As the direct successor of the Qing Empire, the Beiyang government always needed to support the huge system with broken financial resources. However, due to the bankruptcy of international credit, the difficulty of external fundraising has continued to increase. Only Japan, which is at the end of the ranks of the world's great powers, has helped at a critical moment. They have signed a number of loan agreements with the Beiyang government and have a great influence on the subsequent historical development.
Historical traditions
Shigenobu Okuma, Prime Minister of Japan
On January 20, 1917, Shigenobu Okuma, who had recently served as Prime Minister of Japan, sent his own staff member, Kamezo Nishihara, to China secretly. He was ready to sign a loan contract of 5 million yen with Cao Rulin, the president of the Bank of Communications at the time. Later, Nishihara Kamezo also visited China many times. He signed other loan agreements with Duan Qirui, a big man in the Anhui clan, and the total amount of loans was as high as 145 million yen. Judging by the value of the currency at that time, this was undoubtedly a super huge debt!
Of course, it is impossible to borrow so much without collateral. In order to gain the trust of the Japanese side, Duan Qirui successively found out the treasury debt rolls, the income from gold mines and forests in Jilin and Heilongjiang provinces, and the income from the national telegraph business, and all of them were pledged to the Japanese-funded banks. This behavior was heavily criticized by public opinion and was considered to be a loan agreement worse than Article 21. However, Duan Qirui later mortgaged the operation and management rights of the Jiaoji Railway, resulting in Japan refusing to return Shandong at the Paris Peace Conference in 1919. The resulting wave of domestic protests became the May Fourth Movement that everyone is familiar with today.
1919 Japanese delegation to the Paris Peace Conference
Since the wind evaluation is so poor, why does the Beiyang government dare to risk the world's great disobedience and borrow such a large amount of money from foreign banks? In fact, the tradition of foreign borrowing predates the establishment of the Beiyang government. In the mid-19th century, the Qing court frequently borrowed foreign debts because of various events. Just to suppress the Taiping Heavenly Kingdom, he borrowed money 19 times, and the total amount was as high as more than 5 million taels of silver. Later, in order to let Zuo Zongtang send troops to the western region, he also lent another 15 million taels of silver to banks in various countries, accounting for 1/4 of the total western expedition.
When the Battle of Jiawu was defeated and the Gengzi state changed, the imperial court continued to borrow money to repay the war reparations. First, using jianghai customs duties as collateral, large loans were made to foreign banks. Then he continued to ask foreign banks for help in order to train the new army, build railways and set up various industries. Although there are many debts, because there are living water compensation such as tariffs, the payment of principal and interest in installments has always been relatively timely. This also allowed the Qing court to continue to borrow the new to pay back the old, and strive to maintain it for nearly 20 years.
The former Qing court borrowed for a long time for various reasons
Taxes in the Beiyang era
After the end of the Xinhai Revolution, Yuan Shikai kept borrowing money for Beiyang
After the outbreak of the Xinhai Revolution, Yuan Shikai promoted the establishment of a new government through north-south peace talks. But Beiyang didn't have much real money and silver in his hands. The local hills were lined up, and the taxes were intercepted by the warlords of the province for their own use, and only some insignificant scattered inputs were handed over. Therefore, the main funds on which the Beiyang government relies to maintain can only be extracted from the following aspects:
The first is the customs tariff with the most stable income. As a result of the steady increase in the volume of foreign trade, the amount of this money has also increased year by year. Even with the brief turmoil of the Xinhai Revolution, customs duties were quickly restored later, even exceeding the scale of the former Qing Dynasty. The outbreak of the First World War in 1914 made all the belligerent countries purchase large quantities of supplies. The increase in customs duties is even more pronounced. But even so, such a development is still far from satisfying the Beiyang government.
1915 Soldiers of the Beiyang Army taking a group photo at the German Qingdao Fortress
The second is the long-standing salt tax. As a necessity of human life, table salt provided a large source of taxation until the fall of the Qing Dynasty. It's just that most of the salt customs that dare to draw taxes are located within the provinces, and it is very troublesome to get the full amount. After the establishment of the Beiyang government, it simply used the salt tax as a pledge for foreign loans, and relied on the help of the other party to set up a salt affairs bureau. It is a kind of money that could not be obtained, and then put it into your own pocket.
Of course, the same ancient fields can not be ignored. However, from the time of the Taiping Heavenly Kingdom, the grass-roots rule of the former Qing Dynasty tended to disintegrate, and the land endowment was often not handed over in full. Local prefects and county orders also used various means to carry out secret dispatches, and were directly inherited by Yuan Shikai's government. As a result, nominal land grants were often not paid in full due to war or other reasons, and local warlords wantonly increased taxes in the name of the central government. As a result, the Beiyang side could not get any benefits, and he also carried a name in vain.
A street view of Beijing in the 1920s
As for ordinary gold, it is also impossible to satisfy the Beiyang side because of similar problems. This tax is mainly a freight toll charged at a transportation hub. In theory, it is also part of the remaining places, most of which are handed over to the central government. However, in the early years of the Republic of China, the gold will also be arbitrarily intercepted by local warlords. Yuan Shikai's government changed to sending special personnel to collect it, so that it could be regarded as adding a sum of money to itself.
Finally, the Beiyang government also collects deed tax, tobacco and alcohol tax, and various industrial and commercial miscellaneous taxes. Due to financial difficulties, the tax rate is generally higher than in the previous Qing Dynasty. The restricted private economy, on the other hand, is unlikely to continue to develop and provide more taxes.
Limited Income Cannot Support beiyang's goal of expanding its army
Structured expenses
The first congress of the Beiyang government
Therefore, the Beiyang authorities have always lived a tight life. In 1913, when the first Congress was convened, the total annual income was only 20 million yuan. But between May and June of that year alone, more than 30 million were spent. As for the fiscal deficit in 1912, it was as high as more than 153 million. So much so that State Premier Liang Shiyu publicly appealed: the financial black hole is too big, and you can't live without borrowing money!
The Beiyang government's expenditure is so huge that it is mainly used to support a large number of armed forces. After the end of the north-south peace talks, both sides desperately expanded their armies and strengthened their strength. By 1914, the nation's army had swelled to 470,000 men. By 1918, this figure had been refurbished to 850,000. Even in 1919, after the end of world war, the Army further expanded to 1.38 million men.
The size of the army in the Beiyang period was always expanding rapidly
As a result, the national military expenditure also increased from 130 million yuan at the end of the Qing Dynasty to 203 million yuan in 1918. Even in 1927, when Beiyang was about to fall, it cost 700 million yuan for military spending. In this way, the replacement of the old with the new has become the only rule for Beiyang to maintain the basic financial plate. But the growing principal and interest on debt will eventually become an abyss that cannot be solved by itself.
During this period, the government also allocated special funds to support industrial development. Among them, there are infrastructure such as railways and arsenals, as well as once profitable people's livelihood departments, but they are quickly eliminated with the development of the market. All the losses caused by this naturally need beiyang to bear itself. The sum of the above factors has made the Expenditure of the Beiyang Government unable to be reduced. External lending is no longer a question of whether it can be obtained, but how much can be obtained.
Beijing Nanyuan Aviation School is a typical state funding project
Credit history
In 1913, Yuan Shikai signed the "Great Loan for the Aftermath" with banks of various countries.
As early as 1913, the Beiyang authorities began to deal with the problem of debt transfer caused by the collapse of the Qing government. Yuan Shikai used the salt tax as collateral and signed the famous "Aftermath Loan" with the five-country bank group. The agreement borrowed £25 million with an annualized interest rate of 5.95%. This huge amount of money can be described as a clear spring in the great drought for Beiyang, which is almost poor and dead. At this point, the habit of borrowing money to live a life cannot be stopped.
From 1911 to 27, the Beiyang government borrowed 387 foreign debts, totaling 1.280 billion yuan. As the debt on the body increases, so does its international credit. Long-term requirements such as aftermath borrowing are difficult to approve, while the amount of short-term borrowing has increased considerably. In turn, the repayment pressure of such short-term loans has forced the financial pressure of the Beiyang government to double. As a result, the ability to repay the loan was further weakened, and it had to continue to rely on more short-term loans to maintain its operations.
The army that Beiyang spent a lot of money to train in the war never entered any battlefield of the First World War
Only in 1914, when World War I began, the Short-term Debt Default of the Beiyang Government was riskier. The Ministry of Finance, together with the Bank of Communications and the Bank of China, has put forward a plan to sort out short-term debts and gradually pay off long-term debts. However, in the end, it is inevitable that the international credit rating will decline, resulting in a decline in the ability to borrow new to repay the old. As the major financial powers withdrew funds to the war, the Amount of money that the Beiyang authorities could borrow was further reduced, and they finally became exhausted.
At this time, it was the Okuma Shigenobu government that was lending a helping hand. The most famous Intellectual, Nishihara Kamezo, was worried about the weak economic ties between the two countries. In his view, in order to expand Japan's political and economic influence in China, it is necessary to vigorously promote financial investment. The intensification of the world war has made the European land powers have no time to look east, and it has given Japan a major opportunity.
A representative of the famous Zhihua faction of the Japanese cabinet, Nishihara Kamezo
As a result, Nishihara Guisan and the newly appointed Duan Qirui were a hit-and-shoot. He personally acted as an intermediary, contacting a number of Japanese banks to approve loans with the Beiyang government. Of course, the biggest purpose was to squeeze out the economic influence of Britain and France in the Far East.
Nishihara even further proposed that China and Japan could share their currencies and resist the economic aggression of Britain and the United States together. It is believed that this will lead China into Japan's economic and political circle of influence and effectively seek self-sufficiency.
The 1900 yen can be exchanged directly for gold
But Nishihara did not realize that the increasing caution of Britain and France in borrowing from beiyang was not only due to his lack of time. As pioneers of the modern international financial system, they understand that investing in politically unstable countries requires additional risk. Once Beiyang loses power or collapses economically, not only will it be impossible to obtain additional benefits, but even the principal lent out will be difficult to recover. As a rising star in the overseas investment community, Japan does not know much about this.
In addition, the Beiyang authorities had no intention of returning the loans from the outset. According to the memories of witnesses at that time, Duan Qirui was overjoyed after receiving the loan from Xiyuan, and said to the people around him: When we are strong, who plans to pay him back, his eyes are pulled down!
Duan Qirui, who never wanted to pay back the money
Although Duan's administration soon collapsed due to civil war, the rising Cao Kun, Zhang Zuolin, and Chiang Kai-shek were unwilling to bear the huge debts he had left behind. As a result, Nishihara borrowed money directly. It became the largest deficit of foreign aid to Japan after the meiji Restoration began.
As for the several warlords or strategists who inherited Duan Qirui's mantle, they were even more unable to borrow money because of their own behavior...