History of The Chinese Reorganization Gold Loan of 1913 - Part Three

The following information about the 1913 - 5% Reorganisation Gold Loan is reprinted with the permission of author John Thomson and is taken from his brand new book Historic Foreign Bonds of China.

The purpose of the loan was to enable the new government of the Republic of China to meet financial liabilities inherited from the previous Chinese Imperial Government, for the re- organisation of government institutions and to meet the administrative costs.

The loan was secured upon the entire revenues of the Salt Administration of China. In some ways this was a rather dubious security for such a large-scale loan as the entire Salt Gabelle (Salt Tax) had already been committed for other purposes with any surplus being pledged as a security against the Crisp Loan of 1912.

However there was a further provision that foreigners would assist in the reorganisation of the collection of Salt Tax revenues and if the loan was at any time in default, the Salt Tax revenues were to be administered by the Maritime Customs Administration which was primarily under the control of foreigners.

Coupons were payable on 1st January and 1st July each year. The loan has been in default since 1939.

As an interesting footnote to this loan, Mr. M. E. Weatherall, who was a senior official of the Chinese Maritime Customs Service1 in 1921 was quoted in the publication “Wayfoong”2 as making the following observation;

“I believe that I am correct in saying that the greater part, if not all, of the reorganisation loan of 1913 was accounted for by statements and vouchers, but that in actual fact very little of it waseverappliedtothepurposesforwhichitwas lent. It disappeared mysteriously and nobody knows where it has gone.”

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1 The Chinese Maritime Customs Service was established in 1854, but due to the inability of Chinese officials to collect maritime trade duties and revenues, the service was subsequently staffed at senior levels by foreigners, especially after various loans were made to the Chinese Government whereby the security for the loans was from maritime customs revenues

2 Page 154, “Wayfoong, The Hongkong and Shanghai Banking Corporation” by Maurice Collis, first published in 1965 by Faber and Faber Ltd., London