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Part 1.-CHINA.

INTRODUCTION. In preparing this report on Chinese markets for railway materials, equipment, and supplies, it will be assumed that the reader is sufficiently informed concerning general conditions to warrant a somewhat cursory treatment of such features and a concentration of attention upon matters relating to transportation. At first it was not the writer's intention to take up the matter of the railway loan agreements as affecting the Chinese railway markets, but after a survey of all the factors in the situation it was decided (not without reluctance) that any report would be fundamentally lacking if such a discussion was not included. The consideration of this subject, however, is confined chiefly to the features that are believed to be interesting from the viewpoint of an engineer, with relatively little emphasis on the financial and diplomatic aspects.

The history of Chinese engineering and transportation is as engrossing as any other part of China's wonderful history. Without doubt, China at one time had the best general transportation facilities of any nation then existing, as is still evidenced by the remains of the caravan roads, the canals, and the examples of well designed and constructed masonry highway bridges-many now in excellent serviceable condition, though some of them are many hundred years old. As the writer ascertained by personal inspection, the Great Wall well deserves all that has been said of it as a monument of engineering, organization, and everlasting persistence.

Without question there have been great changes in recent years in the attitude of the whole population, especially regarding modern (or rather occidental) utilities. Instead of encountering opposition to these occidental innovations, one is now rather impressed with the search that is being made, particularly by the Chinese gentry, for means to overcome some of the handicaps growing out

of the “Battle for Concessions,” the “spheres of influence," and the loan agreements, and to insure an opportunity for China to develop along natural economic lines.

The statement seems fully warranted not only that the average man in the more important walks of Chinese life will assist in the development of China's many resources by introducing western improvements, but also that a great many of the more advanced thinkers are keenly dissatisfied with certain conditions that tend to restrain the progress of the nation.

If the nation is given the proper opportunity, and the present trend is not entirely upset, one seems justified in predicting that China will see greater changes than probably any other nation in the world in the next 25 years.


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The southern limit of China is at about the twentieth degree of latitude, which is well within the tropical zone, and the northern limit of Manchuria is above the fiftieth degree, being in about the same latitude as the most southeily part of Hudson Bay.

The China Year Book for 1916 shows the area of al Chinese terri. tory as follows:

Square miles.
The 18 Provinces of China proper.

1,532, 800
The 3 Provinces of Manchuria..

363, 700 Mongolia..

1, 367,953 Tibet....

463, 320 Chinese Turkestan..

550, 579 Total.....

4, 278, 352 It is rather interesting to note that the average area of the 18 Provinces of China proper is 85,000 square miles, as compared with an average of 63,000 square miles for the 48 States of the United States. Szechwan, the largest Province, has an area of 218,530 square miles and Chekiang, the smallest, an area of 36,680, against 265,900 and 1,250 for Texas and Rhode Island, the largest and smallest of the American States.

The area of Manchuria is only 33,000 square miles less than the combined area of the four northwestern States of Washington, Oregon, Idaho, and Montana and only 3,000 square miles less than the area of our largest State, Texas, with Arkansas and Louisiana added. Manchuria has an area 25 per cent greater than either France or Germany.


China has all the varieties of climate that one finds in the United States from Florida to Montana.

The greater part of China, however, has a rainy and dry season somewhat comparable to that of the northwest coast of the United States. The seasons in China-in fact, in all the Far East-follow the movement of the sun much more closely than is the case in the eastern and central parts of the United States. In northern Manchuria the people say, with some truth, that they have only two seasons, summer and winter, with no real spring or autumn. This is accounted for by the changes in the prevailing winds, which occur at nearly the same time from year to year.


An actual enumerating census, along the lines of those in occidental countries, has never been taken in China. The population of the 18 Provinces is variously estimated by the different authorities, the


figures ranging from less than 300,000,000 to more than 400,000,000. The Chinese customs authorities in 1910 estimated the total population of the 18 Provinces at 421,425,000 and of the 3 Provinces of Manchuria at 17,000,000. This population is densest along the seacoast and the navigable streams. In some places the only way to appreciate this density is actually to see it; no descriptions or illustrations that the writer had ever seen had given him an adequate conception of the facts. Farther in the interior the population is much less dense; in fact, many places are somewhat sparsely settled. An exception is the Province of Szechwan, on the upper stretches of the Yangtze River, which is quite densely settled; its area is about 218,530 square miles, and the Chinese customs authorities estimate its population at 78,700,000.

LANGUAGE. While the Chinese literature of all parts of the country is written with the same characters, and can be read and understood by the educated Chinese, the pronunciation varies to such a degree that conversation can not readily be carried on by people of different sections. The "mandarin” is the dialect used by persons in official life.

It is the general policy of the large foreign commercial concerns in China to have young men entering their service take up the study of Chinese. The writer was su prised at the progress that some of these men had made at the end of two or three years; at the end of five years many of them apparently speak Chinese very well--at least they can carry on a conversation in Chinese without any noticeable effort. It seems well worth the effort of young or middle-aged men entering the service of commercial concerns in China to take up the study of Chinese, which undoubtedly will prove of great assistance to them in a business way.

WEIGHTS AND MEASURES. It has been the purpose in preparing this report to avoid, so far as possible, reference to foreign weights, measures, and currency, and such units have been employed only where it was not practical to convert them to the terms used in the preparation of American railway data.

Distances and dimensions have in all cases been reduced to miles, feet, and inches, although much of the data secured was in metric measurements. In some of the references the Chinese “li” is mentioned. This seems to be a somewhat variable distance, but in general it may be considered equal to about 0.37 of a mile.

In some of the Chinese references, catties and piculs are mentioned; these are equal to 14 and 133} pounds avoirdupois, respectively.

CURRENCY AND FOREIGN EXCHANGE.' There are three principal kinds of currency in China--the cash, the dollar, and the tael. The cash is a small bronze coin, pierced in the center for stringing, which is familiar in this country as a curiosity. Though it is being superseded to a considerable extent by the frac

This section has been taken, for the most part, from Special Agents Series No. 172, “Electrical Goods in China, Japan, and Vladivostok," and Miscellaneous Series No. 70, The Conduct of Business with China."



tional dollar currency, it is still the commonest coin, especially outside of the large ports, for small retail transactions in which the Chinese į alone are concerned. It is almost never used by foreigners and does not enter into foreign trade. It is customary to reckon the cash as roughly equal to one-tenth of a Chinese cent, but its actual value is constantly fluctuating. It is independent of any gold or silver standard.

The dollar currency is the official circulating medium of China. The basic unit is a silver dollar, sometimes called the “Yuan Shi-kai dollar," adapted from the Mexican dollar and containing 0.779976 of an ounce of fine silver. According to the quarterly statement of the Director of the United States Mint with regard to the value of foreign coins, the Chinese dollar is equal approximately to 0.644 of a haikwan tael; therefore it is equivalent to 0.7174 of a Shanghai tael, at the official ratio between the two taels. (See paragraphs on the tael.)

The new dollar circulates freely and is becoming more and more the standard coin of the country, though it is still discounted in certain localities, especially in the south. It is indicated by the same sign ($) as the United States dollar, and sums in United States currency are distinguished locally by the letter "G" (gold). The official Hongkong dollar is common in South China, and several other local dollars are in circulation. The word dollars" is frequently applied in China to other currency units originally based on the Mexican dollar--even to the Indo-China piaster and the Philippine peso. In the district under Japanese control the Chinese dollar or its equivalent is sometimes called a “silver yen” (SY). Prices in silver dollars of any kind are usually quoted as "Mex." Wherever the term “$ Mex.” is used in the present report, the Chinese silver, or “Yuan," dollar is meant.

The national currency includes silver 20 and 10 cent pieces and bronze cents, which fluctuate independently of the dollar of which they are nominally fractions. This fractional currency is locally known as “small money," to distinguish it from the integral dollar currency, which is called “big money.” As far as foreigners are concerned, the "small money" appears only in minor retail transactions; but it is necessary to understand the distinction because it usually exchanges with big money” at a discount of 10 to 20 per cent of its face value. In the annual statement of a company operating a street railway in one of the treaty ports, a deduction of 20 per cent was made from gross earnings on account of the depreciation of “small coins."

The Chinese Government issues no paper currency, but the Government-controlled Bank of China and Bank of Communications issue notes, which are not at present freely redeemed in specie and circulate only at heavy discounts. The foreign-exchange banks issue in dollar currency notes that circulate at par in the locality where issued and at a small discount (usually about 2 per cent) in other parts of China.

The dollar currency is beyond doubt the coming standard of China, though the tael will continue to rule for a long time in commercial transactions. The dollar is now the medium for all cash payments in which foreigners are concerned, for most small personal bank accounts, and to an increasing degree for general retail business. It is used little in wholesale business and very rarely in foreign trade.

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The tael is not a coin but a weight of silver of a given fineness. The weight of the haikwan, or Maritime Customs, tael is the same as the standard tael weight (1} ounces), and its relation, fixed by treaty, to the other important taels, is as follows: 100 haikwan taels = 101.642395 kuping, or Treasury, taels, 105.215 Tientsin taels, and 111.4 Shanghai taels. One hundred kuping taels are equal to 109.6 Shanghai taels. The ratio of the haikwan to certain other commercial taels is fixed from time to time by the customs authorities. The haikwan and kuping taels are the only important ones distinguished by their use; for the other taels the distinction is mainly geographical, every important commercial center having its own tael.

As there are no coined taels, payments in this medium are supposed to be made in silver bullion, or "sycee.” This is usually in the form of ingots of a peculiar shape known as "shoes," which weigh about 50 taels each. Between foreigners and Chinese firms, however, tael transactions are settled either by negotiable paper or by conversion into dollars. While this inconvenience is driving the tael out of use in cash and retail transactions, it is maintained as the standard currency of the country by the conservatism of the people, the influence of the great exchange banks, and uncertainty as to the purity of much of the silver in circulation.

The tael is not used in Hongkong and is less dominant in the trade of South China than in that of the center and north. The Government of Hongkong, moreover, restricts the circulation of dollar currencies other than its own.

The Chinese purchaser buys abroad for gold and sells his imported goods for silver. The gold values to-day are equivalent to a certain number of taels, while to-morrow they may be quite different. With this constant fluctuation in the number of taels that will be required to pay for a given amount of goods, the buyer is always on the alert to place orders when exchange is most in his favor. This is when the price of silver is high and imports are slack. When silver is high, the buyer can get more gold dollars for his silver money, and when there is no rush of imports there is no competition in exchanging silver for gold and no tendency to raise the price of gold through the run on the market. On the other hand, the exporter finds it the best time to sell when the opposite conditions prevail. Trade is therefore sympathetic to some extent with the variations in the exchange between silver and gold, which is fixed almost from hour to hour by the banks. A complicating feature is the fact that the local currencies fluctuate independently of international exchange, and local fluctuations may make it difficult to sell goods at a particular time in a given district.

For several years gold has been “cheap” in China, owing to the enormous purchases of silver by the warring nations and to the drop in the world's production during recent years, caused by the disturbances in Mexico. So far as exchange only is concerned, the last few years have been favorable to the purchase of goods abroad; but purchases have been somewhat limited by other factors, such as extremely high prices, delayed deliveries, and uncertainty as to the continuance of the high exchange. The trade of China, under the complex war conditions, has been generally prosperous; but in the long run it has

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