CHAPTER VI

CHINA OF MERCHANT-ADVENTURERS

The past may become in the human present more alive than ever. John Richard Green finds in the old records of the guilds of Berwick an enactment "that where many bodies are found side by side in one place they may become one, and have one will, and in the dealings of one with another have a strong and hearty love." In the history of the Saxons, Edwin of Northumbria "caused stakes to be fixed in the highways where he had seen a clear spring," and "brazen dishes were chained to them, to refresh the weary sojourner, whose fatigues Edwin had himself experienced." These things shine with the sun, and enlighten our work to-day. The Maine woodsman sits on a stump whose rings number centuries of growth. When Chinese children came to play with our children at the Legation, I was always impressed by their dignity of demeanour and their observance of the courtesies while their elders were present. On the faces of these little heirs of the Holy Duke the composure of eighty generations of culture and traditions sat freshly; and it by no means alloyed their delight, which was unstinted, in American toys and dolls.

This transmutation of the old into new life is seen everywhere in China. The day comes every morning fresh as a flower. But we know it is old; it is an ancient day, white-clad and beautiful as the stars. The Chinese peasant thrusts his stick of a plough many eons deep into his ancestral soil. In north China it is loess soil, the most fertile on the globe, brought down from the mountains for millenniums and deposited to depths of from twenty to thirty feet. When there are no floods the rain sinks deeply into this porous soil, meets the moisture retained below, and draws up therefrom the inorganic salts that are held dissolved. So its fertility is inexhaustible.

But floods do come, as they have come unchecked for ages. In the Hwai River region, with all this natural richness underfoot, the people are poor, weak, famine-stricken, living in aggregations of shabby hovels that are periodically swept away. Its crops, which should normally be six in three years, average but two and three. This region is only one example of several prodigious and extensive valleys choked with fertility, yet with famine and pestilence raging through them, cursed as they are by inundations that might be completely checked at little engineering cost. With these regions reclaimed and the border provinces colonized, China's crops alone would support double her present population. The people of the Hwai region, secure and affluent, might be easily increased by twenty million living heirs of a fifty-centuries-old civilization. Indeed, a little vision and scientific application would transform China.

With what the ages have produced for the West--the old guild spirit reviving, if you please, in the modern trust--the West can meet the East. The true ministers and ambassadors to China are the merchant-adventurers of the Western nations, bearing their goods, their steel and tools, their unique engineering skill and works. It was not for what the _entrepreneurs_ "could get out of" China, nor yet for what China could get out of us, that my policy as American minister was directed to this complementary meeting of two civilizations. It was because I saw millions perishing wretchedly whose birthright in the higher arts and amenities of living is at least as rich as our own--perishing for lack of an organizing skill which it is the province of the Western peoples to supply. It was because I knew, with their admirable family life and local democratic institutions, it needed only trunk-line railways to link together these close-set communities, comprising one quarter of the earth's population, into as admirable a central democracy.

But how the West was then meeting the East came home to me on the second morning of my stay in Peking. I entered the breakfast room, where I found Doctor Hornbeck in a state of annoyance. He handed me the morning copy of the _Journal de Peking_, a sheet published in French and known to be subservient to Russian and French political interests from which it got subventions. The article in question was a scurrilous attack on me personally, and on American action in China generally.

A Chinese journal in Shanghai had published a laudatory article in which had been cited extracts from my published books. One of these, taken from "World Politics," had happened to speak of French subserviency to Russian policy in the Far East. The French journal repeated these expressions as if they had been given out by me in an interview upon arriving in China. As they were in fact taken from books published more than ten years before, which had run the gauntlet of French critical journals without ever having been taken as hostile to France, I did not have any reason to worry, and the fume and fury of the local journal rather amused me than otherwise. I could, however, not help noting the temper of these attacks, their bitterness and the utter rashness and lack of inquiry with which the charges were made. It gave me early warning, considering its gross lack of courtesy to a newcomer, who had entered the field in a spirit friendly to all, as to what might be expected from some of our friendly rivals. When several years later one of the ministers whose legation stood sponsor for this sheet approached me with a request to use my influence to suppress a Chinese paper which had attacked him, I regretted that it was not in my power to be of assistance.

The significance of the article lay of course in its attack upon American policy, which was characterized as one of "bluff", and which charged the United States with assuming a tone of superior virtue in criticising others, and, while loudly professing friendship for the Chinese, failing to shoulder any part of the responsibility in actual affairs. The Y.M.C.A. and the Standard Oil Company were coupled together as twin instruments of a nefarious and hypocritical policy.

The _China Press_, the American newspaper of Shanghai, pointed out that the attack of the French paper indicated what the American minister would have to face, and observed that the success or failure of his diplomatic mission must depend upon the readiness of the American Government to take an active part in the rehabilitation of China. Should America play the rôle of an altruistic but impotent friend, and of a captious critic of the other powers, it could gain neither sympathy nor respect.

The American Government was at this time severely criticised for its failure to endorse the Six-Power Consortium; it was urged that the Administration had sacrificed the best opportunity for bringing American goodwill to bear on Chinese public affairs, by exercising a moderating and friendly influence in the council of the great powers. On the other hand, it ought to be considered that a new administration, when confronted with the sudden proposal that it give _exclusive_ support to one special group of banks, might well hesitate, particularly in view of the fact that the group in this case consisted of only four New York houses. An earlier administration had answered such an inquiry in a similar way. Considering the merits of the question from the point of view of China, the action might present itself in the light of a refusal to join with others in placing upon the young republic the fetters of foreign financial control. Moreover, the proceeds of the Reorganization Loan were actually not used for the benefit of the Chinese people, but on the contrary this financial support fastened the personal authority of Yuan Shih-kai on the country and enabled him to carry on a successful fight against parliament. That body never gave its approval to the loan.

From my conversations with President Wilson before departing for my post I had formed the conclusion that the President realized that as America had withdrawn from a coöperative effort to assist in the development of China, it was incumbent upon her to do her share independently and to give specific moral and financial assistance; in fact, I received the President's assurance of active support for constructive work in China. In his conversation he dwelt, however, more on the educational side and on political example and moral encouragement, than on the matter of finance and commerce.

It cannot be doubted that in China the withdrawal of the United States from the Consortium was interpreted as an act of friendship by all groups with the exception of that which was in control of the Government at the time, which would have preferred to have the United States at the council table of the Consortium Powers. Those opposed to the Government were particularly strong in their commendation of our refusal to join in an agreement which to them seemed far from beneficial to China. But all parties without exception drew the conclusion that the friendly action of the United States, which had now rejected the method of international coöperation, would continue independently of the others. In view of the power and resources of the United States, it was hoped that there would be a greater participation by the United States in Chinese industrial and commercial affairs, as well as in administrative loans, than had hitherto existed.

It is apparent from all this that the American position in China was not free from difficulties. The covert antagonism of the five Consortium Powers was continuous. We were isolated, and would be judged by what we could do by ourselves. Should it turn out that we had nothing to offer but sage advice, the strictures of our rivals might in time come to carry a certain amount of conviction.

So far as the Americans themselves were concerned, they were thoroughly discouraged, and everywhere talked as if it were all up with American enterprise in China. When I said: "No, it is only just beginning," polite incredulity was the best I could expect. It is very probable that the Americans who were so downcast saw in the appointment of a literary and university man as minister to China an additional indication that there was to be no special encouragement given to American economic enterprise. Having long been familiar with the underlying facts of the Far Eastern situation, I had entirely made up my mind on the primary importance of American participation in the industrial and economic development of China. No one could have appreciated more highly than I did the important work done by American missionaries, teachers, and medical men, in bringing to China a conception of Western learning and life. But if China should have to rely entirely on other nations for active support in the modern development of her industries and resources, then our position in the eyes of the Chinese nation could never come up to the opportunities which Nature had given us through our geographic position and our industrial strength.

I had long discarded any narrow interpretation of diplomacy, but even if I had adhered to the principle that the diplomat must busy himself only with political matters, I should have had to admit that in China political matters included commerce, finance, and industry. I did not, of course, intend that the Legation should enter into a scramble for concessions, but it was my purpose that it should maintain sympathetic contact with Americans active in the economic life of China, and should see to it that the desire of the Chinese to give them fair treatment should not be defeated from any other source.

When I thought of American enterprise in China I had less in mind the making of government contracts, than the gaining of the confidence of the Chinese people in the various provincial centres of enterprise by extensive business undertakings, resting on a sound and broad foundation. In China the people are vastly more important than the Government, so that it is necessary to make up one's mind from the start not to regard Peking as the end-all and be-all of one's activity, but to interest one's self deeply in what is going on in all of those important interior centres where the real power of government over the people is exercised, and where the active organizations of the people are located.

The universal knowledge that America has no political aims in China, of itself gives Americans the confidence of the Chinese and predisposes the latter to favour intimate coöperation. Our policy is known to be constructive and not to imply insidious dangers to their national life. It would be discouraging to the Chinese, should Americans fail to take a prominent part in the development of Chinese resources. To Americans the idea of securing preëminence or predominance is foreign, but from the very nature of their purely economic interest they have to resist any attempt on the part of others to get exclusive rights or a position of predominance, which could be utilized to restrict, or entirely to extinguish, American opportunities.

I was therefore resolved to give every legitimate encouragement to constructive enterprise, whether it were in education, finance, commerce, or industry.[1] Fully a year before going to China I had expressed my view of the nature of American policy there, saying that a united China, master of its own land, developing its resources, open to all nations of the world equally for commercial and industrial activity, should be the chief desideratum.

Among the specific American interests already existing in China, that of missionary and educational work had at this time to be given the first rank. There are two factors which have made it possible for this work to achieve a really notable influence. The one is that it is plainly the result of individual impulse on the part of a great many people animated by friendly motives, and not the result of a concerted plan of propaganda. The second factor is the spirit of helpfulness and coöperation which permeates this work. There is no trace of a desire to establish a permanent tutelage. An institution like the Y.M.C.A. acts with the sole thought of helping the Chinese to a better organization of their own social and educational life. The sooner they are able to manage for themselves, the better it seems to please the American teachers, who may remain for a while as friendly counsellors, but who make no effort to set up a permanent hierarchy of supervision. The Chinese have an intense respect for their educators, and it has been the good fortune of many Americans--men like Dr. W.A.P. Martin and Dr. Chas. D. Tenney--to win the devoted loyalty of innumerable Chinese through their activity as teachers.

Among commercial enterprises the Standard Oil Company was carrying petroleum to all parts of China. It had introduced the use of the petroleum lamp, had extended the length of the day to the hundreds of millions of Chinese, and even its emptied tin cans had become ubiquitous in town and country, because of the manifold uses to which these receptacles could be put. For efficiency and close contact with the people, the Chinese organization of this great company was indeed admirable.

A similar result had been obtained by the British-American Tobacco Company, which, although organized in England under British law, is American by majority ownership, business methods, and personnel. The cigarette had been made of universal use, and had been adapted to the taste and purchasing ability of the masses. Though there were several American commission firms of good standing, none had the extensive trade and financial importance of the great British houses. Several American firm names established in China early in the nineteenth century, like that of Frazar & Company, had become British in ownership. The only American bank was the International Banking Corporation, which at this time confined itself to exchange business and did not differ in its policy or operations from the common run of treaty port banks.

If national standing in China were to be determined by the holding of government concessions, America was at this time, indeed, poorly equipped. The Bethlehem Steel Corporation had in 1910 concluded a contract with the Imperial Government for the construction of vessels to the value of $20,000,000. When I came to China, a vice-president of the corporation, Mr. Archibald Johnston, was in Peking, ready to arrange with the republican government for a continuance of the contract. The American banking group was a partner in the Hukuang Railways, in which it shared with the British, French, and German groups. An American engineer was employed at the time in making a survey of a portion of the proposed line along the Yangtse River. The American group also held the concession for the Chinchow-Aigun Railway in Manchuria, the execution of which had been blocked by Russia and Japan. The group further participated with the three other groups above mentioned in the option for a currency loan. The only activity going on at this time in connection with these various contracts, on the part of America, was the survey of the Hukuang railway line west of Ichang.

For some time the practice had grown up, on the part of European powers, to urge the Chinese to employ, as advisers, men reputed to have expert knowledge in certain fields. The most noted adviser at this time was Dr. George Morrison, who had gained a reputation in interpreting Far Eastern affairs as Peking correspondent for the London _Times_ during and after the critical period of 1900. A fresh group of advisers had just been added under the terms of the Reorganization Loan. Each power therein represented had insisted that the Chinese appoint at least one of its nationals as an adviser. The American Government had never urged China to make such an appointment. But when President Eliot visited China in 1913, Chinese officials expressed to him the wish that a prominent American should be retained as adviser to the Chinese Government. President Eliot suggested that the Carnegie Endowment might propose certain experts from whom the Chinese Government could then make a selection. This method was actually followed, and as a result Prof. F.J. Goodnow of Columbia University, a recognized authority on constitutional law, had been retained by the Chinese Government and was at this time already in residence at Peking. The Ministry of Communications on its part had sought a man familiar with railway accounting, and had called upon the late Prof. Henry C. Adams, the noted economist and railway expert of Michigan University.

The important administrative positions of Inspector General of Customs and of Foreign Inspector of the Salt Revenue were held by two British officials. The salt administration had come within the purview of international supervision through the Reorganization Loan agreement; and, as America was not a party to that loan, the appointment of Americans to any positions in this service was frowned upon by several of the partners. The Inspector, Sir Richard Dane, an official of long experience in India, however, adopted the policy of not confining the appointments to subjects of the Consortium Powers. He had retained several Americans, in whom he seemed to place great confidence. In the Customs Service, Americans did not hold the number of positions to which they were relatively entitled. This was undoubtedly due to the fact that very few people in the United States knew that such positions in China are open to Americans; moreover, many of those Americans who were actually appointed had become impatient with the relatively slow advancement in this service and had been attracted by other opportunities. There were, however, a number of highly reputed and efficient American officials in the Customs Service.

FOOTNOTES:

[Footnote 1: The leading British paper of China had this to say concerning the modern functions of diplomacy: "It is characteristic of Doctor Reinsch and his outlook upon China that he should mark a point of progress in the fact that the legations are ceasing to be merely political centres, and that, instead of politics being the one and only object of their existence, they are now establishing relations of all kinds of mutual helpfulness in vital phases of national reorganization. In this connection, we may see an increase in the number of experts who will come, unofficially for the most part, to study conditions and gather data which may be available as a sure foundation for progress." I may say in passing that the British papers in China, throughout the period of my work there, were almost uniformly fair and friendly, and gave credit for honest efforts to improve conditions.]