I have been reading some biographies of Empress Dowager Cixi and most of them mention the perilous state of finances at the time of her death. The books also mention the fact that the Qing Court used to pawn the dead emperor's robes in order to raise funds for the new one.
Was the Qing Dynasty really this 'poor' in its latter, twilight years? Or was it more a case of funds being plentifully available, but poorly managed?
During its final years, the Qing court did indeed face a major fiscal crisis, with significantly increased expenditures but no concurrent increase in sources of income. Note, however, that I single out the court here – the Qing ultimately did, to some extent, manage to pay for the reforms it intended to carry out, but could not do so through the depleted central treasury.
The aftermath of the Boxer Rebellion and the terms of the Boxer Protocol marked the first fiscal crisis the Qing suffered due primarily to imperialist action. For one, there was the 450 million tael 'Boxer Indemnity', with 4% annual interest until 1940. Had the indemnity been fully paid out, over 1 billion taels of silver would have to have been paid out, with around 30% going to Russia, 20% to Germany, 16% to France, 11% to Britain and around 7.5% each to Italy, Japan and the USA (plus smaller fractions to various other states.) By Cixi's death in 1908, the only reduction was a 12 million tael remission by the USA, although it retained control of the spending of the money, which it used to fund scholarships for Chinese students who studied in America. Qing budget projections for 1911 and 1912 put foreign debt payments at 20% of expenditures. The Boxer Indemnity was not the sole source of new expenditures for the Qing, however, as after the defeat of the reactionary uprising, more reformist elements like Zhang Zhidong and Yuan Shikai pushed to introduce a series of liberalising reforms, which became known collectively as the New Policies. While the Constitutionalist-backed reform movement of 1898 had been violently suppressed by Cixi, the New Policy reforms promulgated after 1901 repeated many of the major proposals of 1898. The key points were the widespread introduction of Western education and eventual abolition of the Confucian civil service examinations; the development of industrial infrastructure, particularly railways; the modernisation of the Qing armed forces; and the creation of proto-parliamentary advisory bodies at both the provincial and imperial levels that would eventually become representative bodies.
However, the Qing were not only facing a major rise in expenditures, but also a bottleneck in their revenues. Since the Qianlong emperor, land taxes had been frozen at Kangxi-era rates, meaning that, accounting for inflation, less and less value was being derived from the main traditional source of income. Instead, the Qing relied increasingly on two income streams, in reality a whole variety of taxes which may collectively be referred to in two broad groups. Firstly, there were 'commercial taxes' – customs tariffs on both domestic and maritime trade; commodity taxes, which after 1853 began to include the lijin tax on goods in transit; revenues from the government monopoly on salt. There were also 'miscellaneous taxes' in the form of various taxes and levies on mining and luxury goods. In 1753, 73% of revenue came from land taxes, 27% from commercial and miscellaneous tax, by 1911 this was reversed. By 1908, total tax revenues were approximately 292,000 taels, up nearly 300% from the 73,792 reported for 1753, but land taxes had only increased 100%, from 54,214 to 102,400. The key thing about the likin, miscellaneous taxes and native customs duties, which collectively made up around 60% of the non-land taxes (around 40% of the total) in 1908, was that they remained largely in provincial hands, and until 1910 a large portion of the salt tax did as well – in 1903, the central government reported 13 million taels in salt revenue, 30 million in 1907, but in 1910 the newly-established General Salt Administration, which replaced the old system by reducing the need for provincial middlemen, reported 45 million in revenues, suggesting that at least a third of salt revenues had been lining provincial pockets beforehand. Add to all this the 'surcharges', a mixture of sanctioned and illicit means of obtaining additional revenues, mainly to pay the salaries of unofficial administrative staff such as clerks and runners, which might not even reach the provincial treasuries – the key official example was the 'meltage fee', which was supposed to compensate for the silver lost in melting down smaller ingots into larger ones for transportation, but at a roughly 10% rate was actually around five times more than it needed to be; unofficial ones included 'tax delivery expenses' and the 'tax-receipt fee'. Wang Yeh-Chien estimates that, combining official and unofficial surcharges, up to 25% might be earned on top of official tax quotas at the local level.
As such, the Qing court's reform programme would have to be carried out mainly at the provincial level, largely using provincial funding spent at the discretion of provincial heads. The New Army, for example, which had to be established following the virtual annihilation of the modernised units of the Banner and Green Standard Armies in the reprisals against the Boxers, consisted of divisions and expanded brigades organised within the provinces, with the exception of the 1st Division which was formed from the Beijing Banner garrison. Peasants chafed at the police bureaux, seeing them as further extensions of the power of the elite families funding and managing them, who had already held an effective monopoly on the provincial militias, critical to the defeat of the Taiping (who were widely seen as peasant heroes) and which were now morphing into the New Army. Money for infrastructure in some cases didn't exist, so railways were often funded and controlled by foreign powers, and in 1911 the violent suppression of the Railway Rights Protection Movement in Sichuan, which sought to buy out the foreign railways and place them under Chinese control, galvanised the nation. Down the Yangtze in Hunan and Hubei, radicals became enraged by the comparative passivity of their own local elites in such affairs (conveniently overlooking their success in securing the key Peking-Hankow route from its Belgian owners in 1908), and one particularly radicalised army unit, the 8th Engineer Battalion, mutinied on 10 October, followed swiftly by the rest of the garrison in Wuchang-Hankou-Hanyang, after a bomb they had been intending to set off later in the month went off prematurely while they were making it.
So in short, the Qing court was indeed rather worse for wear fiscally, but the country as a whole could, for the most part, bankroll the reforms that were being implemented, but in a decentralised manner suiting the decentralised state of the imperial fiscal system.
Sources, notes and references: