Chapter XXXI: Awakened Interest in America 567 (6)

This of course is only a beginning. On account of poor transportation by rail and canal, China imports about 2,000,000 tons of Japanese coal, and Hongkong and Shanghai import Australian and Welsh coal, some of it for admiralty purposes. The largest anthracite mines now open are, in their order, in Shansi, Honan, Pechili and Shangtung provinces; the bituminous as far as mined, in their order, in Pechili, Kiangsi, Shensi, Kansu, Shangtung, Szechuen, Yunnan, Kweichou, Hunan and Kwangsi provinces. Over a million tons of lignite are mined yearly in Manchuria. England has a coal supply for only one hundred and fifty years, and America’s supply will not last much longer. This means that China will step full-panoplied into the coal and iron arena with plethoric supplies which, with her population, will make her probably the world’s richest nation, in material resources, if not in brains. The first shipment of Chinese coal for America occurred in July, 1910, when the steamer _Inverkip_ called at Ching Wang Tao on the Gulf of Pechili and loaded the famous Kaiping coal for San Francisco. The British Peking Syndicate, mining anthracite coal in Shansi province, purposes to build colliers to take coal to America. Coal costs at the mines only seventy-five cents a ton, and with machinery opulent China could reduce this cost. It is a knowledge of the potentiality of this great wealth that kindled some of the fire of the October, 1911, revolution, and led the provincial assemblies of Szechuen and Hupeh to say: “China’s mines and transportation franchises shall not be passed over to foreigners.” The Peking Syndicate, mainly British, operating hard coal and iron mines in Shansi, is capitalized at $6,000,000. The Chinese Engineering and Mining Company has a capital of $5,000,000. It has for many years operated the famous Kaiping coal mines north of Tientsin. This is the company which employed Mr. Kinder, the British engineer, who surreptitiously built the “Rocket,” the first locomotive used continuously in China.

A wonderful tin mine has been worked for many years at Kuo Chao, in the southeast corner of Yunnan province, the tin being exported through Mengtsu. It used to seek Hongkong via the Red River and Haiphong and sometimes via Nanning, the West River and Canton. The costly narrow gage railway which the French have run from Haiphong to Yunnan now catches nearly all of this product. There is much complaint regarding rates, which are based “on all the traffic will bear,” and it is proposed by the Chinese to build a railway to Nanning, and send the tin the remainder of the way by junk and launch. This rich mine produces about 15,000,000 pounds a year, valued at nearly $6,000,000, and now that German machinery and German experts have been introduced by the Chinese miners, a greater and a purer product will result. Until recently the product had to be resmelted at Hongkong. Of course, great as this product is, the Straits Settlements still lead in tin mining. There are 30,000 miners (mostly boys, on account of the narrow unhealthy shafts) at Kuo Chao, and owners, miners, smelters, porters and the government representatives all have their compulsory labor unions. This protection of labor must be copied in all countries, the government forcing the laborer to protect himself, and making the industry share in the cost of government supervision. Charcoal is used as fuel at the clay smelters, and the bellows are hand-worked.

As is well known, Southern China is cursed with white ants and humidity. The former eat the wooden beams, and the latter rusts iron beams. Ceilings have to be perforated to admit air and light between the floors so as to keep down the ravages of the white ant. However, Southern China is copying Hongkong’s example and risking metal beams and ceilings, the trouble being to find a suitable protective paint. China has graphite, lead for oxides, carbon, silica, and oils in abundance, and she will in time manufacture her own protective paints, but we shall supply the machinery. Brass hardware is used instead of iron on account of the humidity.

The important copper mines of Yunnan were worked as a Manchu monopoly. Hunan is perhaps the next richest province, with Szechuen, Shansi and Kweichou following, although every province has copper. Nickel mines exist in Yunnan, Kwangsi and other southern provinces.

The first engagement between the two immense sugar refineries (Butterfield’s and Jardine’s) at Hongkong and the great refiners of Formosa has been won by the latter, which were helped until recently by indirect Japanese subsidies. When the Sugar Trust, after the government fine and municipal suit, jumped the price two cents a pound, in 1911, if America had a Price Board at the head of affairs to induce Congress to act as was done in the coal shortage, Formosa and Hongkong sugar could have flooded the country until the price was restored to the five cents rate, or about that rate. The immense Hongkong refineries (Taikoo and China Sugar) use Javan raw sugar. The Formosa refineries use their local raw. They not only supply Japan under a protective tariff, but have enough to supply China. Formosa produces 600,000,000 pounds a year, and could handily double the amount. America has the Louisiana, Hawaii and Philippine cane fields to protect, it is true, but if sugar rises over five and one-half cents a pound retail, the insistent knockers at the high door, Formosan and Hongkong sugars, might be allowed to come in, as the tariff-enslaved countries are going to heed the new cry that food, clothing and building material must be duty-free, or nearly so.

Flake and amorphous graphite are mined in the Ping An section of northern Korea, and Japan will, therefore, enter into the manufacture of crucibles, lubricants, pencils and steel-paint.

China continues to use the earthenware jar and the paper bottle, reinforced with bamboo withes, to transport her valuable nut, bean and seed oils. Sometimes staves are brought in by foreigners and set up at Hankau, Newchwang, etc., in barrels, but it would seem that tin would eventually come into use, with the idea of conserving wood. The earthenware and bamboo paper containers are the ideal from a conservation point of view, but they are too tender and risky for movement abroad. The Hanyang plant will probably have the first tinware factory.

The royalty imposed in Korea for mining by the Japanese government is thirty per cent. of the net revenue. The Chinese royalty is twenty-five per cent. in general, plus an additional twenty per cent. in the case of precious stones, ten per cent. in gold, silver and quicksilver mines; five per cent. in coal and iron; and export duty of five per cent., and likin (inland customs and provincial transportation tax, literally “cash a catty”) two per cent. As China’s mines are more lucrative, this royalty is not so onerous as the comparison would seem to make it, and the tendency is to reduce it, under the new government.

The ship-building and dock facilities of the Far East have fully risen to the demands. The three largest are at Hongkong, all British owned. The Hongkong and Whampoa Dock Company on the China mainland of Hongkong (Kowloon), and at Aberdeen on Hongkong Island, over the mountains from the city of Victoria, has six docks, one of them seven hundred feet long on the keel blocks. The company builds ships, locomotives, cars, bridges, engines, motor-boats, boilers, machinery, and, indeed, anything after the steel is furnished to them, by Britain chiefly.

The Taikoo Dock (Butterfield & Swire) on the eastern end of Hongkong Island has a dock 787 feet long, and is also equipped to turn out the largest ships.

The Admiralty Dock of the British Navy on Hongkong Island was built from shore in the center of the city of Victoria, into the water by reclamation, instead of being cut out of the rock, as was done with the other docks. It is equipped to handle large battleships, and can be used by the mercantile marine in an emergency.

The Tanjong Pagar Dock at Singapore is equipped to handle battleships and maritime vessels. It is controlled by the Crown Colony.

The Mitsu Bishi Dock, cut out of the high rock at Nagasaki, has one dock 722 feet long. This company built the new 19,000 tons displacement ships, oil burners, of the Toyo Kisen Kaisha for the San Francisco route, and like the Hongkong and Whampoa Dock it always has large salvage steamers ready to go to the rescue of wrecks, now that wireless has been established in the Orient. There have been some wonderful expeditions of help recently on the romantic seas of the Far East.

The Kawasaki Dock Company at Dairen, South Manchuria, has a dock 380 feet long, together with the usual machine and boiler shops. There is a commercial dock at Kobe, the Harima Dock at Oh, and large government docks and arsenals at Yokosuka (near Yokohama), Kure and Sasebo. The last named dock, 777 feet long, built the dreadnought battleship _Kawachi_, 21,000 tons.

The Kiangnan Dock and Engineering Works, Shanghai (Chinese), built the imperial yacht once owned by Prince Tsui, and small cruisers which the republicans seized. It has a dock 575 feet long on the blocks, and has the usual machine and boiler shops. The Yangtzepoo Dock at Shanghai (Chinese and foreign owned) has a dock 455 feet long on the blocks.

The Shanghai Dock and Engineering Company (Chinese and foreign) has docks 560 feet long, where some of the vessels for the Philippine government were built in 1912.

The Tsingtauer Werft, owned by the Germans, has a floating dock at Tsingtau, Kiaochou, Shangtung, China, lifting vessels 460 feet long, and there is the immense floating dock, “Dewey”, of the American navy, at Cavite, Manila, which does not refuse to do a friendly act for maritime commerce, when necessary, if the ships are not over 600 feet long.

The French have small docks at Haiphong and Saigon. It will be seen that as far as taking care of battleships is concerned, only Britain and Japan have more than one string to the bow, Britain being easily in the lead. America has only one dock, and that a floating one. It could not lift a dreadnought, and therefore America has in the meantime wisely moved her first defense line, as I think the writer, Thomas Millard, a Shanghai American, recommended in his books, back to Pearl Harbor, Hawaii, counting on Cavite, Philippines, as a picket post. Germany at Kiaochou, and Russia at Vladivostok are as yet out of the running, with inferior docking accommodations. The Russians are spending $10,000,000 in Vladivostok on a floating dock, ice-breakers and a wharf. As far as America is concerned, she can count on Britain. Dewey fitted out at Mirs Bay, Hongkong, despite all conventions. As Commander Tatnall said at Taku in China, “Blood is thicker than water,” which was reciprocated by Admiral Seymour at Manila. When Admiral Diedrichs asked what the British would do if the Germans fired on the Americans, Seymour replied: “You had better ask Admiral Dewey, who is informed.” That is the story that goes the rounds in the East, and if it is not wholly true in fact, it is so potentially.

There is a growing number of smaller Chinese docks, machine shops and ways. Inland at the Pinghsiang colliery on the borders of Kiangsi and Hunan provinces, China has machine shops fitted to turn out almost anything, and the Hanyang Steel Works, across from Hankau, have been already described. Railway shops are opening up everywhere, and do creditable work, especially the North China railway at Tongshan; the Shanghai & Nanking Railway shops at Wusung, near Shanghai, and the Hongkong and Whompoa Dock shops. The Vulcan Iron Works at Shanghai construct railway and street-cars.

The immense cement works which are already in operation are the Indo-China Cement Company at Haiphong, in Tonquin (French); Tayeh, in Hupeh province (Chinese); Chee Hsin Cement Company, at Tongshan, near Tientsin (Chinese); Green Island Cement Company, at Macao and Hongkong (British and Chinese). Half of the many bridges that are being erected for the immense transportation development throughout China and the Philippines are made of this new concrete.

The Chinese furniture makers of Ningpo, Yunnan, Shanghai, Hongkong and Canton, are famous. They copy foreign models and also execute the native designs. The artistic cabinet work of Li Kwong Loong can be seen in the Shanghai and Hongkong clubs, in the Hongkong Hotel, and in Watson’s Store at Hongkong. The best effects are in the prized teakwood, which is becoming the rage in San Francisco. Vantine’s and the Metropolitan Museum, New York, exhibit specimens of the careful and strong handwork of these Chippendales of the land of Han. China can take care of herself in furniture making if time is not of the “essence of importance.” Loving art, I would not recommend sending her our machinery for furniture, but if government schools and offices are to be supplied quickly, I suppose we shall be compelled to make esthetics surrender to utility here also!

The Germans plan to meet the leadership of America, Britain and Japan in technical instruction in China. The British and Americans control the Tongshan Engineering School at Tongshan, and the Americans are powerful in the Pei Yang Science College at Tientsin. At Mukden the Japanese are influential. At the mechanical shops at Hongkong, Shanghai and Hankau the British are influential. The Germans plan, with the aid of Krupps, their foreign office and the Deutsche Asiatische Bank, to establish a central engineering college at Tsingtau, Shangtung province, with branches possibly at Hankau and Kaiphong. They believe that the graduates will order German machinery and material for China’s coming prodigious development.

The American government has included in its humanitarian pure food laws a prohibition on the importation of green tea, which is colored in the pot over the fire with Prussian blue, indigo, talc and gypsum. This changes the leaf from its flat state and dull yellow and green color to a ball state, colored lustrous emerald, and increases the aromatic flavor slightly. The Chinese complain of having to pot-dry the green tea longer to preserve it under the new rule, and moreover old custom dies hard in China as far as agriculture is concerned. The American government has done a world service in improving the quality of the ideal beverage, and the Chinese, who do things by wholesale, will insist in time that Australia and England, the champion tea-drinkers per capita, though not in bulk, shall take what the Americans have made “ploper fashion.” There were amusing instances of cousin John’s habit of “bluffing” laws on the maxim followed in more lands than in China, “If laws interfere with your business, why laws?” He heard of the May 1, 1912, law of the Americans, but he sent his crop over just the same, saying, “Surely America won’t put it back on my hands, as I haven’t got used to the law yet; like Mencius’ thief, I can only get used to law gradually!” Had America relented, John would have seen that his firers never got used to our laws.

China formulated a patent and copyright office at Peking in 1905, but it has not yet reached efficiency for various reasons, one being that the states’ rights feeling is stronger than the centralized government movement up to date. In the meantime the district or municipal taotai will, upon application of the foreign consul, issue a proclamation prohibiting all Chinese within his jurisdiction from manufacturing, selling or consuming property which is pirated; and such theft and infringement are considered unpardonable by the great body of highly moral Chinese guild merchants, as compared with the lack of similar honor in the first days of modernized commercial Japan. Prosecutions have been actually carried on in the mixed courts of foreign consuls and Chinese taotais against Chinese dealers for handling goods made in Europe and imported into China under marks similar to American marks registered with the taotai, and the dealers, whether ignorant or not, have been convicted and severely punished. Until China is able to establish an efficient patent department the method that should be followed is to register the mark or patent at the consul’s and taotai’s office in each province and port where the goods are to be sold. This will answer very satisfactorily until the growth of trade, transportation and machinery of government make the central government more familiar with modern business methods and international law. It is important in China and absolutely essential in Japan for the foreigner to register his patent promptly, for a pirate may precede him and cause irrevocable loss, in Japan at least.

I want to portray a Chinese character as a type of one interesting and powerful set of men with whom the West will now come in contact. Ah Chuk (I shall call that his name for present purposes) was a Cantonese about fifty-five years of age, though he looked much older because of his parchment face. He had few of his teeth, because he lived in the days before the advent of foreign-trained dentists. In his youth he did not fear to strike. His race were the men who had set in motion the greatest rebellion ever known, the Taiping scourge. My patriotic and legal duty was to obey the law in spirit and in letter, and in addition, under no circumstances to lose temper, but to treat Chuk with unfailing manners. Chuk was the only Chinese whom I ever knew who disobeyed his Confucian code of flowery courtesy (Li). He hated me, as he bitterly hated all who firmly withstood him, and he showed his feelings on every occasion. His gods were not Buddha, but money and power. On one occasion he said: “I can get you a Chinese slave girl for four hundred dollars.” I replied: “You insult me, Chuk.” He hissed, “I meant to.” He asked me why I could not obey the letter of the law and not the spirit, and I told him that an Occidental corporation employé, like the soldier, was expected to be absolutely loyal to orders. He said I was a fool because I made a god of conscience, instead of expediency; that I had no tact. I replied by quoting their maxim; “Tact is the discounting of principle in the mart of expediency.”

He feared neither the American, British or Chinese governments, nor the rich corporation. He corrupted foreign consulates in the old days when forged citizenship certificates were not unknown. He bullied the Canton viceroy. He was lord over half a dozen valleys and a hundred hamlets of Kwangtung province, whose inhabitants were his slaves, because they had signed bonds of $1,000 each for every Chinese whom he safely got into that Eldorado, America. He did not press the man in America any more than he would attempt to press a man in Mars. He pressed his father, his relatives in Kwangtung, who were on the bond also, for the payment of the $1,000, and it took the son in America twenty years to pay the money and the heavy interest. With his foot on the sacred bones of his grandfather he held the grandson in America in constant fear.

He was lord of the underground routes which ran to South Africa, America, Australia, Mexico, Canada and wherever Chinese laborers are not received free. He seldom dressed well; it did not do in those days to look opulent in China, and besides American inspectors might suspect a well-dressed dealer in contract slaves. His voice, unlike the usual pliable voice of his race, was deep in his raucous throat. He would not fear to take life if he had a chance in the lonely walks of his province, if his opponent was a strong obstacle to his worship of his two gods, money and power. He could not get in as many as he wanted by the direct route, so he determined to institute the first Chinese trans-Pacific steamship company, crossing the Pacific to Mexico. I told him that he never could get the money, as Queen’s Road, Hongkong, was a long way from Wall Street; that he would sink a million of the money of his beloved countrymen. He got the money from the Chinese, intensely conservative as they were, which proved the power of his persuasion, and he sank it all in two years. He could not be drawn into much expression by me, though he could speak English well. I heard him, however, speaking like a Rooseveltian tornado of storm and lightning unto his own, and once to two foreigners in whom he trusted, because they had obeyed him at their risk, and he owned them by the bribes they had accepted. His will was of iron, unyielding. His persistency was as tireless as Napoleon’s, and his swift victories were many. He could live without sleep when he planned his campaigns. He would go anywhere and to anybody to accomplish his aims. He loved whispering. He cast looks which wielded men. He swept like a vulture on lambs. He struck at his opponents like a tiger. He was not a Manchu, but he was Manchuized in his confidence that the Oriental was superior to the foreigner. I shall never forget the time when he told me that he had “a white man working for him.” That white man was descended in the third generation from a brother of a president of America.

Chuk was not uncomfortable when he thus wore the crown. He ruled over his subject races of the West with all the assurance which Xerxes or Kublai Khan did. He could plot; he could bribe; he could threat; he could spend with a lavish hand. One time he would travel in state at home and abroad, and on another occasion incognito like a spy. He felt he was abler than any white man because he added the easier conscience of the Orient, which he called wisdom, to an ability equal to the white man’s, and a will just as imperious. He despised all religions as he said “conscience makes faint-hearts of us all.” He had no pity for his dupes or victims. He was a Cantonese Tippo Tib. I never know, when I am speaking to an American or Cuban Chinese, if he is not a slave of Chuk’s, remitting to his old father in Kwangtung province, who will in turn remit to Chuk or Chuk’s heirs, to pay off that $1,000 and usurious interest added. Chuk is a Cantonese example of the power which may come to a money lord who has decapitalized labor, which will never catch up with the principal. His profits on the real cost were 1,500 per cent. Not even a surveillance of communications could probe Chuk’s underground methods. Three insurmountable barriers interposed, the extent of the territory, the Chinese language, and the changing codes which he used. It would be as difficult as ferreting out a criminal in the Trastevere section of Rome, if for one reason alone, because the Trasteverans will not turn informers. Neither will the Chinese. Therefore, with espionage of communications and informing for bribes eliminated, a secret service on Chinese law breakers, as far as we are concerned, is as yet in many respects ineffective.

IV

FINANCE AND BUDGET IN CHINA

With a reformed system of tax collection the following budget is quite feasible, and will, without any greater pressure on the individual than at present, lift China out of the slough of despond.

REVENUE GOLD DOLLARS

Land tax, 400,000,000 acres cultivated, at 50c
a year $200,000,000

Salt monopoly 10,000,000

Maritime customs 50,000,000

Railway surplus, nationalized trunk lines 10,000,000

Fisheries, tobacco, samshu, mining, steamship,
bank, incorporation, telegraph and
other fees 50,000,000

Income tax 10,000,000
------------
$330,000,000

EXPENDITURE

Interest on foreign loans,--past, $200,000,000;
and in prospect, $200,000,000; total,
$400,000,000, at 4 per cent. $16,000,000

Civil service salaries, etc. 30,000,000

Army, a full division for each province,
100,000 men at $100 a year 10,000,000

Conservation, public works, repairing national
architecture, famine relief, etc 50,000,000

Navy for revenue purposes mainly, with one
dreadnought a year added 24,000,000

Education and crafts schools 100,000,000

Canals, railways, steamships, telegraph,
telephone, etc., extensions 100,000,000
------------
$330,000,000

This proposes $330,000,000 a year for 400,000,000 people, against Japan’s $350,000,000 a year for only 55,000,000 population. This plan wipes out the obnoxious opium and likin taxes. The taxes proposed are less than half per capita what poorer India is paying, and one-tenth of what Japan is paying, and so China would remain the lowest taxed nation on the earth. The outstanding government debt of China, even including the proposed four-nation loans of $50,000,000 gold for currency reform, and $50,000,000 for new Szechuen and Hunan province railways, is, as I have detailed elsewhere in this article, only £113,000,000, whereas the present government debt of Japan, with infinitely less resources and population, is £300,000,000, not to speak of Japan’s private industrial loans abroad, which would add another £60,000,000. India’s debt is £170,000,000. The tax proposed in China is so small that room is left for each province to charge a door and head tax of 25c each a year, bringing in an additional $100,000,000 gold for provincial revenues to take care of justice, provincial public works, etc. Municipalities could then raise their ordinary taxes in the usual way. All that is wanted in China is an honest audit, the end of nepotism, and a cessation of “shaking the pagoda tree” by peculating officials. The whole central and provincial tax would not amount to much over $1 a head a year, and the municipal taxes would not be any larger than $1 per capita. This would not be a burden to cause complaint or revolution. With the immense sum collected China would almost at once take her place as one of the mightiest of nations. Her credit would be enormous, and her opportunity for good the greatest in the world because of her wider ethnic connections. She would not need to raise her customs much above the present five per cent. ad valorem, and thus oppressive monopolies could not grow up in the land. Free trade would flow to her with its riches, as it flowed to Britain, and every man would have enough, and no man too much; certainly an ideal condition. This budget would provide a splendid army of well-paid men ($8 gold per man per month is abundant); 100,000 strong, able to throw back any invasion at once, and always ready to keep down piracy. Riot and strikes are not unpatriotic piracy; they are the localized suppuration of an economic distress that can be cured or forestalled in a democracy by other means than a soldiery, which we have found a failure in America and Britain. The new Chinese navy could add a new dreadnought battleship each year, and provide crews, yards, and a full revenue marine. Above all, education and transportation would be taken care of lavishly, and China would not need to beg at any one’s door for a loan. She would be a land of peace, because a total tax of $2 gold a year per capita can raise not the slightest discontent in any land.

The debt of the Chinese government, contracted before October 13, 1911, which debt the republicans recognize, is as follows:

AMOUNT AMOUNT
LOANS in £ Interest in £ DUE
7% silver loan, ’94 £490,500 1924

6% gold loan, ’95 800,000 1924

6% gold loan, ’95 333,400 1915

5% gold loan, ’96, from
France and Russia
for Chinese-Eastern
Railway 12,397,425 1933

4½% gold, ’98, Britain
and Germany
for railways 14,022,625 1933

5% gold railway loan 1,955,000 1933

5% gold (Boxer
indemnities, etc.) 52,500,000 1940

5% Shanghai-Nanking
railway 2,900,000 1915

5% Canton-Kowloon
railway 1,500,000 1920

5% Tientsin-Pukow
railway (British) 1,850,000 1918

5% Tientsin-Pukow
railway (German) 1,100,000 1918

5% Shanghai-Ningpo
railway 1,500,000 1918

5% Hukuang railways 1,500,000 1921
----------

Total gov’t debts--
China £92,848,950 £4,642,000
Japan 300,000,000 12,000,000
India 170,000,000
Italy 1,000,000,000
France 1,200,000,000
Britain 1,000,000,000
United States 200,000,000

If Japan returned to China the £35,000,000 indemnity coerced from her by the Shimonoseki treaty, the Chinese debt would be greatly reduced. This is Japan’s moral duty, especially if she is allowed by the nations to retain Formosa, Korea, and possibly part of Manchuria, all of which she plans to retain. Several of the European nations should follow America’s example and return the excess in the Boxer indemnities. The banking nations, as long as America and Britain retain their present high standard of altruism, will never again permit any power to wheedle an indemnity out of China.

The foreign and local banks operating in China are the following. I use gold dollars for the table:

CAPITAL
BANK PAID UP RESERVE

Hongkong and Shanghai Banking
Corporation $5,000,000 $15,000,000

International Banking Company
of America 3,250,000 3,250,000

Deutsche Asiatische Bank 5,500,000 3,000,000

Yokohama Specie Bank (Japan) 10,000,000 7,000,000

Lloyd’s Bank (British) 20,000,000 15,000,000

Chartered Bank of India, Australia
and China (British) 4,000,000 5,000,000

Netherlands Trading Society 18,000,000 2,000,000

Netherlands-India Commercial
Bank 6,000,000 700,000

Russo-Asiatic Bank (Russia-France) 19,000,000 4,000,000

National Bank of China 1,500,000 400,000

Banque L’Indo-Chine (French) 6,000,000 3,000,000

Bank of Taiwan (Formosan Japan) 1,800,000 300,000

Mercantile Bank of India (British) 5,500,000 800,000

Eastern Bank (British) 2,000,000

Chino-Belgian Bank (Belgian) 2,000,000

It will be noted that with one exception all of these banks are strong institutions. The hoary patriarch among them, endowed with exhaustless strength still, is the Hongkong and Shanghai Banking Corporation, which has been operating in China since 1865.

There is a movement in Canton to establish an “Industrial Encouragement Bank”. The merchants are anxious for currency reform throughout the kingdom and the establishing of coins of fixed value on the American decimal plan, but going to a lower decimal to accommodate small trade and the lower values of China.

It is also proposed by prominent members of the Nanking Assembly to establish a Sino-American bank, plans for which were laid just before the October, 1911, revolution.

At the height of the revolution in November, 1911, the rebels did a remarkable thing successfully at Shanghai. The loyalists at Peking were unable either with their own imperial Ta-Ching bank, foreign loans, or the immense ramifications of the Shansi Bank guilds, to uphold their credit, and the chief fighter of the Manchus, General Chang Hsun Chung, could not pay his troops. The republicans at Shanghai under Sheng Wan Yung, minister of finance, and Wu Ting Fang, foreign secretary, organized the “Chung Hua” Bank at Shanghai with a capital of 5,000,000 taels. The shops immediately took the money at a high premium, doubtless to give an impetus to confidence. “Chung Hua” is the Chinese name for China. It means “central glory”.

Nothing hampers China’s interprovincial trade more than the absence of a national credit system and commercial paper. Treaty-port China gets long enough loans from the foreign manufacturer. The trouble is that the importer can not collect quickly from his customer, and when he does, the medium is coin, bullion and barter, unnecessarily and clumsily handled, whereas coin, bullion and barter should only be used for the balances. China needs a modern currency system, and a modern credit system as well.

It is in accord with manners and business accuracy when at a fair you are informed that an article will cost you a thousand coins (cash) to say: “I’ll pay you 500 _good_ coins.” If you had a thousand counterfeits you could elect to pay with them, but never be so bucolic as to pay a thousand good coins when a thousand coins are asked. As suggested by America, China’s new coinage will have a silver dollar, half, quarter, dime, nickel, two cents, cent, half a cent, and one-tenth of a cent, all minted in government mints, and alone accepted as legal tender in taxes, telegraph, railway, telephone, customs, likin, stamp and other charges. Very slowly the old system of using provincial coinage of debased value, bullion (sycee) exchange, private bank notes, etc., will pass away. A central bank, like the Ta Ching, helped by a four-nations foreign loan, backed 40 per cent. by the government, and 60 per cent. by private subscriptions, with about $6,000,000 capital, could make a good beginning in taking care of the new system. Although a silver coinage, the government, like Japan’s, stands to guarantee the fixed value of the coinage as equal to half its face in gold; that is to say, the central bank will hold reserves so as to redeem or guarantee a silver dollar at fifty cents gold. The silver is to have a fixed purity standard, like the Philippine peso, or the American dollar. Japan stepped into Korea and refused to accept the old coinage. It immediately became copper bullion, and had no other value. For safety’s sake, the Japanese insisted that the coins, worth nominally one-tenth of a cent, should be broken at the square hole in the center. The steamer _Seneca_, in 1912, brought 1,400 tons of these broken Korean coins to New York, whence they were shipped to Chrome, New Jersey, to be smelted. China can not be so rigid, as she has not the police or army, but if she could safely be rigid, nothing would clear up the coinage question better than copying this Japanese example. Since the adoption of the gold standard in Mexico, the government has to accept the old Mexican dollar as legal tender for one dollar gold, which gives a profit of 100 per cent. to the lucky holders of these silver dollars. There are many of them in China; indeed the Mexican dollar was for many years the monetary standard in China, and the thrifty Chinese are smuggling the unchopped coins into Mexico as fast as they can be gathered up from the Shansi, Kwangtung and other bankers. The Mexican government anticipated this move, and placed a duty on Mexican dollars returned from abroad. The honors are even along the Rio Grande boundary; Mexican dollars are smuggled southward, and Mexican Chinese are smuggled northward! Most of the Mexican dollars in China, however, have been chopped in the banks and fan-tan houses, and the thrifty Chinese shroffs groan when they contemplate that by egotistically sinking their chop into the face of the Aztec eagle and the Texoco snake, they have now lost 100 per cent. profit. Moral: never mutilate the coin of a realm, whether it is your own country or not.

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.

Copyright, 1913, The Bobbs-Merrill Company.

The oldest and strongest bank operating in China; the Hongkong and
Shanghai Banking Corporation. It has branches throughout China,
on the British banking plan. The building in the background is
the Chartered Bank of India, Australia and China.
]

Copyright, 1913, The Bobbs-Merrill Company.

The abundant use of street advertising by the new commercial China.]

Copyright, 1913, The Bobbs-Merrill Company.

Court of the splendid Swatow guild house at Canton. These are their
chambers of commerce and clubs combined, and are a power in the
new commercial China, almost equal to the new assemblies. The
heir of a tea magnate rides the statue of a griffin.
]

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.