Court of Revision {Ta-li Shih) the Court of Cassation {Ta-li Yuan) ; amalgamated the Board of Works with the Board of Commerce under the title of Nung-kung-shang Pu or the 487] "^HE GENERAL ORGANIZATION 25 Board of Agriculture, Industry, and Commerce ; created the Board of Posts and Communications or Yu-chuan Pu to take charge of the affairs relating to steamships, railways, telegraphs, and postal administration; renamed the Court of Colonies or Dependencies (Li-fan Yuan) the Board of Colonies or Li-fan Pu; simplified the organization of the censorate; promised to convene the Government Council or the National Assembly and to establish the Court of Audi- tors; renamed the Board of Constabulary the Board ofi Civil Adminstration or the Interior or Ming-cheng Pu to take charge of the local self-government, census-taking, sanitation, etc. ; amalgamated the Court of Imperial Sacrifice, that of Imperial Entertainments, and that of Ceremonies with the Board of Rites; and above all, for our purpose here, renamed the Board of Revenue {Hu Pu) the Board of Finance (Tu-chih Pu) in which the Council of Finance or Tsai-cheng Ch'u was included.'' ' The Board of Revenue was not only renamed, but also substantially reorganized. Its powers were enlarged so as to include the arrangement of state loans, the coiitrol of banks and the other financial institutions, etc. Instead of the territorial division of functions among the former four- teen departments of the board, its internal organization, since April 26, 1907, was based upon the principle of func- tional division. Its organs and their functions were as follows :° 1. The Council or Tsenr-cheng Ting. Its duties were to supervise the most important financial questions and to translate the financial regulations of foreign powers as well as works on Political Economy. 2. The Secretarial Office or Tsan^yi Ting. Its duties were 1 Brunnert, op. cit., pp. 97-8; see also A. Maybon, La Politique Chinoise, 1908, pp. 250-51. 2 Brunnert, op. cit., pp. 119-21. 26 CENTRAL AND LOCAL FINANCE IN CHINA [488 to compile the reports to the emperor, to draft the despatches, and to frame rules and regulations. 3. The Bureau of Land Taxes or Tien-fu Sze. It was put in charge of the levy and collection of land taxes, the exemption from or the postponement of payment of these taxes, and the colonization of the uncultivated lands, etc. 4. The Bureau of Tithes or Tsao-chang Sse. It was put in charge of the control of the grain tributes, their stor- age in the metropolitan and provincial granaries, their distribution to the people in time of need, and their payment in money instead of in kind. 5. The Bureau of Duties or Shui-ko Sze. It had super- vision of the income and expenditure of the native and the maritime customs, customs duties, excise on opium and wine, likin, duties leviable on mechanical and manu- factured goods, stamp taxes or duties, granting of cus- toms certificates, etc. 6. The Bureau of Excise or Kuen-ko Sze. It had the charge of the excise on salt, tea, and native opium, and the consolidation of measures for the monopoly of the last mentioned article, etc. 7. The Bureau of Currency or Tung-fu Sze. It super- intended the provision of gold, silver, copper and tin for currency and the conversion of the bullion into coin, the making and printing of bank notes, the framing of regulations concerning the organization of banks and mints, and the maintenance of a sufficient supply of currency in circulation. 8. The Bureau of State Treasury of Ku-chang Sze. It had the power to supervise the income and expenditure of the State Treasury, to scrutinize the financial reports from the provinces as well as those from the imperial silk manufactories in Kiangsu and Chekiang provinces, and to reorganize provincial treasuries, etc. 9. The Bureau of Emoluments or Lien-fung Sze. It had 489] THE GENERAL ORGANIZATION 27 the charge of the payment of salaries and allowances to officials and princes and the issue of allowances to the Banner-men. 10. The Bureau of Military Supplies or Chun-hsiang Sze. It superintended the distribution of supplies to the mili- tary and naval forces of the empire. 11. The Bureau of Expenditure or Chih-yung Sze. It regti- lated the expenditure of funds provided by the province for use in the capital, as well as the expenditure on buildings, railways, mines, telegraphs and postal ad- ministration. 12. The Bureau of Accounts or Kwai-chi Sze. It had the power to audit the income and expenditure of the State Treasury, to prepare the budget, to determine the ex- traordinary expenditure, to revise accounts, etc. 13. The Statistics Bureau or Tung-chi Ch'u. Its duties are self-explanatory. ' 14. The Registry or Hsu-fa^chi-cha Ch'u. It was in charge of the reception of the incoming and issue of the out- going despatches, of looking after the matters of economy, and of keeping the correspondence with other establishments. It also controlled several other bureaus of the board. 15. The State Treasury or King-ning Ku where the funds, currency, bullion, and bank notes were stored. 16. The Coinage Office. 17. The Government Printing Office. 18. The Government Paper Mill. Closely connected with the Board of Finance in general and with the Bur-eau of Duties in particular though some- what independent of them, was the Commission on Customs Control or Shtd-wu Ch'u. This commission came into existence in 1909 in accordance with an imperial edict dated May 9, 1906, purporting, among other things, to con- trol all customs affairs in the Empire in order to ensure uni- 28 CENTRAL AND LOCAL FINANCE IN CHINA [490. formity of power. This commission still exists and con- trols all the Chinese and foreign employees of the Customs. The administrative reorganization of 1906 soon proved to be inadequate to meet the new situation. Another im- perial decree was issued on May 8, 191 1, about three months before the outbreak of the Revolution. It abolished the Nei Ko or the Grand Secretariat, and substituted the Pi-teh Yuan or Privy Council to which the emperor could turn for advice on various affairs of government.^ It also abolished the Committee of Ministers.^ Instead, the cabinet system was adopted. The cabinet was to be com- posed, of (i) the Prime Minister or the President of the cabinet, (2) the two Vice-Presidents of the cabinet, (3) the Minister of Foreign Affairs, (4) the Minister of the In- terior, (5) the Minister of Finance, (6) the Minister of Education, (7) the Minister of War, (8) the Minister of Navy," (9) the Minister of Justice, (10) the Minister of Agriculture, Industry and Commerce, (11) the Minister of Posts and Communication, and (12) the Minister of Colonies or Dependencies. They were the emperor's near- est assistants in the government of the Empire, especially) the Prime Minister who had personal access to the throne, if occasion demanded it. The questions coming within the scope of the cabinet were as follows : (1) Codes of laws, official systems, edicts and imperial commands. ^ Brunnert, op. cit., p. 525. "The Grand) Osuncil was abolished in August, 1910. (C H. Ktio, History of the Provisional Government of the Republic of China 191 7, P- 10.) « The Board of Navy was created in (August, 1910, together with the General Staff out of the Board of Army. (C. H. Kuo, op. cit., p. 10.) 49 1 J THE GENERAL ORGANIZATION 29 (2) Estimates and the budget. (3) Extraordinary expenditure. (4) Treaties and important diplomatic negotiations. (5) The promotion and degradation of officials holding posts to which appointment was made by imperial edict. (6) Disputes between Ministers with regard to authority. (7) Matters referred to the cabinet by edicts and re- quests and petitions from the people, submitted through the National Assembly. } (8) Important administrative affairs of the various ministries. (9) Matters which by law must be transmitted to the cabinet. ! (10) Matters which the Prime Minister or a Minister of a Ministry concerned considered such as should be discussed by the cabinet. Such were the central administrative and fiscal systems before and after the reorganization prior to the advent of the new-born republic. They may be characterized as a typical example of the check-and-balance system in govern- ment. From the heads or presidents of the Board of Revenue — and, in fact, of every board — ^to the subdirectors of the departments, bureaus, or offices, there was everywhere a system of check and balance between the Chinese and the Manchus, resulting in lack of coordination between the de- partments, bureaus, or offices, inconsistency in fiscal policies, and, therefore, confusion of taxation in the different pro- vinces. It may be further noticed that in the functions of the fourteen departments, there abounded such words as "audit", "control", "supervise", "care for", "regu- late ", " investigate ", and " urge revision ". As a matter of fact, the central control and supervision over the pro- 30 CENTRAL AND LOCAL FINANCE IN CHINA [492 vincial finances was only nominal and superficial, largely due to the vast extent of the country and to the lack of adequate means of communication and transportation. ; After the administrative reorganization of 1906, there was accomplished some centraUzation of authority. The check-and-balance system between the Chinese and the Man- chus was done away with, although the portfolios of the ministry were equally distributed between the Chinese and the Manchus who usually had the first choice of the more fat and important ones. The functional consolidation over against the former territorial diffusion particularly deserves our attention. The defect lay rather in the fact that the functional consolidation did go far enough. Take the Board of Finance for example. The Bureau of Land Taxes, that of Tithes, that of Duties, and that of Excise could be combined into one bureau, inasmuch as they all dealt with one function, taxation. So it was With the Secretarial Office and Registry. The Coinage. Office should be combined with the Bureau of Currency. The Bureau of Emoluments, that of Military Supplies, and that of Ex- penditure should be amalgamated into one Bureau of pay- ments under the direction of a paymaster-general. And so it was with the Bureau of State Treasury and that of; Accounts; the latter should absorb the former. Further- more, one important function of a modern state was not even mentioned, public credit. The bureau of loans was not in existence until the republican era. As regards the central control of the provincial finances, the Bureau of Land Taxes, that of Tithes, and that of State Treasury all had their role to play, especially the last mentioned. The Bureau of State Treasury was empowered to " scrutinize the financial reports from the province .... and to reorgan- ize provincial treasuries, etc." That power, however, as was the case with the fourteen departments of the Board of 493 J THE GENERAL ORGANIZATION 31 Revenue before the administrative reorganization of 1906, existed in name only, inasmuch as the central exchequer for obvious reasons never was able to exert much influence on the provincial authorities during the Tsing Dynasty. This brings us to a discussion of the provincial and local political organizations of the Chinese Empire before the establishment of the republic in 191 2. The chief executive of a province was the governor ap- pointed by the emperor. His powers varied, depending upon the circumstances. In absence of the viceroy or the governor-general (Chung tuh or Chih-tai) who was also appointed by the emperor and who controlled all provincial affairs, both civil and military,^ the governor was as power- ful as the viceroy. The Chancery of the governor (or the governor-general when he was concurrently the governor of a province) was composed of ten bureaus :^ Bureau of Foreign Affairs, Bureau of Civil Affairs, Bureau of Mili- tary Affairs, Bureau of Finance, Bureau of Education, Bureau of Ceremonies, Bureau of Personnel, Bureau of Justice, Bureau of Agriculture, Industry and Commerce, and Bureau of Posts and Communications. These ten bureaus were evidently modeled upon the central administra- tive reorganization. Under the governor's direct control were the six provincial departments : namely, the civil de- partment headed by a civil commissioner or Pu-cheng Sse; the judicial department headed by a judicial commissioner or An-cha Sse; ^ the educational department headed by an educational commissioner or Ti-Hsueh Sse; the gabelle de- ^ He was, ex officio, a President of the Board of War and an Associate President of the Censorate. The Ming dynasty commenced to appoint this official over the empire for itineracy. (Brunnert, op. cit., pp. 396-8-) 2 Brunnert, op. cit., p. 4012. sThe judicial commissioner also controlled the official couriers who existed long before the introduction of the modern postal system. 32 CENTRAL AND LOCAL FINANCE IN CHINA [494 partment headed by a salt commissioner or Yen-yun Sze; the commissariat headed by a commissioner of grain tributes or Liang-tao; and the excise department headed by a cus- toms commissioner or Kwan-tao who was in charge of the regular or inland customs only and had no jurisdiction over the maritime customs. The Committee of Reorganization or Shan-hou Ku, a deliberating and executive board of provincial government, was made up of three commissioners : namely the civil com- missioner, the judicial commissioner, and the salt commis- sioner/ The governor usually sought their advice. Of these six departments, we are here chiefly interested in the civil and the commissariat. The civil department was under the control of the civil com- missioner who had the charge of the civil service as well as the financial administration of the province, and on account of the predominance of the latter duties he had been called the pro- vincial treasurer. He had charge of the collection and dis- bursement of the provincial revenues. But his most important duties were the supervision of the collection of the land tax, for the collection of other important revenues was placed under separate officers. The collection of the gabelle was under the control of the salt commissioner and that of the native customs ^ under the customs commissioner. The grain tribute, which ... is a part of the land tax, was also placed under the charge of a separate official called the grain commissioner.' '^ H. B. Morse, op. cit., p. 51. ^ The native customs means the regular or inland customs. " The customs excise are under the management of different grades of officers according to the importance of their posts. The transit duties levied at the excise stations placed in every town are collected by officers acting under the local authorities." (iS. W. Williams, op. cit., p. 444.) *H. L. Huang, The Land Tax in China, p. 112. 495] THE GENERAL ORGANIZATION 33 In spite of all these limitations, the civil commissioner oc- cupied a unique position in the provincial fiscal system of the Chinese Empire. He was responsible, in the first place, to the department of the Board of Revenue, which department bore the name of his province, for the collection and remittance of the quota of revenue assigned to his province. In the second place, he was held liable by the governor for the expenditures of the pro- vincial government. In the third place, he regulated and supervised the actual collection of the land tax by the district magistrate.^ He also compiled the decennial census for the Board of Revenue.^ The grain commissioner or commissariat was usually equal in rank to the provincial treasurer (or the civil commissioner). Of the eighteen provinces, there were twelve that had grain commissioners, the provincial treasurers attending to this duty in the other six. These commissioners had charge of the collection of the grain tributes collected whether in kind or commuted. For the eight provinces which paid the tribute in kind before the Taiping Rebellion there was also a grain governor (or Tsung tuh) who w'as equal in rank to the gov- ernor-general. He supervised the transportation and disposal of the grain collected in the eight provinces which are all adjacent to the Yangtze River. The actual collection of grain from the farmers was in the hands of the prefects and the district magistrates.^ The minor civil divisions of a province have now to be dealt with. Within each province there were several cir- cuits or Tao which were not administrative areas. In each 1 H. L. Huang, op. cit., p. 113. 2 Leong and Tao, Village and Town Life in China, 1915, p. 47. ^H. L. Huang, op. cit., p. 113. 34 CENTRAL AND LOCAL FINANCE IN CHINA [496 circuit there was a circuit governor or intendant (or Tao tai) who was more concerned with military affairs than, with civil, and acted as a connecting link between the civil officials and the military officers. The circuit governor also transacted the judicial business in his circuit/ He was ap- pointed by the emperor upon recommendation of the pro- vincial civil commissioner and the governor or the governor- general. Within each circuit there were several Fu or prefectures.* The Chinese prefecture should not be confused with the French prefecture. A Chinese Fu was not a French de- partment. The latter is an administrative unit, while the former was, like the French arrondissement, more a channel of communication than an administrative unit. An arron- dissement has the function of allotting among the com- munes their quota of the national and departmental taxes assigned to it by the general council of the department. A Chinese Fu had not even that duty.^ In short, a Chinese prefecture dealt more with the external relations of the unit than with its internal administration.* The prefect was appointed in a manner similar to that of the Tao-tai. 1 There were two kinds of intendant, the travelling and the standing. The former was appointed to look after certain special affairs, such as the salt monopoly, the foreign trade, the corn transportation, the water- ways inspection, and the like. The latter was a regular appointee and is referred to in this chapter. (iLeong and Tao, op. cit., p. 48.) 2 A circuit usually had jurisdiction over wo or three prefectures, one or two prefectures and an indlependent department or an independent sub-prefecture. The whole Empire included 214 Prefectures, 75 Inde- pendent Departments, 54 'Independent !Sub-prefectures, 139 Departments, 57 Sub-prefectures, and 1,381 districts. (iBrunnert, op. cit., p. 426.) 3 "According to the traditional theory, his (the prefect's) business is restricted to the works of the waterways, agriculture, and horse-breeding, transport of corn, farming by the soldiers, and the general administra- tion. But his functions are in reality much lighter, as in most cases he has magistrates to share his work." ('Leong and Tao, op. cit., pp. 48-9.) ■* H. L. Huang, op. cit., pp. 115-6. 497] '^HE GENERAL ORGANIZATION 35 Similar to Fu were the Ting or the Independent Depart- ments and the Chow or the Independent Sub-prefectures. The independent department (Chihli Ting) was usually smaller than a Fu and was governed, like the latter, by an official called Tung chih (Co-knower) directly under the control of the governor of the province. The dependent department or the mere Ting was generally smaller than the independent Ting and was governed by an official called Chih ting (KnoWer of Ting), who, like the district magis- trate, was under the direction and supervision of the pre- fect, inasmuch as dependent Ting formed part of a Fu. The independent sub-prefecture {Chihli Chow) was a civil division very similar to an independent Ting, entirely in- dependent of a Fu and was governed by an official also called Tung chih. The dependent sub-prefecture or the mere sub-prefecture (Chow) formed, like the dependent Ting, part of a Fu and its governor, Chih Chow, the knower of the dependent Chow, was, like the Chih-ting, under the jurisdiction of the prefect. The difference between the independent Ting and the independent Chow was that the former was governed more like a Fu than the latter; but there was no real difference between the dependent Tin^ and the dependent Chow, inasmuch as they closely resembled the Hsien or district which we shall soon discuss. The Co-knower either for the independent Ting or for the independent Chow was appointed in the same manner as the prefect. The Knower either for the dependent Ting or for the dependent Chow was appointed through a process similar to that of district magistrate. The most important unit of local government in China was and still is the Hsien or district. It might be a division of a Fu, an independent Ting, or an independent Chow. In size it was like the French department, the English ad- ministrative county, or the American self -governing 36 CENTRAL AND LOCAL FINANCE IN CHINA [498 county. In function it bore more resemblance to the French commune, the Enghsh borough, or the American city than to the department, the administrative county, or the self-governing county. " As the commune is the oldest unit of local government in France, so is Hsien in Qiina. It has a very ancient origin, some writers believing it to be at least two thousand years old." ^ The Hsien was, and still is, the political, judicial, and fiscal unit of the government of the 'Chinese nation. The district magistrate or Chih-hsien (the knower of the dis- trict) had many duties. He was at once the legislator, the administrator, and the justice of peace of his district. He had charge of the collection of the land tax and the grain tribute, hence he was responsible both to the provincial treasurer or civil commissioner and to the commissariat. « In fact, so far as financial connections were concerned, he might be compared to the Tresoriers-payeurs-gSneraux of the French departments. He kept a complete record of lands within his jurisdiction and was the custodian of the taxes, and he was responsible to the provincial treasurer for the collection of the amount of taxes assigned to his district and might be cashiered for failure to collect the required amount. He was also the register of the deeds of his district.^ A Hsien was usually subdivided into several Sse or Hsiang or divisions. These parts of a district, called Sze, Hsiang, or whatnot, were placed under the control of Suin- kien Sze, circuit-restrainers or hundreds, who formed the last in the regular series of descending rank — ^the last of the "commissioned officers," if you will, in the rather com- lE. H. Parker, China, Her Diplomacy, History, and Commerce, and. ed., 1917, p. 184. 2H. L. Huang, op. cit., p. 116. 499] THE GENERAL ORGANIZATION 37 plicated hierarchy of officials of the old monarchical China.* The main function of Suin-kien of a Sse or Hsiang was to assist the district magistrate in judicial affairs. Beside this official and a regular force of trained subordinates, the district magistrate was further assisted, in each Chuang\ or village,^ by a semi-official person called Ti-pao (or Pao- chia) ^ who was also under the control of the village elder or headman called Hsianglao or Hsiang-chang * who was elected or rather nominated by his fellow-townsmen and confirmed in his position by the district magistrate. The village elder acted as the justice of the peace in his village and cared for many other things appertaining to the village self-government. The medium, however, through whom the district magistrate communicated with the village was the Ti-pao (or "local constable"). Among other miscel- laneous functions, this semi-official agent was " the official land surveyor of his village; had the "duty of verifying title and boundaries in every transfer of land " ; and was responsible for the prompt payment of the land tax and the grain tribute.^ After this cursory review of the provincial and local 1 S. W. Williams, op. cit., p. 441. 2 This is a subdivision of the Sze or Hsiang. It is also interchange- ably called the ward, the Pao, or the Tu. iSome villages are really towns, and several towns or villages make up a large town or city. ^ " This office had its origin in an ancient tithing system under which every hundred families constituted a iQiia, and each iChia was divided into ten Pai. Over each Pai was a headman elected by the ten families, and over the Chia was a headman called 'Pao-chia, or protector of the Chia, usually spoken of as Ti-pao." (E. T. C. Werner, China of the Chinese, 1919, p. 162.) * Sometimes they were called merely " manager." Village elders were not necessarily the oldest men in the village, nor the wealthiest or the literati. Above all, they were practical and experienced in human affairs. (A. H. iStnith, Village Life in China, 1899, p. 227.) s S. W. Williams, op. cit., pp. 500-551 ; see also Smith, op. cit., p. 228. 38 CENTRAL AND LOCAL FINANCE IN CHINA [50O fiscal system, together with the political system, of the old China, a few comments imay not be out of place. The fiscal system as described above was miserably inefficient. And this inefficiency was chiefly due i) to the attempt of the central government to over-centralize the fiscal system of the empire by appointing every official from the presi- dents of the Board of Revenue down to the district magis- trates, 2) to the short tenure of the appointments, thus los- ing the advantages of experience and expertness of adminis- tration, 3) to the appointment of a stranger to govern a locality whose conditions he did not know and whose dialect he could not understand, and 4) to the scanty allowance for the maintenance of the officials and their staffs and for the collection of taxes, thus inducing irregular accounting of the collection of the taxes, especially when control and supervision were wanting due to the vastness of the country and the lack of the means of communication. Social and political institutions change but slowly. China could become a republic in name overnight in 191 2, but she could not change her old political system entirely and fashion it anew within a short period. A new political system must be implanted on the old, and take its place first in letter and only gradually in spirit. Since 19 12 the reorganization of the central govern- ment in China bears a close resemblance to the French cabinet system. The president is the representative of the nation and a figurehead. The prime minister is held re- sponsible to the national assembly ^ and is the real executive of the nation. He and his nine ministers constitute the cabinet or Kouwuyuan. The new word " ministry " has ibeen substituted for the old word "board". The nine ministries are the ministry of foreign affairs or Wai-chao ' It is composed of two houses : the Senate and the House of Repre- sentatives. The former has 274 members; the latter, 596. 501 j THE GENERAL ORGANIZATION 39 Pu, the ministry of the interior or Nei-wu Pu, the ministry of finance or Tsai-cheng Pu, the ministry of army or Lu- chun Pu, the ministry of navy or Hai-chun Pu, the ministry of education or Chiao-yu Pu, the ministry of justice or Shih-fa Pu, the ministry of agricuhure and commerce or Nung-shang Pu, and the ministry of communication or ■Chiao-tung Pu. Of these nine ministries, we are here chiefly interested in that of finance. The minister of finance, Hke the other ministers, is nominated by the premier and appointed by the president with the advice and consent of the Senate. He has a very wide range of power : a general oversight over all the financial affairs of the central government; control of its revenues and expenditures ; control of national loans, national currency and banking, government mono- polies, and the sinking funds; and supervision over the finances of all the provincial and local governing bodies.^ Under the minister are two vice-ministers who are nomi- nated by the minister and appointed by the president. Then follow the four councillors, five bureau heads, four secretaries, and scores of other assistant and minor officials.^ Besides the general secretary office (Chung-wu Ting), the minister and vice-ministers of finance are further as- sisted by five bureaus : namely, the Bureau of Taxation (Fu-shui Sze), the Bureau of Accounts (Kwei-chi Sse), the Bureau of Currency (Chuan-bee Sze), the Bureau of Loans {Kung-tzai Sze), and the Treasury {Koo-chang, Sze). The duties and powers of the five bureaus are respectively as follows : * 1 Fa Kwei Lei Pien (^Classified Laws and Ordinances of the Republic ftf China) : vol. i, part A, division ii, p. 49. Law enacted on Mar. 11, 1912. 2 Ibid., p. SO. 3 Ibid., pp. 50-52. ,/ 40 CENTRAL AND LOCAL FINANCE IN CHINA [502 1. Bureau of Taxatiov^to take caxe of and to control and supervise the collection of na- tional taxes, to keep land registries, to investigate, audit, and analyse the accounts of national taxes, to take care of the non-tax receipts under the jurisdiction of the ministry, to supervise the revenue receipts of the provincial and local gov- erning bodies, etc. 2. Bureau of Accounts — to prepare general and special budgets, to register and scrutinize the esti- mated accounts of all the govern- mental units of the central gov- ernment, to compile reports of annual receipts and expenditures, to keep account of funds and public properties, to supervise the budgetary estimates of the provincial and local gov- erning bodies, etc. 3. Bureau of Currency — to investigate the existing conditions of the national currency, to study, formulate, and recommend schetties of currency reform, to estimate the approximate amount of currency the nation needs, to keep infortned of the world monetary situation and the inter- national movement of specie, to supervise the mints and banks, to issue bank note, inspect specie reserves, etc. 503] THE GENERAL ORGANIZATION 41 4. Bureau of Loans — to float and control national loans, to redeem and pay interest on national loans, to keep full record of the bonds, regis- tering the transfers, to keep statistics of the national loans, to study, formulate, and recommend methods to improve the national loan policy, to issue treasury notes and to provide for their retirement, etc. 5. The Treasury — to take care of all the receipts and ex- penditures of the central government, to inspect and scrutinize all the warrants or orders of payment, to control the national treasury and to keep its accounts and statistics, to control government deposits in fiscal agency banks, to supervise the officials engaged in re- ceipts and payments of money, to take care of sinking funds, trust funds, etc. Judging from the above description of the organization of the ministry of finance since 1912, it is evident that the old system of check and balance between the Chinese and the Manchus has completely disappeared, that the doctrine of functional consolidation has been carried out to its logical conclusion, and that the increasing importance of public credit in the field of modern government finance has been realized and stressed in establishing a special bureau to take charge of national loans. Efforts have also been made to control the provincial and local finances, as is evidenced by the functions of the three out of five bureaus ; but the system of communication and transportation in China remains practi- 42 CENTRAL AND LOCAL FINANCE IN CHINA [504 cally the same as was the case during the monarchical re- gime, and its ideal form is still a long way from realization. The system of the provincial and local government has practically remained the same since 191 2 as before. There are two chief executives for each province, one civil gov- ernor (Sun-chang) and one military governor (Tu-chun). Each is supposed to exercise his authority only within his own sphere of jurisdiction. But owing to the political up- heavals which are more or less inevitable after a great political and social change, the military governor has not infrequently trespassed, encroaching upon the prescribed authority of the civil governor which is to look after the affairs of the civil and police administration of the province and to supervise the financial, judicial, and local administra- tion of the province. Both governors are appointed by the president through the recommendation of the cabinet in common and in particular through that of the minister of the interior and that of army respectively. The military governor has usually more than two divisions of soldiers under his control. He is nominally under the absolute con- trol of the president and the ministry of army, but actually he is more or less independent and not infrequently defies the orders of the central authority. The civil governor's office is divided into five bureaus : namely, the Bureau of General Affairs, the First Bureau, the Second Bureau, the Third Bureau, and the Fourth Bureau. The bureau of general affairs looks after the secretarial, police, financial, judicial and publicity affairs; the first bureau, miscellaneous affairs; the second bureau, civil ad- ministration; the third bureau, education; and the fourth bureau, industry. These five bureau chiefs are appointed by the president on the recommendation of the, civil governor with the approval of the prime minister. ; B'esides, there are three independent commissioners: the 505] THE GENERAL ORGANIZATION 43 Commissioner of Finance (or Tsai-cheng-ting-chang) , the Commissioner of Education (or Chiao-yu-ting-chang) , and the Commissioner of Industry (or Stih-ni-ting-chang) who are all appointed from Peking by the presidential man- date on the recommendation of the respective minis- tries. Of the three provincial commissioners, that of finance concerns us most. He virtually occupies the same position as that once occupied by the provincial treasurer or the civil commissioner of the late Tsing dynasty. Being an agent of, and directly responsible to, the ministry of fin- ance, he looks after the collection of all the national taxes in his province, except the maritime and inland customs and the salt gabelle; scrutinizes, analyses, and reports the pro- vincial budgets to the ministry; and supervises provincial and local indebtedness. The commission of finance is com- posed of three bureaus : the Bureau of General Affairs, the Bureau of Collection, and the Bureau of Expenditure.'; Each of the five territories has also a commissioner of finance.' The unit of Fu or prefecture has 'been abolished since 1912, and in its place the circuit has been reorganized. In- stead of being a link between the civil officials and the mili- tary officers as was the case during the late Tsing dynasty, the circuit governor or Tao-yun as he is now called acts as a channel of communication between the provincial authority on the one hand and the district magistrates on the other who perform in their districts to all intents and purposes, practically the same functions as formerly with the exception that most of the judicial and some of the 1 Fa Lin Ta Chuan (A collection of Laws, Presidential Proclamations and Mandates, Ministerial Rulings and Regulations, etc. of the Republic of China) : Group II, pp. 125-6. 2 The five territories are Kingshoa or the Metropolitan District, Jehol, CJiahar, Suiyuan, and Chuan-pian. 44 CENTRAL AND LOCAL FINANCE IN CHINA [506 legislative functions have been taken away from them. The office of Tao-yun is divided into three bureaus: the Bureau of General Affairs, the Bureau of Civil Administra- tion, and the Bureau of Education and Industry/ He is less a local administrator than a provincial agent to super- vise local affairs. He is appointed by the president on the recommendation of the provincial civil governor with the knowledge and approval of the prime minister. In contrast with Tao-yun, the district magistrate or Hsien-chih shih as he is now called is more a local adminis- trator than a provincial agent. Judicially, he is still the justice of the peace of his district ^ and in some interior and conservative places he acts concurrently as the prosecutor.' His salary fluctuates from $240 to $300 mex. per month according to the size and population of the district. His office is divided into three bureaus : the Bureau of Civil Ad- ministration, the Bureau of Finance, and the Bureau ofi Education.* The bureau of civil administration deals with such matters as the police, the citizen militia, the local self- government, the local chambers of commerce, the local agricultural associations, public charity and the factories or workshops for the poor. The bureau of finance deals with the collection of the national and local taxes — ^the latter are composed of the various additional rates on the former—- and of the special taxes for police, education and local self-government. The bureau of education deals with such affairs as the inspection of schools, encouragement for the establishment of educational institutions, investig'ation of the school age of the children in the district, apportion- ment of school funds, libraries, public lectures, etc. The 1 C C. Lin, A political and physical geography of Chekiang, pp. 115-6. 2iC. C. Lin, op. cit., p. 141. 2 H. Lin, The Present Administrative Law of China, p. 50. * C. C Lin, op. cit., pp. 117-8. 507] "^HE GENERAL ORGANIZATION 45 magistrate is directly under the jurisdiction of Tao-yun, and is appointed in a manner similar to that of the latter. So far the attempt at local self-government has not been successful, due chiefly to the constant political troubles ever since 191 2. This phase of the subject, in connection with our particular enquiry, namely, the fiscal relations between the different grades of governments in China, will be taken up later on. CHAPTER II The Past and Present Fiscal Relations Between, the Central^ the Provincial^ and the Local Governments A. the past fiscal relations A short description of the general and fiscal organization of the grades of governments in 'China both before and after 1 91 2 being given, we are now in a position to go into detail as to the past and present fiscal connections between those different governing authorities. Let us first take up the financial connections between the provincial authorities and the central government during the Manchu administration. As every state rests its first foundation on conquest,^ and as this was especially true of the extended oriental empires, the Chinese emperor was conceived to be the owner of everything and every person throughout the length and breadth of his empire. All the lands, of whatever kind, were his property. The persons owning these lands were but his tenants and as such, they had to pay rent or tribute to the landlord. Such, indeed, was the foundation and origin of the land tax, the grain tribute, or tribute of any other agricultural products and of any other manufactured articles. In the primitive stage of economic evolution when the money economy did not have its full sway as at pre- sent, payment in kind was the most natural procedure. 1 " . . . the iState, as a class state, can have originated in no other way than through conquest and subjugation." (F. Oppenheimer, The State, p. 14.) 46 [508 509] P^ST AND PRESENT FISCAL RELATIONS 47 What the emperor, his imperial household, and his army of officials needed was not money, but the consumable goods to satisfy their daily wants/ To take but a few instances : up to the late years of the Manchu dynasty, the Province of Chekiang annually paid tributes to the emperor in tea, satin, silk, lumber, wood — ( oil, fruit, etc; the Province of Hunan, lumber and wax or candles; the Province of Kiangsi, linen, tea, shrimp (dried), mushroom (dried), ink-stick, lotus, lotus flour, date, letter- paper, lumber, etc ; the Province of Kuangtung, incense, tin, glue, wax or candles, pears, lumber, kitchen utensils, etc.; etc. In short, every province had to pay tribute to the emperor in whatever commodity was its special and re- nowned product. With regard to rice, which is the greatest of all necessities for the Chinese people, every province was required to furnish some to the throne, although the Northern provinces, producing no rice, paid in lieu the grain tribute in wheat, millet, corn, etc. Since China's frequent contact with the West in the last three-quarters of a century, there has resulted a fuller commercial develop^ ment both within and without, and hence a wider application of money economy. As a result of inevitable economic evolution, all the tributes in kind have been commuted into money payments, especially sii^ce the advent of the re- public. In 1907 and 1908, the amounts of the commuta- tion payment of the province of Kuangtung, to take but one example, were 406,106 taels and 344,988 taels respec- tively.^ 1 " Dominion is not an end) in itself, but merely the means of the rulers to their essential object, the enjoyment without labor of articles of consumption as many and as valuable as possible." (Oppenheimer, op. cit., p. 244.) 2 Strange to say, these funds were not remitted to Peking by the same authority. In 1907, the civil commissioner of the province remitted 48 CENTRAL AND LOCAL FINANCE IN CHINA [510 The provincial tributes in kind, however, constituted but a very small fraction of the provincial support of the central government. The provincial authorities supported the Court or the Peking authority in many other ways, trans- acted on a pure cash basis. In the first place, there were provincial contributions to the Court of Imperial Household (Nei-wu Fu) for the specific purpose of meeting the pecuniary needs of the im- perial family. Again to take the Province of Kuangtimg for example, it contributed to this amount, in 1907 and 1908, 941,824 taels and 788,170 respectively.'^ In the second place, there were provincial contributions to the Board of War, inasmuch as this account dealt, in the main, with the national defense or military expenditures. In 1907 and 1908, Kuangtung, for another instance, paid 63.794 taels, the customs commissioner, 3142,313 taels, making a total of 406,106 taels. In 1908, the former remitted 49,662 taels, the latter, 295,326 taels, making a total of 344,988 taels. {Financial Report of Kuangtung, 1909, vol. ii, pp. 1-44.) 1 These were remitted by the following different authorities : 11)07 1908 a. By the Ctistoms Commissioner: to (a) iCourt of imperial household 200,660 tls. 200,660 tls. (b) Imperial commissary 89,934 " 57,200 " (c) (Summer Palace 40,000 " 40,000 " (d) Qii-hua Kuan 13,000 " — " (e) Imperial savings account 314,400 " 314400 " ( f ) Imperial gardeners' salaries .... 300 " 300 " Total 658,294 " 612,560 " b. By the Civil Commissioner 123,960 " 123,960 " c. By the Salt iCommissioner 51,650 " 51 650 " d. By the Bureau of Reorganization — for mausoleum expenses 107,920 " " Grand total 941,8124 " 788,170 " {Financial Report of Kuangtung, vol. ii, pp. 1-44,) 51 1] PAST AND PRESENT FISCAL RELATIONS 49 to this account 1,383,410 taels and 2,389,458 taels respec- tively.^ In the third place, there were provincial contributions to the Board of Revenue. In 1907 and 1908, the same pro- vince contributed to this account 210,910 taels and 499,900 taels respectively.^ 1 These were remitted by the following different authorities : 1907 1908 a. By the 'Civil Commissioner : (a) Pei-yang military reorganization.. 3314,010 tls. 338,800 tls. (b) North-iWestern defense 65,000 " 80,000 " (c) Defense of the realm 70,000 " 130,000 " (d) War chest 100,000 " 200,000 " (e) Famine chest 12,000 " 13,000 " (f ) Administrative expenses 150,000 " 250,000 " Total 731,010 " 1,011,800 " b. By the Customs Commissioner (admin- ministrative expenses, war chest, NorthnWestern defense, and Imperial body guards) 499,400 " 602,628 " c. By the iSalt Commissioner 153,000 " 203,000 " d. By the Bureau of iReorganization-navy " 572,030 " Grand total 1,383,410 " 2,389,458 " (Financial Report of Kuangtung, vol. ii, pp. 1-44.) 2 These were remitted by the following different authorities : igoT 1908 a. By the Bureau of Reorganization : (a) On seignorage 28,538 taels 22,431 taels (b) On sales of titles " 36,234 " (c) For the travelling expenses of special commissions abroad. 63,870 " 131,910 " Total 92,408 " 190,57s " b. By the Civil Commissioner 8,915 " 8,915 " c. By the Customs iCommissioner 103,245 " 103,151 " d. By the Salt Commissioner 6,342 " I97>259 " Grand total 210,910 " 499,90O " (Financial Report of Kuangtung, vol. ii, pp. I-44-) 50 CENTRAL AND LOCAL FINAXCE IN CHINA [512 In the fourth place, there were provincial contributions to defray the central administrative expenses including the purchases and supplies as well as the boarding expenses of the different staffs concerned, of the different boards (other than the Board of Revenue), departments, offices, courts, bureaus, commissions, schools, etc. in Peking. In 1907 and 1908, the same province paid on this account 507,672 taels and 821,531 respectively."- In the fifth place, there were provincial contributions to meet the indemnity payments ° contracted by the central ^ These were remitted by the following different authorities : 1907 igo8 a. By the Customs Commissioner : (a) To the Grand Secretariat, the Board of Foreign Affairs, etc. 80,130 taels 279,279 taels (b) To the special commissions abroad 318,896 " 342,850 " Total 399,026 " 622,129 " b. By the Civil Commissioners (to 17 different offices) 50,226 " 64,668 " c. By the Salt Commissioner (to 11 different offices) 10,264 " 9,632 " d. Ey the Bureau of Reorganization (to 9 different offices) 46,641 " 122,702 " e. By the Education Commissioner, the Industry Commissioner, and the Xan-hai District Magistrate 1,515 " 2,400 " Grand total 507,672 " 821,531 " These were remitted to the different recipients in Peking without the intermediation of the Board of Revenue. A few remittances were even without the knowledge of the latter. In the case of Kuangtung, there were six remittances unreported. {Financial Report of Kuangtung vol. ii, pp. 1-44.) 2 The Japanese Government, in 1895, exacted an amount of 230,000,000 taels from China as a result of the latter's defeat in the Sino- Japsnese War. In igoi, the eight Allied Powers exacted from China an amount of 450,000,000 taels as a result of the Boxer Uprising in 1900. (China Year Book, 1919, p. 348.) 513] PAST AND PRESENT FISCAL RELATIONS 51 authority with the foreign powers. In 1907 and 1908, the same province contributed to this account, remitting directly to the Customs Commissioner of Shanghai 2,928,396 taels and 3,049,281 taels respectively.^ In the sixth and last place, there were provincial contribu- tions to meet the foreign debt charges payable by the central government to the foreign bankers or syndicates concerned. In 1907 and 1908, the same province paid on this account 4,594,571 taels and 4,636,632 respectively.^ So much for the direct provincial contributions to the central government. There was, however, another type of provincial contribution which was indirect in that it was turned over to the needy province or provinces when ordered by the emperor. Looking at it from the viewpoint of the 1 These were remitted by the following different authorities to the Shanghai Customs Commissioner direct: 1907 1908 a. By the Civil Commissioner 2,458,071 tls. 2,470,089 tis. b. By the iSalt Commissioner 41,246 " 40,817 " c. By the Customs Commissioner 429,079 " 538,375 " Grand total 2,928,396 " 3,049,281 " {Financial Report of Kuangtung, vol. ii, pp. 1-44.) 2 These were remitted by the folloviring different authorities to the Shanghai Customs Commissioner direct: jpo7 1908 a. By the Civil Commissioner (for 3 subaccounts) 966,424 tls. 980,677115. b. By the Customs Commissioner (for 4 different subaccounts) 2,305,791 " 2,305,791 c. By the Salt Commissioners (for 2 subaccounts) 279,043 " 263^937 " d. By the Bureau of Reorganization .. . 440,000 " 440,000 " e. By the Bureau of Likin 603,313 '" 646,277 " Grand total 4,S94>S7i " 4,636,682 " {Financial Report of Kuangtung, vol. ii, pp. 1-44-) 52 CENTRAL AND LOCAL FINANCE IN CHINA [514 contributing province, it was nominally a kind of financial assistance given to a less fortunate province or provinces, but it was in fact of the same nature as the above six cate- gories of provincial contributions, the only difference being that it was directly paid to a needy province in order to save the trouble of the Board of Revenue in both receiving and remitting the said contribution. Looking at it from the viewpoint of the receiving province, it was a species of financial aid from the more opulent province or provinces ; but, at bottom, it was a central subsidy, pure and simple, the only difference being that the recipient received the sub- sidy direct from the province which should and would other- wise have remitted the contribution to Peking. Looking at it from the standpoint of the central government, it was a mere counterbalancing of a provincial contribution against a central subsidy. Whether the contribution was remitted to Peking or not, made no difference to the contributing pro- vince, in so far as it had to pay out a certain amount of money at all events. Whether the subsidy came from Peking' or elsewhere, it was all the same to the receiving province, in so far as it received a certain amount anyway. Whether the central authority received and remitted the very same amount of money, was of no consequence to Peking, in so far as it derived no ibenefit for itself from the transaction. In order to obtain some idea about this fiscal arrangement between the different provinces, let us take Kuangtung ^ and Yunnan for examples, the former as a contributing pro- vince and the latter as a receiving province. In 1907, Kuangtung " remitted to 1 The reason why Kuangtung is particularly favored here for illustra- tion is because the Financial Report of Kuangtung is the best and the most scientific of all the provincial financial reports. 'Financial Report of Kuangtung, vol. ii, pp. 45-53. 515] PAST AND PRESENT FISCAL RELATIONS 53 (1) Fukien (2) Hupeh (3) Kiangsu (4) Kuangsi (5) Tibet 113,800 (6) Yunnan 364,225 (7) Misc. provinces 218,182 5,000 tls. for famine relief 2,820 " naval office »xp. military expenses 5,000 92,. ~ postal administration Total 801,516 " In 1908, it remitted ^ to (i) Fukien, Hunan, and Kiangsi (2) Kangsu , (3) Kiangsu (4) Kuangsi (5) Kweichow 285,2:28 (6) Yunnan 1.13,400 (7) Misc. provinces 218,182 25,655 tls. for distribution of additional salt tax collected in Kuangtung famine relief naval office exp. military expenses 20,000 33,232 43,492 postal administration Total 739,189 " In 1909, Yunnan ^ received from ( 1 ) Hunan 230,000 tls. for operating expenses of the copper mines ' (2) Hupeh 654,000 " " military expenses (3) Inland Customs offices in several provinces. 260,000 " " " " (4) Kuangtung 260,000 " " " " (5) Szechuan 2,275,000 " " " " Total 3,679,000 " In general, we may conclude that ten provinces out of 1 Financial Report of Kuangtung, vol. ii, pp. 4S-53. 'Financial Report of Yunnan, pt. i, ch. i, pp. i.-ii. * In igo8, it received 62,444 tls. from Kiangsu and also a certain sum from Kiangsi. {Financial Report of Kiangsu, ch. xiii, pp. 17-20; also Financial Report of Kiangsi, pp. 1-30.) 54 CENTRAL AND LOCAL FINANCE IN CHINA [516 eighteen ^ forwarded such financial aids to the needy pro- vince or provinces under the command of the emperor, twelve receiving them," five both receiving and forwarding/ and five exclusively forwarding.* This system of both receiving and forwarding without striking a balance was established by the traditions and customs of mutual profit and protection among the Man- darins who frequently got fat through illegal handling of 1 Seven (Chihli, Fukien, Kansu, Kuangsi, Kweichow, Yunnan and Anhui) exclusively receiving, and one — Shensi — neither receiving nor forwarding. 2 They were Anhui, Chekiang, Oiihli, Fukien, Kangsu, Kiangsi, Kiangsu, Hunan, Hupeh, Kuangsi, Kweichow, and Yunnan. ^ They were : (i) Chekiang: Forwarding its aids to Anhui, Fukien, Kiangsi and Kiangsu; receiving from Kiangsu the yields of silk tax collected there for the repair of dykes in Che- kiang. As the two provinces are abutting upon each other, this tax was collected in Kiangsu in order to avoid evasion. We might say that one was the tax- collection' agent of the other. (^Financial Report of Kiangsu, ch. xiii, p. 20.) (2) Hunan: Forwarding aids to Hupeh, Kangsu, Kiangsu, Kuangsi, Yunnan, etc. ; receiving from Kuangtung the apportion- ment of the additional salt tax collected there. {Finan- cial Report of Kuangtung, vol. ii, pp. 4'5-S3.) (3) Hupeh : Forwarding aids to Yunnan ; receiving from Hunan. (4) Kiangsi : Forwarding aid to ^Chihli, Kangsu, Kiangsu, iSinkiang, and Yunnan ; receiving from Kuangtung the apportion- ment of the additional salt tax collected there. (5) Kiangsu: Forwarding aids toChihli,Fukien,Kangsuand Yunnan; receiving from. Hunan and Chekiang, the latter appor- tioned the additional salt tax collected within its border to Kiangsu, Anhui, and Fukien'. Thus, in 1908, Che- kiang apportioned the additional salt tax to Anhui, amounting to 17,274 taels; to Kiangsi, 14,008 taels; and to Kiangsu, 13,334 taels. (Financial Report of Kiangsu, ch. i, pp. 1-13; also Financial Report of Chekiang, pp. 31-33.) * They were Honan, Kuangtung, iShansi, iShantung, and Szechuan. 517] P^ST AND PRESENT FISCAL RELATIONS 55 the provincial finances. In 1906, the total expenditures of the central administration of the Chinese Empire were 136,496,000 taels, out of which the imperial subsidies or grants-in-aid to the needy provinces, including all the for- warding of the richer provinces to the poorer ones under the command of the throne, amounted to 34,042,000 taels or 25 per centum.^ According to the budget of the fourth year of the reign of Hsuen Tung, 1911, the last year of the Tsing Djmasty, the matricular contributions amounted to $174,902,441 mex.^ and the central subsidies amounted to $11,327,714, leaving a balance of $163,574,727 for the expenses of the central government. (See Appendix I.) Such were the fiscal relations between the central and the provincial governments in China during the old, rustic, and mediaeval Tsing dynasty. The fiscal relations between the provincial and the local authorities were very simple. The latter were the fiscal agents of the former, who were in turn the fiscal agents of the emperor in collecting revenues, especially the land taxes. Before proceding to discuss the more recent fiscal relations between the different grades of government in China, we may do well to summarize, and characterize, as well as to criticize, these fiscal relations of the ancien regime. A Summary and a Criticism. First, there was communism of finance between the dif- ferent grades of government. The land was supposed to be the property of the emperor, and the land tax, therefore, 1 H. B. Morse, op. cit., p. 129. 2 One Oiinese Yuan (or Mexican dollar) =$.4777 in U. S. currency. (The Monetary Systems of the Principal Countries of the World, com- piled in the office of the Director of the Mint, Washington 'Government Printing Office, 1913, p. 12.) 36 CENTRAL AND LOCAL FINANCE IN CHINA [518 was and should be his chief income. But, owing to the fact that the land tax maintained the Hsien or district magistracy, supported the prefecture administration, nour- ished the circuit governor, and fed the provincial authorities, only a fraction of this tax was returned to His Majesty. The land tax had been, indeed the mainstay of those dif- ferent governing authorities from time immemorial. Thus, generally speaking, the land tax might be divided into two parts. First, the reserve fund which was earmarked by the district magistrate for his own maintenance, for the maintenance of his staff and office, and for the maintenance of the prefecture, which had jurisdiction over him, as well. The fact that his allowance was scanty and hardly enough to keep body and soul together and that the appropria- tion for the collection of the land tax was virtually nil made this reserve fund all the more logical and necessary. Second, the transporting fund which was remitted to the executive department or rather the civil commissioner of the provincial capital. The transporting fund also included the salt gabelle, the maritime customs duties, and the inland customs duties, all of which were, before 1912, administered by special commissioners under the supervision and juris- diction of the provincial governor. Secondly, there was the provincial contribution. " As soon as the appropriations had been approved by the em- peror, those provinces whose collected revenues exceeded their expenditures were required to transport their surplus revenues to Peking or to provinces in less fortunate cir- cumstances." ^ This provincial continuation could not, however, be likened to the German " matricular contribu- tion ", inasmuch as the latter distinctly implies that Ger- many, before 1914, was a federated empire, while China 1 H. L. Huans, op. cit., tp. 104-105. 519] PAST AND PRESENT FISCAL RELATIONS 57 was a unitary autocratic monarchy, pure and simple. It was rather the turning over of the balance of the national land tax to the central government after the deduction of all the necessary expenses incurred in the local and pro- vincial administrations as well as of the surplus of the salt gabelle, the maritime and the inland customs duties over and above the cost of their administration. Thirdly, there was the central subsidy. As any province which had a surplus revenue was called upon to contribute to the central government, so any province which had a deficit received subsidies from the central government or directly from one or more richer provinces as a result of the im- perial command. This central subsidy, again, was not of the same nature as the English grants-in-aid, inasmuch as the former were subventions without any condition for effi- ciency or " national minimum ", and worse still, often made for wasteful and fruitless military expenses without any central control and audit. To criticize the above financial arrangements between the central and the provincial governments, let us take the last point first. The system of central subsidy had begotten at least two undesirable results. First, it had encouraged the deficient provincial governments eagerly to request the support of the Board of Revenue, which, in turn, was com- pelled to depend entirely upon the aid furnished by the richer provinces. Second, it had encouraged the concealment of revenues of the richer provinces, owing to the reluctance of these provinces to share their revenues with the poorer ones. The effects of the system of provincial contribution were anything but desirable. Owing to their reluctance to share the revenue with the Board of Revenue, it had encouraged the concealment of revenues on the part of the richer pro- vinces. It had also encouraged the other boards and offices than the Board of Revenue to solicit the support of these 58 CENTRAL AND LOCAL FINANCE IN CHINA [52O provinces, the success of which depended entirely upon the personal influence of the heads of the dififferent boards and offices. This again furnished the richer provinces another incentive to conceal their revenue. Moreover, human nature 'being what it is, it had undoubtedly a tremendous effect in engendering wasteful expenditures on the part of the richer provinces, for why should they save in order that the Board of Revenue, the other boards and offices in Peking, and the poorer provinces might share their revenue? Administratively speaking, this system was also a glar- ing example of inefficiency and duplication of effort, for no less than eight different authorities, in the case of Kuang- tung, remitted funds to more than a score of different authorities in Peking and elsewhere, separately and without the intermediation, and worse still, sometimes even with- out the knowledge, of the Board of Revenue. Finally, there was communism of revenue between the different grades of government. There was no separation of revenue between the central, the provincial, and the local governing bodies. The inevitable result of such a fiscal arrangement in such a vast country as China was a general scramble for revenue. The district magistrate tried to col- lect from the people as much as possible and remit to the provincial authorities as little as possible. The provincial authorities, similarly, tried to obtain from the district mag- istrates as much and remit to the central government as little as possible. The fact that these local and provincial officials were underpaid before 191 2 further aggravated this evil. Mr. H. B. Morse has well described the Chinese financial characteristics during the imperial regime. He said that a Chinese official was less an administrator than a tax-collector for himself and his staff after the deduction of the minimum or rather the maximum amount of matricular contribution to his superiors; and that he resembled the ^21 J PAST AND PRESENT FISCAL RELATIONS 59 English Paymasters of the Forces up to the time of Pitt who swallowed the entire interest on ofBcial balance as well as the Sheriff of the County of New York who received annual fees amounting to $60,000 exclusive of his annual salary of $5,000 and who paid the salaries of his deputies and provided for the expenses of his office out of these fees. The justification of this financial centralization or com- munism, if it may be so called, during the imperial regime was the consolidation of funds or the " common purse ". But the theory and practice were very divergent, as Mr. Morse further points out. In theory, every thing was subject to the control of the emperor — land, property, and revenue. In practice, the revenue was assigned piecemeal from certain sources of collection to certain defined heads of imperial expenditure and had to be remitted independently for the pur- pose assigned, as we have already pointed out. As a further evidence to prove our point, the Shanghi Customs Commis- sioner was responsible for i ) the interest charges on foreign debts, 2) the expenses of the legations abroad, 3) the ex- penses of the Yellow River flood prevention, 4) the ex- penses of the provincial coastal defense, 5) the expenses of the imperial household in Peking, and 6) the expenses of the imperial mausoleum; and he was obligated to remit the funds separately and independently to the incumbents in charge of the said respective duties.^ All these defects, we may conclude, of the fiscal admini- stration of the Chinese Empire before 191 2, were attri- butable largely, if not entirely, to the non-separation of the sources of revenue between the different grades of govern- ment, in so far as the system itself was concerned. Com- munism of finance between the various governing bodies in 1 The reason' why the Shanghai Customs Commissioner could bear so heavy a burden was because he then controlled the maritime customs at the port of S'hanghai which has long been the New York of iChina. 6o CENTRAL AND LOCAL FINANCE IN CHINA [522 such a vast country as Oiina, which is about one-fourth larger than the United States of America, must assuredly be deprecated and condemned. B. THE RECENT FISCAL RELATIONS The more recent or present fiscal relations between the central, the provincial, and the local governments in China are mere remnants of the old bureaucratic but inefficient fiscal system of the Tsing dynasty. It is still supposed to be highly centralized. But in such an extended country as China, a centralized system of finance between the various grades of government in every detail is a matter of human impossibility. Social and political institutions being slow to change, several characteristics of the late imperial fiscal system still linger, chief of which are the provin- cial contribution and the central subsidy. Separation of national finance from the provincial and local finances, though talked about for quite a while immediately after the establishment of the Republic, has never yet been realized. According to the budget of the second year of the Re- public (1913), the provincial contributions from the rich provinces amounted to $32,418,530 and the central sub- sidies to the poor provinces and to the territories amounted to $29,137,707. The difference between the amount of provincial contributions in 1911 ($174,902,441) and that in 1913 ($32,418,530) was due to the provincial adminis- tration of both the customs duties (inland or regular) and the salt gabelle in 191 1, both of which were put under the direct control and administration of the Ministry of Finance in 1 91 3. The actual receipts from the provincial contri- butions in 1913 amounted to $5,600,000 only, and the cen- tral subsidies, to $2,800,000 only.^ ■■ For a detailed statement, see Appendix II. 523] PAST AND PRESENT FISCAL RELATIONS 61 According to the budget of the third year of the RepubUc (1914), the provincial contributions amounted to $29,737,- 013 and the central subsidies to $18,304,248. But the actual receipts of the former amounted to $14,000,000 only; and the actual disbursements of the latter, to $3,000,000 only.^ In the fourth year budget of the Republic (191 5), the distribution of the provincial contributions among the rich provinces, on the basis of the surplus revenue of the pre- vious year of each of the rich provinces, was as follows : Chekiang $3,060,000 Chihli 200,000 Fukien 1,160,000 Hunan 1,200,000 Hupeh 1,000,000 Kiangsi 2,160,000 Kiangsu 3,000,000 Kuangtung 4,200,000 Shansi 1,000,000 Shantung 1,200,000 Shensi 600,000 Szechuan 3,000,000 Total $21,780,000 Actual receipts I7>9S6,907 ^ In the same year the quota of the specified national re- venues ^ which the rich provinces were required to collect and to remit to the central government was assigned as follows : * 1 For a detailed statement, see Appendix III. 2 S. Y. iChia, The Financial History of the Republic, 1907, voj. i, p. 6a. »The specified national revenues are (i) the stamp tax, (2) the tobacco and wine licenses, (3) the tobacco and wine surtax, (4) the land-title inspection fees, and (5) the land-title surtax. * S. Y. Chia, op. cit., vol. i, p. 60. 62 CENTRAL AND LOCAL FINANCE IN CHINA [524 Chekiang 3,088,316.71 Chihli 200,000.58 Fukien 1,036,454.23 Hunan 1,130,204.42 Hupeh 875,265.59 Kiangsi 2,039,184.91 Kiangsu 3,121,590.71 Kuangtung 2,320,000.00 Shansi 1,000,000.00 Shantung 900,000.00 iShensi 600,000.00 Szechuan 2,678,647.32 Total $18,989,664.47 Actual receipts 18,747,558.88 The central subsidies for frontier defense in 191 5 amounted to $2,749,334.42.' According to the budget of the fifth year of the Re- public (1916), the provincial contributions amounted to $42,308,871 and the central subsidies amounted to $i'2,224,- 588. The amount of the provincial contributions was later on reduced to $25,737,600 due to the provincial peti- tions for reduction.^ The distribution of the reduced amount of the provincial contributions for 191 6 was as follows : ^ Anhui $ 220,000 Chekiang 4,260,000 Chihli 640,000 Fukien 1,520,000 Honan 480,000 Hunan 1,200,000 Hupeh 1,520,000 Kiangsi 2,410,000 Kiangsu 5,000,000 Kuangtung 4,200,000 Shansi 2,100,000 Shensi 960,000 Shantung 1,227,600 Total $25,737,600 1 S. Y. iChia, op. cit., vol. i, p. 63. 2 For a detailed statement, see Appendix IV. 2 S. Y. Chia, op. cit., vol. i, pp. 71-2. 525] PAST AND PRESENT FISCAL RELATIONS 63 Again the quota of the specified national revenues as- signed to the respective provinces and territories was as follows : ^ Chahar $ 117,000 Chuan-pian 230,872 Jehol 100,000 Kweisui iS3,20O Metropolitan district 670,000 Anhui 1,600,000 Chekiang 2,700,000 Chihli 3,740,000 Fengtien 600,000 Fukien 1,090,200 Heilungkiang 300,000 Honan 3,200,000 Hunan 2,110,930 Hupeh 1,830,000 Kangsu 700,000 Kiangsi 1,040,000 Kiangsu 2,500,000 Kirin 1,200,000 Kuangsi 590,000 Kuangtung 2,950,000 Kweichow 420,000 Shansi 1,446,999 Shantung 2,137,200 Shensi 1,254,162 Sinkiang 270,000 Szechuan 3,000,000 Yunnan 649,800 Total $36,600,583 (For the treasury regulations governing the procedure of the provincial contributions as well as the remittances of the specified national revenues, see S. Y. Chia, op. cit., vol. i, pp. S5-60.) So far as outward appearance goes, the fiscal system throughout the entire Chinese Republic is still a very cen- tralized one. No system, political or social, with a long '■ IS. Y. Chia, op. cit., vol. i, pp. 73-5- 64 CENTRAL AND LOCAL FINANCE IN CHINA [526 historical background can be transformed overnight. The system, as stated already is a mere legacy of the old despotism, bureaucracy, and hierarchy, although various minor changes have since 1912 been introduced; such as i) the centralization of provincial remittances to Peking, 2) the centralization of the receipts of provincial contributions by the Ministry of Finance, 3) the centralisation of central subsidies, the forwarding of the surplus revenue of one province to another being discontinued,^ and 4) the central administration of the specified national taxes in provinces by the Commissioners of Finance who are the agents of the Minister of Finance. Like the countries of continental Europe, the central government of the Chinese Republic has nominally at least, complete control over the provincial and local administrations. But, owing to the vastness of the country and the lack of adequate means of communica- tion, this centralized fiscal and administrative system proves to be a misfit, neither feasible nor desirable. Being demo- cratic in tendency and inclination, the Chinese people have long enjoyed village self-government. Local seff-govern- ment, therefore, should take the place of central interfer- ence, even if China were not a republic. The movement for local self-government was started even before the republican regime. In 1907, a joint mem- orial of the Government Council (Tze-cheng Yuan) and the Committee on Constitutional Investigation and Compila- tion, {S'ien-cheng Pien Cha Kuan) formerly known as ^This is due largely to the awakening of the people of the rich provinces that their revenue should not be appropriated for the use of another province— an awakening which is at once salutary and undesir- able. Salutary because this marks the beginning of provincial self- government, inter-provincial emulation, and the end of communism in finance between the provinces. Undesirable, because it savors too much of sectional jealousy that exists more or less in many of the large western countries, where the economic differences between the sections are great. 527] ^^^T AND PRESENT FISCAL RELATIONS 65 the Committee on Investigation of Modern Politics and Government (Cheng-chih Kou Cha Kuan), proposed an elaborate scheme for a nine-year's preparation for a consti- tutional government. The memorial gave much attention to the problem of local self-government. In 191':, the re- volution broke out, nine years being too long to v^^ait. On December 30th of the third year of the Republic (1914), the National Assembly enacted the so-called " Experimental Local Self-government Act " which provided that the unit of local self-government should be much smaller than the Hsien or district and that the district should be the smallest administrative unit of the Republic. According to the provisions of the act, each district was to be divided into four or six self-governing divisions {Sze- chih Chu). Each division was to elect a mayor (Chu tung) from among the local gentry who were to receive no salary but might employ assistants whose compensation should be fixed by the district magistrate. Each division was also to elect a council of from six to ten as the case may be, which should authorize, pertinent to the affairs of the division, i ) charitable, educational, agricultural, industrial, commercial and communicational measures, 2) regulations pertaining to the carrying out of the programs for local self-govern- ment. 3) an annual budget including ordinary and extra- ordinary appropiations, 4) ways and means to meet these outlays, and 5) measures to care for the public properties of the division. The council should also review the annual financial report of the preceding year submitted by the mayor. The act also conferred full supervisory powers over the self-governing divisions upon the district magis- trate who might require from time to time reports from any division council about its legislative business and the bud- getary documents and who might examine the accounts of any division personally or through deputies. 66 CENTRAL AND LOCAL FINANCE IN CHINA [528 According to the local self-government budgets of all the provinces and territories for the year 1913 which had been prepared before the passing of the Experimental Local Self- government Act, the total revenues of all the self-govern- ins divisions of the nation amounted to $38,668,745 and the total expenditures, to $59,3 1 9^863. According to the local self-government budgets in the third year of the Republic (1914), the total revenues of all the self-governing divisions amounted to $38,499,332 while the total expenditures dropped to $32,320,532. ! Again, in the first year of the Republic ( 1916) , the local self-government budgets show that the total revenues of all the self-governing divisions dropped to $27,376,516 and their total expenditures dropped to $18,820,996.^ i The high amount of the authorized expenditures for local self-government in the local budgets of 191 3 was due to a new movement for local autonomy immediately after the establishment of the Republic. And the decreasing amounts in 1 914 and 191 6 must be attributed to the attempt at centralization of administration under the presidency of Yuan-shih-kai who aspired to be the Napoleon of China but failed miserably, ending his otherwise brilliant career by a tragic and sudden death, and apparently broken- hearted. A fitting penalty was this for a misguided ambition, but the price paid by the Chinese nation and people for his personal vanity has been entirely too great. Before concluding this chapter, a few words may be said in connection with the central supervision of the pro- vincial indebtedness since 1912. 'China has, so far, no municipal indebtedness. The reasons for this unique characteristic of municipal finance in China are not far to seek. In the first place, " municipali- 1 For a detailed statistical statement, see Appendix V. 529] PAST AND PRESENT FISCAL RELATIONS 67 ties have always been administered by appointees of the central government and hence loans contracted for muni- cipal improvements are made in the name of the central government rather than in that of the various municipali- ties concerned." ^ In the second place, " owing to the in- complete system of state laws, municipal government has not yet been fully developed, and thus municipalities are unable to contract obligations upon their own responsi- bility." - In regard to the provincial domestic loans, the central g'overnment usually adopts a laissez-faire policy. In re- gard to the provincial foreign loans, the central government has, without a single exception, maintained control, direc- tion, and supervision over the provincial governments. The reasons for so doing are obvious. Politically speaking, " the power to contract foreign loans should be just as much centralized as the power over diplomatic- and foreign af- fairs". ^ Foreign loans in China, whether they are national or provincial, are more or less political in character. The foreign capitalists in their inevstments in China have been heretofore actuated more by the desire to further the- political interests of their respective countries than by the hope of making pure business profits. The story of " peace- ful penetration " is too impressive on Chinese minds. In order to combat such attempts of the foreign capitalists, it it absolutely essential that only the national government should have the power of contracting foreign loans. Fiscally speaking, inasmuch as China has not yet made any separation between the local and the national taxes and inasmuch every tax in the provinces thus constitutes a source of revenue for the national goverrunent, the provin- 1 F. H. Huang, Public Debts in China, p. 13. ''Ibid. 3 F. H. Huang, op. cit., p. 78. 68 CENTRAL AND LOCAL FINANCE IN CHINA [530 cial governments should not mortgage it for a loan which is to be used exclusively for their own benefit. Administratively speaking, absence of central control, dir- ection, and supervision over provincial foreign loans would certainly lead to divergence of loan contracts which would render conversion and consolidation through the issue of a large loan very difficult. Again, there would be no parUamen- tary or ministerial control which is the foundation of a repub- lican form of government. And finally, absence of central supervision would most probably result in signing away special privileges to foreign financial syndicates by the various provinces thus leading to loss of territorial rights and fiscal freedom. Not only is it true that the provincial authorities could and can not contract any foreign loan without the know- ledge and approval of the central government, but even the Chinese merchants and entrepreneurs also could and can not do so without first reporting to, or requesting the con- sent of, the central government. This rule is intended to avoid any complication that may arise out of such financial transactions between Chinese business men and foreign capitalists.^ I 1 For a typical example of the exercise of such authority by the Ministry of 'Foreign Affairs, see British Parliamentary Papers, China, no. 3 (1913), enclosure in no. 58. CHAPTER III Attempts to Separate Local Finance From National Finance From the preceding two chapters, it is obvious that there have been confusion and chaos in the fiscal relations between the central, the provincial, and the local governments in China even during the new republican regime. Influenced by the wave of democracy throughout the whole world, China became convinced, even during the monarchial re- gime, that a system of autocratic and bureaucratic centrali- zation of administration had become obsolete. To promote " local self-government ", therefore, has long been the public policy of the Chinese government. Along with the movement for local self-government, there has emerged the issue of the separation of local finance from national finance. Indeed, local self-government can never be realized until and unless local finances are distincly separated from national or central finance. When China was defeated by Japan in 1895 and humi- liated by the " Eight Allied Powers " ^ in 1900, there was a tremendous undercurrent for political reform. When Japan defeated Russia in 1905, this undercurrent became very active and the thinking Chinese were convinced that Japan's strength lay in constitutionalism : so they concluded that China, too, must be saved through constitutionalism. For this reason the Committee on Investigation of Modern 1 These were Great Britain, the U. S. of America, Germany, France, Austria-Hungary, Italy, Russia, and Japan. S3I] 69 70 CENTRAL AND LOCAL FINANCE IN CHINA [532 Politics and Government was instituted only to be reorgan- ized about two years later and re-named the Committee on Constitutional Investigation and Compilation. With constitutionalism came the issue of local self-government, and with local self-government came the question of the separation of local finance from the national finances. In 1907, a joint memorial of the Government Council and the Committee on Constitutional Investigation and Compilation, as has been said in the previous chapter, pro- posed an elaborate program for a nine-years' preparation for the adoption of a constitutional form of government. For the financial reforms, the memorial provided as follows : in the second preparatory year, the working out of a tenta- tive budget by the provinces; in the third preparatory year, the revision and the trial of the provincial budgets and the fixation of local taxation; in the fourth preparatory year, the settlement of the methods of public accounting, the for- mulation of a national budget, the formulation of the scheme of local taxation, and the determination of the rules for national taxation; and in the fifth preparatory year, the promulgation of the law of national taxation. ; Looking towards the subordination of all financial af- fairs, central or provincial, to the central control of the Board of Revenue, as well as towards the possibility of a separation of local finance from national finance, a Committee for the Reorganization of the Financial Af- fairs of the Empire {Tsing Li Tsai Cheng Chu) was created by the Imperial Edict of the loth January, 1909, in the Board !of Revenue at Peking and, in the provinces, there were established the Branch Offices of the said com- mittee at the Governor-Generals' and Governors' Yamen. Twelve sub-committees were subsequently appointed.^ ^ Brunnert, op. cit., pp. 186-7. 533] ATTEMPTS TO SEPARATE yi They were as follows: 1. The sub-committee on general affairs. 2. " " " for the Metropolitan District or Pre- fecture, the Province of Chihli and the Territory of Chahar. 3. " " " for the Manchurian Provinces (3 in number) . 4. " " " for Kiangsu, Anhui, and Kiangsi provinces. 5. " " " for Shantung and Honan provinces. 6. " " " for Hunan and Hupeh provinces. 7. " " " for Fukien and Chekiang provinces. 8. " " " for Kuangtung and Kuangsi pro- vinces. 9. " " " for Shensi and Shansi provinces and Urga, Suiyuan 'Cheng, Kweihua Cheng, Uliastai, Kobdo, Altai, etc. 10. " " " for Kangsu and Sinkiang provinces and Hi, Tarbagatai, Hsining, etc. 11. " " " for Szechuan, Yunnan, and Kwei- chow provinces and also Tibet. 12. " " " on archives. The Board of Revenue had authority to depute officials to reorganize the finances of any of the provinces, and the Branch Offices of the committee were established in all the provinces with the object of furnishing it with information necessary to the drawing up of a State Budget. As many voluminous reports as there were provinces in China were submitted by the respective Branch Offices to the Committee. These were subsequently published for public information. While explaining the provincial finances, these reports devoted a large portion of space to the discussion of the separation of the local from thd national revenues, as well as of the local from the national 72 CENTRAL AND LOCAL FINANCE IN CHINA [534 expenditures. The views set forth in these reports can readily be guessed. They were almost without a single exception prompted by an irresistible desire to please the Throne. None of these reports dared to suggest that the land tax should be local. This moot question will be dealt with later on. The budget of the third year of the reign of Hsuen Tung. (1910) separated the provincial and local expenditures from those of the central government. The former amounted to $37,703,364 taels : the latter, to $260,740,996 taels.^ ( With the sudden explosion of the Revolution of October 10, 1911, this evolutionary constitutional development and financial reform in China, already undertaken, though re- luctantly, by the imperial regime, was interrupted. The people of China, or rather the enlightened elements o£ China, were too impatient to wait six or seven years more for the convocation of a parliament and the adoption of a constitution. A republic was proclaimed by Dr. Sun Yat- sen, the first provisional President of the Republic of China, on January i, 191 2, at Nanking, in spite of the fact that China was not yet prepared for this form of popular gov- ernment. The goal had been set, and the means of reach- ing it must be provided. Once more the issue of local self- government was at the front, and the problem of the separa- tion of the local from the national finances was again its handmaid. i In June, 1912, the Tutu or the military governor (of the revolutionary era) of the province of Kiangsu, Mr. Te- Chuan Cheng, vigorously advocated both the separation of local from national revenues and that of local from national expenditures. He proposed that such expenditures as the interest charges of the foreign loans, the military expenses, ^ For a detailed statement, see S. Y. Oiia, op. cit., vol. i, pp. 27-32. 535] ATTEMPTS TO SEPARATE 73 the judicial expenses, etc., should be national; that such expenditures as the industrial, the educational, and the civil administration expenses should be provincial or local; that such revenues as the customs duties, the salt gabelle, and the other indirect taxes should be national; and that such revennues as the land tax and the other direct taxes should be provincial or local. '^ This proposal was strongly supported by many famous Chinese reformers and thinkers ;( most of them have been the staunch advocates of local self- government. In the Winter of the same year, a special Committee of Investigation was appointed by the Ministry of Finance to consider and investigate the proposal. The following points were stressed in the report which the committee rendered : ('I ) That the definitions of the words " national " and " local " must be distinct and without ambiguity. The term " local authorities " should mean the authorities of the self- governing localities alone, and should not include the local agencies of the central or national administration. Thus the expenses incurred by the latter should be, without fail, excluded from the list of local expenditures, and the local revenues should be exclusively appropriated for purely local purposes. < (2) That the hierarchy of territorial divisions of each province and the extent of their respective activities should first be settled, this settlement depending upon the settle- ment of the provincial system in the permanent constitution of the Republic. This is because the implications and com- plications of the provincial system are intimately connected with the amount of local expenditures. Pending the framing and adoption of a permanent constitution, a temporary divi- sion of the local governing bodies should be made in order 1 S. Y. Chia, op. cit., vol. i, p. 104. 74 CENTRAL AND LOCAL FINANCE IN CHINA [536 to facilitate the separation of local revenues and expendi- tures from the national revenues and expenditures. The temporary division should be i) the province, 2) the dis- trict, and 3) the division or Hsiang. Thus the report re- commended the abolition of the circuit or Tao and of the prefecture or Fu. (3) That a clear and distinct scope of power and func- tion of the national and local administration should be effected. Those things which are beyond the power of the local administration, such as foreign affairs, national de- fense, administration of justice, etc., should belong to the national administration ; and such things as police, education, communication, agriculture and commerce, finance, etc., should partly belong to the national administration and partly to the local administration. (4) That a National Revenue Board (Kuo Sui Ting) should be created with as many branches in the provinces as necessary to take charge of the national revenues. (5) That a financial commissioner should be created in each province to take charge of the general and specified national revenues and to supervise the provincial revenues and the land surtax (or the land additional tax) not ex- ceeding 30% of the original levy. In accordance with the above recommendations laid down by the Special Committee of Investigation, the Ministry of Finance proceeded, in 191 3, to determine the amounts of the local revenues and expenditures and the amounts of the national revenues and expenditures. But the determination was rejected by the provincial authorities on the ground that the sphere of local and provincial activities and powers was too limited to render the local and provincial governing- bodies effective for the full development of local self-govern- ment, j 537] ATTEMPTS TO SEPARATE 75 A National Revenue Board was also established with many branches in the provinces to take charge of all national revenues and expenditures in the respective provinces, leav- ing the local and provincial revenues and expenditures in the hands of the provincial and local financial agencies. In the ibeginning there was constant conflict between the pro- vincial and the central financial agencies. Among the financial reforms advocated by Dr. Chen Chin-tao, the well- known Yale man of China and the Minister of Finance of the Republic in 1916, was the creation of an inspection ser- vice for the national revenue collection in all the provinces.'' It did not, however, materialize before his downfall. ; The fifth and last recommendation of the Special Com- mittee of Investigation for the creation of a financial com- missioner for every province to head the branch office of the Kuo Sui Ting or National Revenue Board and to super- vise the provincial finances was realized in 191 7, under the administration of the then Minister of Finance, Mr. Liang Chi-chiao, the famous reformer and journalist of China, who has been an enthusiastic advocate of the separation of local finance from national finance and supported Mr. Cheng Te-chuan's proposal in 1912. In the Winter of 1913, the Ministry of Finance drafted a revenue separation bill to be enacted into law by the first parliament of the Republic of China. Owing to the unex- pected dissolution of the parliament by the then dictator- president, Yuan Shih-kai, the bill was never enacted into law. Its provisions, however, are interesting and worthy of our attention. They were later enforced through the treasury rulings and regulations in compiling and estimat- ing the budgets. Presented in outline form, they are as follows : 1 iSingloh Hsu, " The Financial Condition of the Republic of China," Banker's Magasine, vol. g8 (February, 1919), p. 214. 76 CENTRAL AND LOCAL FINANCE IN CHINA [538 ( I ) Separation of the existing revenues : a. For national purposes ; (i) The land tax or taxes/ (2) " saltgabelle, (3) " maritime customs duties, (4) " inland or regular customs duties, (5) " re^lar and miscellaneous duties, (6) " likin or the commodity tax or the transit tax, (7) " mining royalties, (8) " land-title tax,= (9) " business license tax, (10) " pawn-shop license tax, (11) " business license fee,^ (12) " pawn-shop license fee, (13) " tobacco tax, (14) " wine tax, (15) " tea tax, (16) " sugar tax, (17) " fishery tax. 1 The tax is really a composition of the land-capitation tax, the com- muted grain tax, the rent of public lands, the receipt from sale of public lands, the commuted corvee, the additional rate, etc. 2 The land-title tax includes (i) a tax on evidences of transfer, alienation, and conveyance of property from one person to another, (a) a tax on mortgages (on mortgagor), and (3) the deed inspection fee, new deeds being exchanged for the old. The rate on the first varies from 2%-6%; that of the second, from i%-3%; and that of the third, from $.6o-|S.50 a piece from province to province. The third also includes the registration fee. (S. Y. Qiia, op. cit., vol. i, pp. 403-22.) s The difference between the business license fee and the business license tax is that the former is paid periodically and once in a while (say once every S, 10, etc. years when a license is granted or renewed), while the latter is paid annually, semi-annually, or quarterly. (S. Y. Chia, op. cit., vol. i, p. 336.) 539] ATTEMPTS TO SEPARATE yj b. For local purpose; ( 1 ) The land surtax or additional rate on the land tax, (2) " trade tax, (3) " live-stock tax, (4) " rice and cereal duty, (5) " opium duty, (6) " oil and sauce duty, (7) " vessel duty, (8) " miscellaneous commodity duties, (9) " business-shop duty, (10) " rental duty,^ (11) " theatre duty, (12) " carriage duty, (13) " prostitution license duty, (14) " tea-house duty, (15) " restaurant duty, (16) " meat duty, (17) "fish duty, (18) " butchery duty, (19) " carriage-bearer license duty, (20) Miscellaneous taxes and duties. (2) Separation of the possible future revenues : a. For national purposes ; ( 1 ) The stamp tax,^ (2) " recording tax, (3) " succession or inheritance tax, (4) " income tax,^ ^ The rental duty includes (i) 10% tax on rentals of business shops, and 2.5% tax on rentals of private homes. (S. Y. Chia, op. cit., vol. i, P- 399.) 2 The stamp tax has been promulgated and executed since February, 1913- 3 The income tax regulations were promulgated in January, 1914, and again promulgated in January, 1921, for immediate enforcement. The proceeds are to be used for education and industrial development only. For a full text of the new income tax regulations, see Millard's Review, Feb. 5, 1921, pp. 526-8. 78 CENTRAL AND LOCAL FINANCE IN CHINA [540 (5) " production tax, (6) " business tax, (7) " note-issue tax. b. For local purposes; (i) Special taxes or revenues: (a) The house tax or habitation tax, (b) " business tax on those businesses which are free from the national business tax, (c) " consumption tax on those com- modities which are free from the national consumption tax, (d) " octroi or admission charges to market places, (e) " personal property tax, ( f ) " domestic servant tax. (2) Surtaxes or additional rates : (a) The additional rate on the national business tax, (b) " additional rate on the national income tax. (3) Limitations on the local special taxes and surtaxes: a. The Ministry of Finance may prohibit any local special tax when it interferes with the national taxes or is regarded as impolitic by the Ministry. b. The maximum rates of the surtaxes ; (i) On the land tax, at most 30% of the ori- ginal levy. (2) On the business tax, at most 20% of the original levy. (3) On the income tax, at most 15% of the original levy. c. If occasion demands any increase of the rates of 541 ] ATTEMPTS TO SEPARATE yg the surtaxes over and above the maximum rates, the local governing body concerned must first se- cure permission for the increase of the rate from the Ministry. The above provisions sound very much like the fiscal system of France and that of Japan vi^hose system of local administration has been chiefly influenced by, and in fact modeled after, that of France. The monopoly of all the most important and lucrative sources of revenue by the central government, the central control and supervision of local finances, and the system of surtaxes or additionals : all seemed to be adopted wholesale from the bureaucratic France and the autocratic Japan. One could never be mis- taken as to the direction in which the wind blew. i The first budget of the Republic of China (191 3) was compiled in accordance with the above provisions. When the second budget was about to be compiled ( in the Summer of 1914), the Ministry of Finance found that the national expenditures had increased greatly and that the local gov- erning bodies did not effect satisfactory results in education, industry, and general local self-government. So the above provisions, formerly enforced through the treasury rulings, were now withdrawn and disregarded in preparing, the third-year budget through the same process. This swingi of the pendulum toward re-communism of finance and re- centralization of administration, which, as indicated in the preceding paragraph, had been already centralized enough, was to be explained, as already referred to in the previous chapter, by the imperial ambition of the Dictator Yuan Shih- kai who aspired to be the Napoleon The First of China but completely failed to be so by dying an ignominous death. With the downfall of Yuan Shih-kai and re-convocation of the dissolved parliament in 191 6, the House of Representa- tives (Chung Yi Yuan) authorized the Ministry of Finance 8o CENTRAL AND LOCAL FINANCE IN CHINA [542 to re-promulgate the provisions of the Revenue Separation Bill of 1 91 3 to be followed by all the ministries and de- partments concerned in preparing the fifth-year budget of the Republic of China. It was from this time on that the Revenue Separation Bill acquired the status of law enacted by the properly constituted sovereign authority of the nation. So much for the tentative separation of revenues. Now let us touch upon the tentative separation of expenditures for a moment. According to the standard classification of expenditures set forth by the Ministry of Finance in 1912 as an aid to the preparation of the budget, the national expenditures include i ) the legislative expenses — national assembly or par- liament only; 2) the administrative expenses — ^President and Vice-President and their staffs, cabinet and ministries, mili- tary governors and their staffs and offices in the provinces, civil governors and their staffs and offices in the provinces, and the district magistrates and their staffs and offices in the provinces; 3) military expenses — army and navy, in- clusive; 4) expenses incurred by the Ministry of the In- terior — including the expenses incurred in administering the affairs of the Metropolitan Dictrict or Kingshao, the police expenses in the provincial capitals and the treaty ports, and the expenses incurred by those offices under the direct control of the said ministry; 5) expenses incurred by the Ministry of Foreign Affairs — inclusive; 6) expenses incurred by the Ministry of Justice — inclusive; 7) expenses incurred by the Ministry of Education — including the expenses incurred by the special and higher educational institutions under the direct control of the Ministry; 8) expenses incurred by the Mini'^try of Communication in the operation of public utility and service industries, such as the government rail- roads, the government merchant marine, the post-office, the government telegraph and telephone establishments ; 9) 543] ATTEMPTS TO SEPARATE 8l outlays for public works which are national in nature and character; lo) expenses incurred in the colonization of the North-West under the direct control of the Ministry of Agriculture, Industry and Commerce ; 1 1 ) expenses incurred in the collection of the national revenues; 12) redemption and interest payment of foreign loans — provincial foreign loans excluded; 13) redemption and interest payment of domestic loans — provincial domestic loans excluded; and 14) the pension, amounting to $4,000,000 (Yuan) annually, of the imperial family of the defunct Tsing Dynasty/ 1 The local (including provincial) expenditures comprise i) the legislative expenses — provincial assemblies and district councils; 2) expenses for education — includingall educational expenses in the provinces save those incurred by the national and private institutions; 3) the police expenses, including all public protection disbursements except those incurred by the national government in the Metropolitan District or the national capital and in the provincial capitals and the treaty ports ; 4) expenses for operating public industries — ^including all except those incurred by the national government; 5)' expenses for sanitation and health; 6) expenses for public charities; 7) outlays for public work — including all except those which are national; 8) redemption and interest pay- ment of all public loans which are not national; 9) salaries and expenses of the mayors, their staffs and ofifiices, and local gentry who are engaged in the administration of the local self-government; and 10) expenses incurred in the collection of the local revenues.^ 1 This treasury ruling about the classification or rather the separation of expenditures between the national govern- ment on the one hand and the provincial and local govern- 1 S. Y. Chia, op. cit., vol. i, pp. 123-26. 2 S. Y. Chia, op. cit., vol. i, pp. 126-28. 82 CENTRAL AND LOCAL FINANCE IN CHINA [544 merits on the other was withdrawn in 19 15, simultaneously with the withdrawal of the revenue separation ruling, after the dissolution of the parliament and the subsequent dissolu- tion of the provincial assemblies and the district councils. During the dark days of the Yuan monarchical plot, all revenues and expenditures, whether national, provincial or local, were consolidated so that the dictator's grip on the whole nation and people might be tightened and streng- thened. In 1 91 6, the would-be emperor died; parliament and provincial assemblies reconvened; and the parliament authorized the Ministry of Finance to restore the old treasury ruling concerning the separation of local expendi- tures from national expenditures, in order to encourage local self-government. , So far as the mere attempts to inaugurate financial re- form are concerned, they deserve, as a whole, favorable com- ment. The proposed reforms, while by no means perfect and satisfactory, are certainly an improvement over the old hodge-podge system. Unfortunately these attempts have been a failure. The unstable political condition would not give them a fair chance to work out satisfactorily. About a year or so after Yuan's downfall, there came another coup d'etat. In the Summer of 191 7, General Chang Hsun restored the abdicated boy Emperor, Hsuan Tung, to the throne and proclaimed the return of the Tsing Dynasty to power. He was, however, soon ousted and crushed by another Northern general, Tuan Chi-jui by name, and the Republic has since been re-established. Although General Tuan was, in many respects, an excellent soldier and a patriot, he did not know how to steer the ship of state by conciliation and toleration and a sense of poise. Neither did he enjoy the undisputed leadership of the Northern Military Party {Pei Yang Pai) which was the handiwork 545] ATTEMPTS TO SEPARATE 83 of the late Yuan Shih-kai. Soon this military party was split into several factions, and China is now practically ruled by a feudal system of overlordship. Aggravating this already too chaotic and complicated political situation, the Southern Constitutional Party has established an independ- ent government at Canton ever since the second dissolution of the parliament in 191 7 under duress by the Ex-President Li Yuan-hung. Last year, the twice-dissolved parliament, now sitting at Canton, elected Dr. Sun Yat-sen, who was once the first provisional President of the Republic of China, as the legal President of the Republic, while in Peking' there is another President, Dr. Hsu Shih-chang, and another parliament, both de facto. Such has been the political condition in China during the last five or six years and the results of the attempts at the financial reforms can be imagined. To be sure, a distinc- tion has been made between the national and the local re- venues, but when money is needed for provincial expenses, the military governors always retain the installments and quotas due the central government for their own require- ments. Attempts have been made to appoint officials direct from Peking to collect the national revenues in the pro- vinces, but without success. The military governors usually issue no budget, and the annual receipts and expenditures in the provinces are open to no inspection of the central government. Taxes and imposts are collected as usual and new charges often made, but there is no account of the expenditure. Worse still, liquid assets of the provinces have been hypothecated by them in order to pay the soldiers, and worthless paper money has been issued by them in abundant quantity. In a word, the military gov- ernors are a law to themselves. It is to be hoped that such a chaotic financial condition will come to an end when the military despotism shall have been 84 CENTRAL AND LOCAL FINANCE IN CHINA [546 overthrown and the provincial assemblies shall have assumed control of the provincial finances. Learning a lesson from this bitter experience, it is highly important that in the future the central government should as far as possible collect all the national revenues directly v^rithout any interme- diation from the provincial authorities, as is now the case with the likin, the specified national revenues, and to some extent, the inland customs duties and the salt gabelle. Heaven is not reached in a single bound. The trouble in China in attaining a republican form of government during the last ten years or so is but natural and, in fact, inevitable. China is merely repeating the history of America and France in their struggle for a democratic form of govern- ment. When there is a realization of popular control of the purse strings on the central, the provincial, and the local governments, thus giving them proper fiscal relations with one another, 'China will without fail become one of the most prosperous, the most progressive, and the most liberal and democratic powers in the world. Our hope is not without foundation, for there are, at the time of writing, already many cheering signs pointing to the desired goal. There has been during the last two or three years, a general popular movement for a better gov- ernance of the country throughout the whole of China. The system of military governorship (Tuchun) in each province, inaugurated by the late Yuan Shih-kai for obvious reasons, must go if the people are going to have their say in governmental affairs. In despair at the utter impotency of the central government at Peking, quite a few provinces are now trying to govern themselves without military over- lordship or molestation and according to a supreme law, a provincial constitution. The public opinion in the country is overwhelmingly in favor of a federative form of govern- ment, after the American, the Swiss, or the Canadian fashion. 547] ATTEMPTS TO SEPARATE 85 Thus the slogan of a certain wing of the former Progres- sive Party is " Create the states first, unite them afterwards." Already two provinces, Hunan and Chekiang, have either adopted or proclaimed a provincial constitution, framed by the respective provincial assemblies and approved by the re- spective electoral college and in the case of Hunan, it was voted upon by all the eligible voters of the Province and was passed by an overwhelming majority vote (18,744,106 vs. 575,230).^ Its provisions are interesting. \ With regard to legislation, such' professional organizations as the educational associations, the agricultural associations, the industrial and labor associations, the chambers of com- merce, and the lawyers' associations of the province can in- itiate any legislative measures concerning their respective in- terests and welfare through petition and the legislature is in duty bound to consider and deliberate upon them.^ Initiative can also be effected by 1% of the total voters of the pro- vince signing a petition or by one-third of the district councils and municipal councils agreeing to take such action.^ With regard to finance, there are many departures from the old rut. Section 69 under Chapter 7 provides that all the provincial taxes are to be voted by the legisla- ture and collected accordingly by due process and authority. Thus we see that the province is to be financially independent of the central or national government. The Constitution further provides that the annual minimum amount devoted to education in every budget should be 30% of the total expenditure of the province, and that the annual minimum amount set aside for the educational sinking fund should be 2%i of the total estimated expenditure.* The Hunan 1 Shang Pao (,The Shanghai Journal of Commerce}, 'Shanghai, China, Dec. 19, igei, 2 iGhapter vi, section 65 {Shang Pao, Dec. 12, 1921). 3 Chapter vi, section 66 (Shang Pao, ibid.). * Shang Pao, Dec. 13, 1921. 86 CENTRAL AND LOCAL FINANCE IN CHINA [548 province has suffered most from the so-called Civil War between the North and the South (or between Peking and Canton) . Under such circumstances, no wonder that it has been compelled to be the pioneer and leader of the consti- tutional and federative movement.^ The Chekiang Provincial Constitution, adopted by the legislature, is composed of 18 chapters and 158 sections.^, The autonomy of the province is declared in the preamble. There are, according to the provisions of the constitution, five more or less independent governmental organs: the legislature or Sun-yi Yuan which is elected by popular vote, the chief executive or governor (Sun Chang) who is also popularly elected and the executive council or Sun Chen^ Yuan whose members save the governor are elected by the legislature, the judiciary or Fa Yuan ( 11 members or judges who are popularly elected), the censorate or K'ien Cha Yuan (11 members or censors who are also elected by popular vote) , and the board of audit or Sin Chi Yuan ( I'l members who are elected by the legislature). The insertion of the Censorate in the constitution as a distinct governmental organ is quite a novelty. It may be explained, however, as due to the influence of three factors. First, there has been a 1 The forces engendering this movement in Hunati' have been well ' summarized by an anonymous writer in the January ist issue of 1922 of the Shun Pao or the Shanghai Times, the oldest newspaper in China, as follows: (i) The absence of a strong and legally constituted central government. (3) The official (both military and civil) oppression. (3) The political awakening and consciousness of the Young China. (4) The spread of the doctrine of federalism. (5) Party tactics of the Kuo Ming Tang to use federalism as a means to loosen the Peking military grip on the people. (6) The break-up of the old parties. 2 The Jen Pao or the Morning Post, Peking, China : September 20-30, 1921. 549] ATTEMPTS TO SEPARATE 87 Strong sentiment for some kind of machinery to check the growing abuses of power by officialdom. The newspaper as an organ of pubHc opinion does not exert so much in- fluence and restraint upon the conduct of the officials in China as in the West. We might say that this special organ is, partly at least, to take the place of the newspaper. Second, the salutary results of such an organ during the late Tsing Dynasty have been well recognized by the people. And third, the advocacy by Dr. Sun Yat-sen of a Five- Power Constitution (Wu Chuan Hsien Fa) ^ has certainly pro- duced some impression on the minds of the framers of the constitution. It purports to act as a check on the abuses of power or the negligences of duty of all the other four branches of the provincial government, being itself subject to the tribunal of public opinion only. Such new measures as the recall and the initiative are also incorporated in the constitution. The Hsien or district is made the largest administrative, as well as the local self-gov- erning division of the province. Thus the circuit or Tao is done away with. Municipalities are to be created and char- tered by the legislature. Any city having 1 50,000 inhabitants or over may apply for such a charter. A district is to have a magistrate appointed by the governor who is to be assisted by an executive council when uninistering the district self- government. There is also a district council of from 20- 40 members, all to be popularly elected. The district is to be divided into cities or Shih (having a population of 10,000 or over) and towns and villages or Hsiang (having a popu- lation less than 10,000). What interests and concerns us most, of course, is the financial provision in the constitution. All the provincial taxes are to be the sources of provincial 1 The five powers are legislation, execution, administration of justice, civil service examination and impeachment. 88 CENTRAL AND LOCAL FINANCE IN CHINA [550 revenue and are to be voted by the legislature before their collection by due process and authority. In regard to its fiscal relation with the national government, it provides that not more than 30% of the total annual revenues of the pro- vince should be contributed towrards the support of the national government.^ It further provides that the mini- mum annual expenditure for education should be in no case less than 20% of the total annual expenditure ; that that for industrial development should be in no case less than y%; that that for improvement of communication and transporta- tion, should be in no case less than 5%; and that the reserve for the educational sinking fund should be in no case less than 3%. Besides the above two provinces, there are several other provinces that are in process of framing and adopting ^ provincial constitution. Chief among these are Kiangsu, Szechuan, and Kuangtung. Szechuan, being practically in the same bad situation at Hunan, has already declared pro- vincial antonomy through General Hiung Ke-wu. Hupeh is another province which has caught the contagious spirit of provincial self-government, being just a little better off than Hunan. Although somewhat behind Hunan and Qiekiang in con- stitution-making, Kuangtung is the first province which has abolished the abominable system of provincial military gov- ernorship and which has actually put into practice and extended local self-government. On May 23, 1920, the provisional municipal government law for all the pro- vince was proclaimed. On Feb. 15, 1921, it was actually applied to the City of Canton, the most populous city in iChina, when a municipal government of Canton was in- stituted on a modern scale with a modern city charter as its ^ Chapter x, section loi. 55lJ ATTEMPTS TO SEPARATE 89 constitution.^ The complete governmental machinery o£ the municipality is composed of an advisory council of thirty members,^ a mayoralty assisted by six departments, and a board of audit. For the time being, ten of the councilmen as well as the mayor are appointed by the governor; but when the charter shall be formally accepted and ratified by the people of the city in the next five years, they shall be- come elective. The present arrangement is only a make- shift. The functions of the advisory council are to suggest new laws, to advise on their carrying out, and to have equal voice in the management of municipal affairs. The six de- partments under the jurisdiction of the mayor are i) the Department of Finance, 2) the Department of Education, 3) the Department of Public Works, 4) the Department of Public Safety, 5) the Department of Public Health, and 6) the Department of Public Utilities. The duty of the Board of Audit is to check up and audit all the city accounts and to prepare the financial as well as the other reports. * The budget of the city of Canton for the first year 1921- 1922 (beginning July ist) is worthy of our attention, inas- much as this is the first municipal budget in China since the dawn of civilization. Briefly, it runs as follows : ^ ^Shun Pao, Jan. i, 1922; Philip Haddon: "The Government of 'South China," China Review (a monthly published by iQiina Trade Bureau, N. Y.), Sept., 1921, pp. 137. For a full text of the city charter of 'Canton, see S. Y. Wu, "Canton Municipal Progress," The Weekly Review of the Far East, vol. xix, no. i, pp. 9-10. 2 Ten members are to be appointed by the governor (provisionary, of course), ten are to be elected by popular vote, three are to be elected by the chamber of commerce of 'Canton, three are to be elected from among the labor elements by the labor unions of the city, and one each to be chosen by the education association, the medical association, the engineers' association and the lawyers' association' of the city respectively. 9 S. Y. Wu, Canton Municipal Progress, The Weekly Review of the Far East (formerly the Millard's Review of the Fart East), Dec. 3, 1921, pp. 6 7. 90 CENTRAL AND LOCAL FINANCE IN CHINA [552 Revenues : (i) House rent tax $64S,045 (2) Sing-song girl license 518,000 (3) Theatre license 77<7oo (4) Cinema license 12,420 (5) Rubbish disposal 7,20O (6) Boat license 28,956 (7) Rickshaw license 291,458 (8) Market stall rentals 3,5&3 (9) Rent from Taishatou Island 2,170 (10) Public lands converted 63,520 (11) Provincial government subsidies 240,000 ( 12) Physicians' registration fees 5,ooo (13) Special business registration fees 1,270 (14) Building permits 3,600 (15) Blind singers license i,Soo (16) Miscellaneous duties and fees-novelties.... 500 (17) Fines from Department of Public Safety.. . 15,180 (18) Confiscations from Dept. of Public iSafety. 414 (19) Fines from Department of Public Works . 960 (20) Municipal gazette fees 800 (21) Receipts from Municipal Hospital 1,200 (22) Title deeds, etc 49,ooo Total revenues $1,969,476 Expenditures : (1) Mayor's office $51,192 (2) Department of Finance 62,652 (3) Department of Public Safety 1,345,042 (4) Department of Public Works 538,130 (5) Department of Public Health 274,936 (6) Department of Education 543,670 (7) Department of Public Utilities 40,252 (8) Board of Audit 28,392 Total expenditures 2,884,266 Deficit 1 $914,790 Compared with the budgets of the City of New York, 1 This deficit vifas to be stricken off by two contemplated new duties : the license duty on patent medicines and that on the tea houses. 553] ATTEMPTS TO SEPARATE 91 Chicago, London, Paris, etc., the revenues and expendi- tures of Canton are truly insignificant. But we should not overlook the fact that this is the first budget of a newly created municipality in a conservative and tradition-ridden country where the art of local self-government has never, so far, been exercised in a larger area than the village which usually consists of a few hundred families. To conclude, we may state with a reasonable degree of safety that the federative movement will no doubt greatly improve the present confused fiscal relations between the central and provincial governments in China. The pro- vinces, when not interfering with the proper jurisdiction of the national government, will vote upon their own taxes and other sources of provincial revenue without any meddling! from the latter. It seems that it is only a question of time when the central or national government will no longer be able to dictate policies to, and appoint the officials of, the pro- vincial governments. The budget system adopted by the City of Canton and the subvention system adopted by the Province of Kuangtung, as applied to the minor civil divisions for local self-government, will further improve the existing chaotic fiscal relations between the provincial and local gov- errmients. Thus the provincial and local finances will be separate, at least in part. These latest attempts at political and fiscal reforms in the provinces are certainly again a step forward towards the desired goal, as compared with the earlier half-hearted endeavors to separate local (includ- ing provincial) finance from national finance. CHAPTER IV The Systems of National and Local Finance of the Leading Countries and What China Can Learn From Them Thus far we understand that the fiscal relations between the central, the provincial, and the local governments in China are by no means satisfactory. The earlier attempts at readjustment were mere makeshifts : the latter ones are more thoroughgoing. But a new program of reform, both political and fiscal, based upon sound political and fiscal prin- ciples, is needed. Before we proceed to formulate such a program, we must, however, first investigate and study the systems of national and local finance (and incidentally the systems of local administration) of the leading countries in the world. Let us begin with the centralized countries. Central and Local Finance in France. The French political system is a very centralized one, and with this centralized political system comes its handmaiden, a centralized fiscal system. France is divided into about 86 departments which in turn are subdivided into about 362. arrondissements which in turn are subdivided into about 2,868 cantons which lastly are further subdivided into about 36,097 communes. " These divisions form a gradual hier- archy of local administration. No other divisions conflict with them." ^ The canton is purely an electoral and judi- ' ■ ( 1 J. J. O'Meara, Municipal Taxation at Home and Abroad, p. i6o. 92 [554 555] THE SYSTEMS OF NATIONAL AND LOCAL 93 cial unit. The prefect of a department represents the cen- tral government at Paris and acts as its agent. In each arrondlssement there is a Sub-Prefect and in each com- mune, a Mayor. " The Sub-Prefect and Mayor stand to- wards their divisions more or less in the position that the Prefect does towards its department." '• The prefect is nominally appointed by the President of the French Republic, but actually by the Minister of the Interior. He is at once the agent of the central govern- ment and a local officer. His powers extend to all matters afifecting the department.^ To enumerate but a few, he sup- ervises the execution of the laws; maintains vigorous con- trol over all administrative officials of the department even annulling their acts; furnishes the central government in- formation and advice concerning his department ; nominates persons to a variety of subordinate offices; oversees the communal affairs some of which must have his assent be- fore becoming effective ; issues by-laws and ordinances, etc. Assisting the prefect is the Prefectural Council which is composed of three or four lawyers, with administrative qualifications, appointed by the Minister of the Interior. This council acts as the administrative court of the first in- stance concerning the disputes about direct taxes ; as a Board of Control, checking and supervising all receivers of public money and authorizing prosecution for malversation or neglect; and as an Advisory Board to the prefect. The legislature of a French department is the conseil general whose members are elected by popular vote from each canton. Its powers are limited to (i) apportioning direct taxes among the arrondissements, (2) adoption of 1 O'Meara, op. cit., ibid. 2 For a detailed description of the powers of the French prefect, see J. Watson Grice, National and Local Finance, p. 123. 94 CENTRAL AND LOCAL FINANCE IN CHINA [556 measures concerning the construction and upkeep of high- ways, bridges, canals, school-buildings and asylums, (3)1 discussion and voting of prefectural budget, (4) voting of additions to the direct contributions necessary for its own services within the limits allowed by the national legislature, (5) confirmation of financial arrangements made between the department and the communes by the prefectural coun- cil, (6) raising departmental loans, (7) distribution of the State subventions and grants to public institutions, and (8)> some control over communes in matter of additions to local taxes. Its measures and those of its Standing Committee or Permament Delegation during its recess may be vetoed by the central government which has also the power to dis- solve the general council. The sub-prefect of the arrondissement is also appointed by the central government and serves as the district repre- sentative of the prefect. The arrondissement council of nine is elected by universal suffrage and its only function is to allot among communes their quota of the direct taxes as- signed to the arrondissement by the general council of the department. It may be dissolved and its measures, vetoed, by the central government. As has already been said, the canton is a mere electoral and judicial area. It normally contains a dozen communes. The commune is a corporate personality and the real unit of local self-government in France. It varies in size and population. It has a mayor as its executive and a council (from 10-36 members) as its legislature which is elected by universal suffrage for four years. The mayor is elected by the communal council for the same period. He also acts as the representative of the central govern- ment. Both the council and the mayor are under the stringent tutelage of the Ministry, acting through the pre- fect. All decisions must be reported to the prefect and 557] THE SYSTEMS OF NATIONAL AND LOCAL 95 his approval is required for every important detail of ad- ministration. The budget is perforce submitted to him, and he may, by virtue of his office, compel the council to pro- vide for all obligatory expenditures, laid by the national legislature on the commune; as to optional expenses, and for insuring local solvency, he may refuse his approval, which is necessary to render the budget executory. The mayor may be suspended from office for a month by the prefect; for three months, by the Minister of the Interior; and removed from office by Presidential order. The com- munal council may be suspended and dissolved by a min- isterial decree through the action of the prefect. Strict as is the administrative control over local affairs and finance, the legislative control over local finances is no less stringent, and this is secured by the fact that any local tax can be levied only when it is authorized by a law, and that " it is only within the limits and conditions of the law that the local authorities have the power of regulating the local taxes." ^ Although the Chamhre des Deputes gives a general grant of powers to the local bodies which may do anything not expressly forbidden by law, for which they can obtain administrative approval, it " lays down in a general manner the primary necessity of their bearing certain expenditure which is of general utility and which the State wishes to place at their charge," and itemizes the " obligatory expenditures." The local bodies remain free, within the limits of the finance laws, to exercise their dis- cretion as to " optional expenditures." ^ This legislative control of local finance both in respect of the kind and amount of taxation which may be raised to 1 Grice, op. cit., p. 127. ^ For a detailed description and itemization of the " obligatory ex- penditures " of the departments and communes, see Grice, op. cit., PP- 7-8, 173-4. 96 CENTRAL AND LOCAL FINANCE IN CHINA [558 a uniform maximum applicable to the whole country pur- ports to secure at once the national minimum of efficiency in certain services, to allow local variations in others, and to check any possible extravagance, although that maximum may be overriden under special conditions and by special authorization/ Before the imposition of a general and a scheduled (cedulaire) income tax by the general income tax law ^ of July 15, 1914, and the schedule income tax law ' of July 31, 1917, both having taken effect since Jan. i, 1918, there were four direct contributions on which the local bodies could vote additions : they were ( i ) the contribution fonder e (real estate tax), (2) the contribution personnelle et mobiliere which was in fact a personal tax plus a personal property tax (or rather a fixed poll tax, which was three day's labor commuted at the maximum amount of 5.501 francs, plus a tax on the rentals of houses and apartments), (3) the contribution des portes et des fenetres (door and window tax), and (4) the contribution des patentes (license tax on most trades and professions).* With the exception of the contribution fonciere, the the other three taxes have 'been replaced for state purposes, since 1918, by the schedule income tax of eight categories.^ 1 Grice, op. cit., p. 120. 2 For the French text of the law, see L. Bocquet, L'impot sur le revenu, Paris, 1921, 2nd ed., pp. 601-5, * For the French text of the law, see ibid., pp. 611-25. * Grice, op. cit., p. 131, also OMeara, op. cit., pp. 165 et seq. ^ They are income from houses, income from land, income from tan- gible personalty and capital, income from business profits, income from agricultural profits, income from wages and salaries, income from profes- sional earnings, and income from mining enterprises (^redevance propor- tionnelle des mines). (Cf. Seligman, The Income Tax, p. 277; Bocquet, op. cit., pp. 611 et seq.; and Bocquet, Instruction administrative du 30 mars 1918 pour I'etahlissement des impots cedulaire et l'impot general sur le revenu, Paris, 1918.) 259] I'HE SYSTEMS OF NATIONAL AND LOCAL gy Pending further legislation for the establishment of new departmental and communal taxes, the additional centimes on the three abandoned taxes are still levied on the fictitious principals {principaux iictifs) which are based on the real principals of 191 7, modified by the price movements of the taxable objects.^ The central assessors continue to assess yearly these taxable objects so that the resultant fictitious principals may serve as the "skeleton" (carcasse) to sup- port the "grafted additionals " (centimes greffes).^ To outline the departmental and the communal financial resources in France during this transitional period, they are respectively as follows : ^ A. Department: 1. General ordinary centimes (its maximum to be an- nually voted by the general council and determined by the finance act) : a. Additional centimes on the contribution fon- ciere (with building and with no building) and on the contribution personnelle-mobiliere (maxi- mum: 25 centimes), and b. Additional centimes on all four contributions (maximum: 8 centimes). 2. Special ordinary centimes {centimes ordinaires speciaux) on the expenses of road maintenance and on the four contributions in case the total revenue for the purpose is still insufficient (maximum: 15 centimes) . The condition for the latter addition is, however, not rigorously kept. The department may apply it for other purposes than communication in renouncing state subvention for roads. 1 Edgard Allix, Science des Unances et legislation Rnanciere frangaise, Paris, 1921, 4th ed., p. 821. 2 Allix, op. cit., pp. 821-2. 3 Allix, op. cit., pp. 796 (footnote), 822-33. g8 CENTRAL AND LOCAL FINANCE IN CHINA [560 3. Ordinary centimes for insufficiency of revenue- additionals on the four contributions (maximum: 20 centimes). (Before 1907, it was known as "centimes extraordinmres"). A decree in the Council of State is required if the fixed maximum is surpassed. 4. Extraordinary centimes added on the four contri- tributions (maximum: 12 centimes). A decree in the Council of State is required, if the fixed maxi- mum is surpassed. 5. Certain special centimes authorized by special acts: centimes for the completion or revision of the cadastre. 6. One-third of the decime on the turnover tax {la taxe sur le chiffre d'affaires) collected by the State, and One-fifth of the duties on automobiles also collected by the State. A part of the yield of the automobile duties forms a common fund (fonds commun) which is distributed among the departments in proportion to the mileage of their roads. 7. Receipts from public properties of the department. 8. Fees (produit de la copie de pieces d'archives) and tolls (peages). 9. State subventions (to the poor departments only). 10. State subventions, communal contributions, and private donations for charitable and communica- tional purposes. 11. Revenues from public enterprises such as railways and tramways. 12. Extraordinary revenues such as borrowings, etc. B. Commune : 1. Returns from communal domain and investments. 2. Fees and charges: duties on municipal weights, markets, slaughter-houses; rubbish removal; high- way privilege duties, etc. (This class of communal revenue furnishes about one-third of the total re- sources of a commune.) 561] THE SYSTEMS OF NATIONAL AND LOCAL gg 3. Miscellaneous revenues such as penalties and for- feits, hunting permits (20 francs per permit), and state and departmental subventions for certain ser- vices (such as cadastre, connecting roads, gratuitous medical assistance, etc.). 4. Taxes attached to the state taxes : a. Additional centimes (a) Centimes ordinaires: 5 centimes on the contribution fonciere and the contribu- tion mohiliere and 8 centimes on the fictitious principal of the old patentes. The former is optional; the latter is obligatory. (b) Extraordinary centimes to defray the expenses of public utilities and to meet budgetary deficits, the maximum to be first fixed by the general council and then by the annual finance act. (Some of them must be authorized by special acts.) (c) Special centimes for specific purposes such as the revision of cadastre, con- necting and country roads, the country watchmen expenses, public medical treatment, etc. All the above centimes, except the 5 or- dinary centimes and the centimes for cadastre, are additions on the four con- tributions. b. Certain state taxes surrendered to communes- as compensation for the cessation of state sub- ventions as well as for the suppression of the octroi on beverage, by the law of Feb. 20> 1918: (a) 20% of the horse and carriage tax; (b) One-sixth of the principal of the propor- "J~~'. -^ tional mining royalties, lOO CENTRAL AND LOCAL FINANCE IN CHINA [562 (c) Two-thirds of the decime on the turn- over tax, (d) Participation in the allocation of a com- mon fund, consisting of a portion of the state beverage taxes {sur les boissons hygieniques et sur I'alcool) . The former is distributed among the communes in proportion to their beverage consumption in 1913, and the latter, in proportion to their population. 5. Special communal taxes: a. Obligatory tax: dog tax. b. Optional taxes (impots facultatifs) to be au- thorized by the Parliament only (as the Paris domestic servant and piano taxes) or by the Parliament and the prefect both (such as the communal theatre and cinema taxes). 6. Miscellaneous and extraordinary : a. Protestation or road tax in money or in labor (3 days for the connecting roads and one day for the country roads). b. Loans and borrowings. As regards the central fiscal administration which, to some extent, pertains to the local finance, there are (i) the de- partmental tresoriers-payeurs generaux, (2) the arrondis- sement receveurs particuliers des finances, and (3) the com- munal tax collectors proper or percepteurs whose number in each commune depends upon its size and population.^ Besides the Council of State which is at once the center and the pivot of the whole administrative system of France, the Court of Accounts is the second central supervising body. Under its survey and audit pass the whole of the accounts of national and departmental revenue and expenditure. It 1 Grice, op. cit., p. 127. 563] THE SYSTEMS OF NATIONAL AND LOCAL loi also inspects all the accounts of the communes and public institutions whose revenues annually exceed 30,000 francs. It has legal powers for the production of any evidence, and may penalize and surcharge any officials and authorize pro- secution. It consists of life members appointed by the President of the Republic and presents to the Chamber an annual report which surveys the whole financial administra- tion of both the central and local organs of government and may contain any suggestions for reform.^ The commune, whose annual revenue is below 30,000 francs transmits its budget and accounts to the Prefect or the Prefectural Council for approval and audit. Fines of 10 to 100 francs per month for delay are imposed on accountants of the smaller communes, and of 50 to 500 francs, in the case of the larger ones. These amounts the communes concerned are bound to pay.^ To be legal, any departmental budget must be submitted to the Minister of the Interior, who submits it in turn to the office of departmental accounts and afterwards to the Council of State. When approval is granted, the Minister publishes it. Another important fiscal relation between the central and the local governments in France should not be overlooked, and that is the Caisse d'Amortissement et des Depots et Consignations. This according to M. Leon Say, the well known French economist, is virtually a State Bank which makes loans to the State, the departments, the communes, etc., besides its other multitudinous activities.' This caisse 1 Grice, op. cit., p. 122. ^ Grice, op. cit., pp. 315-6. s On pp. 64-65 in his book, Les Finances, Leon Say says as follows : " Cette caisse ...est une colossale banque d'Etat, car sauf I'escompte des effets de commerce, il n'est pas d^affaire de banque qu'elle n'entre- prenne, n'ait entreprise, ou qu'elle ne puisse entreprendre. Elle prete a 102 CENTRAL AND LOCAL FINANCE IN CHINA [564 was established in 1838 after the aboHtion of direct state loans to the localities which were unconsciously led to ex- travagance due to the low rate of interest charged by the central government. Another bank almost of the same nature is the Credit Fancier (established in 1852) which in 1898 advanced to localities 45%^ of their borrowings, chiefly in two accounts : the caisse des chemins vicinaux, and the caisse des Scales. The Credit Fancier has a sort of quasi- monopoly of communal loans and the State does not sanc- tion any communal loan advanced by the Caisse d'Amortis- sement at a lower rate than the Credit Fancier. In 1868, a special central fund financed by the issue of central Ex- chequer bonds was created for the construction of roads and schools in the departments and localities. It was, how- ever, subsequently abolished in 1893 : its effects were by no means salutary, as its interest rate was low, causing local extravagance and central embarrassment.^ ' In 1898, the period allowed for repayment was raised to 30 years; loans of longer duration require special authority and that is no longer given by the legislature, but by a decree of the Council of State.^ Thus the general council can definitely vote departmental loans whose repayment term does not exceed thirty years, and whose interest and amortisation charges do not surpass the ordinary and extraordinary financial resources of the department. AH departmental loans over thirty years must be approved by the Council of State. fEtat, aux departements, aux communes; elle revolt de I'argent en compte courant, et bonifie des interets a ses dSposants; les depots qui lui sont confies elle les place en rentes sur I'Etat, en obligations de chemins de fer, en valeurs diverses; . . . elle est representee sur toute la surface de la France par des correspondents, qui sont en meme temps des fonction- naires publics ". 1 Grice, op. cit., pp. 331-2. 2 Grice, op. cit., p. 333. ^65] T^HE SYSTEMS OF NATIONAL AND LOCAL 103 In 1902, a change came in the position of the prefect's supervision and right of veto over municipal loans. The municipal council can henceforth determine finally on all loans having up to 30 years repayment period, so long as their interest and amortization changes do not go beyond the maximum of extraordinary centimes allowed by the annual Finance Act and fixed by the general council. Loans of the same period, but loans necessitating more centimes, must have the approval of the prefect, and all loans for over 30 years (or their amount exceeding 1,000,000 francs) must be approved by decrees of the President issued in thei Council of State. All lottery loans, departmental or com- munal, must be authorized by a special law.^ During the World War, short-term bonds were resorted to by the departments and the communes as a result of the shortage of revenue. This process of raising revenue was sanctioned by the central government through a ministerial •decree and through the final ratification by Parliament in 191 5. The law was still effective in 1920. The emis- sion must first be approved by the Council of State.^ Central and Local Finance in Japan. ' Japan is one of the countries which have adopted the French system of local administration. Hers is just as centralized and bureaucratic as the French. Although dur- ing the earlier days, Japan's administrative system was modeled after that of China, her system of local admin- istration resembles the French more than the Chinese, for Japan has always made theory and practice coincide, which is usually not the case in China. Japan up to Dec. 31st, 1918 was territorially and ad- ministratively divided as follows.' 1 Allix, op. cit., pp. 838-839. 2 Allix, op. cit., p. 839. ■* The Twentieth Financial and Economic Annual of Japan, 1920, p. 2. I04 CENTRAL AND LOCAL FINANCE IN CHINA [566 Sections Prefec- Rural Cities Towns ViUages- (Z5«) tures (Fu, Ken) Districts {Gun) {Ku) {Cho) (Son) • f Kokoku . . . 6 74 9 180 1,318 Kwanto . 7 73 8 289 1,588 Kokuriku 4 43 7 104 978 Mainland Tosan . . 3 46 S 88 848 Tokai . . 4 55 9 140 1,040 Kinkl . . 5 69 8 13s 1,240 Chingoku S 68 8 132 1,401 Shikoku Kiushui, - 4 7 I I ^6 80 5 87 5 13 2 5 87 148 I 29 720 1,382 Okinawa . Hokkaido. 52 272 Tot! J 47 636 79 1.333 10,839 All the administrative and executive officials from the mayor of the city up are appointed by the emperor. The towns and villages have elective assemblies by which the mayor and other officials are chosen. In 1880, the promise of prefectural assemblies was fulfilled, but they do not pos- sess absolute control of their local affairs — in fact, they are not entirely independent of the central government; in all cases the financial ratification rests with the prefect who is appointed by the Ministry of Home Affairs which has the power to suspend the assembly at its discretion. In 1889, the right of local self-government was extended to cities, towns, and villages, upon a similarly centralized scheme. The mayor of the city is without exception appointed by the central government and manages the municipal affairs through both a " city council " and a " city assembly " ; the latter is a popular representative body, and the former is elected by the latter.^ ^Ernest Wilson Clement, A Short History of Japan, Chicago, 1915. pp. 122-3. 567] THE SYSTEMS OF NATIONAL AND LOCAL 105 The system of central and local finance in Japan resembles that of France even more closely than the administrative system. Among other things, the central government im- poses the land tax, the income tax, the business tax (on sales of goods ; banking and insurance ; money-lending and hiring of goods; manufacturing, printing, publishing, and photo- graphy; warehousing; railway transport; contracting; let- ting of assembly rooms and restaurants; inn-keeping i agency; commission, brokerage and trust business), the min- ing tax, the tax on stock exchanges or bourses, and the tax on patent medicines : on all of which the local bodies impose additional rates/ Thus, according to the RSsume Statis- tique de I'Empire du Japan for 1921 (p. 150), the prefec- tural receipts from surtaxes for the period of 1908-1918I were as follows, including the central subsidies : The land rate 303,944,000 yen The business rate 27,246,000 " The income rate 16,025,000 " The mining rate 2,197,000 " 'Central subsidies 78,110,000 " Total 427,522,000 " Besides, the prefectures levy rates on each household — ■ which is not much different from a poll-tax, being imposed on every member of the household. The business tax as imposed by the prefectural treasury is levied on those occu- pations that do not pay a national tax, such as restaurants, public performances, ships, vehicles, etc. — in all about fifteen. Grants are for police accounts, and subventions are made in connection with epidemics and leprosy, river work, in- dustrial encouragement, etc.^ The receipts of the rural districts, which correspond to 1 Japan Year Book, 1913-1914, pp. 37-6o. 2 The Japan Year Book, 1919-1920, p. 643. I06 CENTRAL AND LOCAL FINANCE IN CHINA [568 the French arrondissements, for the same period were as follows . 1 Communal (cities, towns, and vil- lages) contributions 71,050,000 yen iCentral subsidies 633,000 || Prefectural subventions 8,701,000 Total 80,384,000 " Like the French arrondissements, the Japanese rural dis- tricts have no taxes to impose. Their revenue consists chiefly of contributions, grants and subventions. The receipts of the cites, towns, and villages from the surtaxes and subsidies, etc, for the same period were as follows : " \ The income rate 52,369,000 yen The business rate 127,097,000 " The indirect tax rate 88,000 " Central and prefectural grants 115,256,000 294,810,000 " Ow^n sources of revenue : 1. The land value tax 113,063,000 " 2. The house tax 670,272,000 " Grand total 1,078,145,000 " Besides, the cities, towns, and villages have other sources of revenue, such as the area-rate, the land-transfer duty other than by inheritance which is taxed by the central government, and tax on income not subject to the imposi- tion of the national income tax. Grants and subventions from the central and prefectural treasuries are chiefly in connection with the trouble and expense incidental to the collection of their taxes.' 1 ^Resume Statistique de I'Empire 'du Japan, 1921, p. 152. ^ Resume Statistique de I'Empire du Japan, 1921, p. 153. * The Japan Year Book, 1919-1920, p. 644. 569] THE SYSTEMS OF NATIONAL AND LOCAL 107 While the local bodies receive grants and subventions from the central authority, they also contribute sums to the latter in connection with the local public works. From 1916 to 1920 (fiscal year), these contributions amounted to 22,110,000 yen.^ As is the case in France, there is a legal limit to every local rate on each of the national taxes. This limit may be, however, more or less altered with the consent of the central authority. The legal limit and the average rates are not infrequently divergent. For instance, the legal limit and the average rates for the fiscal year 1919-1920, were as follows : ^ ; Name of Local taxes Average Legal Excess Rates Limit Dwelling land rate 16.6% 13% 3-6% Other land rate 40-7%. 3^% 8.7% Business rate i3- % 11% 2.% Income rate 4-9% A% -9% House tax — no — As regards local indebtedness, there are two categories of local loans : those for the raising of which central approval is required and those for the raising of which central ap- proval is not required. According to the Twentieth Fiscal and Economic Annual of Japan (1920), the former amounted, up to 1920, to 417,199,638 yen; and the later, to 432,249,218 yen.' Central and Local Finance in Germany. Quite similar to, yet somewhat different from, the French and the Japanese administrative and fiscal system is the German system of local administration and of local and 1 Resume Statistique de I'Empire du Japan, igzi, p. 146. 2 The Japan Year Book, 1919-1920, pp. 643-4. = Pp. 38-39, Supplement table I and Supplement table II. lo8 CENTRAL AND LOCAL FINANCE IN CHINA [570 central finance. Similar, because they are all bureaucratic; different, because Germany was a federated Empire, while France and Japan have always been unitary. Before the advent of the Republic in 1918, the German Empire was a federated one, composed of twenty-five semi- independent States: the four kingdorns, the six grand- duchies, the five duchies, the seven principalities, and the three free cities.^ These states varied in size and popula- tion. Prussia was the largest of them all and played a very important role in the governance of the German Em- pire before 1918. The Bundesrat and the Reichstag en- joyed enumerated powers, while the States retained the residual ones and their officials executed the imperial laws for the imperial authority.^ ! The chief sources of imperial revenue were the indirect taxes (or the impositions on processes and things, such as the excise, the stamp duties, and the customs duties), the profits of government enterprises, the administrative reve- nues, and the matricular contributions from the various States, the quotas of which were determined by 16 cents or nearly 4/5 mark per inhabitant.^ These contributions or advances made by the individual States were to meet deficits in the imperial finances. Such contributions were not reimbursable, but they might be refunded at the end of the year to the separate States in such proportion as the unex- pended ordinary receipts exceeded the necessary expenses. In 1879, with the introduction of Bismarck's protective tariff into Germany, it was foreseen that an increase of customs revenue would occur, and by the so-called Franken- 1 Ogg and Beard, National Governments and the World War, p. 449. ^C. J. H. Hayes, A Political and Social History of Modern Europe, pp. 398, 4,ooo " 6,647,000 " Customs duties, export taxes, and tariff increase 7449,Si8 " 10,239,620 " Total indirect taxes 25,476,518 " 17,019,620 Grand total S2,57i,Si8 " 42,033,620 Thus all the most lucrative sources of revenue, in the form both of direct and of indirect taxes, have gone into the coffers of the central government. The way in which the central authority meets the state and local financial difficulties is worth noting. Since 191 9 the state and communal fiscal distresses have been relieved by a system of central "transfers" {Uberweisungen) ?■ In 1920 the total amount of central transfers was 9,400 million marks or about seven and a half per cent of the total central expenditures; in 1921, it was originally set at 9,884 million marks or about nine per cent of total central expenditures, but later on it was found that an increase of 6,784 million marks had to be made, thus raising the per- centage of transfers to central expenditures to a little more than fifteen. The German States are nowadays no more sovereign and independent than the French departments and the English counties; in fact, they are even worse off, so far as the financial attributions are concerned. The central transfers now constitute an integral part of the state budgets. The budget of Prussia for 192 1 amounted to 16,700 million marks of which 5,800 million marks or 40.7% was from the central transfers. As a rule, the por- ' J. Meneau, op. cit., pp. 408, 412-3. _579] THE SYSTEMS OP NATIONAL AND LOCAL 117 tion of transfer amounts to two-thirds for the income tax, one-fifth for the inheritance tax, one-half (and in a few- cases one-quarter) for the land transfer tax, and 15% for the turnover tax. In the last case 5% must go to the locali- ties; in all the other cases, the apportionment to the locali- ties is left to the State.^ American National and Local Finance. Having given three illustrations of a highly centralized and bureaucratic administrative and fiscal system, we may now present an example of the opposite extreme, the United States of America. The United States are a federated republic with the Federal Government exercising the enumerated powers and the constituent semi-independ- ent and semi-sovereign States retaining the residual ones. The individual States elect their own officers, conduct their own affairs, and are beyond the reach of federal control and supervision. Like the Federal Government, each State has a bicameral legislature, a Senate and a House of Representa- tives. It has an independent judiciary and a popularly chosen executive department headed by a governor. Each of the forty-eight States is divided into a number of coun- ties which are both administrative and local self-govern- ment areas. A county is further divided into cities, towns or townships, and the other minor civil divisions. Al- though the state authority in no case appoints any local officials, legislative, executive, or judicial, it has, never- theless, constitutional and legislative control over them. Regarding the financial resources of the different grades of government in America, it may be said that there is an almost complete separation of the sources of revenue be- tween the federal and the state governments. Formerly, the Federal Government had resort to indirect 1 Seligman, Essays in taxation, 9th ed., 1921, p. 665. Il8 CENTRAL AND LOCAL FINANCE IN CHINA [580 taxes only (such as the customs duties and the internal revenue or excise) for its financial support. More recently, it imposes, besides the indirect taxes, a personal income tax, a corporation income tax, an inheritance tax, etc. The state derives its revenue mainly from the general property tax, sharing the proceeds with the localities. Some states now impose an income tax which is a substitute for the belated general property tax in order to achieve justice in taxation, that is, according to ability to pay. The yields of the income tax are invariably apportioned among the major and minor civil divisions of the State according to a fixed percentage. According to the Financial Statistics of States of 1919 (pp. 19-22), the state revenue system may be summarized as follows: Hi' (i) Property tax, both general and specific. (2) Poll or personal taxes. (3) Income tax (in a few states only, taking the place of the general property tax).^ (4) Business tax: (a) license taxes. (b) non-license taxes : (a) general licenses (such as on dogs and vehicles), (b) permits (such as marriage per- mits, etc.). (5) Special assessment. (6) Special charges for outlays. (7) Fines and forfeits. (8) Escheats. (9) Federal subventions and grants, conditional or otherwise. (10) Donations (private). 1 Wisconsin (1911), New York (1919), Massachusetts (1916), Con- necticut (i9i,S), Missouri (1917), etc. (altogether 12 in number). <^Q^^S>ti^^STEMS OF NATIONAL AND LOCAL ng (ii) Pension assessments. (12) Fees and charges (the former is for something done by the government for the individual, the latter is for the right to do something granted to the individual by the government) . (13) Tolls. (14) Rates (applied to public service enterprises). (15) Highway privilege dues, both major and minor. (16) Other revenues: (a) state private enterprises. (b) borrowings. (c) fund accumulations. The introduction of federal subventions and grants is an entirely new feature in American national and local finance. There happened, however, something like the German assignments in 1836, during Jackson's administra- tion, when $28,101,641 of a surplus of $42,000,000 was dis- tributed among the States. But, strictly speaking, this was by no means an assignment, for, according to the terms of the authorization by Congress, it Y^as to be held by them imtil the Federal Government should call for it. Such deposits, if we may so call them, were carried on the Treasury's books as an asset for seventy years. In 1907* this was transferred as a charge against the States. The money has, however, never been repaid to the Federal Gov- ernment.^ The present system of federal subventions and grants can not be compared with the former aimless distribution or deposit of federal surplus revenue among the States. The present innovation is largely inspired by the English system of grants-in-aid, purporting to secure a "national minimum " and to remedy some of the defects of a parti- cularistic system of political organization. According to 1 The New York Times, February 24, 19S2, p. 15, column 8. I20 CENTRAL AND LOCAL FINANCE IN CHINA [582 Paul H. Douglas, it is a result of gradual realization of the need of centralization and the futility of chaos and confusion of state regulation of national problems. In spite of the opposition of the strict constructionists, the state-rights men, and the rich Eastern States, the Smith-Lever Bill for the purpose of giving " instruction and practical demonstra- tions in agriculture and home economics to persons not " attending or resident in colleges in the several communi- ties " was passed in 1914, the Good Roads Act for federal aid to Post-Roads was passed in 1916, the Smith-Hughes Act for the purpose of promoting vocational education was passed in 191 7, and the Chamberlain-Kahn Act for purpose of aiding the campaign against venereal desease in the civil population was passed in 1918/ Thus, from 1905 to 1919, the total revenues and federal aids for state universities, agricultural and mechanical colleges, highways, experimental stations, agricultural extension, soldiers' and sailors' relief and home, etc. were as follows : — ^ Year Total Revenue Federal Subventions Percentage and Grants 1915 $458,232,597 $5,356,799 I.I 1916 466,946,748 10,252,542 2.2 1917 522,924,733 8,209,840 1.2 1918 588,305,651 8,848,569 1.5 1919 675,217,202 11,709,458 1.7 (The percentage of federal subventions and grants to state universities and agricultural and mechanical colleges viras 51.5 in 1915, 74.8 in 1916, 53.9 in 1917, 49.4 in 1918, and 40.9 in 1919.) Although the percentage of federal aid to the total re- venue of the States is very small, it is, nevertheless, a signi- 1 " The Development of a System of Federal iGrants-in-aid," Political Science Quarterly, vol. xxxv, pp. 255, 258, 262, 524-532. 'Financial Statistics of States, 1915, pp. 36, 66, 72; 1916, pp. 37, 68, 74; 1917, pp. 38, 68, 74; 1918, pp. y7, 66, 72; 1919, pp. 36, 60, 66. 583J THE SYSTEMS OF NATIONAL AND LOCAL ^j ficant development and departure from the practices of the so-called " good old days ". The decentralizationists allege that this entering wedge of federal interference with state affairs would inevitably lead the Federal Government to become bureaucratic, top-heavy and encumbered with red tape, that a centralized system is naturally unfit to such a large, populous and complex country as the United States of America ; and that it would destroy the sovereignty of the States. The centralization- ists claim, however, that such a system lessens the heavy bur- dens on poor states in process of improvement, for the means of a state are not necessarily always in proportion to its needs; that it insures a certain standard of national mini- mum, which is absolutely necessary for no state can now live in isolation while its population migrates so often and no in- dividual citizen should be handicapped because of the acci- dents of birth; that it insures relatively more economic ex- penditures of federal funds and prevents their misuse, as the aids are to be without exception duplicated by the states assisted — ^thus eliminating the log-rolling and pork-barrel processes in local scrambles for rivers, harbors, and post- offices appropriations of the last thirty-five years; that it creates no centralized bureaucracy, granting local initiative, plasticity, and autonomy instead — thus avoiding deadening uniformity and allowing political experimentation; that it affords a clearing house for information and permits a centralized research, distributing the results of investiga- tions and experiments; that it does not conflict with the Constitution, for initiative in requesting federal aid always comes from the States and their acquiescence in certain con- ditions attached is absolutely voluntary, and therefore it is not a violation of state sovereignty which should be con- sidered as plastic and sharable rather than fixed and mon- istic ; and that it serves to integrate the units affected within 122 CENTRAL AND LOCAL FINANCE IN CHINA [584 the State and to strengthen state control in order to avoid too great variation on the part of the localities within that State.' The fiscal relations between the state and the local gov- ernments are comparatively more complex. There is a partial separation of the sources of revenue between the two. The general property tax, the income tax, and some corporation taxes are held to be common sources of revenue for both. The inheritance tax and some other cor- poration taxes are held to be exclusive sources of state re- venue ; while the real estate tax, the house or habitation tax, the dog license, etc., are exclusively sources of local revenue. As regards revenue administration, the practice differs from state to state. In some states taxes on the capital stock of banks and other corporations, and other- revenues accruing in part or in their entirety to the benefit of counties, cities, and minor civil divis- ions are collected by the state, which retains its part if it par- ticipates in the revenue, and transmits to the civil divisions such amounts as are due them. In other states such revenues are collected and expended by the counties and cities them- selves." ^ " In some states the general property tax, taxes on the capital stock of banks and other corporations, taxes on the liquor traffic, and other revenues accruing, in part or in their entirety, to the benefit of the state or county, or both, are col- lected by the city, which retains its part, if it participates in the revenue, and transmits to the other civil divisions such amounts as are due them. In other states these revenues are collected by the county governments, which pay over to the cities their proportions of the amounts collected.* Quite recently, the tendency of the tax administrative re- ^ Paul H. Douglas, op. cit., pp. ajs, 5140-542. » Financial Statistics of States, 1919, p. 12. * Financial Statistics of Cities, 1919, p. 23. 585] THE SYSTEMS OF NATIONAL AND LOCAL 123 form in the States is without a single exception towards <:entralization in the hands of a state tax commission or 5ome other organ of the same nature. | There are also state and county subventions and grants to the localities. According to the Financial Statistics of Cities, the subventions and grants from the state and county- authorities to the cities of more than 30,000 inhabitants and the total revenue of such cities, from 1915 to 1919, were as follows : '' Year No. of Cities Total Revenue State and County Percentage Subven. & Grants 1915 204 $940,385,311 $36,141,199 3.8 1916 213 994,710,241 37,666,043 3.7 1917 219 1,065,537,142 39,806,668 3.7 1918 227 1,124,094,899 41,277,908 3.6 1919 227 1,224,112,714 44,802,680 3.6 (.The percentage of state and county subventions and grants to education was Sa in 1915, 87 in 1916, 87.4 in 1917, 87.2 in 1918, and 85.4 in 1919). These state and county subventions and grants do not mean that the state and county authorities can thereby con- trol and impose conditions upon the city authorities in ex- pending the amounts. Quite the contrary. According to Prof. Frank J. Goodnow, the American system of local gov- ernment, as contrasted with the French and German system, is one of complete administrative decentralization made good by a system of legislative centralization to the most minute details." J The state constitution itself acts as a check upon the power of the local authorities, prescribing the limits of their authority, often laying down the maximum of their taxing power, and the forms of taxation which they are authorized to use. If they 1 191S, pp. 69, 140; 1916, pp. 71, 140, 172; 1917, pp- 72, 140, 172; 1918, pp. 64, 124, is6; 1919, PP- 63, 152, 11& * Comparative Administrative Law, 1913, vol. i, book i, ch. vL 124 CENTRAL AND LOCAL FINANCE IN CHINA [586 exceed their legitimate powers, the usual method of judicial redress through the courts can be brought into play/ Usually the power of the localities to incur indebtedness is also limited by the constitution. The audit of local accounts is generally in the hands of local authorities themselves and the state authorities have usually nothing to do with them. English National and Local Finance. Standing between the Franco-Prusso- Japanese adminis- trative and fiscal system of local government and that of the United States of America is the English system.'' While avoiding the defects of both, bureaucracy and anarchy, England retains the excellencies of both, efficiency and liberty or local self-govertmient. \ Let us first take up the English local organization.^ Eng- land is divided territorially into 64 administrative counties which were created and regulated by the local government legislations of 1888 and 1894; six of them coincide with the historical counties. While including all non-county- boroughs and all urban districts, they exclude the 74 county boroughs situated within them. They vary extremely in size and population. Each administrative county has nor- mally an elective council of 75 who look after the county affairs concerning finance, highways, sanitation, education, games, property, license-granting, and supervision of the minor rural authorities through committees. It is subdi- vided into (i) rural districts (672 in England and Wales) each of which has an elective council and a permanent staff chosen by the council which, besides the selection of officials, 1 S. Leacock, Elements of Political Science, revised edition, p. 303. ' Sidney Webb, Grants-in-aid, revised edition, 1920, pp. 1-6. » Ogg and Beard, op. cit., pp. 388-396. 587] "^HE SYSTEMS OF NATIONAL AND LOCAL 125 enforces public health laws, cares for highways other than the "main roads", and levies district rates; (2) parishes (15,000 in England and Wales) each of which is composed of urban parishes which have no administrative import- ance and the rural parishes (each of which may or may not have a council), cares for the local means of communi- cation, and levies poor rates; (3) urban districts which are on the way of becoming boroughs and which are each governed by committees which look after sanitation and highways; and (4) four hundred municipal boroughs char- tered by the Local Government Board in the name of the crown and governed by a mayor (chosen by the council), several aldermen (chosen by the council for six years) and councillors who govern the borough by committees on all sorts of matters under the supervision of the Local Gov- ernment Board which has the veto power on public health ordinances, etc. The debt limit of the municipal boroughs is set by the central authority and central permission is re- quired for every new issue of bonds. As already indicated, there are 74 county boroughs in England. These county boroughs are similar to municipal boroughs, but have withdrawn from the jurisdiction of the administrative counties in which they lie, and have them- selves been endowed with the powers of such counties. The Local Government Act of 1888 provides that any borough is so withdrawn automatically when it attains a population of 50,000. All these local governing bodies are more or less under the supervision of five central authorities : ( i ) the Home Office regulating factory inspection and police, (2) the Board of Trade regulating the commercial enterprises con- ducted by the localities such as electrical undertakings and tramways, (3) the Board of Education, (4) the Board of Agriculture directinsr veterinary matters, and finally (5) 126 CENTRAL AND LOCAL FINANCE IN CHINA [588: the local Government Board (now the Ministry of Health), supervising charities, sanitation, finances, etc. However,, the intervening link between the central departments and the minor local authorities is missing, inasmuch as there is ex- tensive local responsible government and no administrative hierarchy such as exists in France, Prussia, and Japan. This gap is fortunately filled by an elaborate system of " grants-in-aid," According to Mr. Grice, the history of the relations of local and national fiinance in England may be conveniently divided into three periods. " The first be- gins with the passage of the Reform Bill in 1832 and ends with the proposals of Sir Robert Peel in 1846; the second includes the discussions and agitations which led to the in- creased grants in aid, provided for by Sir Stafford North- cote in his budget of 1874; the third is concerned with the revolutionary changes made by Mr. Goschen in 1888-1890,, the relief grants under the Agricultural Rates Act of 1896, the modifications of the Local Taxation Accounts, intro- duced in the Finance Acts of 1907, 1908 and their results." * The " grants-in-aid " are given the localities usually for (i) the pohce, (2) elementary education, (3) industrial and reformatory schools, (4) public health (including pro- vision for the sick and infirm, venereal diseases, tubercu- losis, maternity and infancy), (5) the distress committee (unemployed workmen's relief, (6) lunacy, (7) highways, and (8) various contributions in lieu of poor rates. In 1833-1834, the first grant-in-aid for national education was made. From that time on, this ingenious system of reconciliation between liberty or local autonomy on the one hand and efficiency or central control and supervision on the other gradually gained ground. In order to show how fast it grew, let us adduce some figures. Afecording to * Grice, op. cit., p. 11. 589] THE SYSTEMS OF NATIONAL AND LOCAL 127 Mr. Sidney Webb, it grew from decade to decade since 1830 as follows : ^ 1830 about 100,000 £ 1840 500,000 " 1850 750,000 " i860 over 1,000,000 " 1870 about 2,000,000 " 1880 5,000,000 " 1890 12,000,000 " 1900 16,000,000 " 1911-1912 30,000,000 " 1920-1921 65,000,000 " In his book " Grants-in-aid " (p. 26) Mr. Webb ad- vances four grounds for a system of general grants-in-aid : (t) to mitigate any inequalities of burden between dif- ferent localities, (2) to secure effective authority for the necessary super- vision and control of the national government, (3) to encourage the kind of expenditures most desir- able in the interest of the community as a whole, and (4) to make it possible to attain to anything like a uni- versal enforcement of the " national minimum " that Parliament has prescribed. There is practically no separation of revenue between the national and the local governments in England. Accord- ing to the financial arrangement of 1888, the general scheme of central subventions out of the Local Taxation and Ex- chequer Distribution Accounts has been as follows : ^ (i) The Local Taxation Account absorbs (i) the local taxation licenses such as duties on dogs, killing game, guns, carriages including locomotives on 1 Grants-in-aid, p. 8. ^ Grice, op. cit., p. 97. 128 CENTRAL AND LOCAL FINANCE IN CHINA [590 highways, armorial bearings, and male servants, (2) part of the Estate Duty, and (3) eighty per cent, of the surtax on beer and spirits. Out of this account, the central government grants (i) diseases of animals grants, (2) agricultural rates, (3) metro- politan police grants, (4) police pensions, and (5) costs of revising barristers. In compliance with the modifications effected in the Finance Acts of 1907 and 1908, the power of levying local taxation licenses has since then been transferred to county councils which are lequired to make returns to the Local Government Board as to the amounts collected. (2) The Exchequer Distribution Account of counties and county boroughs caters to the needs of ( i ) technical education, (2) extra metropolitan police, (3) sani- tary officers, (4) union officers, (5) pauper lunatics, (6) poor law teachers, (7) public vaccination, (8) registration of births and deaths, (9) school fees and pauper children, and (10) other services. By the provisions of the Finance Acts of 1907 and 1908, all grants are thenceforth to be charged on and paid out of the Consolidated Fund.^ (3) Besides these two accounts, there are also general grants in aid of rates. With reference to the audit of local accounts, the Local Government Board examines yearly or half-yearly the ac- counts of all local bodies except municipal boroughs. It also has the power to disallow illegal or improper expendi- ture or to surcharge it upon the individual members of the offending authority.^ The accounts of a municipal borough are audited by three members, one of whom is appointed by ^ Grice, op. cit., p. 98. 3 Percy Ashley, " The financial control of local authorities," Economic Journal, igo2, p. 184. 591] THE SYSTEMS OF NATIONAL AND LOCAL 129 the mayor from among the members of the borough council and the other two are elected burgesses. Such local auditors are usually incompetent and wanting in interest. The other central controls of local finance are (i) the limitation of local tax rates, and (2) the requirement of central sanction for local loans which, above all, have also to undergo the process of referendum. Thus the local authorities may acquire borrowing powers either (i) by clauses in general acts such as the Public Health Acts, the Education Acts, and the Municipal Corporation Act, or (2) by special local act. Each general statute usually specifies a maximum period for repayment, the discretion within these limits resting with the government department especially concerned with the object for which the loan is desired. The maximum periods vary from ten to sixty years. The Local Government Board, which does most of the controlling (since 1902 also for loans under the Educa- tion Acts), usually acts only after local inquiry by one of its inspectors into the probable durability and continuing! utility of each object for which a loan is required. By a process of equating the periods of utility, a period for the whole loan is arrived at which usually falls some- what below the maximum allowed. This process of equa- tion is not required where either the sum in each group of items in the estimates is large or the local authority prefers separate loans. It also takes into account the probable future condition of the local body with regard to debt.^ Conclusion. We might continue with the systems of national and local finance of other nations or countries such as Belgium, Italy, Switzerland, Canada,^ etc. But space does not allow; iGrice, op. cit., pp. 346-347- 2 The fiscal relation between the Dominion and the provincial gov- I30 CENTRAL AND LOCAL FINANCE IN CHINA [592 US to do so. It is assumed that the five systems of national and local finance here dealt with practically cover all the different important features concerning the fiscal relations between the central or national and local governments. The characteristics of the first three systems (French, German, and Japanese) are (i) centralization of adminis- tration and control, (2) bureaucracy and hierarchy, (3), loss of local autonomy, and (4) gain in efficiency. The characteristics of the American system are (i) fullest de- velopment of local self-government, and (2) local anarchy resulting in local misgovernment, chaos, confusion, and ex- travagance and waste. The characteristics of the English system are (i) preservation of local self-government, and (2) highly developed central control, supervision, and direc- tion of local affairs, especially finance. ernments in Canada is peculiar, due to the fact that the former is con- stitutionally or rather statutorily required to subsidize the latter. This kind of subsidy system is very objectionable from the standpoint of correct budget procedure : .1. *' In the first place, the Dominion subsidies violate the sound constitutional and economic principle that the best way to check extravagance in public and private expenditures is to oblige these political units which spend funds of any description to furnish the proceeds with which to defray such outlays. 2. " The granting of large Dominion subsidies has also delayed the introduction of direct taxation in the Provinces, which would prove the best curb on extravagance as it would result in a more careful scrutiny of government expenditure. 3. " Furthermore, the knowledge that the iDominion will help them out in case of necessity has caused the Provinces to be im- provident in many instances and to postpone facing the respon- sibility which they were incurring for the future. 4. " Finally, the Canadian subsidy system has weakened the idea of self-help among the people and has retarded the growth of local self-government." Provinces having a large subsidy from the federal government, have unnecessarily taken over the im- provements which ought to be initiated by the different localities concerned and to be financed by local means. (H. J. Villard and W. W. Willoughby, The Canadian Budgetary System, New York, 1918, pp. 280-281.) 593] THE SYSTEMS OF NATIONAL AND LOCAL 131 To generalize further these five systems, we may add that the Franco-Germano- Japanese system of local administration and finance gains efficiency at the expense of local liberty; that the American system of local administration and finance gains local autonomy at the expenses of efficiency; and that the English system of local administration and finance secures every advantage of the Continental and American systems without incurring their disadvantages. What can China learn from these five systems? The answer is obvious. She can learn efficiency from France, Germany, and Japan. She can learn liberty from America. And she can learn the compromise of reconciliation between efficiency and liberty from England. As regards the separation of revenue, we understand that the practice differs from country to country. Thus, in France, Japan, and England, there is practically no separa- tion of revenue at all. In Germany, there was complete separation of revenue both between the Imperial Govern- ment and the State Governments, and between the State and the local governments (especially in Prussia) before 1919, but a completely unified system has since then taken its place. In America, there was until recently almost com- plete separation of revenue between the Federal and the State Governments on the one hand, and partial separation of revenue between the State and local governments on the other. Again, what can China learn from them with regard to this important question that has been engaging the attention of her political and fiscal reformers ever since the Imperial Edict for a nine-years' preparation for the adoption of a constitutional form of government in 1907? Being such a vast and unwieldy country, China can, in this respect learn very little from France, Japan, England or the present-day Germany. The evils of communism of 132 CENTRAL AND LOCAL FINANCE IN CHINA [594 finance are well known. She can learn a little more from the old German system of complete separation of re- venue both between the Imperial and the State Governments and between the State and the localities. The latter pro- cedure probably goes too far. But China can learn most from the American system of an almost complete separa- tion of revenue between the Federal and State Governments on the one hand and a partial separation of revenue between the State and local governments on the other. It is the purpose of the next two chapters to develop these two suggestions (reconciliation between liberty and effi- ciency and a system of both complete and partial separa- tion of revenue between the different grades of govern- ments) and to formulate a constructive politico^scal pro- gram for China. | CHAPTER V Some Fundamental Recommendations for the , Political Readjustment between the Central, the Provincial and THE Local Governments As has already been said, government finance is closely related to governmental structure and organization. There can be no efficient government finance without efficient gov- ernment structure and organization. In order to readjust the fiscal relations between the central, the provincial, and the local governments in China, some fundamental recom- mendations concerning the reorganization of the political system of the entire nation should be first noted and effected. True it is that China is still groping in the dark and cares about no principle but expediency. But we must not be too immediately practical and realistic. Any change or reform, however beneficent it may prove to be in later years, is first considered, if not condemned, as utterly visionary and im- practicable. However hopeless the present political situa- tion in China may appear to be, there is absolutely no reason why we should not set forth some fundamental principles of government the attainment of which should be the goal of all our practical reforms. With this long-range view in mind, the author of this monograph ventures to suggest the following recommenda- tions for the political readjustment between the central, the provincial, and the local governments in China. In the first place, provincial and local self-government 595] 133 134 CENTRAL AND LOCAL FINANCE IN CHINA [596 should be granted in the National Constitution, which, to our regret, has never yet been framed and adopted by the people, because of internal troubles. This naturally brings us to a discussion, at this point, of the advisability and the possibility of the establishment of a federal republic in China. The decentralizationists argue that it is advisable for China to adopt a multiple or federal government be- cause ( 1 ) it is so far the only kind of flexible and hence durable government permanently applicable to a vast and extended country such as the United States of America or China,^ (2) it is more in harmony with the ideal of modern de- mocracy than a unitary polity — as a means of realizing the maximum of liberty compatible with order,^ and (3) it avoids the tyranny of the majority which Rous- seau overlooked and upon which Tocqueville laid stress ' and affords better channels for the operation of an active consent on the part of the people than any other form of government.* On the other hand, the centralizationists contended that it is inadvisable for China to adopt a federal form of gov- ernment, because (i) it lacks the strength of a unitary government which " is strong since all authority is concentrated in a single organization and can be fully brought to bear at any time," " 1 John Fiske, American Political Ideas, 1911, p. 84. ^Ibid., pp. 125-126; also Henry iSidgwick, Development of European Polity, 1903, p. 437. 'Sidgwick, op. cit., p. 438. * Harold J. Laski, The Foundations of Sovereignty and Other Essays, 1921, p. viii. 'W. F. Willoughby, An Introduction to the Study of the Government of Modern States, 1919, p. 212. 597] SOME FUNDAMENTAL RECOMMENDATIONS 13c (2) it lacks the simplicity of a unitary government which " is simple, since the problem is not presented of rigidly de- fining the respective jurisdiction of the central government and that of its political subdivisions," ^ and (3) it lacks the flexibility in operation of a unitary gov- ernment w^hich can, by mere legislative act, at any time alter the distribution of powers and duties between the central government and its political subdivisions.^ Carefully balancing the relative weight of all the argu- ments on both sides in the controversy, the author is in- clined to cast his lot with the affirmative, being mindful of the fact that Qiina, like America, is virtually a small con- tinent by itself.' As regards the possibility of a federal form of govern- ment in China, we can do no better here than to refer to the last part of Chapter III, where the recent movement in China for a federation of self-governing provinces is fully treated. But whether China should and can adopt a federal form of government or not is immaterial for our purpose here. Substance is far more important than mere form. What we are really after is provincial and local self-government. The writer's first recommendation for the political read- justment between the central, the provincial, and the local governments in China is, as has been already stated above, the granting of provincial and local self-government in the National Constitution which is yet to be drafted and adopted, no matter whether the Chinese people have already possessed 'W. F. Willoughby, op. cit., p. 212. ^ W. F. Willoughby, op. cit., p. 212. ^ " The unified governance of America is a physical and economic im- possibility; and the roots of the federal tradition were already laid there." (Laski, op. cit., p. 53.) 136 CENTRAL AND LOCAL FINANCE IN CHINA [598 self-governing capacity or not.^ This recommendation is based on five reasons : First, provincial and local self-government is desirable and should be the goal of the political life of any nation or people, because ( 1 ) "It creates among the citizens a sense of their com- mon interest in common affairs, and of their individual as well as common duty to take care that those affairs are efficiently and honesty administered .... Whoever learns to be public-spirited, active and upright in the affairs of the village (or town or city) has learnt the first lesson of the duty incumbent on a citizen of a great country." ^ (2) ". . . . Local institutions train men not only to work for others but also to work effectively with others. They develop common sense, reasonableness, judgment, sociability. Those who have to bring their minds together learn the need for concession and compromise. A man has the opportunity of showing what is in him, and commend- ing himself to his fellow-citizens. Two useful habits are formed, that of recognizing the worth of knowledge and tact in public affairs and that of judging men by perfor- mance rather than by professions and promises." " (3) It eliminates the spoils system and political patron- 1 This assertion may seem to be a little too bold. But it is really not so. To be sure " local self-government ought not to be given till the people have learnt how to use it. Yet how will they learn to use it except by trying? This is the old problem which has always divided thinkers as well as politicians. Swimming can be learnt only by going into the water, but if you go in before you can swim, you may be drowned. Those who know the history of Switzerland, America, and England do not deny the risk, but think it well worth taking." (James Bryce, Modern Democracies, vol. i, p. 285.) 2 Bryce, op. cit., pp. 131-2. 'Bryce, op. cit., vol. i, p. 132. 599] SOME FUNDAMENTAL RECOMMENDATIONS 137 age on the part of the central government at least in the selection of local officials.'^ (4) It eliminates unreasonable expectations from and complaints against the government, since the mass of the community has a " general diffused knowledge of the real nature of governmental business and the conditions and limitations under which it is carried on . ..." ^ (5) It guards against the deadening uniformity of a central bureaucracy which tends to become attached to its settled habits, to dislike novelties and experiments and hence to retard progress, and to assume towards the private citizens a slightly supercilious air and hence to cause the flagging of popular interest in local government and the deepening of the gap of misunderstanding between the governing and the governed.' (6) It contributes " to the development of local centres of thought and action. Many a country has had reason to dread the excessive power of its capital city. There ought to be many cities, each cherishing its own traditions, each representing or embodying a certain type of opinion. . . ." such as Lyons, Marseilles, and Bordeaux in France and Munich, Frankfurt, Hamburg, Leipzig, Dresden, and Cologne in Germany.* The advocacy of provincial and local self-government •does not mean a downright laissez-faire policy, but the quin- tessence of liberalism. In view of the fact that no system is perfect in this imperfect world and hence a system of provincial and local autonomy also has its drawbacks and ' Bryce, op. cit., vol. ii, p. 436 ; also Sidgwick, The Elements of Politics, 1891, p. 488. ^ Sidgwick, The Elements of Politics. 'Bryce, op. cit., vol. ii, p. 437; also Laski, op. cit., p. vii. * Bryce, op. cit., vol. ii, p. 437- 138 CENTRAL AND LOCAL FINANCE IN CHINA [600 defects/ central control is perhaps necessary in one form or another. What is objectionable is not exactly the central control itself as a theory, but rather the high-handed pro- cess and procedure in and by which it is often effected and maintained in not a few highly civilized and organized countries today. Central control can 'be secured through other channels than a centralized, bureaucratic and hierarchic administration.^ Second, provincial and local self-government is the only alternative for China's political reorganization. Like the United States of America and the Dominion of Canada, China is too vast a country to render possible any efficient working of a centralized and bureaucratic system of ad- ministration. It is impossible to expect all government departments in Peking, however efficient, to initiate, execute, and supervise numerous social, industrial, and economic reforms in all the provinces, as they are hampered by the distance from the scene and the diffi- culties in getting an inside knowledge of local conditions. In a territory so extensive in area " and so rich in natural resources 'All the arguments employed against federalism may be also used against provincial and local autonomy. In addition we should also beware of the possibility of local disaffection finding its vent in a ready- made machinery for organizing resistance against the central govern- ment. But this fear can be easily dispelled if we should assign a unified control over all the military affairs of the country to the central government. 'As regards the other channels of central control, one of which will be fully presented in the next chapter where the English system of grants- in-aid is endorsed heartily by the author. • " It will be seen that the least extensive province, iChekiang, is larger than Portugal (excluding her colonies), the area of which is 35,ooo square miles; and that the most extensive province, Szechuan, exceeds the French Republic or the German Empire (colonies excluded) by 10,000 square miles. The least populous province, Kansu, has a population almost as big as that of the Kingdom of Sweden or of Greece; and the most populous province, Chihli, has one as big as the populations of the Austro-Hungarian Empire and the Caiilian Republic combined." (S. G Cheng, Modern China, a Political Study, 1919, p. 136.) 6oi] SOME FUNDAMENTAL RECOMMENDATIONS 139 as China, it is indeed necessary for the Central Government to devolve some of its functions on the provincial authorities, if it is to develop the country on a comprehensive scale and by Western methods.^ Aside from its inefficiency, a centralized and bureaucratic system of administration in such a large country as China tends to be inimical to democracy. Centralization and democracy can go together in France because France is small, only as large as the two or three smallest provinces or the one largest province in China. Bureaucracy was efficient in Germany, for the same reason; and yet we should not overlook the fact that the German municipalities have long enjoyed a much wider scope of administrative freedom than in any of the democratic nations in the world. The British Isles are smaller than the province of Szechuan of China, yet their counties, county boroughs, districts and parishes enjoy local self-government to a great extent. The fact that only the small nations (in area) of the world have been materially influenced by the Napoleonic system of local ad- ministration is a further evidence for its unsuitability in a large and vast country.^ The old oriental despotism is nowadays not only theoretically unsound, but also practic- ally unworkable. It had its day in the past and now it must yield to a more enlightened and democratic system of administration. If we should further examine the actual conditions in France and England, we would get a still clearer view of the direction in which the wind is blovong. There has been >S. G. 'Oieng, op. cit., p. 125. 2 "Its influence (the influence of the Napoleonic system of local administratioTii) upon the local government policies of other countries — of Italy, Belgium!, Spain, Greece, Japan, and the South American republics, for instance, has also been marked." (W. B. Munro, The Government of European Cities, p. 7.) I40 CENTRAL AND LOCAL FINANCE IN CHINA [6o2 a strong movement for regionalism both in France and in England. The fact that France, the home of centraliza- tion, should also now turn to decentralization is full of: significance. According to Lord Bryce, the French decen- tralizationists have proposed to regroup the 86 de- partments into 17 regions, each containing from 3 to 10 departments, on geographical lines in accordance with their respective economic interests and historical traditions — and then to confer upon each such area a measure of local auto- nomy sufficient to relieve the Central Government of many functions.'' Probably no Frenchman voices the favorable opinion for devolution in France better than M. Briand who spoke in the Chamber of Deputies on March 21, 1919, as follows : ^ la guerre nous a montre combien est dangereuse, redoutahle, cette espece de congestion du pays dans le pouvoir central. Demain ne comprenez-vous done pas que si le pays n'est pas dote d'une nouvelle organisation administrative, s'il n'est pas possible de decentraiiser sa finance, s'il n'est pas possible a tous les citoyens de mettre leurs initiatives et leurs intellegences en valeur, si on ne leur en procure pas les moyens, alors I'avenir sera sombre malgre la victoiref Though already much more democratic and decentralized than France, England has also been flooded with literature advocating regionalism and devolution. Thus Mr. G. D. H. Cole, the well-known guild socialist, while advocating re- gional democracy and devolution and condemning centra- lization and the bureaucratic machine in Whitehall, says that ". . . . a transference of any considerable part of the legislative and administrative responsibilities of the State to smaller localized bodies within its area would have very '- Modern Democracies, vol. i, p. 285. 603] SOME FUNDAMENTAL RECOMMENDATIONS 141 great advantages in affording more time and opportunity for the consideration of important questions, and also in simplifying the work of central government." ^ Mr. F. J. C. Hearnshaw, in his book ' Democracy at the Crossways,' advocates the establishment of four National Councils or Sub-Parliaments in England, Scotland, Wales, and Ireland in order to relieve the House of Commons from the over- work ^ and prophecies that " the great states of the future will undoubtedly be federated states, in which many nations, peoples, and tongues combine with cordial loyalty for com- mon ends, but in which they retain within the federation the cherished traditions of their respective historic personal- ties." ^ Mr. Sidney Webb, the well-known Fabian socialist, in his book A Constitution for the Socialist Common- wealth of Great Britain, is of the opinion that devolution is an alternative scheme of reform to relieve the House of Commons and the Cabinet from congestion of business if his scheme of a Dual-Parliament (Political Parliament and Social Parliament) should not be adopted.* He would also encourage local emulation and rivalry in efficiency amon^ the administrators of all local services.^ * The Future of Local Government, 1921, p. 20. 'P. 453. •P. 454. *Pp. 131-4. '"This emulation among different Municipal Authorities, whether with regard to particular services or to the whole complex of services that they administer, will not mitigate against— on the contrary, it will help forward — the development of federal institutions among the various Local Governing Bodies. It is one of the outstanding advant- ages of local, as compared with national, administration that it offers an easy opportunity for the development of a freer and more elastic centralization than is possible in an industry or service nationally ad- ministered from a central office" {op. cit., pp. 240-1). 142 CENTRAL AND LOCAL FINANCE IN CHINA [604 Third, the Chinese people have enjoyed local self-govern- ment in their villages from time immemorial and now they should enjoy a much wider scope of local autonomy under the republican form of government so that they will have ample room for the development of initiative, energy, and intelligence. Benevolent despotism can no longer be tol-, erated by a self-respecting people. " Paternalism, however wide be the basis of consent upon which it is erected, is the subtlest form of poison to the democratic state," ^ Fourth, there has been too much national politics in Pek- ing which has been absorbing a disproportionate share of the brains of the country at the expense of the provinces and districts, and, therefore, it is highly desirable to make the local and the provincial politics nearly, if not equally, as attractive as the national politics. The decentralization of the nation's intellect would most likely lessen the possibility of constant nation-wide political upheavals which have been chiefly due to the discontent and jeal9usy of the many ambitious political leaders of the country, all found in Peking for lack of attractiveness of provincial and local politics. This is no less true of a large number of the minor officials. If the provincial authorities are made ex- clusively responsible for the administration of certain func- tions, there will be opened in every province a new field of employ- ment far a large number of Civil Service Candidates who would otherwise go through the difficult process of making their way to Peking in order to obtain their " loaves and fishes " by favor- itism or other undesirable means. They will then have the opportunity of training themselves for administrative work in their own province and form the reserve from which the Central Government can draw its supply of experienced offi- 'Laski, op. cit., p. 43. 6o5] SOME FUNDAMENTAL RECOMMENDATIONS 143 cials.^ The same thing is true with the legislative branch of the Central Government. . . . Parliament in China is not rep- resentative, as both voters and representatives have not been trained to understand what is required of them. A separate legislature in the province will be a useful institution to train the prospective members of the Central Parliament.^ Thus we might say that provincial and local self-government affords a training school of politics to those capable, ener- getic, and ambitious citizens who otherwise would have little opportunity to show their worth in their own provinces or localities or would go to Peking to be contaminated by the corruption of the capital and to create troubles due to a too severe struggle of existence (or shall we say for office?) in the crowded metropolis. Fifth and last, in conformity with the principle of " divi- sion of labor also, the advisability of provincial and local autonomy is placed beyond any shadow of doubt. The central government has already more than enough to do with the more important national functions. To un- reasonably over-burden the central government is certainly against the valuable lesson of human experience. " Noth- ing is more clear .... than the existence of a law of dim- inishing administrative returns." ^ The smooth circulation of the blood of the administrative machinery can best be secured through a well-proportioned distribution of func- tions between the central, the provincial, and the local gov- ernments. Experience shows that centralization (or rather over-centralization) often " results in apoplexy at the centre and anaemia at the extremities." * The irresistible tendency 'S. G. Cheng, op. cit., p. 128. » S. G. Cheng, op. cit., pp. 128-9. •Laski, op. cit., p. vii. ^Laski, op. cit. 144 CENTRAL AND LOCAL FINANCE IN CHINA [6o6 of centralization " to apply uniform and equal solutions to things neither uniform nor equal " ^ is, again, utterly arti- ficial and unscientific, to say the least. The first and most important political recommendation being disposed of, we now come to the second recommenda- tion, namely, that the unit or division of the local governing bodies should be three-fold only : first, the province ; second, the district ; and third, the cities of municipalities, the towns or townships, or the villages. The present retention of Tao or circuit as a connecting link between the districts and the province is justified on no ground except that of expediency; namely, to provide a means of communication within the provinces and also an outlet for job-seekers or position- hunters. The central government may redivide a province into as many units or districts as may be necessary for pur- poses of administering justice and performing other national functions. For purposes of special activities of a local or provincial nature (or both) such as election, education, sani- tation, highways, parks, conservancy, industrial develop- ment, etc., the districts, cities, towns, and villages may also !be regrouped and redivided. This recommendation is in perfect accord with the newly framed and adopted Pro- vincial Constitutions of Chekiang and Human. In the third place, the provinces should have full power to formulate and adopt their own constitutions, subject, of course, to the restrictions of the National Constitution." Like the British North America Act, the National Constitu- tion of China may do well to distribute the legislative 'Laski, ibid. 'The two Provincial Constitutions of Chekiang and Hunan were framed without consulting the National Constitution which is yet unborn. But in no case have they encroached upon the functions and powers that are apparently national in character and scope, such as military and foreign affairs, etc. 607] SOME FUNDAMENTAL RECOMMENDATIONS 145 powers, between the National and the Provincial Assemblies.'' Speaking broadly, such functions and powers as the conduct of foreign relations, the military defense of the nation, the administration of justice, both civil and criminal, the control of international and interprovincial commerce, communica- tion and transportation, and the other functions and powers that are by nature national in character and scope should be- long to Parliament ; and such functions and powers as are by nature provincial and local in character and scope should belong to the Provincial Assembly. The provincial legisla- ture should give charters to incorporate the populous cities or municipalities. The districts, which have long been the smallest units of local administration in China, should be confirmed by a general law of local government as the largest units of local self-government within the province and as the provincial administrative counties as well. Towns and villages need not be chartered, but should be confirmed or created by a general law of local government enacted by the legislature and promulgated by the governor of each respective province. In the fourth place, the central government should not interfere with the administration of districts, towns, and villages; these local governing bodies should be subject to 1 For the full text of the act, see J. G. Bourinot, How Canada is Governed, appendix, pp. 289'-326. According to Prof. W. F. Willoughby, there are three methods of distributing powers be- tween the central and state governments, (i) By enumerating in detail the powers which are granted to the central and the state governments respectively. This method is never used by any nation. (2) By specifying the powers granted to the central govern- ment and declaring that all the remaining powers of government shall belong to the state governments. This method is used by the United States of America, Switzerland, and Australia and was until recently used by Germany. lAnd (3) by specifying the powers granted to the state governments and declaring that all the remaining powers of gov- ernment shall belong to the central government. This method is used by Canada and is the most scientific {op. cit., pp. 209-212). 146 CENTRAL AND LOCAL FINANCE IN CHINA [608 the control of a Local-Government Board in the provincial capital only/ for they derive their legal existence from the constitution and the general laws of local government of the province concerned. The central government should estab- lish a Provincial-Government Board ^ which should have the power to advise the provincial Local-Government Boards. In the fifth and last place, all the important political of- ficers of the provincial, the district, the city, the town, and the village governments should be elected by the respective electorates." This should be so because "the accepted rationale of responsible government rests on the principle that the interests of any group of governed persons are 'The Local-Government Board should not be confused with its name- sake in England. One should be an agency of provincial control, the other is that of central control. The composition of this board should include all the provincial departmental heads who in one way or another are connected with local administration of a complex of ser- vices or functions, including the provincial treasurer who should form a connecting link between this Board and the Boardi of Local Finance — thus securing cooperation between the two agencies of provincial control of local administration. {Infra, p. 168.) The powers of this board should be more advisory than administrative so that the spirit of local autonomy may not suffer. 2 The Provincial-iGovernment Board should be an agency of central control of all provincial activities save the financial which should be^ circumscribed by another board to be known as the Board of Provincial Finance. {Infra, p. 167.) The composition of this board should in- clude all the cabinet members who in one way or another are connected with provincial administration of various activities, including the Min- ister of Finance who should form a connecting link between this board, and the 'Board of Provincial Finance — thus securing the cooperation be- tween the two agencies of central control of provincial administration. The powers of this board, like those of the provincial iLocal-Government Board, should be more advisory than administrative in order to foster the spirit of provincial self-government. 'The executive officers may, however, be elected or appointed) by the legislature as is the case in Canada, Australia, New Zealand, Great Britain and) Germany. (For a detailed treatment, see James Bryce,. Modern Democracies, vol. ii, p. 440.) 609] SOME FUNDAMENTAL RECOMMENDATIONS 147 likely to be best looked after by governing persons whom they have the power from time to time to dismiss, directly or indirectly." ^ The short ballot and the scrutin de liste or the general ticket should be preferred.^ The minor ad- ministrative officials should be recruited in accordance with a strict civil service law enacted by the respective legislature concerned. ( Theory and Practice. To recommend what ought to be is one thing, to realize what is recommended as desirable is quite another. It is not infrequently the case that theory is at loggerheads with practice. Psychologists tell us that habits are difficult to change and sociologists warn us that sweeping changes of the established social and political institutions are often accompanied by unexpected and contrary results. Desir- able though federalism may be, we are confronted with three difficulties in its application to China. ^ First, the lacks experienced administrators and legislators. Accord- ing to Lord Bryce, the success of federalism in America was due chiefly to the previous training of the people in the state government during the colonial days. China has had no such previous preparation Second, she lacks a strong Supreme Court to settle conflicts and disputes be- tween the central and provincial governments. An inde- pendent judiciary also accounts for much of the American success in federalism. And third, China has backward pro- vinces which lag behind the South-Eastern provinces in al- most every phase of development. :' •Sidgwick, Elements of Politics, p. 486. •The merit of "general ticket" consists in the fact that it tends to. give less scope for intrigue and to secure better men. (Bryce, op. cit.,. vol. ii, p. 441.) » S. G. Cheng, op. cit., p. I34- 148 CENTRAL AND LOCAL FINANCE IN CHINA [610 Despite her unfitness for federalism, the arguments for its adoption in China purely on grounds of expediency and circumstances are not wanting. First, if federation usually follows the period of independent states,^ then this truism applies exactly to 'China. Formerly, the provinces in China, though owing 1 a common allegiance to the Chinese Emperor, nevertheless . . . had long enjoyed such autonomous powers as to give to them the status of almost independent commonwealths. They had their own armies and, even when their country was attacked by a foreign power, took only such part in the contest as their individual interest directed.^ Second, as Thiers once said that a republic divides the people (French) the least, we might also aptly say, in the case of 'China, that federalism is the lesser of the two evils. The present-day nominal centralization has threatened to ruin her and has deprived her of a most valuable and much- desired chance of pulling herself together. True it is that federation, if not carefully operated, may cause violence and incompetence in administration: but every system of government may bring forth undesirable results and machinery can sometimes solve a deadlock from which the antagonists are striving to escape without losing credit. It can certainly, in time, alter environment, and diminish the influence of traditions so that the people who adopt it will gradually become fit for new institutions and for new principles and methods of government.^ And third, considering the immense size of China, the dif- ferences in dialect and custom between the provinces, and ' Willoughby, op. cit., p. 202. ^ Willoughby, op. cit., p. 204. 'S. G. Cheng, op. cit., p. 133. 6iiJ SOME FUNDAMENTAL RECOMMENDATIONS i^g the strength of provincial feeling, one is likely to be correct in thinking that what is wanted is a sort of federal system, most of the functions of government being assigned to pro- vincial assemblies and officials, with only those reserved to the Central Parliament which must be uniform in their action for the whole nation, and which provide for its com- mon interests as regards commerce and national defense.^ As regards local self-government, China also suffers from lack of previous training and from lack of education. If she continues to leave ninety or more per cent of her people illiterate, the prospect of local autonomy is very dim indeed. While the people are being educated, local self-government should, however, be, within the reasonable margin of safety, fostered by the provincial authorities. The fact that " so late as 191 3 there was no larger rural area (other than the village) possessing self-government and the cities were ruled by officials appointed by the Governor of the province, who is himself appointed by Peking " " further renders it difficult to follow the recommendations and to achieve re- sults. Although " what one may call the raw material for popular government is not wanting, . . . there have ex- isted few institutions that can be turned to account for the purpose." ' I 'Bryce, op. cit., vol. ii, pp. Sio-U- 'Bryce, op. cit., vol. ii, pp. Sio-ll. 'When considering the raw material for popular government in the Chinese people, Lord Bryce said in part as follows : "But in some ways China furnishes no unpromising field for an experiment in popular government. Its people have five sterling qualities —industry, independence of character, a respect for settled order, a sense of what moral duty means, a deference to intellectual eminence. They have the power of working together ; they can restrain their feelings and impulses ; they are highly intelligent and amenable to reason. Weak as they have seemed to be in international affairs, they have plenty of national pride and a sort of patriotism, though it does not flow into military channels" {op. cit., vol. ii, p. 510)- CHAPTER VI Some Fundamental Recommendations for the FiscAii Readjustment Between the Central, the ; Provincial, and the Local Governments The goal and the machinery of a Hberal and democratic provincial and local self-government Ibeing set, the proper fiscal relations and readjustments between the central, the provincial, and the local governments in China can now be discussed more clearly. ! As a corollary to the principle of provincial (or federal) and local self-government is the automatic grant of financial autonomy to the provinces and the other local governing' bodies. This financial autonomy should, however, never be construed as absolute financial independence of the pro- vinces toward the central government or of the local authori- ties toward their respective provincial authorities. Each governing body should have a revenue, treasury and ex- penditure system of its own. There should be a separation of revenues between the central and the provincial govern- ments on the one hand and between the provincial and local governments on the other : the former separation should be complete, the latter, partial. Each government should know what revenues are available and what are unavailable for its own expenditures. I As far as is feasible, its revenues should be obtained by taxes and dues collected within its own territory, and its payments ISO [612 6i3] SOME FUNDAMENTAL RECOMMENDATIONS 151 should be made for tnatters affecting the interests of such (self-governing) territory. If provision is made for payments from local to provincial treasuries ... or vice versa, the provision should be of a definite character and conform to some fixed principle. In no case should one local district be compelled to contribute to the support of another local district or one province to the support of another province.^ When each self-governing body " feels that it has a revenue wholly its own, that its obligations to other bodies are definitely fixed, and that, subject to these obligations, its income will be applied to its own use," ' it will naturally have such a feeling of independence and responsibility as will make the effective working out of a proper system of genuine self-government possible. Complete Separation of Sources of Revenue between the Central and the Provincial Governments As regards the proper separation of the sources of reve- nue between the central government on the one hand and the provincial and local governments on the other, it is re- commended here that all the so-called indirect taxes, national in scope and character, such as the customs duties, the salt gabelle, the wine and tobacco excise, the stamp tax, etc. should be national. This is the general practice throughout the whole civilized world and is based on sound economic principle, for the basis of taxation determines the question as to whether a given source of revenue is naturally more suitable for utilization or administration (or both) by one 1 W. F. Willoughby, " Memorandum on the Adjustment of the Finan- cial Relations between the Central Government, the Provincial and the Local Governing Bodies,'' The Chinese Social and Political Science Review, 1917, part 3, pp. 27-28. 'W. F. Willoughby, The Chinese Social and Political Sc. Rev., Joe. cit., p. 28. 1^2 CENTRAL AND LOCAL FINANCE IN CHINA [614 tax jurisdiction rather than by another.^ The narrower the basis, the narrower may be the tax jurisdiction: the broader the basis, the broader must be the tax jurisdiction. Thus all consumption or expenditure taxes such as customs duties, salt gabelle, wine and tobacco excise, stamp duty, etc. should by nature be administered and utilized by the national government, inasmuch as their basis is nation- wide and uniformity of rate and control of assessment is absolutely essential. The fact that the tariff policy over- laps the field of diplomacy, which is especially true for China, further strengthens the advisa)bility of allocating customs duties to the national government. Such other nation-wide excise taxes as the tea tax, the sugar tax, the fishery tax, and the proposed (191 3) production tax should also be assigned to the national government. The pro- posed (191 3) note-issue tax should also naturally be allo- cated to the national government which controls all matters concerning currency and coinage. I The various kinds of business taxes (such as mining royalties, business-license tax and fee, pawn-shop license and fee, and the proposed business tax (191 3) should be provincial or local sources of revenue, inasmuch as their basis is still limited to one province only. Even if it should reach over into the other provinces, the provinces and locali- ties in which these businesses are conducted and make their profits should have power to require them to con- tribute something towards the support of the provincial or local government in proportion to the volume of business transacted within their own territory. | As to the direct taxes such as the age-long land tax, the already promulgated income tax ( Jan. i, 1921 ) , and the pro- ' Edwin R. A. Seligrnan, The Income Tax, 2nd ed., 1914 p. 643. 6i5] SOME FUNDAMENTAL RECOMMENDATIONS 153 posed succession or inheritance tax (1913)/ though the latter two are nation-wide in basis and hence needing a national tax jurisdiction for the control of assessment, they should nevertheless be all utilized and appropriated to the provinces. True it is that, the income and inheritance taxes have all been recently allocated to the national gov- ernment in France, Great Britain, and even in the United States of America, the home of state sovereignty and state and local direct taxes, etc. This has been so because of the increasing and widening demand on the respective central or federal authorities for the extension of governmental functions. The tendency is nowadays just the opposite in China. China has had too much seeming benevolent des- potism, and now is the time to get rid of this pernicious restriction, however nominal it may be, on the initiative, energy, and intelligence of the people and to develop pro- vincial and local self-government as completely as possible, with the least possible interference from the central gov- ernment compatible with the attainment of maximum effi- ciency in effecting national unity and in heightening national 1 Owing to the existence of a family system by which any inheritance can be handed down to the male offspring without will, an inheritance tax would be rather difficult to execute in China. We are told by Dr. H. C. Chen, however, that this form of taxation was at least thrice practiced in the annals of iChinese history. Quoting Dr. iChen directly : "In the kingdom of Latter Shu (907-65 A. D.), when people married, their dowries were assessed and taxed. This was the first time that the dowry tax occurred in history. But it was abolished in 11524 A. K. (or 973 A. D.) by Sung Tai Tsu.'' "The true inheritance tax began in 1670 (1119 A. D.). All the test- ments, or bequests to daughters, were required to be stamped with the official seal and to pay a tax. But this tax was abolished after a short time." "According to the stamp-tax act of 24S8 'A. K. (1907 A. D.), every testament was required to be pasted with a stamp of one thousand copper coins. But this act has not been universally enforced." (The Economic Principles of Confucius and His School, p. 681.) 154 CENTRAL AND LOCAL FINANCE IN CHINA [6l6 strength. If the fiscal recommendations should be consis- tent with the poHtical recommendations set forth in the previous chapter, then the income and inheritance taxes must also be assigned to the provincial governments, for China needs provincial and local development today above all her other urgent prdblems. The administration of these two direct taxes, however, should be intrusted to the national government, in order to avoid double taxation. Unlike real estate, income has no situs. It is not infrequently the case that the inhabitants of one province may derive, in part or in entirely, their in- come from other provinces. If the provincial authorities should administer the income tax, the cry of harship due to double taxation on the part of the income taxpayers would inevitably arise. The same thing is also true of the inheritance tax, for a decedent's properties may be scat- tered over more than one province. If the national gov- ernment should administer and control the assessment, unify the rate, and manage the levy of these two taxes, such hard- ship and inequality would soon disappear. Of course, if without central interference the provinces could effect inter- provincial comity or agreements, as has been proposed and agitated in America, central administration would be un- necessary; but such procedure would entail too much inter- provincial bickering and consequent loss of fiscal efficiency. Another way of central interference to prevent the gross in- justice of double taxation is the enactment of a national law" imposing upon the separate provinces a certain degree of uniformity of action such as the German imperial act of 1909 regulating the entire subject of double taxation and requiring the commonwealth income-tax laws to conform to its provisions. But this procedure, while equally encroach- ing upon the right of self-determination of the provinces, is also devoid of fiscal efficiency. Why should not we, then, 6i7] SOME FUNDAMENTAL RECOMMENDATIONS 155 adopt the method of national administration and thus, at one blow, eliminate all the troubles of double taxation, inter- provincial negotiation and bickering, and parliamentary- legislation. Moreover, if, in the future, there is demand for the extension of governmental functions and powers to the central authority, and hence if it will need more financial resources it can easily take over the income and inheritance taxes. ^ Pending such development and in accordance with the proposal of allocating the two taxes to the provincial gov- ernments, their proceeds should be returned, in proportion to the fraction of the total yield of each province, to the respective provinces by the national government after the deduction of the necessary expenses for their assessment and collection. If the provincial bickering over the method of distribu- tion of these yields proves to be too annoying, it is here recommended as an alternative that the national authority should keep the proceeds of the income and inheritance taxes and use them exclusively for the purpose of the central grants-in-aid to the provinces. Before proceeding to discuss the reasons why a system of grants-in-aid should be adopted in China and the methods by which it may be carried out, let us first turn to a more important problem as to the tax jurisdiction to which the land tax should be allocated. \ Hitherto the land tax in China has been a national tax from time immemorial. As a corollary to a rather decen- tralized political system, as recommended in the preceding chapter, it is further recommended that the land tax should hereafter be an exclusive source of revenue for provincial 1 When such time comes, the provinces can impose supplementary rates on the national income and inheritance taxes, if they need revenue. 1^6 CENTRAL AND LOCAL FINANCE IN CHINA [6l8 and local purposes, in letter as well as in spirit. This recom- mendation is based on the following considerations.^ ( I ) Fiscally speaking, with the introduction of a decen- tralized political system, the central government can forego its claim on the land tax, for then its expenditures will be greatly reduced, and the provincial and local governments must have an exclusive claim on it as a most fitting and proper new source of revenue, for then their expenditures will be greatly enhanced. Moreover the appropriation of this tax for provincial and local purposes exclusively would not entail unbearable hardship on the central govern- ment, for the reason that its returns in the form of matri- cular contributions are only a small fraction of its total (about one-third), that a large portion of the official re- turns are sent back to meet provincial and local needs, and that other taxes such as likin or the commodity tax ^ whose partial proceeds formerly went to meet provincial and local ^ Mr. Kuan Yin Wu, a well-known ^Chinese publicist, advanced three general arguments for the assignment of the land tax to the provincial and local governments, one of which is quite ingenious. He is of the- opinion that the existing inaccuracy in the statistics of acreage of land in China is due to local concealment in order to avoid national taxation. If the tax should be transferred! to the localities, then this concealment would most probably disappear, for the local ratepayers would check each other so that no body could shun his duty. The other two arguments are (i) dealing with theory, basing the argument on the benefit theory, the local fiscal stability due to the certainty of the tax, the arousing of the people's sense of responsibility, etc, and (2) dealing with the fiscal adequacy of the central government, stating that the central authority can impose new taxes and undertake public industries for profits to offset the loss of the land tax. ("Appropriation of the Land Tax for Local Purposes,'' The Justice [Yung Yen Pao] Shanghai, vol. i, nos. 1-4, from I>ec. i, 1912 to Jan. 16, 1913, vol. i, no. 6 and no. 8. Also Tsai Chieh Yen, Land Taxation of China, an account of the Existing System and Recommendations for Reform, ch. iv, pp. 312-46.) ' When China can add 2.5% on her tariff as a condition for abolishing ■this obnoxious transit tax, the central government will be still better off. 6i9] SOME FUNDAMENTAL RECOMMENDATIONS 157 needs can be made an exclusive national tax in order to offset the loss, if any, of the land tax."^ (2) Theoretically speaking, the land tax is a direct tax which is better suited to serve as a local tax than a national tax. Professor Seligman says that real estate is naturally a local tax, because its basis is narrow and limited to the im- mediate locality.^ Professor Bastable states that: both abstract reasoning and experience tend to show that a large proportion of the local taxation must be obtained from Huang, H. L., op. cit., pp. 134-5. The reason why the exclusive appropriation of the land tax for the provincial and local purposes v\fould' not entail unbearable hardship on the central government can be further shown by the following figures of the proceeds of the land tax in the provincial budgets in 1913, 1914 and 1916 and of the matricular contributions for the corresponding years : Year Land Tax Matricular Contribution 1913 $82,396,602 $32,418,530 1914 79,227,809 29,737,013 1916 97,553,513 25,737,600 The above figures presuppose that the matricular contributions are ■derived from the land tax alone; but, as a matter of fact, they are derived from a provincial common purse and the land tax contributes only a share. Thus it is evident that the land tax is practically a provincial and local tax, although nominally a national tax. Again, if the commodity tax or likin (also known as the inter-provincial transit tax) is transferred so as to be an exclusive national tax (the com- modity tax is not included in the national budget, but in the provincial budget), it will more than offset the loss of matricular contributions. Let the following figures tell the tale : Year Matricular Commodity Tax Contribution 1913 $32,418,530 $36,882,877 1914 29,737,013 34,186,047 1916 25,737,600 40,290,084 {Cf. S. Y. Chia, op. cit., pp. 39, 81, 90 and 98.) 'Seligman, Essays in Taxation, 1921, p. 643. 1^8 CENTRAL AND LOCAL FINANCE IN CHINA [620 this important "object" (land). In the rural districts there is little else to be taxed, and in the case of towns the value of the land is so much increased by the action of social conditions that it forms a most suitable mark for the larger taxation that the wants of the urban societies make necessary. . . . The theory of incidence also supports this view ... it has definiteness of incidence in its favor; while its pressure falls on a form of wealth that is likely to grow without effort on its owners' part.^ (3) Administratively speaking, a national land tax in such an extensive country as China is fraught with adminis- trative difficulties and inefficiency due to the largeness of the task and the extremely divergent conditions of the pro- vinces. The provincial and local bodies are much more competent to determine the proper tax rate and the proper tax unit (or rather the unit of measurement) and to in- troduce and carry out the cadastre which is indispensable and the most important step in land tax reform in China. With the land tax, the title deeds tax, which the Revenue Separation Bill of 191 3 ^ assigned to the central government, should by nature be allocated to the provincial and local governments, inasmuch as the land and the deed always go together and accordingly taxes on them should go together. To recapitulate, the scheme proposed here for a complete separation of revenue between the central and the provincial governments may be sumarized as follows : I. National revenues : (i) Maritime customs duties, (2) Regular customs duties, (3) Likin or commodity tax or transit tax (to be abolished after the raising of the tariff) , 1 C. F. Bastable, Public Finance, 3rd ed., 1903, pp. 396-7. 2 Supra, p. 76. 621] SOME FUNDAMENTAL RECOMMENDATIONS 159 (4) Tobacco and wine excises, (5) Other consumption taxes on tea, sugar, fishery, etc., (6) Stamp tax, (7) Production tax (prospective), (8) Note-issue tax (prospective). 2. Provincial and local revenues : ( 1 ) Land tax, (2) Title-deeds tax, (3) Business-license tax and fees, (4) Pawnshop-license tax and fees, (5) Business taxes (prospective), (6) Mining royalties, (7) Income and inheritance taxes (prospective). Partial Separation of Sources of Revenue between the i Provincial and the Local Governments Although a province is too small a territory for a com- plete separation of revenue between the provincial and the local governments,^ a partial separation is nevertheless ad- 1 The disadvantages of a complete separation of revenue between the provincial or state and the local governments have been eloquently pointed by Prof. Seligman. First, the dernarcation of governmental functions of the different grades of governing bodies is not always clear cut (which fact is more true of the provincial or state and the local governments than of the central and the provincial governments) and therefore the contention that a complete separation of revenue be- tween the provincial and the local governments conforms to the natural division of governmental functions and activities does not hold. Second, a system of complete separation of revenue may lead to fiscal embarrassment of both the provincial and the local governments, inas- much as there is no transfer of surplus to deficit, thus losing the very advantage of a consolidated fund system which always allows room for fiscal adjustment between the different governing bodies concerned. {Essays in Taxation, 9th ed., 1921, pp. 667-8.) Prof. Bullock also holds a similar view. He says : "I do not say that there is never a coin- cidence between the allotment of functions and the allotment of revenues, indteed, the customs revenue of the national government furnished an example of such coincidence; but I do maintain that the controlling l6o CENTRAL AND LOCAL FINANCE IN CHINA [622 visable. Certain taxes are naturally more adapted to be exclusively local or municipal revenues. For instance, the house or habitation tax, the local consumption taxes and licenses such as the live-stock tax, the rice and cereal duty, the opium duty, the oil and sauce duty, the boat duty, the miscellaneous commodity duties, the meat duty, the butchery duty, the small-business shop duty, the theatre duty, the car- riage duty, the sing-song girl or prostitution license duty, the tea-house duty, the restaurant duty, the carriage-bearer or rickshaw license duty, the domestic servant tax, the octroi, etc. are by nature local or municipal sources of revenue. Along with the approaching industrialization of China, an- other important source of local or municipal revenue will be the land value tax.^ Other exclusively local or municipal sources of revenue that may be mentioned in passing are the special assessment, special charges (fees and licenses) for services rendered and privileges conferred, fines and penalities, regulatory taxes,'' municipal monopolies, etc. So much for the exclusively local or municipal revenues; we may now turn to the exclusively provincial revenues. With the exception of the land, the income, and the inheri- tance taxes, all the other sources of revenue, such as the title- factor in the distribution of functions is administrative convenience, that the controlling factor in the assignment of revenues shouldi be comparative fiscal needs, and that betvi^een the two there is no necessary and automatic connection." {Readings in Public Finance, 1920, p. 448.) 1 Cf. Seligman's view on the question in The Final Report of the Committee on Taxation of the City of New York, 1916, p. 114; J. A. Hobson's view in his book Taxation in the New State, New York, 1920, pp. 241-251 ; and Luther H. Gulick's view in his article "A Model System of Municipal Revenues," The Bulletin of the National Tax Association, vol. vij 1920-1921, p. 81. 2 The regulatory taxes, for illustration, are the dog licenses, taxicab licenses, the bowling alley and pool room licenses, vacant land tax, tax on sign-boards, etc. 623] ^OMB FUNDAMENTAL RECOMMENDATIONS 161 deeds tax, the business-license taxes and fees, the pawn- shop-license taxes and fees, the general business taxes (pro- posed), the mining royalties, etc., that are assigned to the provincial government on the page 126, should be exclusively provincial. Besides the above mentioned sources of revenue, the pro- vincial government may also impose special assessments, special charges for services rendered and privileges granted, fines and penalties, etc. for its own purposes and also under- take public industries for revenue. The land, the income, and the inheritance taxes should be held as common sources of revenue for both the provincial and local governments. The first should be common in order to secure the unified assessment of the land in each pro- vince, to retain the connecting link between the provincial and the local governments, and to preserve the sense of re- sponsibility of the provincial authority in the matter of local taxation as well as in its own budget-making and expendi- ture.^ A very high percentage of the proceeds of the land tax collected under a unified provincial control and ad- ministration should, of course, be returned to the localities. When the prospective income and inheritance taxes should be enforced by the national government on behalf of the provincial governments, the quota received by each pro- vince should be held in common for both provincial and local purposes in order to secure elasticity and flexibility in the provincial and local finances and to permit a system of provincial grants-in-aid after the model of the central or 1 Cf. the Preliminary Report of the Committee of the National Tax Association upon a Plan of a Model System of State and Local Taxation, Proceedings of the Twelfth Annual Conference of Taxation tmder the auspices of the National Tax Association of America, igip, pp. 426-70, and also Charles J. Bullock, Readings in P^lic Finance, ipao, ch. xiii, sec. 58, PP- 491-532. l62 CENTRAL AND LOCAL FINANCE IN CHINA [624 national system of grants-in-aid. This leads us to a discus- sion of the reasons why China should adopt such a system and the methods by which this system may be successfully carried out. In order to reconcile liberty and efficiency and to counter- act the inevitable tendency of a system of complete provin- cial and local self-government such as is recommended in the preceding chapter towards a state of anarchy of provincial and local autonomy in education, sanitation, charities, means of communication, etc. such as is already experienced in America to a great extent ^ and in Canada to some extent, a system of grants-in-aid, as so eloquently and convincingly presented by Mr. Sidney Webb,^ the well-known Fabian socialist, should be adopted by the central (or federal) gov- ernment of China for the self-governing provinces on the one hand, and by the provincial governments for the self- governing districts, cities or municipalities, towns and villages on the other. The reasons for this recommendation are as follows : ' ( I ) In the first place, it simply continues the old practice in China, admirable in purpose but to be condemned in proce- dure and method, of making up the deficiencies of the poor provinces with the surplus revenues of the rich ones. As Mr. Webb puts it, it is intended to prevent an extreme inequality of burden between one district (or province or locality in our case) and another and to enforce a " national minimum " of efficiency in (provincial and) local services and in the well-being of all the people within the nation. 'Webb, op. cit., pp. 4-5. *Ibid., pp. 4-6. 15-25- 'For a representative view of opposition to a system of central grants- in-aid, see Richard Higgs, The Control of Public Finance, 1919, especially chapters vii, viii and x. But his view is rather a reaction against the bureaucratic tendency in British administration. 625] SOME FUNDAMENTAL RECOMMENDATIONS 163 (2) In the second place, it purports to secure central con- trol over the provinces indirectly and in a decent manner. While it does not discourage provincial initiative or hurt provincial self-respect and pride on the one hand, it secures a sufficient degree of centralization, standardization, and uni- formity of national administration on the other. It ac- complishes the latter by giving to the provinces the advant- age of the wisdom of experience, of the superiority of know- ledge and of the breadth of view of the central government and by giving weight to the suggestions, criticisms, and authoritative instructions by which the central siuthority seeks to secure greater efficiency and economy in the pro- vincial administration.^ The same arguments advanced here for the adoption of a system of central or national grants-in-aid for the provinces can also be exactly applied to the adoption of a system of provincial grants-in-aid for the districts, cities or municipali- ties, towns and villages. The basis for determining the amount of the grants-in-aid should be equality. Such crude bases as population, assessed valuation of real estate, and taxes paid to the province (or to the nation), should have no place here, for they violate the first principle of the grants-in-aid which is to equalize the burden between the rich districts or localities (or the rich provinces) and the poor districts or localities (or the poor provinces).* If any of these three bases should be introduced in China to determine the amount of the grants- in-aid at all, the later should bear an inverse ratio to the former, that is to say, the more populous or wealthy a dis- 'C/. Webb, op. cit., pp. 18, 21-22. •"The way actually to aggravate this inequality (inequality of wealth), and to transfer the grant in aid from a beneficent to a maleficent force, is to make it vary in proportion to the rateable value of each district." (Webb, op. cit., p. 17.) 1 64 CENTRAL AND LOCAL FINANCE IN CHINA [626 trict or locality (or a province) is, the smaller proportion or percentage of grants-in-aid it should get as compared with its population, wealth, or taxes paid to its superior. The other mechanical methods of allocating grants-in-aid such as the number of persons treated, the number of officers engaged, at so much per head, at a certain proportion of the salaries paid, at so much per school place or per hospital bed, at a given sum per attendance at school or per week per patient, etc. should also have no place here. To make the whole system effective and fruitful, the fol- lowing general principles governing the administration of the grants-in-aid are suggested: ( 1 ) Grants should only be given to services in which the general interest is predominant, and on which it is generally considered desirable to stimulate expenditure. In no case should grants be given to objects which directly and ob- viously raise the value of fixed property in any locality. (2) Grants should be made by a responsible board spec- ially created for the purpose and given directly to the pro- vincial (or local) authority in charge of the service, the latter being subject in all cases to thorough periodical in- spection and criticism. (3) Grants should be conditional on the amount of work done and the degree of efficiency obtained in the service, and variable, so as to increase the effectiveness of the central (or provincial) supervision and criticism. (4) Allocations of grants should be so arranged as to minimize the inequalities between different provinces (or localities in a province) in respect of expenditures on pro- vincio-national (or loco-provincial) services. (5) Grants should, for financial and administrative reasons, be kept, as far as possible, at the lowest proportion necessary to achieve all the purposes of the grants-in-aid. 627] SOME FUNDAMENTAL RECOMMENDATIONS 165 The provincial (or local) interest in economical administra- tion should by all means be maintained. (6) For the convenience of the national (or provincial) treasury the total of the grants might be fixed for a certain specified term of years, the details of allocation, and the special regulations governing them, being subject to periodic revision. Of course, the sum that a province can set aside for the purpose of aiding the localities is dependent upon its quota of the yields of the income and inheritance taxes distributed or granted by the national government — ^thus making the local and provincial situation uncertain. But this difficulty can easily be overcome by a somewhat arbi- trary method of allocating the national grants in inverse proportion to the wealth and population of the respective provinces. The provincial governments should then be held responsible for the efficient administration of loco-pro- vincial services by their respective localities. Constitutional, Legislative, and Semi-Administrative Con- trols of Provincial and Local Finances. Again, in order to safeguard the provinces from extra- vagance and heavy debt, it is recommended that some limitation on the tax rate and the amount and term of in- debtedness is desirable and should be provided in the National Constitution; and under no circumstances should any province contract foreign loans without the knowledge and permission of the central (or federal) government.** This recommendation seems inconsistent with the political recommendations set forth in the preceding chapter. As a matter of fact, too much decentralization is just as bad and undesirable as too much centralization. Centralization to some extent is necessary and desirable; this centralization, 1 See supra, pp. 67 et seq. 1 66 CENTRAL AND LOCAL FINANCE IN CHINA [628 however, should not be effected through political appoint- ments and bureaucracy, but through a financial control which is, in fact, even more subtle and fruitful in prevent- ing the anarchy of provincial autonomy on the one hand and in encouraging provincial self-government on the other. Similarly, the power of districts, cites or municipalities, towns and villages to impose taxes and to contract loans for local purposes should be limited by the provincial constitu- tion. By way of suggestion, the provincial constitution should provide that the local tax rate should not exceed 10%, that the local debt limit should not exceed 10% of the as^ sessed valuation of the real estate within its territory, that the term of the local debt should not exceed the life of the improvement for which it is incurred, and that the purpose of borrowing should be exclusively for local improvements and capital outlays. Under no circumstances should the bor- rowings be made for current administrative expenses except in this case revenue bonds in anticipation of revenue (to be resorted to only under exceptional circumstances in order to save interest charges) and the special revenue bonds to meet emergencies. As regards the forms and methods of local taxation, they should be prescribed by the provincial law. Local option and discretion should not be allowed to go too far. In order to enforce the provisions of constitutional con- trol of provincial finances and that of constitutional and legislative control of local finances, some organ of direction, supervision, inspection, and criticism and advice is necessary. The Ministry of Finance at Peking (or elsewhere) should, therefore, create a Board of Provincial Finances whose duty it would be (i) to investigate periodically and inspect through experts the financial condition of the provincial gov- ernments in the country, (2) to offer advice as to how pro- vincial finances can be improved, (3) to receive provincial 629] SOME FUNDAMENTAL RECOMMENDATIONS 167 reports and analyse them and give a consolidated statement of the finances of all the provinces of the nation, and (4) to see to it that the conditions for the central (or federal) grants-in-aid have been duly and properly carried out by the provinces aided and that the constitutional provisions con- cerning the tax rate, the debt limit and term and purpose have been strictly observed. In conformity to the principle of provincial self-government, this board should be more advisory than administrative. In connection with the cen- tral (or federal) grants-in-aid, the board should co-operate with the Board of Provincial Government consisting of several cabinet ministers as recommended in the preceding chapter.^ Similarly, every province should create a Board of Local Finance whose duty it would be ( i ) to prescribe fitting and uniform financial, budgetary, bookkeeping, accounting and reporting systems for the different grades or classes of the local self-governing bodies, (2) to supervise the operation of these systems and give advice, (3) to receive and analyse the local financial reports and give a consolidated statement of the local finances of the province, and (4) to see to it that the conditions for the provincial grants-in-aid to the localities have been duly and properly carried out and that the constitutional and legislative provisions concerning the local taxation, the local debt limit and term and purpose have been strictly observed. In order to carry out its func- tions effectively, this board should have the power to appoint a staff of travelling inspectors (to be called the commis- sioners of accounts) whose duty it would be to inspect and report upon the manner in which the financial, budgetary, bookkeeping, reporting and accounting systems were being operated by the localities, the conditions of local taxation ^ See supra, p. 146. l68 CENTRAL AND LOCAL FINANCE IN CHINA [630 and indebtedness, and the efficiency of the provincially aided local (or loco-provincial) services. The inspectors should never go beyond their prescribed ftinctions of mere inves- tigating, visiting, and instructing or advising. As to audi- ting and correcting of local accounts, not only have they no time for it, but the local sense of self-respect and responsi- bility would also be trampled upon. Hence, the auditing of local financial statements and accounts with all necessary attached documents and evidences should be performed only by the local auditors chosen by the local legislature or other- wise. The French centralized system of auditing of local accounts by a national court of accoimts or by the general comicil (or the prefecture or departmental council) is in- compatible with the fundamental principle of local self-gov- ernment which demands a due respect from above for a local sense of self-respect and responsibility. In connection with the provincial grants-in-aid, the Board of Local Finances should co-operate with the Board of Local-Government consisting of several provincial depart- mental heads as recommended in the previous chapter '- in the same spirit in which the Local-Government Board at London co-operates with the Board of Trade, the Home Office, the Board of Agriculture and the Board of Educa- tion. Regarding the important financial provisions which ought to be inserted in any city charter or general local govern- ment act to be enacted by the provincial legislature, the fol- lowing features deserve our special attention and endorse- ment: ( I ) That the local districts, cities or municipalities, towns and villages shall have no power to levy taxes or to impose charges or dues of any kind except such as are authorized ' See jttpra, p. 146. 63 1 J SOME FUNDAMENTAL RECOMMENDATIONS 169 by the organic acts enacted by the legislature of the respec- tive local governing body concerned. (2) That it shall be obligatory for each local governing body to provide for tlie total revenues to be collected and the total expenditures to be made during the fiscal year by the annual consolidated finance act. (3) That provision shall first be made in the local finance act for meeting any interest or sinking-fund charges or any other payments on account of indebtedness incurred, any payments required by the general law (e. g. " obligatory functions", and provincial taxes), and any unliquidated obligations coming over from the operations of the previous year. (4) That the total of local expenditures shall not exceed the total of local revenues. (5) That, as a basis for the preparation of the local finance act, the chief executive of the district, the city or municipality, the town or the village shall submit to the fund-raising and granting or appropriating body a budget- ary statement in which he shall give the condition of the treatury, namely, the total resources and liabilities ,of the locality at the time of the preparation of the statement. (6) That local revenues and expenditures shall be classi- fied, the form of the local budget shall be standardized with comparative figures for three or four years, and the system of accounts and reports which shall make known such facts shall also be standardized. The advantages derivable from these financial provisions in the city charters and the general local government acts are chiefly (i) to insure the local taxpayers against the arbitrary and illegal exactions which had been so prevalent in China due to the corruption of officialdom and the in- efficient administrative control, (2) to insure solvency and financial credit of the local governing bodies, and (3) to J70 CENTRAL AND LOCAL FINANCE IN CHINA [632 insure an orderly and proper financial conduct of these local governing bodies. Theory and Practice. The above scheme of a complete separation of revenue between the national and the provincial governments, a par- tial separation of revenue between the provincial and the local governments, the reconciliation between liberty and efficiency to be brought about by a system of grants-in-aid from the national government to the provincial govern- ments and from the provincial governments to the local gov- ernments and by a system of constitutional, legislative and semi-administrative control of provincial and local finances, is entirely dependent upon the political recommendations. If the latter fails of adoption, the former becomes meaning- less. Assuming that the latter will be adopted, we still find some obstacles to the realization of the former. In the first place, the idea that all the lands in the country belong to the Emperor (Poo Hen chih shia, moo fee wang too) and hence that the land tax should be a national tax, is pretty hard to shatter. Thus the proposal that the land tax should be allocated to the provinces and the locali- ties would certainly meet the deaf ears of the conservative and benighted elements in the Chinese population. In the second place, the system of grants-in-aid has very little chance to succeed if the people (and especially the merchant class) are against the enforcement of the income tax and the introduction of the inheritance tax, inasmuch as the former depends upon the latter. The anachronous family system and ancestral-worship would surely work against the introduction of the latter tax even as a revenue measure, not to mention it as a social measure. They form in fact the bulwark of private property in China. Any 633] SOME FUNDAMENTAL RECOMMENDATIONS 171 tax that might be miscontrued as anti-private-property would unfailingly meet the strong opposition of both. In the third place, even if the income and the inheritance taxes can be enforced and collected, the opposition of the South-Eastern rich provinces to such a system as recom- mended above would also be enormous. For, as in America, the possible conflict of sectional economic interests in China is a force that must be reckoned with in a system of distri- buting national grants to the various provinces in inverse proportion to their wealth and population. Sectional economic selfishness is a grave problem that perplexes every stateman in every large country. In the fourth and last place, the old corrupt official- dom might exert its pernicious influence against various kinds of efficient financial control which dry up their sources of profits or illegal acquisition. This is altogether natural; but the right and the efficient must triumph at any cost. Progress is costly and painful. While it is admitted that evolution is much better as a measure of reform than re- volution, a steadfast militant spirit of reform is necessary in order to subdue the old inefficient and unscientific systems, organs, and institutions. To conclude this chapter, the writer can do no better than to quote Professor Fred Rogers Fairchild of Yale, who, while advocating an ideal system of taxation for New England, said : Only by having an ideal set before us may we hope to make progress. Even though our goal may never be reached, we may at least have some confidence that what progress we do make is in the right direction and is good so far as it goes.^ 1 " The Ideal System of Taxation for New England," Bulletin of the National Tax Association, vol. ii, 1916-1917, p. 187. CHAPTER VII Fiscal Relations Between the Leased Territories, THE Foreign Settlement and the Central Government In order to make this monograph a complete and logical whole, the fiscal relations between the leased territories and foreign settlements or concessions in China and the central government should also be briefly considered. The history of the leased territories in China is an un- pleasant one. It was and still is the theory of international balance of power working in the Far East, particularly in an independent and sovereign but economically and mili- tarily weak nation, China. In 1898, when Germany, on pretext of the murder of two German missionaries in a cer- tain district of the province of Shantung, demanded and secured the leas of Kiao-Chou Bay for 99 years from the Chinese Imperial Government, Russia demanded and secured the lease of Port Arthur and Dalny for 25 years; France, that of Kuangchow Wan (or bay) for 99 years; Great Britain, that of Kowloon for 99 years to counter-balance France in the South and that of Wei-Hai-Wei for 25 years to counterbalance Germany and Russia in the North. In 1905, the Russian leased territories in China passed into the hands of Japan, as a result of the Russo-Japanese War. As a result of the late Great War, the German leased ter- ritory in China also passed into the hands of Japan, in spite of China's protest in the Versailles Peace Conference, 19 19. By lease is meant the transfer of title within an agreed 173 [634 635] FISCAL RELATIONS 173 period of time, the lessee to pay a certain sum or rent to the lessor per annum or otherwise.^ Although China's sov- ereignity is not surrendered,* she gets no rent nor can she impose any tax on the properties and the persons within the leased territories; these properties and persons are only subject to taxation by the governing or leasing power. It was in the Kiao-Chou leased territory that Germany made the first successful experiment with the unearned increment tax. Even the customs revenues at Kiao-Chou were not entirely China's ; 2% had to go to the German government of the leased territory.' Since Japan seized it in 1914. China has been further deprived of the proceeds. What has been true of Kiao-Chou has also been true of all the other leased territories in China. Less humiliating than the leased territories to China are the " foreign concessions " or " settlements " at the so- called " treaty ports ". The significance of such a conces- sion or settlement is the permission by the Chinese Gov- ernment to the foreigners concerned to set up and maintain local administrative agencies for public purposes, sanitation, making of roads, providing building regulations, etc.* The administrative organs thus created levy taxes, the proceeds of which must be wholly devoted to the performance of these local administrative tasks. They may not be levied for any other purposes and the Chinese Government has no share in them. Although some form of land tax in cer- ' According to Fvink and Wagnall's New Standard Dictionary of English Language, a lease is " a contract for the possession (and profits) of lands for a determinate period (less than the time for which the lessor holds the same) in consideration of a recompense of rent." »For treaty stipulations to that effect, see V. K. Wellington Koo, The Status of Aliens in China, pp. 2524- 3 Chin Chu, The Tariff Problem in China, p. 66. * W. W. Willoughby, Foreign Rights and Interests in China-, pp. 213-4 ; also Koo, op. cit., pp. 230-5B31. 174 CENTRAL AND LOCAL FINANCE IN CHINA [636 tain settlements is still collected by the Chinese Govern- ment, China's right not only of general taxation but also of tariff imposition has come to naught in such concessions or settlements/ China at present can tax neither foreign products nor Chinese goods in such special areas for foreign trade and residence beyond what is allowed by the treaties. For instance, in October, 191 9, the Chinese Government levied a stamp tax becoming effective March i, 191 4, on bills of lading, shipping companies' receipts, consignees' re- ceipts and other documents relating to exports and imports. All the treaty Powers except the United States of America protested against the revenue measure, charging that the tax was a violation of the Provisions in China's treaties with the Powers. The Chinese Government nevertheless continues to insist upon its right to levy the stamp tax and, in fact, in many cases, it is collected.' Thus, even China's sovereign right to impose stamp duties on evidences of goods for exportation and importation is challenged in the foreign concessions or settlements, and yet it is explicitly stated in the treaties and reiterated in diplomatic correspondences time and again that China's sovereignty is intact therein. Of the injustices done China by the treaty Powers by restricting her tariff-making power and by imposing extra- territoriality on her, it is not within the scope of this monograph to treat. With the downfall of the old despotic monarchy and the inauguration of a republican form of government, the Chinese nation has fully realized her precarious international situation. No foreign nation can save her from being subjugated and exploited by foreign militarism and imperial- ism; this can be done by her own people alone. A nation 1 Chin Chu, op. cit., p. 66. - Willoughby, op. cit., pp. 130-131. 637] FISCAL RELATIONS 1 75 with her tariff autonomy restricted by numerous treaties, with extraterritoriality imposed on her, with her best com- mercial ports and naval bases leased to the Powers, and with her sovereign right of taxation surrendered in the leased territories and in the foreign concessions or settle- ments, has much to overcome in order to enjoy full freedom, independence and sovereignty. China has been duly pun- ished for her long isolation, for her extreme conservatism, and for her exceeding ignorance and disregard of the modern sciences. But with a popular move for political democracy, with a hopeful era of industrial modernization, and with a coming state of prosperity and strength, China can no longer permit such foreign intrusions on her in- herent sovereign rights. No nation, if it has any sense of justice and fairness, can refuse China's just demand to restore the leased territories to their rightful owner, to abolish extraterritorialty and concessions or settlements, and to return to her sovereign right, as an independent nation, to determine her own tariff policy. However successful the late Washington Conference might have been in other respects, its solution of the Chinese pro- blem was far from satisfactory. Three out of the six leased territories are still to be retained indefinitely by Great Britain {Kowloon) and Japan (Dalny and Port Arthur).^ The abolition of extraterritoriality is to take effect only when an international commission of jurists appointed for 1 As a result of the Shantung Settlement between Japan and China through the good offices of the United iStates and Great Britain, the Kiau-Chou leased territory is to be returned to China by Japan immedi- ately after the ratification of the agreement by the two contracting parties. As regards the British leased territory, Wei-Hai-Wei, in the North, and the French leased territory, Kuang-Chou-Wan, in the South, the two Powers concerned have before the Washington Conference, openly declared their intention to withdraw soon. {New York Times, February 2, 1922, p. 4.) 176 CENTRAL AND LOCAL FINANCE, IN CHINA [638 the special purpose shall report in its favor.^ The alien post offices are still to stay in the leased territories and foreign concessions or settlements after January i, 1923, although the other alien postal establishments shall be with- drawn from Qiinese territory after that date.^ The tariff restriction is still fastened on China and the rate is only in- creased to 5% effective ad valorem, with 2j4% surtax if the likin or the inter-provincial transit tax is abolished as well as 5% surtax on the luxuries." Although the late Washington Conference gave some manifestations of an awakened international conscience (or perhaps more truly of an enlightened self-interest of the Powers), it would be foolish to have expected a complete volte-face of the former aggressive Powers ; and the Chinese people, without any hatred or malice towards them, must work out their own destiny. ' New York Times, Nov. 30, 1931, p. 3. ' The alien postal agencies at present in China may be listed as follows : France 13. Great Britian 12. U. S. A I. Japan 124, The Japanese postal establishments are further classified as follows : First class offices 7 Second class offices 23 Third class offices 4 Unclassed offices 10 Sub-offices 3 Box offices I Agencies 33 Letter Boxes 33 Field Post Offices (The China Year Book, 1921-2, p. 479.) " New York Times, Jan. 6, 1922, p. 4. APPENDICES Appendix I Matricular Contributions and Central Subsidies of the Provincial AND Territorial Governments or the Chinese Empire as shov^tn in the Budget of 191 i (the last year of the Tsing Dynasty) Provinces or Total Tbial Matricular Central Territories Revenues Expenditures Contributions Subsidies Anhui $7,811,948 $3,185,666 $4,626,282 Chekiang 18,249,754 7,768,755 10,480,999 Chihli 24,998,539 10,641,272 14,357,267 Fengtien 17,265,018 13,502,262 3,762,756 Fukien ii,533,4i9 6,312,803 5,220,616 Heilungkiang 5,798,618 4,607,039 1,191, 579 Honan 12,042,370 6,011,721 6,030,649 Hunan 10,480,526 4,708,967 5,771,559 Hupeh 20,242,711 9,231,684 11,011,027 Kangsu 2,740,796 3,128,147 $387,351 Kiangsi ii,550,i33 5,264,842 6,285,291 Kiangsu 63,315,514 22,141,573 41,173,941 Kirin 12,138,652 8,926,834 3,211,818 Kuangsi 6,570,776 4,805,098 1,765,678 Kuangtung 35,530,696 13,782,713 21,747,983 Kweichow 1,681,209 2,542,694 861,485 Shansi 10,319,219 2,972,151 7,349,o68 Shantung 17,137,250 6,297,861 10,837,389 Shensi 6,928,624 3,968,357 2,960,267 Sinkiang 1,583,967 3,369,989 1,786,922 Szechuan 30,O47,57S 13,229,496 16,818,079 Yunnan 5,570,203 7,747,176 2,176,973 Altar 2,454' 223,748 136,625 Chahar 155,926 601,255 445,329 Chuanpian iii,750 1,104538 992,788 Cobdo 5,040 49,270 44,230 Hi 145,585 1,459,579 1,313,994. Jehol 911,010 1,451,712 540,712 Kweihua 222,839 36,291 186,548 Metropolitan District 213,675 98,030 115,645 Suiyuan I5,073 410,547 395,474 Tarbargatai i,497 138,122 136,625 Tibet 1,739,383 1,739,383 Uliassutai 6,352 81,275 74,923 Urga 612,930 823,171 210,241 Total $335,940,748 $172,366,021 $174,902,441 $11,327,714 Balance for the Central Government .... $163,574,727 (Adapted from S. Y. Chia, The Financial History of the Republic, vol. i, pp. 47-8.) 639] '77 178 APPENDIX [640 Appendix II Mateicular Gjntmbutions and Central Subsidies of the Provincial AND TeEKITOMAL GOVERNMENTS OF THE RjEPUBLIC OF ChINA AS SHOWN IN theSecond Year Budget OF theiRepublic ( 1913) Provincesor Tiital Total Matricular Central Territories Revenues Expenditures Contributions Subsidies Anhui $6,069,078 $4,602,182 $1,466,896 Chekiang I3,3IS,873 7,552,382 5,763,491 Giihli 10,391,781 9,830,067 561,714 Fengtien 14,160,984 7,493,901 6,667,083 Fukien 5,593,715 4,351,559 1,242,156 Heilungkiang 3,867,608 3,991,494 $123,886 Honan 10,093,902 7,339,549 2,754,353 Hunan 7,175,406 5,364,302 1,811,104 Hupeh 7,817,585 11,170,498 3,352,913 Kangsu 4,224,666 2,942,149 1,282,517 Kiangsi 7,991,724 5,549,546 2,442,178 Kiangsu 15,279,112 13,340,842 1,938,270 Kirin 6,105,285 4,810,436 1,294,849 Kuangsi 3,215,077 6,515,101 3,300,024 Kuangtung iS,592,30i 18,075,425 2,483,124 Kweichow 1,550,760 3,035,656 1,484,896 Shansi 6,427,928 6,721,369 293,441 Shantung 11,247,902 8,806,304 2,441,598 'Shensi 5,084,607 4,927,032 157,575 Sinkiang 1,645,920 6,815,704 5,169,784 Szechuan 14,386,248 11,822,969 2,563,279 Yunnan 2,951,992 8,210,796 5,258,804 Altar 507,926 507,926 Chahar 82,889 583,685 500,796 Chuanpian 3,661,156 3,661,156 Ili 31,467 31,467 Jehol 2,340,818 3,579,384 1,238,466 Metropolitan District 138, 173 307,673 169,500 Siningchinghai ... 23,548 23,548 Suiyuaii 1,131,846 i,i3i,'846 Tarbargatai 40,542 40,542 '^''^et 396,750 396,750 Uhassutai 205 205 Total $176,782,801 $173,501,978 $32,418,530 $29,137,707 (Adapted from S. Y. Oiia, op. cit., vol. i, pp. 84-7.) 641] APPENDIX 179 Appendix III Matricular Contwbutions akd Central Subsidies of the Provincial AND Territorial Governments of the Republic of China as SHOWN IN THE ThISD YeAR BuDGET OF THE REPUBLIC ( I9I4) Provinaspr Total Total Matricular Central Jerrttoria Sevtnues Exjicnditures Contributitmt Subsidiu ''^■hui $5,697,254 $6,322,731 $625,477 Chekiang 14,104,692 6,486,859 $7,617,833 Chihli 7,896,459 7,868,687 27,772 Fengtien 11,795,734 9,738,134 2,057,600 Fukien 5,366,469 3,674,467 1,694,002 Heilungkiang .... 4,485,291 4,551,223 65,932 Honan 9,001,337 7,582,736 1,418,601 Hunan 7,516,027 S,35S,S68 2,160,459 ■Hupeh 8,648,669 8,504,455 144,214 Kangsu 2,377,683 3,i03,477 725,794 Kiangsi 7,685,934 5,462,282 2,223,653 Kiangsu 13,897,452 9,680,154 4,217,298 Kirin 4,081,152 5,084,783 1,003,631 Kuangsi 2,585,448 5,896,100 3,310,652 Kuangtung 14,781,779 10,663,552 4,118,227 Kweichow 1,376,925 2,514,882 i,i37,957 Shansi 5,606,359 5,339,596 266,763 Shantung 10,037,382 7,584,879 2,452,503 Shensi 4,469,737 5,1 12,449 642,712 Sinkiang 1,572,948 4,729,870 3,iS6,922 Szechuan 10,323,490 8,985,401 1,338,089 Yunnan 2,013,509 5,007,993 2,994,484 Altar 1,669 380,638 378,969 Chahar 93,455 464639 341,184 Chuanpian 193,495 I,9I5,053 i,72i,SS8 Jehol 869,007 1,727,330 858,323 Metropolitan District 763,303 836,975 73,(>72 Suiyuan 253,009 869,264 616,255 Tarbargatai 218,526 218,526 Tibet 402,200 402,200 Total $157,497,668 $146,064,903 $29,737,013 $18,304,248 (Adapted from S. Y. Chia, op. cit., vol. i, pp. 92-5.) l8o APPENDIX [642 Appendix IV Mateicular Contributions and Central Subsidies of the Provincial AND Territorial Governments of the Republic of iChina as shown in the Fifth Year Budget of the Republic ( 1916) Provinces or Total Total Matricular Central Territories Revenues Expenditures Contributions Subsidies Anhui $7,592,467 ^,725,565 $866,902 Chekiang 13,972,845 8,466,649 5,506,196 Chihli 11,208,377 9,868,693 1,339,684 Fengtien 12,858,818 9.SS2,o6s 3,306,753 Fukien 6,475,327 4,490,797 1,984,530 Heilungkiang 4,815,215 5,325,224 $510,009 Honan 10,796,061 9,304,468 i,49i,S93 Hunan 7,430,435 6, 177,726 1,252,709 Hupeh 11,331,683 9,438,960 1,892,723 Kangsu 3,817,895 3,439,345 378,550 Kiangsi 9,609,110 5,403^811 4,205,299 Kiangsu 17,752,536 12,378,605 5,373,931 Kirin 5,818,582 5,274,064 544,5 18 Kuangsi 4,221,773 5,597,221 1,375,448 Kuangtung 21,440,780 14,045,374 7,395,4o6 Kweichow 1,590,983 2,850,637 1,259,654 Shansi 7,410,338 5,476,485 1,933,853 Shantung 11,524,815 9,253,989 2,270,826 Shensi 7,833,390 5,942,747 1,890,643 Sinkiang 3,307,635 4,730,279 1,422,644 Szechuan 11,551,052 10,876,297 674795 Yunnan 2,903,155 6,086,363 3,183,208 Altar 387,298 387,298 Chahar 610,305 687,208 76,903 Chuanpian 525,69s 2,063,881 i,S38,l86 ^ol'do 65,132 65,132 Jehol 936,722 1,669,456 732,734 Kiachta 62,972 62,972 Metropolitan District 858,313 1,000,287 141,974 Suiyuan 458,812 1,033,373 574,561 Tarbargatai 229,477 229,477 'Ti^st 401,000 401,000 Uliassutai 68,972 68,972 Urga 194,416 I94,'4l6 Total $198,653,119 $167,568,836 $42,308,871 $12,224,588 (Adapted from S. Y. Chia, op. cit., vol. i, pp. 101-3.) 643] APPENDIX 181 Appendix V Summary of the PsoviNaAL and Teesitoeial Self-Goveenment Budgets for the Second and Third Year or the Republic OF China (1913 and 1914) Provitu:espr jfjs 291* Territoria Revenua Expenditures Revenues Expenditures ^^"i $1,246,933 $2,253,815 $1,239,864 $872,100 Chekiang 2,058,452 2,339,805 1,936,911 1,959,394 Chihli 1,092,150 5,546,938 3,864,651 2,154,119 Pengtis'i 5,271,459 4,224,306 Fukien 891,203 I,i93,5i9 891,621 826,940 Heilungkiang i,403,3H i,S04,356 223,509 254,269 Honan 3,292,090 7,396,738 2,308,250 1,242,958 Hunan 248,493 1,131,360 847,796 1,424,519 Hupeh 2,115,677 2,959,048 7yiff70 1,915,275 Kangsu 808,122 1,691,000 679,395 453,786 Kiangsi 1,547,288 3,008,038 1,708,339 1,708,339 Kiangsu 4,155,739 8,529,778 3,125,246 3,125,246 Ki"»i 2,270,332 2,971,285 407,709 Kuangsi 1,017,251 830,899 141,029 87,934 Kuangtung 3,580,625 4,617,827 2,642,435 Kweichow 610,159 579,199 153,554 394,852 Shansi 2,401,241 3,511,632 1,492,774 2,336,064 Shantung 1,261,508 1,403,172 1,778,675 1,778,675 Shensi i,544,SSO 4,433,024 691,176 384,279 Sinkiang 1,004,325 259,428 1,057,582 181,524 Szechuan 6,306,379 6,306,379 1,077,397 1,077,397 Yunnan 1,736,215 1,778,154 1,643,322 2,868,411 Chahar 7o,4S7 53,923 Jehol 260,047 339,326 Metropolitan District 16,530 Total $38,668,745 $59,319,863 $38,499,332 $32,320,531 (The above budgets were authorized by the respective provincial assemblies and a duplicate copy was sent to the iMinistry of Finance for reference.) Note. — The total revenues and expenditures of all the provinces and territories for 1916 as shown in the self-government budgets of that year were $27,376,516 and $18,830,996 respectively. There were no provincial and territorial self-government budgets in 1915. Owing to the unsettled' political condition of the Republic, the more recent data are also not available. (Adapted from S. Y. Chia, op. cit., vol. i, pp. 128-133.) BIBLIOGRAPHY I. OFFiaAL Documents and Publications and Yeas Books (a) china Fa Kwei Lei Pien (or Classified Laws and Ordinances of the Republic of China, edited by Chung-hui Wang), Shanghai, 1915. (In Chinese.) Fa Lin Ta Chuan (or a Collection of Laws, Presidential Proclamations, Ministerial Rulings and Regulations, etc. of the Republic of China), Shanghai, 1915. (In Chinese.) Koo Sun Tsai Cheng Soo Ming Shu (or The Financial Reports of the Twenty-two Provinces) of 1909. (In Chinese.) The China Year Book, 1916, 1919-20 (London) ; 1921-212 (Tientsin). The British Parliamentary Papers, iChina, no. 3 ( 1913) , enclosure in no. 58. (b) FRANCE Situation financiere des departements en 1914, Melun, 1917. (C) JAPAN Resume statistique de I'Empire du lapon, Tokyo, 1921. (In both French and Japanese.) The Twentieth Financial and Economic Annual of Japan, Tokyo, 1920. The Japan Year Book, 19113-14 (Yokohama) ; 1919-20, Tokyo. (d) u. s. A. Final Report of the Committee on Taxation of the City of New York, 1916. Financial Statistics of Cities, 1915-19. Financial Statistics of States, 19x5-19. U. S. State Papers, House Document, serial no. 6300; and Senate Document, serial no. 5611. II. Periodicals Annals of American Academy of Political and Social Science, Philadelphia. The American Political Science Review, Baltimore. The Banker's Magazine, New York. The Bulletin of the National Tax Association, Lancaster, Pa. The China Review, New York. The Chinese Social and Political Science Review, Peking. The Economic Journal, Londoni. 182 [644 645] BIBLIOGRAPHY 183 Finans-Archiv: Zeitschrift fur das gesamU Finanzwesen, Stuttgart und Berlin. Foreign Relations Monthly, Tsinanfu. (In Chinese.) Jen Pao (or Morning Post), Peking. (In Chinese.) The Justice (Yung-yen Pao), Shanghai; (In Chinese.) New York Times. Political Science Quarterly, New York. Proceedings of the National Tax Association. Quarterly Journal of Economics, Boston. Revue de science et de legislation financieres, Paris. Revue economique internationale, Paris. Shang Pao (or Shanghai Journal of Commerce'), Shanghai. (In Chinese.) Shun Pao (or Shanghai Times), Shanghai. (In Chinese.) The Weekly Review of the Far East, Shanghai. (Formerly the Millard's Review of the Far East.) III. Books, Pamphlets and Articles Adams, Henry C, The Science of Finance, New York, 1909. , Public Debts, New York, 1693. Adams, T. S., "Separation of State and Local Revenues," Annals of the American Academy of Pol. and Soc. Sc, vol. 58 (1915). Allix, E'dgard, Traite eUmentaire de science des finances et de legislation financiere frangcUse, Paris, 1921, 4th ed. Ashley, Percy, Local and Central Government, a Comparative Study of England, France, Prussia and the United States, New York, 1906. , " The Financial Control of Local Authorities," Economic Journal, 1902, pp. 182-191. Baldwin, D. C, " The Budget Procedure of English and French Cities," Annals of the American Academy of Political and Social Sciences, vol. 62, pp. 204-211. Bastable, C. F., Public Finance, London, 1903, 3rd ed. Bevan, L. R. O., " China's Constitution," The Chinese Social and Political Science Review, 1917, pt. 4, pp. 89-126. Bocquet, Lucien, La reforme des impositions locales, Paris, 1921. , L'impot sur le revenu, Paris, 1921, 2nd ed. , Instruction administrative du 3 mars 1918 pour I'etablissement des impots cedulaires et de l'impot general sur le revenu, Paris, 1918. Bourinot, J. G., How Canada is Governed, Toronto, 1895. Bruere, Henry, The New City Government, New York, 1916. Brunnert, H. and Hagelstrora, V., Present Day Political Organization of China (translated by A. Beltchenko and E. E. Moran), Shanghai, 1910. Bryce, James, Modern Democracies, New York, 1921 (2 vols.). Bullock, C. J., Selected Readings in Public Finance, Boston, 1920, 2nd ed> 1 34 BIBLIOGRAPHY [646 . ".Separation of iState and iLocal Revenues," Quarterly Journal of Economics, vol. 24 (1910). Cartwright, O. G., " County Budgets and their Construction," Annals of the American Academy of Pol. and Soc. Sc, vol. 62, pp. 223-234. Cheng, S. C, Modem China, a Political Study, London, 1919. Chia, S. Y., The Financial History of the Republic of China (^Ming Kuo Tsai Cheng Shih), Shanghai, 1917 (2 vols., in Chinese). Clement, E. W., A Short History of Japan, 'Chicago, ipiS- Cohn, G., The Science of Finance (translated by Thorstein Veblen), Chicago, 1895. Cole, G. D. H., The Future of Local Government, (London, 1921. Colquhoun, A. R., China in Transformation, New York, 1899. Cossa, Luigi, Scienza delle Finanze (translated by Horace White), ■New York, 1896. Daniels, W. M., The Elements of Public Finance, New York, 1911. Dawson, W. H., Municipal Life and Government in Germany, London, 1914. Dodd, W. F., Modern Constitutions, Chicago, 1909. Douglas, P. H., "Development of a System of Federal Grants-iii-aid," Pol. Sc. Quarterly, vol. 33, pp. 255-7, 522-32. Douglas, R. K., Society in China, London, 1901. Fairchild, F. R., " The Ideal iSystem of Taxation for New England," The Bulletin of the National Tax Association, vol. ii, 1916-17. Fairlie, J. A., Municipal Administration, New York, 1901. Fiske, J., American Political Ideals, Boston, 191 1. Gamer, J. W., Introduction to Pol. Science, New York, 1910. Geiser, K. F., " The German Municipal Budget and its Relatioo to the General Government," Annals of the American Academy of Pol. and Soc. Sc, vol. 62, pp. 192-203. Gettel, R. G., Introduction to Political Science, Boston, 1910. Giles, H. A., China and the Chinese, New York, IQ02. Goodnow, F. J., Comparative Administrative Law, New York, 1903. (2 vols.) , Municipal Government, New York, 1919, 2nd ed. , Politics and Administration, New York, 1900. Grice, J. W., National and Local Finance, London, 1910. Gulick, L. H., "A Model iSystem of Municipal Revenues," The Bulletin of the National Tax Association, vol. vi, 1920-21. Hearnshaw, F. J. C, Democracy at the Crossways, London, 1918. Higgs, Richard, The Control of Public Finance and Officials, Dover, 1919. Hobson, J. A., Taxation in the New State, New York, 1919. Hsu, Singloh, "The Financial Condition of the Republic of China," The Banker's Magazine, New York, vol. 98, pp. 2i3"23i. Hsu, Ung-Yuan, "The Reform of Land Tax in iChina," The Chinese Social and Political Science Review, 19 16, pt. i, pp. 102-110. 647] BIBLIOGRAPHY 185 Hunter, M. H., Outlines of Public Finance, New York, 1921. Kuo, Chung-Hsiew, A History of the Provisional Givernment of the Republic of China, Shanghai, 1917. (In Chinese.) Lapp, J. A., "Federal Grants-in-aid," The American Political Science Review, vol. x, pp. 738-43. , " Highway Administration and State Aid," ibid., vol. x, pp. 73S-8. Laski, H. J., The Foundations of Sovereignty and Other Essays, New York, 1921. Leacock, S., Elements of Political Science, Boston, 1913. Leon, ,Say, Les finances, Paris, 1896. Leong, Y. K. and Tao, L. K., Village and Town Life in China, London, 1915- Lin, C C., A Political and Physical Geography of Chekiang {Chekiang Ti Li Chih), Hangchow, igi8. (In Chinese.) Lin, Han, The Present Administrative Law of China, Peking, 1919. (In Chinese.) Masterman, C. F. G., How England is Governed, New York, 1922. Maybon, A., La politique chinoise, Paris, igoS. Medhurst, W. H., China, Its State and Prospects, Boston, 1838. Meneau, J., " Le Budget et des finances publiques de I'Allemagne'' Revue economique internationale, vol. iv, pp. 401-441. Mill, J. S., Considerations on Representative Government, New York, 1905. , Principles of Political Economy, with some of their Application to Social Philosophy, edited by Sir W. J. Ashley, London, 1920. Morse, H. B., The Trade and Administration of the Chinese Empire, New York, 1920, 3rd ed. Munro, W. B., The Government of European Cities, New York, 1914. • — ' — . Principles and Methods of Municipal Administration, New York, 1916. Nevius, J. L., China and the Chinese, New York, 1869. Ogg and Beard, National Governments and the World War, New York, ipig. CMeara, J. J., Municipal Taxation at Home and Abroad, London, 1894. Oppenheimer, F., The State (translated by J. M. Gitterman), Indian- apolis, 1914. Parker, E. H., China, her Diplomacy, History and Commerce, London, 1917, 2nd ed. Plehin, C. C, Introduction to Public Finance, New York, 1919. Poincare, R., How France is Governed (translated by Bernard Miall), London, 1913. ■Reinsch, P. S., Intellectual and Political Currents in the Far East, New York, 191 1. , World Politics, New York, 1900. Robertson-iScott, J. W., The People of China, London, 1900. l86 BIBLIOGRAPHY [648 Seligman, E. R. A., Essays in Taxation, New York, 1921, 9th ed. , The Income Tax, New York, 1914- Sidgwick, Henry, Development of European Polity, iLondon, 1903. , The Elements of Politics, London, 1891. Smith, A. H., Village Life in China, a Study in Sociology, New York, 1899. Stamp, iSir Josiah, The Fundamental Principles of Taxation in the Light of Modern Developments, London, 1921. Sun, Yat-sen, Two Addresses, one about the Three-iPopular-Principles and the other about the Five-Power-'Constitution, Canton, 1921. (Iq Chinese.) Thomson, J. 'S., China Revolutionized, Indianapolis, 1913. Villard, H. G. and Willoughby, W. W., The Canadian Budgetary System, New York, 1918. Wang, C, Essentials of Local Administration, Shanghai, 1914. (In iGhinese.) Weale, Putnam, The Fight for the Republic in China, New York, 1917. Webb, Sidney, Grants-in-aid, a Criticism and a Proposal, London, 1920. Webb, S. and B., A Constitution for the Socialist Commonwealth of Great Britian, London, 1920. Wells, D. A., Theory and Practice of Taxation, New York, 1900. Werner, E. T. C, China of the Chinese, London, 1909. Williams, S. W., The Middle Kingdom, New York, 1901. Willoughby, W. F., An Introduction to the Study of the Government of Modern States, New York, 1919. , " Memorandum on the Adjustment of the Financial Relation be- tween the Central Government and the Provincial and Local Gov- erning Bodies," The Chinese Social and Political Science Review, 1917, pt. 3, pp. 26-37. Willoughby, W. W., Foreign Rights and Interests in China, Baltimore, 1920. Wu, Kuan-yin, "Appropriation of the Land Tax for Local Purposes," The Justice (Yung Yen Pao), Shanghai, vol. i, nos. 1-4, 6, 8, 1913. (In Oiinese.) Wu, S. Y., "Canton Municipal Progress," The Weekly Review of the Far East, vol. xix, pp. 6-8. Yao, T. K., Essentials of the Old. Chinese Political Institutions, Shanghai, 1919. (In Chinese.) Yen, Tsai-chih, Land Taxation in China, an account of the existing system and some recommendations for its reform {Tien Fu Tchoo Yi), Peking, 1915, (In Chinese.) 649] BIBLIOGRAPHY 187 IV. Columbia University Studies Chen, H. C, The Economic Principles of Confucius and His School, vols, xliv, xlv, 1911. Chen, S. K., The System of Taxation in China in the Tsing Dynasty, 1644-1911, vol. ix, no. 2, 1914. Chu, C, The Tariff Problem in China, vol. Ixxii, no. 2, 1916. Huang, F. H., Public Debts in China, vol. Ixxxv, no. 2, 1919. Huang, H. 'L., The Land Tax in China, vol. Ixxx, no. 3, 1918. Koo, V. K. W., The Status of Aliens in China, vol. 1, no. 2, 1912. Newcomer, Mabel, Separation of State and Local Revenues in the United States, vol. Ixxvi, no. 2, 1917. STUDIES IN HISTORY ECONOMICS AND PUBLIC LAW EDITED BY THE FACULTY OF POLITICAL SCIENCE OF COLUMBIA UNIVERSITY VOLUME NINETY-NINE COLUMBIA UNIVERSITY LONGMANS, GREEN & CO., AGENTS London: P. S. King & Son, Ltd. 1921-22 CONTENTS 1 . The Economic History of China : A Study of Soil Exhaustion — Mabel Peng-hua Lee, Ph.D i 2. Central and Local Finance in China — Chuan Shih Li, Ph.D 463 The University includes the following : Columbia College, founded in 1754, and Barnarcl College, founded in 1889, offering to men and women, respectively, programs of study which may be begun either in September or February and which lead normally in from three to four years to the degree of Bachelor of Arts. The program of study in Co- lumbia College makes it possible for a well qualified student to satisfy the require- ments for both the bachelor's degree and a professional degree in law, medicine, technology or education in five to seven years according to the course. The Faculties of Political Science, Philosophy and Pure Science, offering advanced programs of study and investigation leading to the degrees of Master of Arts and Doctor of Philosophy. The Professional Schools of Law, established in 1858, offering courses of three years leading to the degree of Bachelor of Laws and of one year leading to the degree of Master of Laws. Medicine. The College of Physicians and Surgeons, established in 1807, offering two-year oourees leading to the degree of Bachelor of Science and four- year courses leading to the degree of Doctor of Medicine. Mines, founded in 1863, offering courses of three years leading to the degrees of Engineer of Mines and of Metallurgical Engineer. Chemistry and Engineering, set apart from School of Mines in 1896, offering three-year courses leading to degrees in Civil, Electrical, Mechanical and Chemical Engineering. Teachers College, founded in 1888, offering in its School of Education courses in the history and philosophy of education and the theory and practice of teaching, leading to appropriate diplomas and the degree of Bachelor of Science in Education ; and in its School of Practical Arts founded in 1912, courses in household and industrial arts, fine arts, music, and physical train- ing leading to the degree of Bachelor of Science in Practical Arts. All the courses in Teachers College are open to men and women. These faculties offer courses leading to the degree of Master of Arts and Master of Science. Architecture, offering a progi'am of indeterminate length leading to the degree of Bachelor of Architecture and Master of Science. Journalism, founded in 1912, offering a two-year course leading to the degree of Bachelor of Literature in Journalism. The regular requirMnrait for ad- mission to this course is two years of college work. Business, founded in 1916, offering two and three-year oonrges in busdnesa train- ing leading to appropriate degrees. Dentistry, founded in 1917, offering four-year courses leading to appropriate degrees. Pharmacy. The New York College of Pharmacy, founded in 1831, offering courses of two, three and four years leading to appropriate certificates and degrees. In the Summer Session the University offers courses giving both general and professional training which may be taken either with or without regard to an academic degree or diploma. Through its system of University Extension the University offers many courses of study to persons unable otherwise to receive academic training. The Institute of Arts and Sciences provides lectures, concerts, readings and recitals — approximately two hundred and fifty in number— in a single season. The price of the University Catalogue is twenty-five cents postpaid. Detailed information regarding the work in any department will be furnished without charge upon application to the Secretary of Columbia University, New York, N. Y. Published May /, t922 China at the Conference BY MV. W- WILLOUGHBY Professor of Political Science at The Johns Hopkins University Octavo. 435 pages. Price $3.00 This volume, in the form of a semi-official report, will take its place along side the author's well-known work " Foreign Rights and Interests in China," and will give the reader an accurate statement of the results of the recent Conference at Washington. Besides chapters explaining the reasons for the discus- sion by the Powers of the political and international situa- tion in the Far East, describing the organization and pro- cedure of the Conference, and estimating its results, there are chapters dealing severally with each of the important subjects discussed in the Conference and regarding which Treaties or Resolutions were adopted. In an Appendix the texts are given of these important documents. Inasmuch as, with the exception of a part of a single session which was devoted to the situation in Siberia, the entire work of the Conference so far as it dealt with polit- ical questions in the Pacific and Far East, was concerned with the aflfairs of China, the present volume gives, in effect, a comprehensive account of the work of that Con- ference. In order that it may be quite complete in this respect there is given in the Appendix the statements made — there were no discussions — with reference to the Siberian situation. The Johns Hopkins Press Baltimore, Maryland, U. S. A. Columbia University Press Publications CONSTITUTIONAL GOVERNMENT IN THE UNITED STATES. By WooDROw Wilson, LL.D., President of the United Slates. Pp. vii + 236. OUR CHIEF MAGISTRATE AND HIS POWERS. By William Howard Taft, Twenty-seventh President of the United States. Pp. vii+ 165. CONSTITUTIONAL POWER AND WORLD AFFAIRS. By George Suth- erland, former Uniled States Senator from Utah. Pp. vii -f 202. WORLD ORGANIZATION AS AFFECTED BY THE NATURE OF THE MODERN STATE. By David Jayne Hill, LL.D., late American Ambas- sador to Germany. Pp. ix +214. Reprinted with new Preface. THE BUSINESS OF CONGRESS. By Samuel W. McCall, Governor of Massachusetts Pp. vii -|- 215. THE COST OF OUR NATIONAL GOVERNMENT. By Henry Jones Ford, Professor of Poliiics in Princeton University. Pp. xv -|- 147. POLITICAL PROBLEMS OF AMERICAN DEVELOPMENT. By Albert Shaw, LL.D., Editor of the Review of Reviews. Pp. vii -|- 268. THE PRINCIPLES OF POLITICS FROM THE VIEWPOINT OP THE AMERICAN CITIZEN. By Jeremiah W. Jenks, LL.D., Professor of Gov- ernment and Public Administration in Newr York University. Pp. xviii -f- 187. THE NATURE AND SOURCES OF THE LAW. By John Chipman Gray, LL.D., late Royall Professor of Law in Harvard University. Pp. xii + 332. THE GENIUS OF THE COMMON LAW. By the Right Honorable Sir Fred- erick Pollock, Bart., D.C.L., LL.D. Pp. vii+ 141. THOMAS JEFFERSON. His Permanent Influence on American Institutions. By John Sharp Williams, U. S. Senator from Mississippi. Pp. ix -f 330. THE MECHANICS OF LAW MAKING. By Courtenay Ilbert, G. C. B., Clerk of the House of Commons. Pp. viii -f- 209. LAW AND ITS ADMINISTRATION. By Harlan F. Stone, LL.D., Dean of the School of Law, Columbia University. Pp. vii -)- 232, AMERICAN CITY PROGRESS AND THE LAW. By Howard Lee Mc- Bain, Ph.D., Eaton Professor of Municipal Science and Administration, Co- lumbia University. Pp. viii -f- 269. Uniformly bound, 12mo, cloth. Each, $2.00 net. THE LAW AND THE PRACTICE OF MUNICIPAL HOME RULE. By How- ard Lee McBain, Eaton Professor of Municipal Science and Administration in Columbia University. 8vo, cloth, pp. xviii -|- 724. Price, iSs.oo net. STUDIES IN SOUTHERN HISTORY AND POLITICS. Inscribed to William Archibald Dunning, Lieber Professor of History and Political Philosophy in Columbia University, by his former pupils, the authors. A collection of fifteen essays. 8vo, cloth, pp. viii -\- 294. $3.00 net. THE ENGLISH-SPEAKING BROTHERHOOD AND THE LEAGUE OF NATIONS. By Sir Charles Walston (Waldstein), M. A., Litt. D., fof- merly Professor in the University of Cambridge. l2mo, boards, pp. xxiii-224, ^1.60 net. COLUMBIA UNIVERSITY PRESS LEMOKB & BUEOHNER, Agents 30-32 East Tvsrentieth Street, New York City LONGMANS, GREEN & CO. THE VILLAGE LABOURER, 1760-1833 : A Study in the Government of Eng- land before the Reform Bill. By J. L. and;Barbara Hammond. 8vo. $2.25 Tiet. " There is not a chapter in Mr. and Mrs. Hammond's book which fails to throw new light on enclosures or on the administration of the poor laws and the game laws, and on the economic and social conditions of the period. ... A few other studies of governing class rule before 1867 as searchingly analytical as Mr. and Mrs. Hammond's book will do much to weaken this tradition and to make imperative much recasting of English History from 1688."— — Am. Political Science Review. THE TOWN LABOURER, 1760-1832: The New Civilization. By J L. Ham- mond and Barbara Hammond, Authors of " The Village Labourer. 1760-1832 : A Study in the Government of England before the Reform Bill." 8vo, $2 25 Ttei."^ This volume is the first part of a study of the Industrial Revolution. It will be completed by another volume giving in detail the history of the work- people in various industries, with a full account of the Luddite rising and of the disturbances connected with the adventures of th^asent provocateur OMyct. " Never has the story been told with such masterly precision, or with such illuminating reference to the original sources of the time, as in this book .... The perspective and proportion are so perfect that the life of a whole era. analyzed searchingly and profoundly, passes before your eyes as you read." — The Dial. " A brilliant and import-ant achievement. ' The Town Labourer ' will rank as an indispensable source of revelation and of inspiration."— 7%« Nation (London). BLACK AND WHITE IN THE SOUTHERN STATES : A Study of the Race Problem in the United States from a South African Point of View. By Mau- rice S. Evans. 8vo. $3.00 net. "This is a sequel to the author's earlier volume. Black and White in South East Ai-rica. It is a product of the same searching insight and the same candid observation." — American Journal of Sociolosy. BLACK AND WHITE IN SOUTH EAST AFRICA: A Study in Sociology. By Maurice S. Evans. Svo. $3.00 net. " An exceedingly lucid statement of the arduous and intricate problem which lies before the people of South Africa in dealing with the native races." — TheJVaiion. Second Edition, brought up to the Spring of 1919. THE CONTROL OF THE DRINK TRADE IN BRITAIN. A Contribution to National Efficiency during the Great War. 1915-1918. By Henry Carter. With Illustrations, Charts, and Diagrams, and a new Preface by Lord D'Abernon Svo. $1.75 net. His Grace the Archbishop of Canterbury says : " The whole position concerning iptemperance has been fundamentally altered by the war. I would very earnestly and seriously ask any who remain unconvinced, either as to the necessity or the practicability of such changes, to road one book — sane, cool, lucid, and absolutely well-informed — ' The Con- trol of the Drink Trade.' " Fourth Avenue and 30th Street, NEW YORK LONGMANS, GREEN & CO. THE ADMINISTRATION OF INDUSTRIAL ENTERPRISES. With Special Reference to Factory Practice. By Edward D. Jones, Ph.D., Professor of Commerce and Industry, University of Mich- igan. With Illustrations and Bibliographies. Large l2mo. $2.35 net, {Fifth Impression). "To the head of any industrial organization, and especially to the executives of those which have not long been created and are still faced with many of the problems dis- cussed in the volume, it should be particularly useful " — Wall Street yournal. THE WORKS MANAGER TO-DAY: An Address Prepared for a Series of Private Gatherings of Works Managers. By Sidney Webb, Professor of Public Administration in the University of London (School of Economic and Political Science). Crown 8vo. $1.35 net An examination, in easy lecture form, of the problems of management of any considerable industrial enterprise, especially in relation to the or- ganization of labor, methods of remuneration, " Scientific Management" and " Welfare Work," piecevfork and premium bonus systems, restriction of output and increase of production, the maintenance of discipline, etc, THE ECONOMIC HISTORY OF THE UNITED STATES. By Ernest Ludlow Bogart, Ph.D., Associate Professor of Economics in the University of Illinois. With 26 Maps and 95 Illustrations. Crown 8vo, S2.00. READINGS IN THE ECONOMIC HISTORY OF THE UNITED STATES. By E. L. BoGART, Ph.D., and C. M. Thompson, Ph.D., of the University of Illinois. 8vo. $3.20. A source book which collects in one volume contemporary material illustrating the most important economic developments in the country's history. The material is arranged as follows : Eight chapters deal with the United States before 1808; nine with the period of 1808-1860; and six with the period since i860. RAILROADS. In two volumes. By William Z. Ripley, Ph.D. Nathaniel Ropes Professor of Economics in Harvard University, author of " Railway Problems," etc. Vol. I. RATES AND REGULATION, with 41 maps and diagrams. 8vo. ^4.00 net. Vol. II. FINANCE AND ORGANIZATION, with 29 maps and diagrams. 8vo. ^4.00 net. PRINCIPLES OF ECONOMICS: with Special Reference to Amer- ican Conditions. By Edwin R. A. Seligman, LL.D. McVickar Professor of Political Economy in Columbia University. Eighth Edi- tion, Revised (1919). f3-00 net. AN ESSAY ON MEDIAEVAL ECONOMIC TEACHING. By George O'Brien, Litt.D., author of " The Economic History of Ireland in the Seventeenth Century," " The Economic History of Ireland in the Eighteenth Century, etc." t^-li net. It is the aim of this essay to examine and present in as concise a form as possible the principles and rules which guided and regulated men in their economic and social relations during the period known as the Middle Ages. Fourth Avenue and 30th Street, NEW YORK p. S. KING & SON, Ltd. INSURANCE AGAINST UNEMPLOYMENT With special reference to conditions in Great Britain and the United States of America. By Joseph L. Cohbu, B.A. Cantab.; M.A. , and Gilder Fellow in Economics, Columbia University. 18s. Postage Is. A comprehensive study of the Problem of the Prevention of Unemployment in the United States, Great Britain, and in Etirope. PROHIBITION IN AMERICA, AND ITS RELATION TO THE PROB- LEM OF PUBLIC CONTROL OF PERSONAL CONDUCT By Sir Arthur Newsholmb, K.C.B., M.D., Author of "Public Health and Insurance," &c. ; Lecturer on Public Health Administration in Johns Hopkins University; late Principal Medical Officer to the Local Government Boai'd of England. Price 2s. 6d. Postage 2d. Methodist Times : " We suggest that all who aspire to pass an opinion on the Prohibition ■question should read this book. . . contains a History of the Prohibition Movement and a careful analysis of the motives leading to National Prohibition. . . , There iB also as an Appendix, a Summary of the National Prohibition Act." PRINCIPLES OF COMPARATIVE ECONOMICS By Radhakamal Mtokeejee, M.A., Ph.D., Professor of Economics and Sociology, Lucknow University; Premehand Eoychand Scholar; Sometime Pro- fessor of Economics, Krishnath College, Berhampore; Special Lecturer in Indian Economics, University of the Punjab, 1917, late Lecturer in Economics, Post- Graduate Department, Calcutta University; Author of " The Foundations of Indian Economics." Vol. I ready. Price 158. Postage 2s. Vol. II will be issued early in 1922. Price 18s. With a Preface in French by Raphaei- Geosgbs Levy, Senateur, Membre de I'lnstitut de France, etc.; with English Translation. In the first volume the author examines the principles of economics ; in the second he •describes the situation in India. Several chapters are devoted to the social dynamic, to what has been called the spiral of production, to marginal limitations, to evolution, to co-operative productivity studied as a new factor in economics, to the laws of consumption. PRICES AND WAGES An Investigation of the Dynamic Forces in Social Economics. By PEEcr Wallis and Albert Wallis. Royal 8vo. 480 pp. With numerous Charts and Diagi-ams. 25s. Postage Is. Co-partnership : ■' The importance of this work cannot be over estimated the book is of the utmost value to students of economics and sociology ... an excellent course for study circles during the coming winter session." WEALTH AND ITS TAXABLE CAPACITY By Sir JosiAH Stamp, K.B.E., D.Sc, Guy Medallist of the Eoyal Statistical Society, and late of the Inland Revenue Department. Being the Newmarch Lectures of 1920-21. Price lOs. 6d. Postage 9d. In the House of Commons during the Debates on Taxation and the Budget these Lec- tures were referred to by several Members, and the Chancellor of the Excheouer 'stated that he understood they would be published. Sir Josiah Stamp has now revised them and thev will be issued shortly. ' MONETARY POLICY Being the Report of a Sub-Committee appointed by the Research Committee of the British Association for the Advancement of Science on Currency and the Gold Standard. 2s. 6d. Postage 2d. Orchard House, 2-4 Great Smith Street Westminster, England Studies in History, Economics and Public Law edited by Faculty of Political Science of Columbia University VOLUME I, 1891-92. 2nd Ed., 1897. 396 pp. Price, cloth, $3.50. 1. The Divorce Problem. A Study la Statistics. By Walter F. Willcox, Ph.D. Price, 73 cents. S. The History of Tariff Administration In the TJuited States, from Colonial Times to the McKlnley Administrative Bill. By John Dhan Goss, Ph. D. Price, ^i .00. 3. History of Municipal I.and Ownership on Manhattan Island. By George Ashton Black, Ph.D. Price, $i.oa. 4. Financial History of Massachusetts. By Charles H, J. Dooglas, Ph.D. Price, J1.00. VOLUME n. 1892-93. (See note on last page.) 1. [5] The X^conomlcs of the Kusslan Village. By Isaac A. Hourwich, Ph.D. {Out ofprin{\. 8. [6] Bankruptcy. A Study In Comparative Legislation. By Samuel W. DuNscoMB, Jr., Ph.D. (Not sold separately.") 8. [7J Special Assessments ; A Study In Municipal Finance. By Victor Rosewatee, Ph.D. Second Edition, 1898. Price, $1.00. VOLUME III, 1893. 465 pp. (See note on last page.) 1. [8] *Hlstory of Elections In American Colonies. By Cortland F. Bishop, Ph.D. {Not sold separately.') 5. [9] The Commercial Policy of England toward the American Colonies. By George L. Beer, A. M. (Out o/print.) VOLUME IV, 1893-94. 438 pp. (See note on last page.) 1. [10] Financial History of Virginia. By William Z. Ripley, Pla.D. (Not sold separately ) 2. [Ill* The Inheritance Tax. ByMAx West.PK.D. Second Edition. 1908. Price, |2co. €. [IS] Histo'^v of Taxation In Vermont. By Frederick A. Wood, Ph.D.((9«^ of print ) VOLUME V, 1895-96, 498 pp. Price, cloth, $3.50. 1. [13] Double Taxation In the United States. By Frakcis Walker, Ph.D. Price, |i.oo. S. [14] The Separation of Governmental Po^wers. By William Bondy, LL,6., Ph.D. Price, ^x.oo. 8. [15] Municipal Government In Michigan and Ohio. By Delos F. Wilcox, Ph.D. Price, ^i.oo. VOLUME VT, 1896. 601 pp. Price, cloth, $4.50 ; Paper covers, $4.00. £16] History of Proprietary Government In Pennsylvania. By William Robert Shepherd, Ph.D. VOLUME Vn, 1896. 512 pp. Price, cloth, $3.50. 1< [17] History of the Transition from Provincial to Common-wealth Gov- ernment In Massachusetts. By Harrv A. Gushing, Ph.D. Price, ^2.00. JBa [ 18]*Speculatlou on the Stocli: and Produce Exchanges of the United States By Henry Crosby Emery, Ph.D. Price. 91.50. VOLUME VIII, 1896-98. 551 pp. Price, cloth. $4.00. 1. [19] The Struggle between President Johnson and Congress over Kecon- Structlon. By Charles Ernest Chadsey, Ph.D. Price, jji.oo. -S. [SO] Recent Centralizing Tendencies in State Educational Administra- tion. By William Clarence Webster, Ph.D. Price, 75 cents. 3. [21] The Abolition of Privateering and the Declaration of Paris. By Francis R.Stark, LL.B,, Ph.D. Price. Ji 00. 4. [33] Public Administration In Massachusetts. The Belation of Central to Xiocal Activity. By Robert Harvey Whitten, Ph.D, Price, $1.00. VOLUME IX, 1897-98. ' 617 pp. Price, cloth, $4.00. 1. [33] *Bngllsh liOcal Government of To-day. A Study of the Relations of Central and Local Government. By Mild Roy Malteik, Ph.D. Price, ijz.oo. 5. [34] German Wage Theories. AHlstory of their Development. By James W. Crook, Ph.D. Price, jgi.oo. S, [35 ] The Centralization of Administration In STevr Torli State. By John Archibald Ii'aiklik, Ph.D. Price, ^i.oo. VOLUME X, 1898-99. 409 pp. Price, cloth, $3.50. 1. [86] Sympatlietlc strikes and Sympatlietloliockotits. „!. T^ -o ■ By Fred S. xIalz., Fa.lJ. jriictp fl.oo, S. [37] *Rliode Island and tJie Formation of IteTJnlon. ™ ^ r. - ^ By Frank Greenb Baths, Ph.D. Price, «i. 50. 3. [38]. Centralized Administration ol lilqnor Laws In the American Com.. monTrealths. By Clbmbnt Mooeb Laciy Sites, Ph.D. Price, Ji.oo. VOLUME XI, 1899. 495 pp. Price, cloth, 4.00; paper covers, $3.50. f^9] The Growth of Cities. Ey Adna Ferrin ■Wbbee Ph.D. VOLUME XII, 1899-1900. 586 pp. Price, cloth, $4.00. • .- [30] History and Functions of Central Labor Unions. By William Maxwell Burke, Ph.D. Price, ^i.oo. a„ [31.1 Colonial Immigration Laws. _, „ „ . „ „ . By Edward Emerson Proper, A.M. Price, 75 cents, a. [33] History of Military Pension Legislation in the United States. By William Henry Glasson, Ph.D. Price, ^i.oo. 4. [33] History of the Theory of Sovereignty since Eousseau. „ .„ _ By Charles K. Merriam, Jr., Ph.D. Price, ^1.50. VOLUME XIII, 1901. 570 pp. Price, cloth, $4.00. 1. [34] The Legal Property Belatlons of Married Parties. By IsiDOR Lore, Ph.D. Price, gi.50. 5. [35] Political Nativism In New York State. .^ By LouLS Dow Scisco, Ph.D. Price, $2.00. 3. [36] The Reconstmction of Georgia. By Edwin C. Woolley, Ph.D. Price, jr.oo. VOLUME XIV, 1901-1902. 576 pp. Price, cloth, $4.00. i. [37] Loyallsm In New^ York dnrlng the American Kevolution. By Alexander Clarence Flick, Ph.D. Price, fz.oo. S. [38] The Economic Theory of Risk and Insurance. By Allan H. Willett, Ph.D. Price, $1.50. 8. [39] The Eastern Question: A Study In Diplomacy. By Stephen P. H. Duggan. Ph.D. Price, $1.00. VOLUME XV. 1902. 427 pp. Price, cloth, $3.50; Paper covers. $3.00. [40] Crime in Its Relation to Social Progress. By Arthur Cleveland Hall, Ph.D. VOLUME XVI, 1902-1903. 547 pp. Price, cloth, $4.00. 1. [41] The Past and Present of Commerce in Japan. By Yetaro KlNOSlTA, Ph.D. Price, ^1.50. a. [43] The Employment of Women in the Clothing Trade. By Mabel Hurd Willkt, Ph.D. Price, $1.50. 3. [43] The Centralization of Administration in Ohio. By Samuel P. Orth, Ph.D. Price, $1.50. VOLUME XVn, 1903. 635 pp. Price, cloth. $4.00. 1. [44] ^Centralizing Tendencies In the Administration of Indiana. By William A. Rawles, Ph.D. Price, ^2.50. S. [45] Principles of Justice in Taxation. By Stephen F. Weston, Ph.D. Price. ^2.00. VOLUME XVIII, 1903. 753 pp. Price, cloth. $4.50. 1. [46] The Administration of low^a. By Harold Martin Bowman, Ph.D. Price, ^1.50. 3. [47] Turgot and the Six Edicts. By Robert P. Shepherd, Ph.D. Price, $1.50.. 3. [48] Hanover and Prussia, 1795-1808. By Guy Stamton Ford, Ph.D. Price, ^.co. VOLUME XIX, 1903-1905. 588 pp. Price, cloth, $4.00. 1. [491 Josiah Tucker, Economist. By Walter Ernest Clark. Ph.D. Price, $1.50. 2. [50] History and Criticism of the Labor Theory of Value In English Polit- ical Economy. By Albert C. Whitaker, Ph.D. Price, $1.50^ 8. [51] Trade Unions and the Law In Kew York. By George Gorham Groat, Ph.D, Price, $1.00. VOLUME XX, 1904. 514 pp. Price, cloth. $3.50. 1. [53] The Office of the Justice of the Peace in England. By Charles Austin Beard, Ph.D. Price, ^1.50. a. [63] A History of Military Government in New^ly Actjulred Territory of the United States. By David Y. Thomas, Ph.D. Price, $2.00. VOLUME XXI, 1904. 746 pp. Price, cloth, |4.50. 1. [54] *Treaties, their Making and Enforcement. By Samuel B, Crandall, Ph.D. Price, $i.so. S. [55] The Sociology of a Kew York City Block. By Thomas Jesse Jones, Ph.D. Price, {i.oo. 8. [56] Pre-Malthusian Doctrines of Popui ation . By Charles E. Stangeland, Ph.D. Price, ^3.50. VOLUME XXII, 1905. 520 pp. Price, cloth, $3.50; paper covers, $3.00. (57] TUe Historical Development ol tbe Poor Law of Connecticut. By Edward W. Catkn, Ph. D. VOLUME XXIII, 1905. 594 pp. Price, cloth. $4.00. 1. [58] The Xlconomlcs otXiaud Tenure In Georgia. By Enoch Marvin Banks, Ph.D. Price, ^x.oo. 8. [59] Mistake In Contract. A Study In Comparative .Tnrlsprudence. By Edwin C. McKeag, Ph.D. Price, Ji.oo. 3. [60] Combination In tUe Mlnlns Industry. By Henry R. Mussev, Ph.D. Price, $i.oo. 4. [61] The Bngllsb. Cralt Guilds and tie Government. By Stella Kramer. Ph.D. Price, Ji.oo. VOLUME XXIV, 1905. 521 pp. Price, cloth, $4.00. 1. [6S] The Place of Maglo In tlie Intellectual History of Europe. By Lynn Thorndikh, Ph.D. Price, ^i.oo. 5. [63] Tlie Ecclesiastical Edicts of tte Theodoslan Code. By William K. Boyd, Ph.D. Price, Ji.oo. 3. [64] *Tlie International Position of Japan as a Great Power. By Skiji G. Hishida, Ph.D. Price, $2.00. VOLUME XXV, 1906-07. 600 pp. (Sold only in Sets.) 1. [65] *Munlclpal Control of Public XTtllltles. By O. L. Pond, Ph.D. (Not sold separately.) a. [66] The Budget In the American Common-wealths. By Eugene E. Agger, Ph.D. Price, $1.50. 3. [67] The Elnances of Cleveland. By Charles C. Williamson, Ph.D. Price, $2.00. VOLUME XXVI , 1907. 559 pp. Price, cloth, $4.00. X. [68] Trade and Currency In Early Oregon. By James H. Gilbert, Ph.D. Price, $i.oo. ■2. [69] liUther'sTable Talk. By Preserved Smith, Ph.D. Price, ii.oo. S. 1701 The Tobacco Industry In the TTnlted States. By Meyer Jacobstbin, Ph.D. Price, $z. 50. 4. [7 1] Social Democracy and Population. By Alvan a. Tbnney, Ph.D. Price, 75 cents. VOLUME XXVII, 1907. 578 pp. Price, cloth, $4.00. 1. [73] The Economic Policy of Robert "Walpole. By NoRRls A. Brisco, Ph.D. Price, $1.50, a. [73] The United States Steel Corporation. By Abraham Berglund, Ph.D. Price, $1 50. 8. [74] The Taxation of Corporations In Massachusetts. By Harry G. Friedman, Ph.D. Price, ^1.50. VOLUME XXVIII. 1907. 564 pp. Price, cloth, $4.00. 1. [75] DeWltt Clinton and the Origin of the Spoils System In New York. By Howard Lek McBain, Ph.D. Price, $1.50. 5. [76] The Development of the I.eglslatnre of Colonial Virginia. By Elmer I. Millbr, Ph.D. Price, ^1.50. 8. [77] The Distribution of Ownership. „ ,, ™„ „. . By Joseph Harding Underwood, Ph.D. Price, ^1.50. VOLUME XXIX, 1908. 703 pp. Price, cloth, $4.50. 1. f78] Early jSTew England Towns. By Anne Bush MacLear, Ph.D. Price, ^1.50. S. [79] STew Hampshire as a Koyal Province. nv T^ n • , By William H. Fry, Ph.D. Price, ^3.00. VOLUME XXX, 1908. 712 pp. Price, cloth, $4.50 ; Paper covers, $4.00. [80] The Province of New Jersey, 1664—1738. By Edwin P. Tanner, Ph.D. VOLUME XXXI, 1908. 575 pp. Price, cloth, $4.00. 1. [81] Private Freight Cars and American BaUroads.^ ^^_^^ ^^^^ ^ .^^ ^^ ^^ 8. [83] Ohio before 1850. By Robert E. Chaddock, Ph.D. Price, ^1.30. 3. [83] Consanguineous Marriages In the American Population. ». Louj v/uAxa. ^» By George B. Louis Aensr, Ph.D. Price, 73 cents. 4. [84] Adolphe Quetelet as Statlstiolau. By Frank H. Hankins, Ph.D. Price, $1.25. VOLUME XXXII, 1908. 705 pp. Price, cloth, 4.50; paper covers, $4.00. 85] The Enforcement of the Statutes of Laborers^^ ^^^^^ ^^^^ ^^^^^^^ ^^.^ VOLUME XXXin, 1908-1909. 635 pp. Price, cloth, $4.50. 1 [86] I'actory liOglslatlon in Maine. By E. Stagg Whitin.A.B. Price, Ji.oo. a'. [871 •Psychological Interpretations of Society. •'■'"■''' " By Michael M. Davis, Jr., Ph.D. Price, |2.oo. R rs81 *An Introduction to the Source.s relating to the Germanic Invasions. o. Looj .a. - gy (;j^„^Tj,jj J jj, Hayes, Ph.D. Price, fi.50. VOLUME XXXrV, 1909. 628 pp. Price, cloth, $4.50. , 1. [89] Transportation and Indnstrlal De^^loPSiS-F* *- S^« .^.%^ll.;VVest^ S. [90] social Reform and the Reformatton^^^^ ^^^^^^ Schap.ro. Ph.D. Price. (!x..s. S. [91] Responsibility lor Crime. By Phiup A. Parsons. Ph.D. Price, $1.50. VOLUME XXXV. 1909. 568 pp. Price, clotli, $4.50. 1. [98] The conflict over tHe Judicial Po7«J^[?,*^f,FfiiJif * |t^««P*°ec',|r^"o: «. [93] A Study of tHe Population of fanhattanvine.^^^^^^^^^ ^^^ ^^.^^ ^^^^ 8. [94] • Divorce: A Study In Social Causation. ^ lichthnbebgrr. Ph.D. Price, *r.s<.. VOLUME XXXVI, 1910. 542 pp. Price, cloth, $4.00. 1. [95] •Reconstruction In Texas. By Charles William Ramsdeli.. Ph.D. Price, $2.5.. a. [96l • Tlie Transition In Virginia fromJ^olonyJo^Comm^^^^^ ^^^^ VOLUME XXXVII, 1910. 606 pp. Price, cloth, $4.50. 1. [97] standards of Reasonableness In I^Og^*} ^i^e^f ?* »»c1fARi?P°B" Pn?e, J...,. S. [98] Legal Development In Colonial Massacbusetts.^^^^^^ ^^^_ Price. «x.as. 8. [99] « Social and Mental Traits of the Negro.^^^^^^ ^ ^^^^ ^^^ p^.^^_ ^^^ VOLUME XXXVm, 1910. 463 pp. Price, cloth, $3.50. 1. [1001 Tbe Public Domain and Democracy.^^^_^^^ ^^^^^ ^^^^_ ^^^ P.ice,$..». ». [101] Organlsmlc Tbeorles of tbe State.^^ ^^^^^^^ ^ ^^^^ p^^ ^^^^ ^^ ^^ VOLUME XXXIX, 1910-1911. 651 pp. Price, cloth, $4.50. 1. [lOa] Tbe Making of tbe Balkan states. t,^ -n -a ■ , ■• ^ By William Smith Murray. Ph.D. Price. $1.50. S. ri031 Political History of Ne-w Torfe State during tbe Period of tbe Civil War. By Sidney David Brummer, Ph. D. Price, 3.00. VOLUME XL, 1911. 633 pp. Price, cloth, $4.50. 1. [104] A Survey of Constitutional Development In Cblna. „ „ „ . ^ ' ■" By Hawkling L. Yen, Ph D. Price, $iM>. ». [105] Oblo Politics during tbe ClvU War Period. „, ^^ „ . , By George H. Porter. Ph.D. Price. $1.75.^ S. [106] Tbe Territorial Basis of Government under tbe State ConstltntlonSn. By Alfred Zamtzingbr B.bed^ Ph.D. Frice,$i.75. VOLUME XLI, 1911. 514 pp. Price, cloth, $3.50; paper covers, $3.00. [107] Nevy Jersey as a Royal Province. By Edgar Jacob Fisher, Ph. D, VOLUME XLn, 1911. 400 pp. Price, cloth, $3.00 ; paper covers, $2.50. [IDS] Attitude of American Courts In Xiabor Cases. By George Gorham Groat, Ph.D. VOLUME XLm, 1911. 633 pp. Price, cloth, $4.50. la [109] 'Industrial Causes of Congestion of Population In New Yorfe City. By Edward Ewing Pratt, Ph.D. Price, $2.00. «. [110] Education and the Mores. By F. Stuart Chapin, Ph.D. Price, 7s ceuU, 8. 1111] The British Consuls in the Confederacy. By MiLLBDGB L. BoNHAM, Jr., Ph.D. Price,$2.o«. VOLUMES XLIV and XLV, 1911. 745 pp. Price for the two volumes, cloth, $6.00 ; paper covers, $5.00. (lis and 118] The Bconomlo Principles of Confucius and his School. By Chen Huan-Chang, Fh.Dt VOLUME XLVI, 1911-1912. 623 pp. Price, cloth, $4.50. 1. [114] The Rloardlan Socialists. Bn Esther Lowenthal. Ph.D. Frice.$i,oa S. [115] Ibrahim Pasha, Grand Vizier of iSuIelman, the Magnificent. By Hester Donaldson Jenkins, Ph.D. Price, ^i.oo. St. [116 J 'Syndicalism In Prance. By Louis LEviini, Ph.D. Second edition,_i9i4. Pricey ^i.so. 4. [IIT] A Hoosler Village. " " VOLUME XLVII, 1912. 544 pp. Price, cloth, $4.00. 1. [118] TUe Politics of MlcMgau, 1865-1S78, , , ByHaeeietteM. DiLLA, Ph.D. Price, fc.oo. S. [1 19] *Tlie United States Beet Sugar Indnstry and the Tariff. By Roy G. Elakey, Ph.D. Price, jSz.oo. VOLUME XL Vin, 1912. 493 pp. Price, cloth, $4.00. 1. [ISO] Isldor of Seville. By Ernest Brehaht, Ph. D. Price, $».<». 9. [lai] Progress and Uniformity In Chlld-Ijabor legislation. By WjLLiAM Fielding Ogburh, Ph.D. Price, ^1.75. VOLUME XLIX, 1912. 592 pp. Price, cloth, $4.50. 1. [188] British Radicalism 1791-1797. By Walter Pbelps Hall. Price, $3.00. 1*. [183] A Comparative Study of the Lavf^ of Corporations. By Arthur K. Kuhn, Ph.D. Price, $1.50. 8. [184] *The Negro at Work In Kew Tork City. By George E. Hathbs. Ph.D. Price, $1.25. VOLUIVLE L, 1911. 481 pp. Price, c!oth, $4.00. 1. [1351 •The Spirit of Chinese Philanthropy. 'By Yai Yue Tsu. Ph.D. Price, ^i.oo. S. [186] *The Allen In China. By Vi. Kyuin Wellington Koo, Ph.D. Price, $2.50. VOLUME LI, 1912. 4to. Atlas. Price: cloth, $1.50; paper covers, $1.00. 1. [1S7] The Sale of I^lquor In the South. By Lbohard S. Blakey, Ph.D. VOLUlflE LII, 1912. 489 pp. Price, cloth, $4.00. 1. [188] 'Provincial and Liocal Taxation la Canada. By Solomon Vimebbrg, Ph.D. Price, $1.50. «. [139] *The Distribution of Income. By Frank Hatch Streightoff, Ph.D. Price, $1.50, S. [ISO] *The rinances of Vermont. By Frederick A. Wood, Ph.D. Price, ^i.oo. VOLUJVTE Lni, 1913. 789 pp. Price, cloth, $4.50; paper, $4.00. [131] The Civil "War andKeconstructlou In Morlda. By W. W. Davis, Ph.D. VOLUME LIV, 1913, 604 pp. Price, cloth. $4.50. 1. [138] 'Privileges and Immunities of Citizens of the United States. By Arnold Johnson Lien, Ph.D. Price, ys cents. S. [133] The Supreme Court and Unconstitutional Legislation. By Blainb Free Moore, Ph.D. Price, gi.oo. S. [134:] 'Indian Slavery In Colonial Times -within the Present lilmlts of the United States. By Almon Wheeler Lauber, Ph.D. Price, $3.00. VOLUME LV, 1913. 665 pp. Price, cloth, $4.50. 1. [135] *A Political History of the State of New York. By Homer A. Stbbbins, Ph.D. Price, 54.00. H. [13S] »The Early Persecutlonsof the Christians. By Leon H. Cahfield, Ph.D. Price, 51.50. VOLUME LVI, 1913, 406 pp. Price, cloth, $3.50. 1. [137] Speculation on the Ne-w York Stock Exchange, 1904-1907. By Algernon Ashburner Osborne. Price, $1.50. ■S. [138] The Policy of the United States to-wards Industrial Monopoly. By Oswald Whitman Knauth, Ph. D. Price, $12 .00. VOLU]ffiE LVII, 1914. 670 pp. Price, doth, $4.50. 1. [139] *The Civil Service of Great Britain. By Robert Moses, Ph.D. Price, 52.00. 9. [140] The Financial History of New York State. By Don C. Sowers. Price, 52.50. VOLUME LVIII, 1914. 684 pp. Price, cloth, $4.50; paper, $4.00. [14:1] Keconstruotlon In North Carolina. By J. G. DE Roulhac Hamilton, Ph.D. VOLUME LIX, 1914. 625 pp. Price, cloth, $4.50. 1. ri431 The Development of Modern Turkey by means of Its Press. ». L-i»~J *- By Ahmed Emin, Ph.D. Price, Ji.oo. JB. [143] The System Of Taxation In China, 1614-1911. „,^ „ „ . w. L'.x'J J By Shao-Kwan Chen, Ph. D. Price. Jr.oo. 8. [144] The Currency Problem In China. By Wen Pin Wei, Ph.D. Price, 51.25. 4:. [1461 *Jev7lsh Immigration to the United States. By Samuel Joseph, Ph.D. Price, 5i.SOi VOLUME LX. 1914. 516 pp. Price, cloth, $4.00. 1. ri4:6] *Coustantlne the Great and Christianity. „u r. t. „ By Chuistopmbr Bush Coleman, Ph.D. Price, t».oo. 3. [147] The Establishment of Christianity and the Proscription of Pa- ganism. By Maud Aline Huttman, Ph.D. Price, J2.00, VOLUME LXI. 1914. 496 pp. Price, cloth, $4 00. 1. [148] *The Railway Conductors: A Study In Organized Labor. B/ t.DwiN Clyde Robbins. Price, 81.50. 3. [149] *The Finances of the City of New York. „ . „ „, „ „. By Yin-Ch'u Ma, Ph.D. Price, ^2.30. VOLUME LXII. 1914. 414 pp. Price, cloth, $3.50. [1501 The Journal of tbe Joint Committee of Fifteen on Reconstruction. 39th Congress, 1865— 1867. By Benjamin B. Kendrick, Ph.D. Price, $3.00. VOLUME LXIII. 1914. 561 pp. Price, cloth, $4 00. 1. [151] EmlleDurkheim's Contributions to Sociological Theory. Bv Charles Elmer Gehlke, Ph.D. Price, Ji. 50, 3. [153] The Nationalization of Railways In Japan. By '1 osHiHABU Watarai, Ph.D. Price, ?i.25. 3. [163] Population: A Study In Malthuslanlsm. By Warren S. Thompson, Ph.D. Price, ^1.75. VOLUME LXIV. 1915. 646 pp. Price, cloth, $4.50. I. [154] *Recoiistruction in Georgia. By C. Milured Thompson, Ph.D. Price, 3.00. S. [155J *The Review of American Colonial Legislation by tlie King: In Council. By iLLMER bEECHER RussELL, Ph.D. Pricc, I1.75. VOLUME LXV. 1915. 524 pp. Price, cloth, $4.00. 1. [156] *The Sovereign Council of New France By Raymond Du Bois Cahall, Ph.D. Price, $2.25. 3. [157] *Sclentlflc Management (3nd. ed. 1918). By Horace B. Drury, Ph.D. Price, $2.00 VOLUME LXVL 1915. 655 pp. Price, cloth, $4.50. 1. [158] *The Recognition Policy of the United States. By Julius Gobbrl, Jr., Ph.D. Price, J2.00, 3. [159] Railway Problems in China. By Chih Hsu, Ph.D. Price. J1.50, 3. [160] *The Boxer Rebellion. By Paul H. Clements, Ph.D. Price, ji.oo. VOLUME LXVn. 1916. 538 pp. Price, cloth, $4.00. 1. [1611 'Russian Sociology. By Julius F. Hecker, Ph.D. Price, {2.50. 3. I16'2j State Regulation of Railroads In the South. By Maxwell Ferguson, A. M., LL.B. Price, $1.73- VOLUME LXVIII. 1916. 518 pp. Price, cloth, $4.50. [163] The Origins of the Islamic State. By Philip K. Hitti, Ph.D. Price, <4.oo. VOLUME LXIX. 1916. 489 pp. Price, cloth, $4.00. 1. [164] Railway Monopoly and Rate Regulation. By Robert J. McFall, Ph.D. Price, fa oo. a. [165] The Butter Industry In the United States. By Edward Wiest, Ph J > „, ^.oo. VOLUME LXX, 1916. 640 pp. Price, cloth, $4.50. [166] Mohammedan Theories of Finance By Nicolas P. Aghnidbs, Ph.D. Price, ;4.oo, VOLUME LXXI. 1916. 476 pp. Price, cloth, $4.00. 1. [167] The Commerce of l^onlslana during the French Regime, 1699—1763. By N. M. Miller Surrey, Ph.D. Price, $3.50. VOLUME LXXII. 1916. 542 pp. Price, cloth. $4.50. 1. '168] American Men of Letters: Their Nature and Nurture. By Edwin Leavitt Clarke, Ph.D. Price. «r «> a. [169] The Tariff Problem In China. By Chin Chu, Ph D. Price *.£ 3. II 70] The Marketing of Perlshfthln Fnnri ■p^«,it,.,»= . »> -y- vw^ujiLxi iji&.j^iii. xui7. tfi6pp. Price, cloth, $4.fi0. I. [171] *T]ie Social and Eoonomlc Aspects of the Chartist Moyement. By Krank F. ROSENBLATT) Ph.D. Price, 53.00. 3. [173] *The Decline of the Chartist Movement. By Preston William Slosson, Ph D. Price, fa 00 3. [178] Chartism and the Ctanrches. By H. U. Faulkner, Ph.D. Piice, fi.35, VOLUME LXXIY. 1917. 646 pp. Price, cloth, $4.50. 1, [174] The Blse of Eocleslastlcal Control In Quebec. By Walter A. Riddell, Ph.D. Price, $1.75. 3. [175] Political Opinion In Massaohnsotts dnrlne the Civil War and Be- oonstrnotlon. By Edith Ellen Ware, Ph.D. Price, 51. 75* 3. [176] Collective Bargalnlns in the Ijlthoeraphlc Industry. By HTE. HoAGLAND, Ph.D. Price, »i. 00. VOLUME LXXV. 1917. 410 pp. Price, cloth, $4.00. An extra-lllnstrated and bonnd volume is published at $5.00. 1. [177] New York as an Eighteenth Century Municipality. Prior to 1781. By Arthur Everett Phtbrson, Ph.D. Price, $2.00. 9. [178] New Tort as an Eighteenth Century Municipality. 1731-1776. By George William Edwards, Ph.D. Price, ^z.oo. VOLUME LXXVI. 1917. 489 pp. Price, cloth, $4.00. 1. [179] •Economic and Social History of Chowan County, North Carolina, By W. Scott Boyce, Ph.D. Price, J2.50. 3. [180] Separation of State and Xiocal Bevenues in the United States. By Mabel Newcomer, Ph.D. Price, (1.75. VOLUME LXXVII. 1917. 473 pp. Price, cloth, $4.00 tlSlJ American Civil Church Law. By Carl Zollmann, LL.B. Price, $3.50. VOLUME LXXVIII. 1917. 647 pp. Price, cloth, $4.50. [183] The Colonial Merchants and the American Bevolution. By Arthur Meier Schlesinger, Ph.D. Price, 94.00. VOLUME LXXIX. 1917-1918. 535 pp. Price, cloth, $4.50. 1. [183] Contemporary Theories of tTnemployment^and Unemployment Belief. By Frederick C. Mills, Ph.D. Pnce, 81.50. 3, [1841 The French Assembly of 1848 and American Constitutional Doc- trine. By Eugene Newton Curtis, Ph.D. Price, $3.00. VOLUME LXXX. 1918. 448 pp. Price, cloth, $400. 1. [186] *Valuatlon and Rate Making. By Robert L. Hale, Ph.D. Price, I1.50. 8. 1186J The Enclosure of Open Fields in England. ou r. r. 1 . ' ■■ By Harriet Bradley, Ph.D. Price, ji.25. 3. [187] The Land Tax in China. By H. L. Huang, Ph.D. Price, 51.90. VOLUME LXXXL 1918. 601pp. Price, cloth $4.50. 1. [188] Social Life in Bome in the Time of Plautus and Terence. ^ ■• By Georgia W. Lefpihgwell, Ph.D. Puce, $1.25. 3. [189] ^Australian Social Developmentj,^^_^^_^^__ ^ Northcott, Ph.D. Price, 52.50. 3. [190] ^Factory Statistics and Industrial Fatigue.^ Florence, Ph.D. Price, 5i.»5. VOLUME LXXXn. 1918-1919. 576 pp. Price, cloth, $4.50. 1. [1911 New England and the Bavarian Illumlnatl. o -r. t> ■ .. X. lioii i^ciT' ..-.^BAo, By VernonStaupfer, Ph.D. Price, 53.00. 3. [193] Besale Price Maintenance. By Claudius T. Muechison, Ph D. Price, $1.50. VOLUME LXXXIII. 1919. 432 pp. Price, cloth, $4 00. [1931 The I "W. W. Second Edition, loao. By Paul F. Brissendek, Ph.D. Price. 53.50. VOLUME LXXXIV. 1919. 634 pp. Price, cloth, $4.50. 1. [1941 The Eoyal Government in VlrglnW,pie34-^1775^^^^^^ ^^^ ^ ._^^ ^^^ 8 [195] Hellenic Conceptions of Peace. ByWALLACE E.Caldwell, Ph.D. Price,5i25. VOLUME LXXXV. 1919. 450 pp. Price, cloth, $4.00. 1- f*^«^^,^/„n?c"pfrlol ^"''"^ °* ^""^ «^"l];\f„°EST^ErP%'J^vrPh.D.'^p'„''cf, 53^00* 8. [197fpubUc''DeMs of China. By F. H. Huang, Ph.D. Price, 51.00. VOLUME LXXXVL 1919. 460 pp. Price, cloth, $4.00. 1198] The Decline of Aristocracy in the Poimos gl New^York. ^^.^^^^^ VOLUME LXXXVII. 1919. 451 pp. Price, cloth, $4.00. ri09l Foreign Trade of China. By Chong Su See. Ph.D. Price. $3.50. VOLUME LXXXVIII. 1919. 444 pp. Price, cloth, $4.00, 1. [800] The StreetSurfaceBailwayFrancWse^s^of New York Wty.j,^.^^^^^^ 8. [801] Electric Light Franchises In New York City^^ ^^^^ ^^^ ^^.^^ ^^ ^^ Missing Page