Front matter (continued 2)

The President not only sent messengers and letters of cordial invitation, but he also rearranged the disposal of troops, with the result that bodies of troops upon which Yuan Shih-kai could rely were drawn around Wuchang with a constantly shortening radius. Finally in December General Li realized that he had no alternative. He therefore informed the latest messenger of Tuan that he could no longer resist the repeated cordial invitations, and that while he was sharply conscious of his shortcomings, he would endeavour to assist the chief magistrate to the limit of his powers.

He came to Peking in December, without troops of his own. The President received him with the greatest cordiality, embracing him and vowing that now the burden of responsibility was lightened for him; that he must have his great associate and friend always close at hand, where he could consult with him daily, in fact, any hour of the day and night; he therefore invited General Li to make his home close to the palace of Yuan, namely, on the little island in the South Lake in whose many-coloured, gracefully formed halls, Emperor Kwang Hsu was for many years kept a prisoner by the Empress Dowager.

There General Li took his residence, knowing that his great friend the first magistrate could not spare his presence at any hour of day or night.

The question arose whether the foreign representatives should call on the newly arrived Vice-President. The Government tentatively suggested that as hosts it might be proper for them to make the first call. Whether or not this was done in the expectation that the suggestion would not be accepted, it certainly was not the desire of Yuan Shih-kai to encourage close relations between the Vice-President and any outsiders.

Although Yuan Shih-kai still allowed the rump parliament to exist, he had undoubtedly decided at this time to dispose of it entirely. A ready pretext was at hand, because, with the expulsion of the Kuo Min Tang, the parliament no longer could muster a quorum. On November 13th, it was announced that a central administrative conference would be created to act in an advisory capacity in matters of government. It was plain that this body was intended to displace parliament. The list of nominees was made up mostly of men of the old régime, literati and ex-officials—the kind known among the Chinese as "skeletons"; a group of high standing and very good reputation, but from which little constructive action could be expected. Among them was a very effective orator, Ma Liang, a member of the Roman Catholic Church. He was a dignified, elderly man, who came to see me to talk about reforestation and colonization of outlying regions. His contact with Western civilization had been through the Jesuit College at Zikawei. Another member was Dr. Yen Fu, who had won reputation by translating a large number of scientific works into Chinese and creating a modern scientific terminology in Chinese. Among other councillors with whom I became well acquainted was Hsu Shih-chang, later President of China, and Li Ching-hsi, a nephew of Li Hung-chang, who had been Viceroy of Yunnan under the Empire.

Dr. Frank J. Goodnow, the American Constitutional Advisor, often discussed Chinese political affairs with me. It was his impression that parliament had attempted to take over too much of Western political practice without sufficiently considering its adaptability to Chinese uses. He believed that the administrative power should not be subject to constant interference by parliament, and that China was not yet ready for the cabinet system. He therefore held a rather conservative view favouring gradual development in the direction of Western institutions, but not a wholesale adoption of the same. The Yuan Shih-kai government took advantage of this attitude of the American expert to give out, whenever it proposed a new arrangement for strengthening its hold, that the matter had the approval of Doctor Goodnow and other foreign advisers. However, these authorities were not really consulted; that is, they were not brought into the important conferences, nor given the chance to coöperate in the formulation of vital projects. As a matter of form they were, of course, "consulted"—but usually after the decisions had been made. They were informed of what had been agreed upon; and then it was announced that the approval of the advisers had been secured. Another example of the bland self-sufficiency of Yuan Shih-kai and his government. They believed in themselves; they considered that they were accountable only to themselves; they had fundamentally the monarchic point of view in all departments of public service.

CHAPTER V

WITH MEN WHO WATCH POLITICS

I found in Peking several good observers of political life, especially Dr. George Morrison, Mr. B. Lenox Simpson, and Mr. W.H. Donald. All three had the training in observation and judgment which comes from writing for responsible papers. Doctor Morrison was gifted with a memory for details. Thus, he would say: "When I first visited New York I lived in a little hall room on the third floor of 157 East Twenty-ninth Street, with a landlady whose name was Simkins, who had green eyes and a red nose and who charged me two dollars a week for my room." He delighted in detailing minutely his daily doings. His sense of infinite detail combined with his remarkable memory made Doctor Morrison an encyclopædia of information about Chinese public men. He knew their careers, their foibles and ambitions, and their personal relationships. Like most British in China he was animated with a sincere wish to see the Chinese get ahead, and was distressed by the obstacles which a change for the better encountered at every step. His own mind was of the analytical and critical type rather than the constructive, and his greatest services were rendered as interpreter of events and in giving to public men and the people a clear idea of the significance of complex Chinese situations. "I am annoyed," he would say, "because kindly old ladies persistently identify me with the missionary Morrison who died in 1857."

Mr. Donald's acquaintance with Chinese affairs had come through close contact with the leaders of new China, with whom he coöperated intimately in their military and political campaigns. He had a heart for the Chinese, as if they had been his own people. He worried about their troubles and fought their fights. Mr. Simpson, the noted writer who uses the pen name "Putnam Weale," began active life as a member of the Maritime Customs service, but he soon resigned, to devote himself wholly to literary work. His masterly works of political analysis were written in the period of the Russo-Japanese War, although his best-known book came a little earlier—a book which long earned him the ill-will and suspicion of many of the legations in Peking. He himself disavows giving in "Indiscreet Letters from Peking" a recital of actual facts. He told me: "I wished to give the psychology of a siege, selecting from the abundant material significant facts and expressions, but I was not in any sense attempting to chronicle events and personal actions."

Mr. Simpson has also written a series of novels dealing with Chinese life. The short stories are the best; the longer ones, while interesting in description and clever in dialogue, lack that intuitive power of characterization which is found in the greatest novels, though "Wang the Ninth" which has recently come from the press is an admirable study of Chinese psychology and an excellent story as well. Though his playful and cynical mind often led people to judge that he was working solely for literary effect, it seemed to me he had a deep appreciation of what China should mean to the world; he also had real sympathy for the Chinese, and desired in every way to help them to realize the great promise of their country and people. As a conversationalist Mr. Simpson resembled Macaulay, in that his interludes of silence were infrequent. Notwithstanding the brilliance of this conversation, luncheon parties of men occasionally seemed to become restive under a monologue which gave few others a chance to wedge in a word.

Aside from these three British writers, many other men were following with intelligent interest the course of events. Bishop Bashford, gifted with a broad and statesmanlike mind, could always be trusted to give passing events significant interpretations. Dr. W.A.P. Martin had then reached an age at which the individual details of current affairs no longer interested him. His intimate friend, Dr. Arthur H. Smith—a rarely brilliant extemporaneous speaker—was full of witty and incisive observations, often deeply pessimistic, though tempered with a deep friendship for the Chinese people.

Among the members of the diplomatic corps it was chiefly the Chinese secretaries who busied themselves, out of professional interest with the details of Chinese affairs, although they did not in all cases exhibit a broad grasp of the situation.

Mr. Willys R. Peck, Chinese secretary of the American Legation, born in China, had a complete mastery of the difficult language of the country. He could use it with a colloquial ease that contrasted most pleasantly with the stilted and stiff enunciation of the ordinary foreigner speaking Chinese. His tact in intercourse with the Chinese and his judgment on character and political affairs could be relied on. Mr. Peck took the place of Mr. E.T. Williams, who was called to Washington as chief of the Far Eastern Division in the State Department. I considered it great good fortune that there should be at the Department a man so experienced and so familiar with Chinese affairs.

It was my good fortune to have as first secretary of the legation a man exceptionally qualified to cope with the difficulties and intricacies of Chinese affairs. Not only are these affairs infinitely complex in themselves, but they have been overlaid through many decades with a web of foreign treaty provisions, which makes them still more baffling to the stranger who tackles them. But Mr. J.V.A. MacMurray, the secretary, was possessed of a keenly analytical, legally trained mind which was able to cut through the most hopelessly tangled snarl of local custom, national law, international agreement, and general equity. Also his interest in things Chinese was so deep and genuine that his researches were never perfunctory. The son of a soldier, he had an almost religious devotion to the idea of public service.

Among the ministers themselves, Sir John Jordan, actual Dean of the Diplomatic Corps, was through long experience and careful attention to affairs most fitted to speak with authority on things Chinese. I was immediately greatly attracted to him and formed with him a close acquaintanceship. This led to constant coöperation throughout the difficult years that lay ahead. Sir John was a man of unusually long and varied experience in China. He came first to the consular service, then became minister resident in Korea, and his forty years of official work had given him complete intimacy with Chinese affairs. Although he speaks Chinese with fluency, in official interviews and conversations he was always accompanied by his Chinese secretary and expressed himself formally in English. As a matter of fact, few diplomats ever use the Chinese language in official conversation. Because of its infinite shades of meaning it is a complex and rather unprecise medium, therefore misunderstandings are more readily avoided through the concurrent use of another language. While Sir John understood Chinese character and affairs and was sympathetic with the country in which his life work had been spent, yet there dwelt in him no spirit of easy compliance. When he considered it necessary, he could insist so strongly and so emphatically upon the action he desired taken that the Chinese often thought of him as harsh and unrelenting: yet they always respected his essentially English spirit of fairness and straightforwardness.

Other colleagues with whom close relationships grew up were Don Luis Pastor, the Spanish minister, a gentleman thoroughly American in his ways and familiar through long residence in Washington with our affairs; and Count Sforza, the Italian minister. To the latter China seemed more or less a place of exile; he appeared bored and only moderately interested in the affairs about him. But his legation—with Countess Sforza, Madame Varè, whose Lombard beauty did not suggest her Scotch origin; the Marquise Denti, with her quizzical, Mona Lisa-like haunting smile, concealing great ennui; and the entirely girlish and playful Countess Zavagli, a figure which might have stepped out of a Watteau—was a most charming social centre. M. Beelaerts van Blokland, the Netherlands minister, a man of clear-thinking, keen mind, and great reasonableness, and the Austrian minister, M. von Rosthorn, a profound Chinese scholar, who was then working on a Chinese history, were men of whom I saw much during these years.

There were few sinologists in Peking at this time. The successive Chinese secretaries of the American Legation ranked high in this respect. Of resident sinologists the most noted, Mr. (later Sir) Edward Backhouse was a recluse, who never allowed himself to be seen in the company of other people of a Western race. At the only period when I had long conversations with him I found him much disturbed by wild rumours current in the Chinese quarter to which I could not attach any weight. Others whose knowledge of Chinese was exceptional were Mr. Sidney Mayers, representative of the British China Corporation, who had formerly been in the consular service; Doctor Gattrell, who had acted as secretary of the American Group; Mr. W.B. Pettus, the director of the Peking Language School; Mr. Simpson, already mentioned; and several missionaries and professors at Peking University.

Of the Chinese there were, of course, many with whom I could profitably discuss the events of the day and gather suggestions and interpretations of value. With all these men I conversed upon events, relying for my information not on rumours or reports, but on the facts which I could learn through the men directly concerned; or through others well informed. The opinion which I formed from such various sources about the political condition of China at this time, the spring of 1914, may be stated as follows:

The political authority of the Central Government in China rested upon military organization. Other sources of authority, such as customary submission on the one hand, and the support based upon the intelligent coöperation of all classes of citizens in the achievement of the purposes of government in accordance with public opinion on the other, were only of secondary influence. It was therefore important to inquire whether the military power was so organized as to afford a stabilizing support to public authority. This did not seem to be the case.

In the first place, the existence of a large army of doubtful efficiency was in itself an evil, considering the then limited resources of the Chinese State, and the fact that any attempt to reduce the military forces to more reasonable dimensions met with stubborn opposition. Whenever troops were disbanded they showed no tendency to return to useful occupations: the ex-soldiers desired only to continue to live upon the country, and, no longer serving the established authority, they joined bandit gangs, rendering the interior of the majority of the provinces insecure.

The weakness of the army was strikingly demonstrated whenever an attempt was made to use it to defend the country against either external or internal enemies. In the campaign against the Mongols, the Chinese troops had failed entirely; even within the country itself, this huge army was not able to insure the fulfilment of that first duty of a government—the protection of the lives and property of its citizens.

In the provinces of Honan and Hupei brigands, led by a person known as "White Wolf," had for months been terrifying the population; ravaging the countryside; sacking walled cities; murdering and outraging the population; and in a number of instances had killed foreigners. Thus far the army had been powerless to suppress these brigands; in fact, evidence was at hand that the troops had repeatedly been so lax and remiss that the only explanation of their conduct would seem to lie in a secret connivance at the brigandage, and lack of coöperation among the commanders of the troops.

As the authority of the Central Government was commensurate with its control over the tutuhs (tuchuns), or military governors, the attitude of the latter toward the President had to be carefully watched; and it was causing no small uneasiness that there did not seem to be perfect agreement among these pillars of authority in the various provinces; thus, friction had recently been reported between General Tuan Chi-jui, the Minister of War, who was the acting tutuh of Hupei, and General Feng Kuo-chang, the tutuh of Kiangsu, two of the most powerful supporters of the President.

None of the provinces of China, during the preceding three months, had been free from brigandage, attempted rebellion, troubles resulting from the disbanding of troops, and local riots. Conditions were worst in the provinces of Honan and Hupei, in which the bands of "White Wolf" are operating.

These bands had assumed a distinctly anti-foreign attitude. In Kansu there were constant Mohammedan uprisings, related to the open rebellion in Tibet and Mongolia. Bandit movements had also occurred in the provinces of Shansi, Shensi, Szechuan (super-added to revolts of the troops), Anhui, Kiangsi, Hunan, Fukien, Kweichow, Yunnan, and Kwangtung. Chekiang, Kwangsi, Shantung, and Chihli had been the least molested.

While the Government had been unable to fulfil its duty of protecting the lives and property of its citizens, it was also unable to exercise the elementary power of providing, through taxation, the means for its own support. The maintenance of the army had eaten up the available means and it had not been possible to secure sufficient money from the provinces to meet the ordinary running expenses of the Central Government. The remarkable resisting power of China is illustrated by the fact that, notwithstanding the conditions of rebellion and political unrest which characterized the year 1913, general commerce remained so active that the collections of the Customs and of the Salt Gabelle exceeded those of any previous year. These two sources of revenue were sufficient to provide for the interest payments and amortization of the long-term foreign loans then contracted; their administration, under foreign control, had secured to the Central Government the funds to meet these obligations and to avoid open bankruptcy.

All other forms of taxation were disorganized. The collection of the land tax was in many places discontinued; records had been destroyed, or the population took an attitude hostile to its collection. The proceeds of the likin, as far as collected, were retained for provincial use. Altogether, the Central Government received from the provinces not more than 10 per cent. of the estimated income from these sources under the last Imperial Budget for 1912.

Meanwhile, the Central Government had been living from hand to mouth, using the proceeds of foreign loans for administrative purposes, and was kept going by taking cash advances upon foreign loan contracts made for furnishing materials and for various concessions. In this way the future had been discounted to a dangerous extent.

The weakness of the financial administration of the Government was found in all other branches of its activities. There was little evidence of constructive capacity.

In the ministries and departments of the Central Government the greatest disorganization was apparent. In dealing with technical questions the officials were often entirely at sea, not being trained themselves in these matters, nor willing to make real use of the many advisers who were engaged by the Government; there was no adequate system of accounting; the departmental records were not well kept; frequently the existence of a transaction was not known to the officials most nearly concerned; past transactions, fully consummated, had been forgotten; there was no centralization of governmental knowledge; so a great deal of the public business was transacted in a haphazard way, leading to a helpless opportunism of doing the things most strongly urged and of grasping at small immediate advantages at the cost of engagements long to be regretted.

Ambitious schemes of general policy had been brought up, and elaborate regulations promulgated, to all of which little attention was subsequently paid. On the other hand, there had scarcely been one single concrete result obtained in constructive work.

The metropolitan Province of Chihli had been quiet and peaceful since the outbreak of 1912. The Government here certainly had sufficient authority to introduce constructive reforms, and the general conditions for such action in this province had been relatively most favourable. But not even in the case of Chihli Province had the taxation system been rendered efficient; no efficient auditing methods had been introduced in practice, although systems of auditing control had been promulgated; educational institutions had been allowed to run down: in short, under the most favourable conditions, no constructive work had been accomplished.

Nearly all attempts to do something of a constructive nature had been immediately associated with foreign loans, often involving a cash advance to the Government. It might, of course, be said that the great difficulty of the Chinese Government was exactly that it lacked the funds for carrying out constructive work; and that, therefore, only such lines of improvement could be followed for which it had been possible to secure foreign loans.

This, however, was only partly true. A great many reforms could have been accomplished without the increase of expenditure; indeed, they would have resulted in a reduction of outlay. The fact seemed to be that the Central Government, realizing how important foreign financial support had been to it during the Revolution of 1913, was anxious to secure more and more funds from abroad without counting the ultimate cost.

An opportunity for obtaining from abroad large sums of money, far beyond any amount ever before dealt with by Chinese officials and merchants, in itself had an unsettling effect upon methods of public business. The old caution and economy, which kept the public debt within narrow limits, had given way to a readiness to obtain funds from abroad in enormous amounts, without apparently the realization of the burden imposed upon China by way of the necessity of return in the future through the results of labour and sacrifice of millions of people.

Nor had the old system, under which the inadequate salaries of officials had ordinarily to be supplemented by extraneous illicit gains, given way to a more efficient and business-like organization of the public service under which officials would be able to devote their undivided attention to the accomplishment of their regular allotted tasks without spending their energy in contriving additional means of obtaining income.

In the case of certain classes of officials, the Government had endeavoured to place their salaries at a figure sufficient to render them independent of these practices; but the resources of the Government were not adequate to enable it at once to place the entire public service upon a basis of individual independence. It was also true that certain among the closest advisers of the President were commonly believed to have used their positions for the purpose of accumulating vast private fortunes—a belief which, whether justified or not, must be counted with in determining the standing of the Government as enjoyed throughout the country.

Thus the old hostility and lack of confidence, which formerly characterized the relations between merchants and officials, continued under the new system.

Through the dissolution of the Parliament, the Government had destroyed an organ which might, in the course of time, have established relations of confidence between the great middle class of China and the Government.

As a statesman, the President emphasized in the first place the requirements of order and of authority. To him it seemed that Parliament, with its free discussion, with its opportunity for forming political factions, opposing the men in authority, stood in the way of the establishment of a lasting system of legal order. He, therefore, dissolved first the national parliament, then the assemblies of the provinces, and finally the local self-governing bodies.

In each case inefficiency was justly complained of. The men in the parliamentary bodies had often been self-seeking, factional, and unpractical. But the President seemed to have no perception of the true value of parliamentary action as a basis of public authority; he considered opposition to the Government synonymous with opposition to lawful authority. And in his ideas upon the reconstitution of Parliament, as far as they had been announced, two main principles dominated: first, that only men of mature experience and of conservative ideas should be selected; and secondly, that the activities of Parliament should be confined to discussing and giving advice upon policies already determined upon by the Administration.

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.