THE CITY OF SHANGHAI.

New Zealand Herald, Volume LXIX, Issue 21117, 26 February 1932, Page 6

THE CITY OF SHANGHAI.

BY J. 0.-L.

GATEWAJY OF CHINA. 4

COMMERCE AND INDUSTRY. yAST FINANCIAL OPERATIONS.

No. n. The first regulations in Shanghai -were agreed to by the British Consul alone. Subsequently as amendments and additions were required the whole consular body was called upon to discuss and approve them, and finally they were approved by the representatives of the foreign Powers at Peking and the Chinese Imperial representative. So one traces through a period of years a British Settlement of 138 acres to the International Settlement of to-day. The constitution built up on those land regulations, while it bears a general resemblance to other municipal constitutions of British type, has a special character which may be summarised by saying that this system has become international in character rather than national, and while the governing body is subject to a certain measure of international control, it is not subject to. the control of any individual national Government. The electorate which the Council repreBents includes fifty nationalities. The Court before which the council has to be Sued is an International Court. There is no national body to exercise the control to which an ordinary municipal body is subject or to give assistance which an (ordinary municipal' body receives from a central national Government. The absence of control gives the council wider and freer scope; on the other hand the council is left to depend upon .itself entirely. It serves no one but the ratepayers. Government of Settlement.

As the city has gro-wn and become more prosperous and the Chinese population has grown and become more prosperous and influential there has arisen a desire for representation on the council, and to-day there are nine foreign representatives and five Chinese representatives. The foreign representatives comprise five British, two American and two Japanese. It is interesting to note that among the first, if not the first, of the ratepayers to recognise the advisability of giving the Chinese representation was Mr. E. S. Little, of Kerikeri. The expenditure of the Shanghai Municipal Council amounts to £2,000,000 annually, and the following are its activities :—Education, public works, public health,'public safety (fire brigade police and defence). The following utilities are run by companies:—Electric power, telephone service, electric construction, omnibus and tramway transport, gas and water. The annual expenditure in the French Concession is £450,000, and in Greater Shanghai £700,000. Commercial Importance. Shanghai may be truthfully described as the Gateway to China. In the lYangtse delta there is an. area of 50,000 square milfts with 40 millions of people. In the Yangtse watershed there are 750,000 square miles supporting a population of 180 millions of people, or more than one-tenth of the inhabitants of the •whole world. All this trade and practically the whole of the trade of North China filters through Shanghai. In 1929, 22,289 vessels' of all kinds representing 35,869,560 tons passed through the Port bf Shanghai The value of the whole trade of the port, imports and exports, amounted to £129,861,341 in 1929. Shanghai, besides being the largest trade port, is also the largest industrial centre in China. Over 53 per cent, of the cotton spindles in China are in Shanghai. Spinning, flour milling, shipbuilding, etc., are the foremost industries. Banking and Finance. As a banking and financial centre, the city has no rival in China. There are in Shanghai 20 branches of foreign exchange banks, 39 Chinese banks of the modern type, and 77 Chinese banks of the old type. The only banks in the Chinese area are seven Chinese native banks. These banks hold large sums in silver stored in their vaults in the Settlement which serve as reserves against their note issues and as reserves for current accounts and general banking purposes. Slocks of silver, bar silver and sycee and dollars amounted in December, 1930, to £25,086,275. The note issue is £36,150,000. The storage of these large sums of silver is. one of the essential elements in the far-reaching system of credit which pivots on Shanghai and on which the whole of the foreign trade of Central and Northern China, and a great part of the internal trade also, directly depend. Since the civil strife in China, particularly since 1925, Shanghai has become not only the clearing house, but also the storehouse of China. Metallic money held in the interior is subject to expropriation, confiscation or robbery, not only by brigands and undisciplined soldiers, but often by the authorities themselves, not merely 'in the outlying provinces, but in the better developed districts. In 1927 the Government of China requisitioned all the silver funds in Hankow. Financial Centre of China.

The membership of the Shanghai 'Foreign Exchange Bankers' Association consists of three American, one Belgian, four British, two Dutch, two French, one German, one Italian and six Japanese banks. It is confidently estimated that these institutions control the financing of 90 per cent, of the total in and out trade of Central and North Cbin.i amounting to some £300,000.000. The financing of local industries amounts to many hundreds of millions of taels. Thus Shanghai is a financial centre of the greatest importance. Its importance is increasing.. It is a means of financing China's trade through London and New York: It brings, by reason of its security, short-term money from abroad. Shanghai holds the reserves of the banking facilities of China. The reserves are there because of the existence of the International Settlement. The importance of Shanghai may be summed up in the word '•'security"—security in the fullest sense of the wcfcrd.