Soong's Song

A brilliant young Chinese banker of barely 38 swiveled round from his desk in Shanghai last week, peered keenly through tortoise rimmed glasses at a respectful group of correspondents, read in flawless English a crisp, resolute announcement. He was sick and tired, he said, of raising the scores of millions of dollars which Nationalist China has been squandering annually on bootless wars. He, T. V. Soong, scion of the great "Soong Dynasty" of Shanghai bankers, would no more be a party to China's orgy of military waste. In fine, he announced his resignation as Finance Minister of the Nationalist Government. "I prefer to retire," concluded Banker Soong, "rather than face the just censure of a sorely tried people."

If there had been no Soong scion, if he had not learned sound banking and business principles at Harvard, the course of modern Chinese history would have run in a profoundly different rut. In 1922 the Nationalists, who have since conquered all China, were an insignificant group of zealots dominating only the region of Canton. On an income from local taxes of only one million dollars per month they could not finance a China-conquering expedition. Two years later young T. V. Soong was called to the Nationalist Finance Ministry.

Without increasing taxes Banker Soong magically increased the Canton tax yield from one to ten million dollars per month. He has said that he did it by cutting down graft, by rigid Harvard budgeting. On ten million dollars per month the Nationalists launched their successful war of conquest, financed additionally for a time by grants from Soviet Russia, a state with which they soon quarreled, are still quarreling.

For five years, excepting one short interval, Finance Minister T. V. Soong has found the money for the bigger-and-better conquests of his brother-in-law Marshal (now President) Chiang Kai-Shek. Last week President Chiang was so distressed by the resignation of Finance Minister Soong that he dropped all official business at Nanking, rushed to Shanghai, and day after day argued, pleaded.

As thrashed out between Soong and Chiang, the banker's principal grievance had to do with the conqueror's reluctance to cut down Nanking's stupendous military forces. Today Nationalist China has the largest standing army in the world, though by no means the most effective. A rabble nearly 1,500,000 strong are the soldiers of Nationalism, nondescript, ill-drilled, often ragged. Some of their commanders are hired bandit chieftains, others are feudal "War Lords" left over from previous regimes. The cream are spruce, young, "intellectual" Nationalist generals. But the whole motley gang have costly appetites.

Recently the leading Nationalist commanders were summoned to a "Disbandment Conference;" reached tentative agreement to cut the military establishment from 1,500,000 to 800,000 men. Last week however, Banker Soong charged that the militarists were making just as heavy demands on the Finance Ministry as ever. They would not consent, he declared, to abide by any fixed budget. He had offered to provide them with $6,500,000 per month, but they would not budget even on that generous basis. For a Soong and a banker there was only one alternative. In his long, closely reasoned letter of resignation, Soong wrote:

"The people have borne heavy burdens solely in the hope that, when unification of the country was accomplished, military expenditures would be greatly reduced and a budget enforced. Even now there is no assurance that these primary principles will be made effective. If after disbandment no limit is set on military expenditures, then the national credit will be ruined and it will be impossible to raise more funds."

Optimists professed to believe that the Soong resignation was a potent bluff. Object : to scare President Chiang Kai-Shek and the more recalcitrant militarists into adopting a sound Harvard budget. On that basis, most observers believed, smart T. V. Soong would be glad to carry on.

Other developments in the Chinese situation last week: 1) From Washington a note was sped by Secretary of State Henry Lewis Stimson courteously refusing a Nationalist request of last April that the U. S. surrender the extraterritoriality rights of its citizens in China; 2) At Moscow, Communist organs touted a wild charge that Statesman Stimson and Wall Street tycoon Thomas W. Lamont had been in league, during the recent Russo-Chinese crisis (TIME, July 22, et seq.), to have the Chinese Eastern Railway taken over by the Great Powers and later sold to an Anglo-U. S. banking syndicate; 3) Peace parleying to adjust finally the Chino-Russian quarrel continued desultorily at muddy, stinking Manchuli; remote frontier town on the Manchurian-Siberian border. The basic fact is that by treaty of 1924 both nations jointly own the Chinese Eastern Railway. China has expelled the Soviet members of the railway staff, branding them as "Communist Terrorists." Russia demands their reinstatement. While the quarrel simmered, last week, Soviet planes continued to zoom along the Chinese frontier, Chinese artillerymen kept up their pot-shooting.