Part 14

As illustrating the irregularity of the currency, let us cite the situation at Newchwang in 1912 for instance. National taxes are paid in Kuping taels; provincial taxes in Manchurian dollars. Customs duties are paid in the usual Haikwan taels; local octroi in small silver. The national post-office will only accept Mexican dollars. The national telegraph office will only accept Manchurian dollars. The national Chinese railway cashiers must receive payment of freight bills in either Peiyang or Kiauchou (German) dollars. The pursers of the national China Merchants’ Steamship Company demand payment of fares in either Mexican dollars or Newchwang taels. The Japanese, who run a railway, a concession, public utility works and a hotel here, demand payment of their bills in the Japanese silver yen (dollar). On their railway line they demand payment in the Japanese gold yen. The Russian demands payment in his paper ruble note. The Americans and the English demand payment respectively in eagles and sovereigns. All of these concerns will discount other moneys at a heavy profit, so that they, and the money changers, in the multiplicity of standards, soon shave the dollar down till its pride and distinction of stamp are humble and thin enough! A tael, the old monetary system, is a Chinese ounce equal to 1⅓ ounces avoirdupois. The Haikwan tael, the standard of fineness accepted by the Custom House, is rated at 100, in comparison with which are the Tientsin tael at 105; the Hankau and Newchwang at 108, and the Shanghai at 111. When new silver arrived at the old provincial mints, it was refined or adulterated to conform with these grades. The edict of October 5, 1908, suggested that if the standardization of silver was successful, a gold standard might be looked for. This would probably slightly raise wages and costs in China, and slightly decrease them elsewhere.

The national customs, heretofore called the “Imperial Customs”, managed from Peking in succession by the British knights, Robert Hart, Bredon and Aglen, continue to be the financial pillar of China, the basis of foreign loans, the payer of the hated indemnities, the provider of armies, pensions, and nearly all the machinery of government and even “graft”. Until a reorganization of the taxes is effected, the customs might be raised to double what they now are so as to get China on her feet. The department has been honestly managed, and is a monument to the late Sir Robert Hart, the sinologue. Where a missionary or a Buddhist monk is not at hand to take care of a needy traveler, there will be found a national customs cadet, generally a Briton, an American or a German.

How China is neglected by London, the world’s banker, is illustrated by the following investments of new capital in a normal year, 1910. China was given only $3,500,000 in 1909, and $8,000,000 in 1910, whereas to nearly a billion already loaned, Japan was given $30,000,000 more in 1910; Mexico a like amount; Argentine, $112,000,000; Russia, $20,000,000; and even little Denmark, Greece, Turkey and Cuba each received as much as dormantly opulent and vast China. The neglect of China by America reveals a similarly regrettable situation. Trade follows the loan as much as it follows the flag and the missionary, as England’s trade relation with Argentine proves.

The famous Russo-Chinese Bank, which was the catspaw for the Russians in securing from the Chinese the troublesome concession for the Chinese-Eastern railway, which largely led to the war with Japan, was absorbed in a new institution in October, 1910, called the Banque Russo-Asiatique, which is largely financed by the Banque du Nord and the _Société Générale_ of Paris. The old Russo-Chinese Bank had a capitalization of 21,000,000 rubles, one-third of which was subscribed by China. The capitalization of the new bank is double that of the old.

China is suspicious regarding foreign loans, and many of the new China party which precipitated the October, 1911, revolution are opposed to even railway loans. Objection has been made to one American loan that it included, besides proper interest, a bonus of millions to take up bonds of a previous American syndicate which never performed railway work in China for those bonds; that is, they were organization paper, not property paper. Objection is also made that our loans name as security the perpetuation of the odious likin system which disjoints the trade, politics and transportation of the provinces. The Chinese of the south have constructed many short railroads, which are run at a profit without foreign loans, and it is this system which the “states’ rights” people wish to spread. Political and economical education in the provincial assemblies will in time teach them the wisdom of the nationalization of trunk railways at least. There is the same conflict in China between the states, or provinces, and the federal power, as there is in other countries. In the matter of foreign loans, the provincial papers complain that the central government has sold the nation by paying bonuses and heavy interest. The trouble with provincial loans for railways will be the mixed security offered, one province providing for the continuation of the objectionable likin, and another province withstanding it. It is a perfect curse along the magnificent Shanghai-Nanking railway built by British contractors. The strong desire of the provinces, in the first ebullition of patriotism, is to build and operate their railways without foreign aid or federal intervention.

In times of political trouble, the Chinese place vast sums in the trust, not only of foreign banks at Tientsin, Shanghai and Hongkong, but valuables and money are placed implicitly in the care of missionaries, whose fiduciary honesty is esteemed by the Chinese, who, if they do not understand the text, understand the living example! The missionary is not only a tower of “doctrine”, to use the Chinese idiom; he is a tower of finance also. It is a remarkable thing that when the white man’s honesty at home in certain scandals exposed by government prosecutions, is rocking like a wooden steeple in the grasp of a tornado, the white man’s honesty in China is standing steadfast as a rock, and unmoved in the typhoon of local and international distress, and political, religious and educational change. It seems that it is a wholesome time to send some of our monopolists to China, and bring some of our missionaries back to reform things at home!

The licensed pawnshops are called Tang Po Tien and Chi Tien. The “Yah” pawnshop corresponds to our “fence” shop, to which thieves bring their plunder. The regular pawnshops are an embryo trust company. They loan on land, crops, jewels, rent, bills receivable, possessions, houses. They change money and sell notes of credit. The pawnshops of Mukden and the north loan on crops, such as beans, millet, etc. The visible grain, and not a warehouse receipt, is the security, and therefore the pawnshops of the north have yards and sheds in connection with the plant. The towering square pawnshops of Kwangtung province in the south are higher than in the other provinces, showing that capital circulates more among the active Cantonese merchants. The Chinese of America are mainly Cantonese, or Kwangtungese; that is, if they are not of the provincial capital, they are from the province.

Trained carrier pigeons are still used by the Shansi Bankers’ Guilds in carrying secret code messages stating the exchange prices of silver. This is quicker than the post, and more secret than the telegraph.

Regarding salaries that will be paid in China’s reconstruction, the following may give some indication. The salary of advisers to the privy council has been $90 per month in a nation of 400,000,000, compared to the salary of an American attorney-general of $1,500 a month.

It is often said that the Chinese are absolutely honest, but when an exception occurs it is as startling as a bolt from a clear sky. As an aftermath of the rubber speculation at Shanghai, the taotai, Tsai Nai Huong, absconded in August, 1911, owing several million dollars to the government, which sum had been loaned him to assist the local banks.

Some of their proverbs hung up as texts in their guild houses are:

“Don’t wait till you are thirsty to dig your well.”

“Don’t wait for the battle before you sharpen your sword.”

“The higher up, the deeper down when the tumble comes.”

“Fish and fools are the same; neither sees the string on every bait.”

“The fish is measured by your bait.”

“He who buys luxuries soon sells his necessities.”

“A debtor never remembers as long as a creditor.”

“Conscience grows heavier as store weights grow secretly lighter.”

“Hot broth and a time loan both require deliberation.”

“If you are rich and live in a desert, it’s never too far for your poor relatives to come.”

“If you have money, even your enemy will slave for you.”

“There’s such a thing as drawing the line somewhere; I don’t lend my umbrella in the dog-days.”

“Some men’s faces are as good as a credit slip.”

It will be perceived that they had a Franklin in China!

The idiom for a lunar eclipse is: “The moon has suffered a deficit,” but the other expression of the Chinese astronomers: “All round again”, indicates that losses have been underwritten and solvency reestablished! May the international financial astrologers in and out of China soon bring in this happy state. Then a “cycle of Cathay” will be as good as any other cycle, despite Tennyson’s dictum, and this will redound to the good of every nation, particularly America and Britain.

V

BUSINESS METHODS OF FOREIGNERS IN CHINA

The British national board of trade, partly on the advice in Admiral Lord Beresford’s book, has appointed commercial attachés separate from the diplomatic and consular bodies to work as specialists and free lances in China. In contrast with the diplomatic and consular departments, they are free to use the helpful publicity of the home newspapers in order to correct and create interest. Canada in a small way has followed Britain’s example. A consular officer is fixed to his post on account of his daily relationship with shipping, courts, visits of nationals, emigration and health inspection. A commercial attaché has more of a roving and special commission, and it is important in the nature of his office that his advice should be followed promptly in China and at home. He is in a position to strike quickly and bring trade to his flag. He is not necessarily that loathsome being which flourished in China previous to the Russo-Japanese War, a concession hunter and a looter of weak countries. His aim is to strengthen weak countries, as he knows that only a rich and contented people can trade richly with his flag. The more he is of a scholar, gentleman and Christian the better, for such a person in the long run makes an ideal trader and patriot, as the American reformers are insisting. He should be a statistician, an economist, and also an idealist, so that he may be able to formulate a policy amid the present confused conditions. He is not in any sense a historian, for he is not to follow his country. He is to lead it, and, moreover, he must also sympathize with the Chinese point of view to a sufficient degree.

Europe and America have been trading in China on an extended scale since in 1842 the Nanking Treaty opened up Canton and four other ports. Surprisingly few traders have learned the language. The home-rule principle has been recognized, and the Chinese have been allowed to run the trade in their own way on the compradore and shroff system. The foreign firm takes into its employ at a percentage, with a guaranteed minimum, a Chinese compradore, who speaks English, and who is bonded by the Chinese, and the compradore takes into his employ a shroff cashier, who is bonded to him by Chinese. The compradore pays the wages of his Chinese staff. The foreigner (Si Yang Jin--West Sea people) must deal with the Chinese customers only through the compradore, and the compradore must under no circumstances appeal to the head of the foreign firm in London, San Francisco, etc. He must deal with the agent or branch in the China port, in whose office he is located on the first floor, with a Chinese staff as large as the foreign staff up-stairs. One who enters the offices of the Pacific Mail, American (International) Bank, Standard Oil, P. & O., Butterfield and Swire, Jardine’s, Fearon’s, and other companies in China, might think at first that the concern was Chinese. No one but Celestials is to be seen. This system is an approximation of two views. The Chinese might desire to handle his own trade, in which case the compradore would set up for himself, and buy sewing-machines, oils, machinery, tobacco, cotton, etc., direct from the foreign agent at the treaty port, or he could ignore the foreign agent and send his Chinese buyer across to San Francisco, or over to London. Or the foreigner might learn the language, dismiss his compradore, and try to sell direct to the Chinese consumer and Chinese merchant.

It is a world-trade question, a terrific struggle in economics, this getting rid of the middleman, the drone, and it is therefore still an unsettled question in China. The compradore and shroff exist, although many foreign commercial travelers, especially Germans and Japanese, are selling direct to the Chinese in small lots. Many of these compradores have become notable and able men, especially those employed by the Hongkong and Shanghai Banking Corporation. Again, some compradores have tricked the foreign agent and company with all the legerdemain of a conjurer. That is, instead of inducing the foreign agent to bring out large quantities of oil, flour, etc., we shall say, in time for a high market, the compradore, with his Chinese alliances (or conspirators, shall we say!) induces the agent to get stocked in godown when a low market suddenly drops on him. The compradore shifts and says the market will drop lower still, and the agent authorizes the compradore to sell quickly. The compradore sells to himself by dummy, and the oil or flour suddenly rises. The agent is mad clear through, but if he changed compradores every time this happened he would change so frequently that his concern would lose prestige with the Chinese. The Chinese compradore will bleed you, but he will not knowingly bleed you to death. Of all ornithologists of trade, he does not believe in killing the goose that lays the golden eggs. He only plucks the goose occasionally! I have heard tales which, if they are true, would indicate that the Chinese compradore is not alone expert in legerdemain, but that the foreign agent sometimes “stands in” with him. There certainly are some mountain palaces and a princely ménage on the hills of the sumptuous Far East that the savings from an agent’s salary, or an unexpected legacy never bought. In trade and in politics, as well as in religion, “by their fruits ye shall know” compradores, agents, and every one else!

Successful companies operating in China, with foreign managers and with the majority stock in foreign hands, but using Chinese money also, are the following incorporated or joint-stock registered companies:

Hongkong and Shanghai Banking Corporation (British and German). Indo-China Steam Navigation (British). Peking Syndicate (British), Shansi and Honan anthracite coal. Anglo-French Syndicate (Yunnan mines). Anglo-French Land Investment Company. Hongkong Land Investment Company. Hongkong and Whompoa Dock Company. Hongkong and Kowloon Wharf and Dock Company. Green Island Cement Company (Hongkong and Macao). Société Anonyme du Luhan (Belgian), s. e. Shansi coal. Tientsin Land Investment Company. Tientsin Gas and Electric Company. Tientsin Water-works. Hongkong, Canton and Macao Steamboat Company. Hongkong Cotton Company. Hongkong Rope Company. Hongkong Dairy Company. Chinese Engineering and Mining Company (British), Kaiping coal mines.

The immense Taikoo Company (Butterfield & Swire), operating docks, shipyards, sugar refineries, steamship lines, etc.; China Sugar Refinery; Bank of Australia; Eastern and Australia Cable Company, etc., are owned mainly by British capitalists, who operate an extensive apprentice system or school in maintaining their personnel in the Far East. The Banque l’Indo-China is, of course, mainly French, as is the Anglo-French Syndicate. The Russo-Asiatique Banque is French and Russian. The Cathay Trust Company is British and Chinese. The Shell Transport (oil and shipping) is Dutch, largely. Humphreys’ Land Company is British, mainly. There are scores of rubber companies whose plantations are in Malaysia, but whose shares are actively dealt in by the Chinese and foreigners of Shanghai, Hongkong and Tientsin. Large department stores of Hongkong and Shanghai are incorporated, and their shares are actively dealt in. I refer to Lane-Crawford, Watson, Central Stores, Weeks, Moultrie, Hall & Holtz, etc.

The largest foreign commission houses, banks and agencies, with offices in the various treaty ports, are the following:

United States Steel Products Export Company (American). Standard Oil Company (American). American Tobacco Company. Singer Sewing-Machine Company (American). International Banking Company (American). Yokohama Specie Bank (Japanese). Deutsche-Asiatique Bank (German). Mitsui & Co. (Japanese), Fushun coal, machinery, cotton, etc. Mitsu Bishi (ship-building at Nagasaki). Kawasaki Dock Company (ship-building at Dairen). American Trading Company. Sassoon & Co. (German). Reiss & Co. (British). Melchers & Co. (German), machinery, shipping, etc. Arnhold, Karberg & Co. (German). Henley’s Telegraph Works (British). Shewan, Tomes & Co. (British and American). Fearon, Daniel & Co. (American). Andersen, Meyer & Co. (German). Carlowitz & Co. (German), smelting, matting, machinery, etc. J. G. White & Co. (American), engineering. Punchard, Lowther (British), engineering. Pearson (British), engineering. Tsingtau Dock Company (German), ship-building. Rose, Downs & Thomson (British), oil, machinery. Priestman Brothers (British), dredgers, excavators. Indo-China Cement Company at Haiphong (French). Bohler Brothers (British), hardware. Siemssen & Co. (German). Kelly, Walsh & Co., Brewer & Co., _North China Herald_ (British), publishers and booksellers. Brunner Brothers (German), gas lighting. Hohenzollern Company (German), locomotives. Konigs Company (German), bridges. Reinecker Company (German), machinery, tools. Hurst-Nelson Company (British), railway equipment. Glasgow Rolling Stock Company. Mellowes & Co. (British), station roofs. Hunt & Co. (British), machine shops. Leeds Forge Company (British), steel cars. Cassella & Co. (British), engineering instruments. Tangye & Co. (British), oil engines. Yorkshire Copper Works, Union Electric Company (British), electric plants. Wilkinson-Heywood Company (British), paint. Dudgeon, Ltd. (British), excavators. Waygood & Co. (British), elevators. Nasymth Wilson Company (British), locomotives. Vickers, Ltd. (British), railway equipment. Hawthorne-Leslie Company (British), mining equipment. Arts and Crafts Company (British), decorators. Sun Life of Canada, insurance. Royce, Ltd. (British), cranes. Herring, Hall, Marvin (American), safes.

The Mutual Life Insurance Company, of New York, opened a branch in Hongkong in 1903, but it was closed in 1904, insurance companies preferring, as a rule, to act through general commission houses at present.

Foreign firms advertise in Chinese almanacs, which circulate in immense numbers throughout the land. An example is _Hallock’s Miscellany_, printed in a scholarly manner by the American Presbyterian Mission Press, 18 Peking Road, Shanghai. The Chinese editions of the Hongkong and Shanghai papers are excellent mediums, if one is not on the ground. Chinese travelers arrive at a station hours before the departure of a train, and foreign firms find it advantageous to display their cartoons and advertising in Chinese at railway stations. Even if some of the Chinese can not read, they become familiar with the “chop” or cartoon, which accordingly is more important than in any land, and should therefore be registered with the foreign consul and the Chinese taotai. The Asiatic Petroleum Company, of London, (Dutch-British), uses a cartoon of three square oil tins, with a tin lamp flaming on the top. The Standard Oil Company uses a picture of the hand lamp and some paraffin candles. Scott’s Emulsion Company shows the familiar codfish on the back of the man. Green Island Cement Company shows the famous mountain island of Macao’s inner harbor, with the cement chimneys at its foot. Barnard & Leas Company, of Moline, Illinois, use a picture of their grain sifter. Mousin et Cie, of Frankfort on Main, use a picture of a rose spray and a Chinese man and woman. The New Home Sewing-Machines use a picture of the machine and a greyhound. The Victor Talking Machines show the well-known fox-terrier listening to “His Master’s Voice”. Many of the firms draw attention by quoting an epigrammatic gem of Chinese wisdom. The Singer Sewing-Machine insists that the Chinese shall become familiar with the English letters and not the Chinese letters in the bridge of their machine, and they have had wide success. The Wheeler & Wilson Sewing-Machine Company shows Gabriel blowing his horn, or the spirit of reform telling China to wake up! The Longines Watch Company, of Paris, uses a Chinese lily in a vase and a winged hour-glass. The Chinese are becoming large buyers of time-keepers, and these trade-marks are most important. Several suits over trade-marks on watches have appeared in the courts of Hongkong. The Taussig Soap Company, of Vienna, uses a man-headed bird, which appeals to the humorous Chinese, whose hobgoblins are legion.