veritable nightmare. Puzzled by a phenomenon which is so disconcerting
as to be incapable of any clear definition, they have ended by declaring
that an empty Treasury is an empty rule, adding that as it is solely
from this monetary viewpoint that the New China ought to be judged,
their opinion is the one which will finally be accepted as
authoritative. The situation is admittedly dangerous; and it is
imperative that a speedy remedy be sought; for the heirs and assigns of
an estate which has been mismanaged to the brink of bankruptcy must
secure at all costs that no public receivership is made.

What is the remedy? That must consist simply enough in attacking the
grand simplicities directly; in recognizing, as we have clearly shown,
that the bases of Chinese life having collapsed through Euro-Japanese
pressure, the politico-economic relationship between the Republic and
the world must be remodelled at the earliest possible opportunity, every
agreement which has been made since the Treaties of 1860 being carefully
and completely revised.[28]

To say this is to give utterance to nothing very new or brilliant: it is
the thought which has been present in everyone's mind for a number of
years. So far back as 1902, when Great Britain negotiated with China the
inoperative Mackay Commercial Treaty, provision was not only made for a
complete reform of the Tariff--import duties to be made two and a
half times as large in return for a complete abolition of _likin_
or inter-provincial trade-taxation--but for the abolition of
extraterritoriality when China should have erected a modern and efficient
judicial system. And although matters equally important, such as the
funding of all Chinese indemnities and loans into one Consolidated Debt,
as well as the withdrawal of the right of foreign banks to make banknote
issues in China, were not touched upon, the same principles would
undoubtedly have been applied in these instances, as being conducive to
the re-establishment of Chinese autonomy, had Chinese negotiators been
clever enough to urge them as being of equal importance to the older
issues. For it is primarily debt, and the manipulation of debt, which is
the great enemy.

Three groups of indebtedness and three groups of restrictions,
corresponding with the three vital periods in Chinese history, lie
to-day like three great weights on the body of the Chinese giant. First,
there is the imbroglio of the Japanese war of 1894-5; second,