"SLOW AMERICANS"
"The Americans are altogether too slow!"
This exclamation from a Chinese seemed amusing. It came on the evening
of the red dust-storm that enveloped Peking, during one of the long
after-dinner conversations with Liang Shih-yi and Chow Tsu-chi; and it
was the latter who thus gave vent to his impatience.
Liang Shih-yi, the "Pierpont Morgan of China," Chief Secretary to the
President, was credited as being, next to Yuan Shih-kai, the ablest and
most influential man in Peking. Mr. Liang is highly educated according
to Chinese literary standards, and while he has not studied Western
science, he has a keen, incisive mind which enables him readily to
understand Western conditions and methods. His outstanding quality is
a faculty for organization. He built up the Chinese Communications
Service on the administrative and financial side. He declined taking
office as a minister, but usually controlled the action of the cabinet
through his influence over important subordinates, and managed all
financial affairs for Yuan Shih-kai. Cantonese, short of stature and
thickset, with a massive Napoleonic head, he speaks little, but his
side remarks indicate that he is always ahead of the discussion, which
is also shown by his searching questions. When directly questioned
himself, he will always give a lucid and consecutive account of any
matter. He did not rise above the level of Chinese official practice
in the matter of using money to obtain political ends. To some he was
the father of deceit and corruption, to others the god of wealth, while
still others revered in him his great genius for organization. While
by no means a romantic figure, he thoroughly stimulated a romantic
interest among others, who attributed to him almost superhuman cunning
and ability.
When the noted Sheng Hsuan-huai became Minister of Communications in
1911, he used his influence and cunning to thwart Liang and throw him
out of the mastery of the Board of Communications, known as the fattest
organ of the Government. Mr. Liang stood his ground, and his influence
greatly increased because of his ability to withstand so strong an
attack. During the revolution Liang Shih-yi was also very influential
in the Grand Council, attaching himself more and more strongly to Yuan
Shih-kai. Always satisfied with the substance of power without its
outward show, he steadfastly declined to become a responsible minister,
and worked from the vantage ground of the Secretariat of the President.
His life has frequently been endangered. He gained the hatred of
the democratic party, with which he was once associated, because he
aided Yuan in playing his complicated game of first confusing, then
destroying, parliament. Nor were the Progressives (Chin Pu Tang)
enamoured of him. Of great personal courage, he was indifferent to
the blame and ridicule which for a while almost all newspapers heaped
upon him. As he was still in a comparatively inferior position when
these attacks began, they rather helped him by calling attention to his
abilities and his personal importance. Thus his opponents advertised
him. In possession of all the intricacies of the situation, when the
parliamentarians first came to Peking, he sat back inconspicuously,
and, supplied with influence and money, moulded the political situation
as if it had been wax.
Of all the cabinet, Mr. Chow Tsu-chi, Minister of Communications,
was personally most familiar with American affairs, having lived for
several years in Washington and New York in an official capacity.
He speaks English fluently and prefers American methods. He hates
unnecessary ceremony. Whenever he called upon me I had almost to
engage in personal combat with him to be permitted to accompany him to
the outer door, as is due to a high dignitary in China. He believes in
learning improved methods from reliable foreigners, and will go as far
as any Chinese in giving foreigners whom he trusts a free hand, though
he would not yield to any one a power of supreme control. On this
occasion he talked about the reorganization of the Bank of China, and
the possibility of floating domestic bonds among Chinese capitalists.
Mr. Chow was chanting a jeremiad about how the Chinese had been led to
give valuable concessions to Americans, which had not been developed,
and how this had brought only embarrassment and trouble to China.
We spoke, also, of the original Hankow-Canton railway concession which
the Americans tried to sell to King Leopold; of the Knox neutralization
plan, and of the Chinchow-Aigun railway concession, the only effect of
which had been to strengthen the grip of Russia and Japan on Manchuria.
When the Americans, as a mark of special confidence and trust, had
received the option on a currency loan with the chance to reorganize
Chinese currency, they had straight-way invited Great Britain,
Germany, and France into the game. "Thus they saddled China with the
International Consortium," Chow Tsu-chi moaned. And so on went the
recital, through many lesser and larger enterprises that had proved
abortive.
One had to confess that in China we certainly had not taken Fortune by
the forelock, nor even had we clung to her skirts. Mr. Chow Tsu-chi
was especially grieved at the circuitous and dilatory methods of the
Four-Power Group which held the contract to build the Hukuang railways.
"The thirty millions of dollars originally provided has been almost
entirely spent," he complained, "without producing more than two
hundred miles of actual construction; and there is constant wrangling
among the partners concerning engineering standards. Moreover,
everything has to be referred from Peking to London, thence to New
York, Paris, Berlin, and back and forth among them all, until it is
necessary to look up reams of files to know what it is all about. And
it may all have been about the purchase of a flat car."
I knew well enough that Americans, too, were much discouraged at the
cumbersome progress of the Hukuang railway enterprise. The engineering
rights on the section west from Ichang up into Szechuan Province had
been assigned to America, and Mr. W. Randolph was at this time making
a survey. He had great energy and unlimited belief in the future
importance and profitableness of this line. But beyond the initial
survey the available funds would not go, and no new financing could
be obtained--this for a railway to gain access to an inland empire of
forty millions of people!
In the American enterprises which had been launched recently, however,
there was no little activity. The Standard Oil Company with commendable
expedition, if perhaps with undue lavishness of men and supplies,
sent to China geological experts of the first order, together with
large staffs of engineers, drilling experts, and all needed machinery.
The geologists were soon off toward the prospective oil regions in
Chihli and Shensi provinces. In Mr. Hsiung Hsi-ling's bureau and in
the Standard Oil offices the outfitting of expeditions, the purchase
of supplies, and the selection of a large Chinese personnel proceeded
apace. Everyone was hopeful.
With the Hwai River conservancy matter, also, negotiations had gone
rapidly in the United States. The American National Red Cross and the
engineering firm of J.G. White & Company had agreed to finance the
preliminary survey. The American Congress in May passed an act lending
the services of an army engineer for the preliminary survey. Colonel
Sibert of the Panama Canal Commission was designated as chairman of the
engineering board. The outlook was favourable, action had been taken
promptly.
The excitement stirred up among the Japanese by the sojourn in China of
the Bethlehem Steel Company's vice-president, Mr. Archibald Johnston,
now had a further sequel. The text of an alleged contract between the
Chinese Government and the Bethlehem Steel Company was circulated early
in May--by interested persons--which included among other provisions
arrangements for construction of a naval base in Fukien Province.
The bogus quality of the report was at once manifest. Through some
influence, however, it was assiduously pushed forward in the press;
it became the basis of a legend, which even got into the books of
otherwise well-informed writers as authentic. It was on the subject of
this spurious paper that the Japanese ambassador at Washington called
on Secretary Bryan for information. Thus the matter of the possible
building of a naval base in Fukien for the Chinese Government by
American contractors became a matter of State Department note. I was
informed that the Japanese ambassador at Washington had left a summary
of the conversation, of March 12th, between the Japanese minister at
Peking and myself. Apparently the Japanese were attempting to get
around my refusal to acknowledge that American enterprise in China
could in any way be limited by the declarations or agreements of other
powers than the United States.
The State Department inquired whether the newly reported contract for
a loan of $30,000,000 was identical with the older contract of the
Bethlehem Steel Company. I was informed that the Japanese Government
did not object to the loan, but to the construction of any new naval
base in Fukien, and that the Department had been told that the Chinese
Government itself did not wish to construct there because of the
Japanese objection. It was intimated to me that I might encourage the
Chinese in the idea that such building, while legitimate, would be
unwise.
I reported to the Department that the original Bethlehem contract had
no connection with the spurious document recently circulated; that
only a very small sum was to be devoted to harbour work in China, the
location of which had not been fixed; and that the execution of the
entire contract had been postponed because of financial conditions.
While the Chinese Government was not contemplating any construction
at this time, I stated that the attempt of any other government to
establish a claim of special rights of supervision must be considered
derogatory to Chinese sovereignty and to American rights of equal
opportunity; I urged, therefore, that we avoid any action or statement
which would admit such a claim, or which would in any way encourage
the making of it. The Chinese Government has never admitted that its
right to plan the defence of its coastline is subject to veto by any
other government. Such admission on our part that Japan has the right
to claim special interests in Fukien would shake the confidence of the
Chinese in our seriousness and consistency, and in our determination to
protect our legitimate interests in an undivided China, freely open to
the commerce of all nations, where Americans can do business without
asking permission of any other outsiders.
Dr. Chen Chin-tao was then acting as Financial Commissioner of the
Chinese Government in Europe and America. The danger of a further
growth of the idea of spheres of influence in China had been
accentuated. Railway concessions had been allocated to different
nations according to territorial areas where the respective countries
claimed certain priorities; if concessions were made otherwise, the
combined influence of the powers seeking special spheres was used to
defeat them. To meet this danger a plan was developed for granting a
large construction contract to an international syndicate made up
of British, American, French, and German companies, who would divide
the construction on some basis other than localized national spheres
of influence. Doctor Chen, with an American assistant, was charged to
take up this proposal with various companies. On the part of France and
Germany, contractors and governments seemed favourable to the idea.
In Great Britain the firm approached was Paulding & Company, who had
already in the preceding year received a railway concession in China
extending through the Province of Hunan and to the south thereof. This
firm would readily coöperate, but the British Government objected.
It would accept the principle of the international company only on
condition that all lines traversing the Yangtse Valley should be
constructed by the British participant in the syndicate.
This suggests the extent to which the sphere-of-influence doctrine
dominated at this time the thought and action of the British Foreign
Office.
The American Government, on its part, took exception to the size and
duration of the concession, which it feared might gain a monopolistic
character. Probably the difficulty would have been cleared up, since,
after all, a specific and limited, though considerable grant, was
intended. But the preliminary discussion had not resulted in agreement
before the Great War supervened.
When Mr. Gest returned to the United States, he took up the matter
of a loan to China with American financial interests, but they
hesitated to act until the American Government expressed its approval
and willingness to give support. Mr. Gest thereupon laid siege to
the Department of State. He succeeded on the 3rd of June in securing
from the Secretary a letter to the effect that the Department would
be gratified to have China receive any substantial assistance from
Americans in the nature of a loan upon terms similar to the present
agreement. "This Government," the letter stated, "will, in accordance
with its usual policy, give all proper diplomatic support to any
legitimate enterprise of that character."
There had been much talk about the supposed determination of the
Department of State to let American interests abroad shift for
themselves, quite without encouragement or special protection.
The letter, though moderate in language, nevertheless attracted
great attention and was taken to indicate a change of heart in the
Administration. I may say at this point that the Department of State
never at any time failed to back me in efforts to develop and protect
American interests in China. But it was not always able, especially
later on, when overburdened with the work of the war, to follow up
matters which it had approved, when the opposition or indifference of
other departments put other claims in the forefront.
I had for a season observed and worked with American commercial
interests in China. I had definite conclusions as to what was needed in
the way of organization to encourage American trade. The great defect
lay in the absence of financial institutions for handling foreign
loans, and for assisting in foreign industrial development, helpful to
American commerce. The only American bank in China, the International
Banking Corporation, then confined itself strictly to exchange business
and to dealing in commercial paper; it had developed no policy
of responding to local industrial needs and helping in the inner
development of China. All the foreign banks had wholly the treaty-port
point of view. They thought not at all of developing the interior
regions upon which the commerce of the treaty ports after all depends.
They were satisfied with scooping off the cream of international
commercial transactions and exchange operations.
I strongly favoured creating banking institutions which would broadly
represent American capital from various regions of our country, and
would respond to the urgent need of China for a modern organization of
local credit.
There were but few American commission houses. In most cases
American-manufactured goods were handled by houses of other
nationality, who often gave scant attention to promoting American trade
and used American products only when those of their own nation could
not be obtained. It seemed worth while to establish additional trading
companies, especially coöperative organizations among exporters,
after the fashion of the "Representation for British Manufacturers,
Ltd." Further, I strongly urged the American Government to station a
commercial attaché in China. I was gratified by the appointment during
the year of a commercial attaché in the person of Consul-General Julean
Arnold, an official of great intelligence, wide knowledge, and untiring
energy.
The Chinese cabinet, which had been under a provisional premier for
several months, was finally reorganized in June, 1914. The chief change
in the cabinet was the appointment of Mr. Liang Tun-yen as Minister
of Communications, and the shifting of Mr. Chow Tsu-chi from that
position to the Ministry of Finance. With these new ministers American
contractors and financiers had much to do. Premier Hsiung Hsi-ling had
withdrawn in February, and with him the two other members of the Chin
Pu Tang or progressive party. These political leaders had served Yuan's
purpose by aiding him to dissolve parliament; they could now be spared.
But a new premier was not immediately found. Yuan at length prevailed
on Mr. Hsu Shi-chang to take the premiership in June. The title of
premier was changed to secretary of state.
I met Mr. Liang Tun-yen for the first time on June 2nd, at a luncheon
given by Mr. B. Lenox Simpson, whose landlord he was. Mr. Liang is
tall, aristocratic-looking, with a fine, intellectual face. He speaks
English perfectly, as he received his earlier education in the
United States. Then, as on frequent occasions in subsequent years, he
expressed himself in a deeply pessimistic strain. He complained of
recent inroads attempted by the French in Yunnan, and of the methods
they employed to strengthen their hold. But this was only one cause for
pessimism. In the future of his country he saw "no prospect of strong
national action," or of "any sort of effective help from the outside."
He considered the upper classes "incapable of sacrifices and vigorous
action." He had recommended in 1901, he told me, that, instead of
paying an indemnity, the Chinese should be allowed to spend an equal
amount of public funds in sending abroad young men to be educated. All
young Chinese, he said, should be sent abroad quite early, "before they
have become corrupted."
When Mr. Liang Tun-yen assumed office, it was announced that he would
subject the Ministry of Communications to a thorough cleansing. This
implied that the ministry had been corrupt and systematically so, under
the control of Mr. Liang Shih-yi. Outsiders watched for indications of
how that astute manager would handle the new opposition.
Mr. Yeh Kung-cho, able and expert, had been chief of the Railway
Bureau; he became a vice minister, but as he was a lieutenant of Liang
Shih-yi's, it was understood that this position would probably be an
empty dignity. A friend of Mr. Liang Tun-yen's, a highly respected
engineer of American education, was appointed as the other vice
minister. With no formal or open breach between the different factions,
maneuvring and counter-manoeuvring there undoubtedly was. The
influence of Mr. Liang Shih-yi, however, seemed not seriously shaken.
He had organized the Chinese railway experts and engineers in a railway
association, keeping in touch with them through Mr. Yeh Kung-cho. Thus
he held in his hands the main lines of influence. Also, he continued to
head the Bank of Communications, which is the fiscal agency for the
Railway Board. So again it seemed that the opposition could not get at
the source of this unusual man's power.
Mr. Chow Tsu-chi, as Minister of Finance, warmly urged the idea that
the Americans, to whom the Government had shown itself so friendly,
reciprocate by making a loan to the Chinese Government. He planned a
loan of $40,000,000 for the purpose of refunding the entire floating
indebtedness of his government. Hopes had been entertained that the
Standard Oil Company would use its influence in bringing about such a
loan, but that company was not willing to go outside of the special
business of its contract with China. The option which had been given
to Mr. Gest had not yet resulted in any completed transaction in
the United States. So accustomed were the Chinese to the readiness
of any nationality which held important concessions, in turn to
support the Chinese Government financially, that they could not
understand how America, with professions of great friendship and just
now substantially favoured by the Chinese, should not be ready to
reciprocate. The soundness of the desire of the Americans to have every
transaction stand on its own bottom and not to use financial support as
a bait to obtain concessions, could, of course, be appreciated by the
Chinese. But at times their urgent needs made them impatient.
The news of the assassination at Sarajevo reached us on July 1st. As
this happened to be, though we did not then suspect it, the eve of a
terrible convulsion in which all accepted conditions of life, national
and international, were shattered and unsettled, I shall here insert
parts of the memorandum which I drew up for my guidance at this time:
It is evident that China finds herself in a critical situation, in
the sense that the fundamental character of her political life and
the direction of her political development are now being decided.
While a vast community living under a complicated social system,
which embodies the experience of thousands of years, cannot change
its methods of a sudden and will undoubtedly for a long time continue
to differ radically from Western political societies, yet it admits
of no doubt that a new era of development has begun and that certain
essential alternatives are being faced. Such alternatives are
the continued unity of the nation or its division; its continued
independence or the direct dominance of one or more foreign suzerains;
its commercial unity or its division into spheres of influence; the
tendency of its institutions of government, whether in the direction
of the absolutism of Russia and Japan, or the republicanism of the
United States; and the character of its educational and legal system,
either dominated by the ideas of America and England or of continental
Europe or Japan. From these, there also follow important alternatives
in industrial and commercial policy.
Under these circumstances, it is of great moment whether the Chinese
Government will remain free, with the assistance of influences
friendly to the development of China's nationality, to preserve the
unity of the Chinese State and to develop its institutions; or whether
its financial distress, combined with the plottings of a revolutionary
opposition, will deliver it into the hands of those who are not
favourable to the growth of China's national life.
The United States of America enjoys a position of great advantage
for assisting the Chinese Government and influencing its development
in the direction of free national life. The lack of a desire for
political interference, the real sympathy felt in America with the
strivings of the Chinese people, and cultural, educational, and
charitable work unselfishly performed, have given the United States
the undivided confidence of China. It is certainly true that the
Chinese people are anxious to follow in the footsteps of the United
States if they may only be permitted to do so.
Any development of enterprise which increases American commercial
interest in China is incidentally favourable to Chinese independence;
because, through the enlistment of neutral interests, the desire
of outsiders for political control can be counterbalanced. The
organizing of an American investment bank and similar agencies for the
development of American commerce in China, participation of American
capital in railway building, and the development of mines and oil
fields through American companies and under American business methods
would all be welcomed by China as the strengthening of a favourable
influence. Different Chinese ministers have repeatedly said to me
that at this time China is in need of the active assistance of those
who are amicably disposed and that China is willing to do her part in
coöperating, and in extending advantages, if only such active support
is forthcoming. If American capital, industry, and commerce are not
ready at this time to give that comparatively slight assistance to
China which the situation calls for, it is likely that American action
in China in the future will be on a far more modest basis than present
possibilities promise.
The war, of course, brought many changes in China. Much of the good
work which had been started was either destroyed or long delayed. It
marked the end of one phase of China's development.