666 FRANK H.H.KING balance.While this does not touch Hart's intentions or integrity,the change and the role of the indemnity need to be studied if criticism of Hart's customs service and indeed of Hart himself is to be under- stood. Certainly in the mid-nineteenth century provincial officials were in need of temporary funding,usually for non-productive purposes,and they learned that borrowing domestically was not always possible.But borrowing from foreigners could involve the provincial governor in the complexities of the Treaty System,thus drawing the attention of the imperial government in Peking.The financial demands of major internal disturbances and the Sino-French conflict of 1874 were sufficient to force the Chinese to consider issuing public loans through the agency of foreign banks,primarily the Hongkong and Shanghai Banking Corporation.Potential subscribers to such loans either knew nothing of China's resources or,on the other hand,knew too much.In both cases the question of security arose,and the Customs revenues appeared an obvious answer.Since Hart did not allow his local commissioners on their own authority to pledge local port revenues as security in foreign loan agreements,his approval had to be obtained. But Hart acted only on instructions from the Tsungli Yamen,the imperial government's foreign affairs bureau.Consequently,Chinese provincial authorities had first to obtain imperial approval in Peking. Then,with the appropriate edict issued and communicated to Hart through the Chinese authorities,the foreign inspectorate could take note of and act upon the security arrangements. This relatively protracted procedure would enable the merits of the loan to be more carefully examined.In this way China could preserve its credit-worthiness while confirming that Customs revenues would be offered as security only with central government approval.Hart indeed hoped for more.At the least he wished for the Inspectorate-General to become a clearing house for China's foreign borrowing;beyond that he hoped to be in charge of negotiations.Neither expectation was fulfilled;only in 1894 were the negotiations in his hands,and then but briefly. That the customs revenues were to play such a key role in foreign borrowing was at first glance surprising.As Hart argued,an imperial edict made the loan a sovereign risk loan,the resources of the Empire were pledged.However,foreigners did not know what those resources were or how to obtain them in case of default.The revenue from the Maritime Customs on the other hand was clearly defined and accurately reported by the foreign inspectorate.666 FRANK H. H. KING balance. While this does not touch Hart’s intentions or integrity, the change and the role of the indemnity need to be studied if criticism of Hart’s customs service and indeed of Hart himself is to be under￾stood. Certainly in the mid-nineteenth century provincial officials were in need of temporary funding, usually for non-productive purposes, and they learned that borrowing domestically was not always possible. But borrowing from foreigners could involve the provincial governor in the complexities of the Treaty System, thus drawing the attention of the imperial government in Peking. The financial demands of major internal disturbances and the Sino-French conflict of 1874 were sufficient to force the Chinese to consider issuing public loans through the agency of foreign banks, primarily the Hongkong and Shanghai Banking Corporation. Potential subscribers to such loans either knew nothing of China’s resources or, on the other hand, knew too much. In both cases the question of security arose, and the Customs revenues appeared an obvious answer. Since Hart did not allow his local commissioners on their own authority to pledge local port revenues as security in foreign loan agreements, his approval had to be obtained. But Hart acted only on instructions from the Tsungli Yamen, the imperial government’s foreign affairs bureau. Consequently, Chinese provincial authorities had first to obtain imperial approval in Peking. Then, with the appropriate edict issued and communicated to Hart through the Chinese authorities, the foreign inspectorate could take note of and act upon the security arrangements. This relatively protracted procedure would enable the merits of the loan to be more carefully examined. In this way China could preserve its credit-worthiness while confirming that Customs revenues would be offered as security only with central government approval. Hart indeed hoped for more. At the least he wished for the Inspectorate-General to become a clearing house for China’s foreign borrowing; beyond that he hoped to be in charge of negotiations. Neither expectation was fulfilled; only in 1894 were the negotiations in his hands, and then but briefly. That the customs revenues were to play such a key role in foreign borrowing was at first glance surprising. As Hart argued, an imperial edict made the loan a sovereign risk loan, the resources of the Empire were pledged. However, foreigners did not know what those resources were or how to obtain them in case of default. The revenue from the Maritime Customs on the other hand was clearly defined and accurately reported by the foreign inspectorate