Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-07-21
CHINA AND RUSSIA
IN NEED OF CREDIT
Both Countries Face War
Crisis With Depleted
Treasures.
BY JOHN r. SINCLAIR.

Special Dlspatch 10 The Star.
NEW YORK, July 20.-China and
Russia, on the verge of war, were never
so hard up financially.
But relations between the two ma
tons have not been particularly friend
ly since Chang Tso-Lin raided the
Soviet embassy at Picking In 1927. Now
the seizure by the Manchurians Of the
Chinese Eastern Railway has brought
matters to definite crisis.
Russia has been at work these II
years now, building up her wealth as
best she could from the inside and re-
ceiving very little financial support from
outside countries. with the possible ex-
ception Of cooperation from German
groups. 1t has been very hard. Natur-
ally, her progress has been much de-
layed by an inability to secure credits
outside
China, now hammering out q new
form OF government, is In an even more
precarious financial position.
For several months past George B.
Rea, representative Of the Chinese min
istry Of railways. has been in the United
states negotiating for credit sufficient
to build a l0,0o0-mile extension of Chi
nese railroads, estimated to cost ulti-
mately $600,000,00o
Plan for Loan.
1t is we'll known that Mr.. Rea has
consulted with governmental and bank
ing officials. including the Morgan
house. He had hoped to complete ar
rangements before the end Of this year
by which this credit would be advanced
In approximately 10 annual installments
Of S60,000,000 each.
How large are American investments
In China now? One authority estimates
them at about 5000 900, oo0-diyided,
roughly: Sl45000.000 In commercial
loans and 5000 900 in missionary and
research work-such as the Rockefeller
Foundation. etc.
O1 this amount very little is in Man.
churia. the storm center Of the day.
probably around $4,000 900.
But 1t has been dificult for Mr.. Rea
ana others seeking money for Chinese
internal development. for 1t Is known
that for several years past the state
department has been cooperating with
americans in an effort to collect. or, at
least, reaojust the payments now due
from China on loans already advanced
Tor different purposes there
Take the 100000 loan to the
Chinese Eastern Railroad in 1918 to
Keep 1t going during the war. When
asked for the payment of this loan
the railroad replied by saying that II
was completely Offset by like charge
for transporting troops over 1t during
the war.
Among the American companies
which have loaned money to China
and whose claims have not vet been
paid are: The Standard Oil Co. of
New York. the Baldwin Locomotive Co,
the American Car g. Foundry Co., the
Pressed Steel Co., American Trading
Co. of New York. American Locomo-
tive Co. General American Car Co.,
Texas Oil Co. and the Robert Dollar
Co. There is also an equity which the
Siems-Carey Co.. headed BY w. F.
Carey Of New York. has in an uncon-
pleted railroad venture. This amounts
TO about $4,000, 600.
Lees Estimate.
Frederick e: Lee, one-tine American
consul at Shanghai. estimated two
years ago that the total American in.
vestments in China amounted to about
$4,000, 600. He divided 1t as follows:
Twenty million dollars In bonds and
other government securities So. 300 900
in railway bonds and other advances to
China for internal development 10000
900 in longtime credits by American
concerns and $50 900 900 in investments
in lands. buildings, etc
Recently the American Foreign Power
Co. paid $50o00.000 for the Shanghai
Municipal Electric Light Co.
Mr. Rea. in explaining the opportuni-
ties for railway development in China,
described them as the most profitable
railways in the world. Even under
troublesome times and military control
their operating expenses never exceeded
IS per cent of the revenues. In many
cases this item has been kept down to
40 per cent.
Should the trouble ooU hetuaeo pux
STA and China be settled and Mr. ReA
succeed in securing the credit needed to
carry out the railroad expansion. 1t
would mean much for China, for such
an undertaking when completed would
practically double that nations present
railway system.
Only two American corporations are
known to have branches in the terri
tory directly affected. Harbin-a key
Vladivostok, on the Japanese Sea- and
also connecting with the Chinese
Southern Railroad through Mukden-
is the most important Chinese center
which connects directly with Seoul, In
Korea. and also with Port Arthur, on
the sea. and with Pekin. the big city
in the war zone. In Hardin, the Ma
tional City Bank Of New York has o
branch and the Standard OH Co. has
a distributing C6IlucT
And so Russia and China-one with
a population Of l5o.0oo,ooo and the
other with 4o0,000.00n about one
quarter of the population Of the earth)
both desperately poor and pleading
for credit from outside nations. face
each other today in what may be real
war tomorrow.
War Would Affect Credit.
Should war come. there is no question
but what IT. would set back the ability
of either country to secure credits out
side for internal improvements for many
years. Thousands. perhaps mil
lions. Of persons would be killed or
manned for life-for China has 1900
600 men in armies and Russia has the
finest and largest standing army In
Europe. about $4,000 well trained men.
Business would be disorgani1ed and the
life Of the average man on the streets
of the two countries made still more
unbearable.
Both Russia and China have signed
the Kellogg peace pact. agreeing TO
settle differences by arbitration. but
should neither of them submit its con-
tention for arbitration no outside power
can.
The League Of Nations. too, Is watch
ing with ANXIOUS eye the developments.
hoping that some compromise can be
reached.
And the armies Of Russia and China,
the youth of the land, are facing each.
other, waiting for the word.
(Copyright. 1879. by North American News
paper Alliance.l