THE FREEMAN PAMPHLETS 
 
 ASIA'S AMERICAN PROBLEM 
 
 A Diffident Discussion of the 
 
 Project sometimes called the New International 
 
 Chinese Consortium, and of certain other 
 
 combustible matters pertaining 
 
 thereto. 
 
 by 
 
 Ceroid Tanquary Robinson 
 
 NEW YORK 
 
 B. W. HUEBSCH, Inc. 
 
 MCMXXI 
 
 25c. 
 
Digitized by the Internet Archive 
 
 in 2007 with funding from 
 
 IVIicrosoft Corporation 
 
 http://www.archive.org/details/asiasamericanproOOrobirich 
 
THE FREEMAN PAMPHLETS 
 
 ASIA'S AMERICAN PROBLEM 
 
 A Diffident Discussion of the 
 
 Project sometimes called the New International 
 
 Chinese Consortium, and of certain other 
 
 combustible matters pertaining 
 
 thereto, 
 
 h 
 Ceroid Tanquary Robinson 
 
 NEW YORK 
 
 B. W. HUEBSCH, Inc. 
 
 MCMXXI 
 

 ^Ch'p'yri^iit, ig2i, by B. fV, Huebsch, Inc. 
 
 
For permission to reprint those portions of this 
 pamphlet which appeared originally in the pages of The 
 Pacific Review and The Freeman, the author makes grate- 
 ful acknowledgment to the publishers of these period- 
 icals. 
 
 4^i)12iS 
 
<r 
 
ASIA'S AMERICAN PROBLEM 
 
 The new Far Eastern policy of the United States 
 Government has created in Asia an "American prob- 
 lem" which is by all odds the most important factor in 
 Asiatic-American relations. 
 
 Now as a matter of course, this is not the sort of 
 statement with which one ordinarily launches out upon 
 a casual conversation. It resembles rather a proposition 
 to be proved. And yet the writer has neither argument 
 nor proof in view, but intends simply to talk upon this 
 subject for a while, diffidently, and with no show of an 
 assurance he does not feel, in the hope that certain topics 
 which have gone for a long time undiscussed may pres- 
 ently receive the attention they seem to him to deserve. 
 
 I. CLOSING THE OPEN DOOR. 
 
 To begin with, it may be said with a show of reason 
 that the United States has never been in a position to 
 profit very much "by the maintenance of a system of 
 spheres of influence in China. This much may be gath- 
 ered from the history of the other late comers in the 
 field — Germany and Japan. These powers, like the 
 United States, had open to them the choice between enter- 
 ing tardily into the old game, and attempting to substitute 
 new rules which would minimize the disadvantages of 
 their late arrival on the scene. Germany chose the for- 
 mer course, and followed it with no great success. If 
 
 [3] 
 
]kp^n liiid bietter luck, it was largely because the Russo- 
 Japanese War placed in her hands a group of concessions 
 such as no late comer in China could have acquired peace- 
 fully. When the United States adopted the alternative 
 policy, and promulgated the doctrine of the Open Door, 
 it is fair to assume that self-interest was at least as effect- 
 ive as altruism in the councils of our Cabinet. If the 
 Open Door policy did not become fully effective, it was 
 largely because Great Britain and Russia, the chief bene- 
 ficiaries under the old system, were just as much opposed 
 to the abandonment of this system as they were to the 
 expansion of German and Japanese holdings under it. In 
 other words, each of the Powers favored the system that 
 would serve it best; and it seemed that, at this stage of 
 the game, the interests of the United States were coinci- 
 dent with those of China, and opposed to those of the 
 great concessioners. 
 
 Things continued pretty much in this state until the 
 outbreak of the great war, when the bottling up of Ger- 
 many and the preoccupation of the Allies with European 
 affairs, enabled Japan to increase her influence in China 
 very rapidly by taking over the German holdings, by 
 enforcing the famous "demands" upon the Chinese Gov- 
 ernment, and by financing the warring factions which 
 divided the country. The United States was naturally 
 regarded as the enemy of this kind of expansion; and it 
 is generally thought that China entered the war in the 
 hope that this move would enable her to take advantage 
 of the supposedly permanent identity of Chinese and 
 American interests. 
 
 [4] 
 
with the publication of the Lanslng-Ishli Agreement, 
 the process of disillusioning the Chinese was begun. Mr. 
 Lansing has held that this Agreement was in essence a 
 re-affirmation of the Hay Doctrine; but most unfortun- 
 ately the note included the statement that "the Govern- 
 ment of the United States recognizes that Japan has 
 special interests in China, and particularly in that part 
 to which her possessions are contiguous." The Japanese 
 Government has interpreted this statement as an 
 acknowledgment of Japan's special and even dominant 
 position In China, and from the fact that the agreement 
 was drawn up and signed entirely without the knowledge 
 or consent of China — the party most concerned — one 
 may infer that the Japanese interpretation is at least as 
 plausible as that of Mr. Lansing. 
 
 At Paris, President Wilson might perhaps have 
 cleared up the uncertainties created by this unhallowed 
 agreement, but the use he made of the opportunity 
 seemed to confirm the broadest claims of the Japanese 
 Imperialists; for here again a matter which touched the 
 national interests of China was disposed of in accordance 
 with a secret agreement to which China was not a party 
 — not this time a note from Mr. Lansing to Mr. Ishii, 
 but a secret treaty between Great Britain, France and 
 Japan, in accordance with which the German holdings in 
 China were to pass to the power last named. Whatever 
 may have been the reasons for this disregard of the rights 
 of China, the Chinese might with reason have concluded 
 that their own Interests and those of America were no 
 longer exactly Identical. 
 
 [5] 
 
Yet in the process of becoming anti-Chinese, Ameri- 
 can policy had not become pro-Japanese, and hence what 
 was lost on the one hand was hardly made up by gains 
 on the other. Not only had the Government at Wash- 
 ington persistently "misinterpreted;" the Lansing-Ishii 
 Agreement, but in the matter of Shantung, Mr. Wilson 
 had yielded most ungraciously and only after long debate. 
 And besides this, America had been by no means as 
 friendly as the other powers to Japanese advances in 
 Siberia. Upon the protest of the United States, the 
 original arrangement for intervention by Japanese troops 
 alone had been abandoned, and a new agreement drawn, 
 which provided that the United States, as well as several 
 of the Allied Powers, should participate in the affair. 
 During the period of American operations in Siberia, 
 the Japanese were frequently at outs with the American 
 military, and with the officials of the railway administra- 
 tion. When Japanese troops occupied Vladivostok four 
 days after the departure of the Americans, it looked for 
 a while as though the Governments of the two countries 
 had come to an understanding; for not only did Wash- 
 ington fail to protest the seizure, but a dispatch from 
 the capital said that ^'Japan's vital interest, from the 
 point of view of national defense, in the maintenance of 
 troops in Siberia is recognized by the [American] Gov- 
 ernment." But with the publication of the American pro- 
 test against the Japanese seizure of the northern half of 
 the island of Saghalin, the two Governments were seen 
 to be again at odds on the Siberian question. 
 
 [6] 
 
In the meantime the United States had initiated 
 another project which was destined to reveal the widest 
 differences of opinion between Washington and Tokio. 
 On July 29, 19 1 8, the State Department announced 
 America's intention to take a hand in the financial rehabil- 
 itation of China, in a statement which read in part as 
 follows : 
 
 "China declared war against Germany very largely because 
 of the action of the United States. Therefore this Government 
 has felt a special interest in the desire of China so to equip herself 
 as to be of more specific assistance in the war against the Central 
 Powers. ... An agreement has been reached between [certain 
 bankers] and the State Department which has the following 
 salient features: 
 
 "First — The formation of a group of American bankers to 
 make a loan or loans [to China] . . . . 
 
 "Fifth — Assurances that, if the terms and conditions of the 
 loan are accepted by this Government and by the Government to 
 which the loan is made, . . . the American Government will be 
 willing to aid in every way possible and to make prompt and 
 vigorous representations and to take every possible step to ensure 
 the execution of equitable contracts made in good faith by Its 
 citizens in foreign lands. . . . 
 
 "Negotiations are now passing between the Government of 
 the United States and those Governments [of Great Britain, Japan, 
 and France] which it is hoped will result in their co-operation and 
 in the participation by the bankers of those countries in equal parts 
 of any loan that may be made." 
 
 Great Britain and France readily agreed to enter the 
 
 new International Chinese Consortium here projected, 
 
 but Japan held aloof until the summer of 1920. The 
 
 reason for eagerness on the one hand, and reluctance on 
 
 the other, is not far to seek. One of the prime objects 
 
 of the Consortium was the substitution of international 
 
 [7] 
 
co-operation In the financing of China, for the further 
 competitive expansion of national spheres of Influence. 
 Because of their numerous troubles In Europe, and later 
 In newly acquired colonies and mandate areas, France 
 and England were unable, for the time being at least, to 
 push their claims in China under the old competitive sys- 
 tem. On the other hand, the maintenance of this sys- 
 tem exactly suited the needs of Japan, since she alone 
 was In a position to extend her sphere of influence. After 
 two years of negotiation, Japan finally entered the Con- 
 sortium, but whether with or without reservations Is a 
 matter still in dispute. On the one hand there Is the 
 statement of the most important promoter of the pro- 
 ject, Mr. Thomas Lamont of J. P. Morgan and Com- 
 pany, that "J^P^^ withdrew her reservations In toto, and 
 the Japanese Government authorized Its banking group 
 to enter the Consortium without qualification." And 
 to balance this — or out-balance it — there is this equally 
 specific assertion of Premier Hara of Japan : 
 
 "As to the reservations made on our side in regard to Man- 
 churia and Mongolia, . . . something vital to us as a nation is 
 involved in the matter. . . . This is not a new phase of the Jap- 
 anese policy since it was expressly recognized in the Ishii-Lansing 
 Agreement. . . . America, France and Great Britain now fully 
 appreciate our situation and are in perfect accord with us." 
 
 This last statement is of a later date than the official 
 correspondence on the subject of the reservations which 
 the State Department at Washington Issued to the press 
 on 29 March, 192 1. But whether or not Japan has been 
 granted the exceptional right to expand her private 
 sphere of influence in Manchuria and Mongolia, It is fairly 
 
 [8] 
 
certain that the Consortium sets limits of some kind to a 
 process of Japanese penetration which might otherwise 
 have gone on Indefinitely; and It is equally certain that 
 this limit was fixed at the instigation of the United States, 
 and after long opposition by the Government at Tokio. 
 Since the Consortium does not affect enterprises 
 already established, and since the protest of Washington 
 against China's cancellation of Russian privileges seems 
 to indicate a great solicitude for the preservation of the 
 existing spheres, the Japanese may with some reason con- 
 clude that iVmerica's Far Eastern policy Is not pro- 
 Chinese, or anti-concessionary in any general sense, but 
 simply anti-Japanese. 
 
 II. "in the interest of china." 
 
 Is It then to be supposed that with the launching of 
 the Consortium, the flirtation with Japan has come to 
 an end, and the old identity of American and Chinese 
 Interests has been re-established? The well-informed 
 promoters of the Consortium have said again and again 
 that all the operations of this new body will be con- 
 ducted "in the interest of China," and the press has 
 played this tune over repeatedly, with all possible varia- 
 tions. The writer is obliged to admit that he has only the 
 haziest notions as to what the interests of China may be; 
 notions as hazy, perhaps, as those of most of the para- 
 graphers who have broken a thousand bottles of ink 
 over the bow of the Consortium, and have sent it thus 
 blithely forth upon the unknown sea. 
 
 [9] 
 
This launching is likely to have large consequences, of 
 some sort or other; hence it may be worth while to in- 
 quire what the Chinese think these consequences will be. 
 It is very likely that the Chinese themslves do not know 
 what is good for China, but there can be no harm in try- 
 ing to ascertain their judgment as to where their interest 
 lies. Is there such a thing In China, then, as public 
 opinion? Is popular sentiment favorable to the Consor- 
 tium, or opposed to it? A few press-dispatches and some 
 stray items of first-hand testimony seem to indicate that 
 public opinion can hardly be said to exist, and that the 
 sentiment of the most intelligent group in the country — 
 the student-class — is divided on the question. 
 
 Beyond this very limited evidence, one can not go; 
 but this hardly relieves Mr. Lamont and his friends 
 of the obligation to do what they can to prove that 
 a decent number of Chinese approve of the Consortium 
 project. If the Consortium is actually being formed 
 in the interest of China, and if there Is one man in 
 China, in or out of the Government, who knows what 
 that interest is, the promoters of the Consortium would 
 have nothing to lose and everything to gain by taking 
 that man into their confidence. But if any represen- 
 tative of the Chinese Government, or any individual 
 citizen of the Republic was admitted to the councils of 
 the Consortium during the formative period, the fact 
 has escaped public notice; and now that the final agree- 
 ment between the banking groups and the Governments 
 of the United States, Great Britain, France and Japan 
 has been formulated, no special Importance attaches to 
 
 [10] 
 
the Intimation that Chinese participants may hereafter 
 be admitted to the Inner circle. 
 
 ) It appears, then, that China has had as little part 
 In the preparation of the Consortium-agreement as the 
 Germans had In the drafting of the Peace of Versailles. 
 China may accept the terms, or reject them. It Is said; 
 but the choice Is hardly more real than It was In the 
 case of Germany. To be sure, Sir Charles Addis, who 
 represented the British group at the recent New York 
 conferences, has said that ''without the assent and good- 
 will of China the Consortium Is not only powerless to 
 act, but has no desire to act." And Mr. Thomas La- 
 mont, representing the American group, has stated that 
 no attempt will be made to Influence China unduly to 
 take loans, and that assistance will be provided only If 
 China desires it. 
 
 All this has the show of reason; but no more than 
 the show of It. Report has It that the monthly deficit 
 of the Chinese Government comes to something like 
 $6,000,000; the amount of fluid capital within the coun- 
 try is limited, and it is admitted on all hands that the 
 country Is practically bankrupt. China must borrow; and 
 the nations from which she must borrow, now including 
 Belgium, have just reached an agreement to handle 
 through the Consortium all the loans to China which are 
 "of a character sufficiently important to warrant a public 
 Issue." With all due regard to the possibility that 
 small domestic or foreign loans may still be negotiated 
 Independently, one must still conclude that as between 
 the acceptance and the rejection of the Consortlum- 
 
 [11] • 
 
conditions, China can have, in the long run, no real 
 choice. 
 
 But perhaps this is not such a bad thing for China 
 after all. If the country prospers under the treatment 
 she is to receive, it may some day be forgotten that 
 no Chin4*»afl was called in consultation when the pre- 
 scription was prepared. And certainly China is no 
 Paradise under the present system of disunity, peri- 
 odic revolution, corrupt finance, and competitive con- 
 cession-hunting. The pooling of foreign interests will 
 undoubtedly result in the elimination of one of the 
 chief sources of trouble; and in the end, the Consor- 
 tium-group may actually achieve the political and eco- 
 nomic rehabilitation of the country. Indeed, China must 
 be made Into a going concern, politically and economic- 
 ally, If the bonds underwritten by the financiers are to be 
 worth the paper they are printed on. 
 
 However, this task of reconstruction can not be 
 carried out solely by the advancing of funds. Paul S. 
 Reinsch, former United States Minister to China, gives 
 a hint of the manner In which the rehabilitation of 
 China is to be accomplished when he says : 
 
 "The foreign lenders have the right to demand security for 
 their investment. . . . The best security from every point of view 
 is found in improved methods of revenue and general administra- 
 tion." 
 
 One of the latest newspaper reports on the subject 
 
 says, more specifically: 
 
 "Some of the conditions under which an Initial loan may be 
 made, it is understood, are: 
 
 "Disbandment of the standing armies; 
 
 [12] 
 
"Reunion of the North and South; 
 
 "Assignment of a part of the loan to the southern provinces; 
 
 "Supervision by representatives oi the consortium of the 
 expenditure of the loan; 
 
 "Pledging of the surplus of the salt gabelle, of customs duties 
 and other income, to guarantee repayment of the loan." 
 
 The last two conditions have been mentioned repeat- 
 edly in other reports, and it may be concluded that 
 they are fairly well settled upon. When the security 
 of the new loans depends of necessity upon the peace 
 and prosperity of China, It is only natural that the 
 Powers should contemplate a sort of collective guard- 
 ianship, with a considerable participation In the internal 
 affairs of the Republic. A cable from Pekln even goes 
 so far as to say that the situation requires 
 "not only foreign auditing after expenditure of the loan-proceeds, 
 but foreign approval before expenditure and foreign supervision 
 during expenditure. And Inasmuch as there must be protec- 
 tion of the security for the loans, there must be supervision over 
 the collection and disbursement of the ordinary revenues of the 
 Government. And this means an International financial trustee- 
 ship." 
 
 A recently published memorandum, bearing the date 
 of 8 October, 191 8, reveals the complacency with which 
 the Government of the United States would look upon 
 the establishment of such a trusteeship. In a previous 
 communication, it had been stated that the Government 
 "would be opposed to any terms or conditions of a loan 
 which sought to impair the political control of China, or 
 lessened the sovereign rights of that Republic." The 
 memorandum of 8 October says that this reservation 
 "had reference only to the future activities of the American Group, 
 and was not intended to call In question the propriety of any speci- 
 
 [13] 
 
fie arrangement in operation between the former Consortium and 
 the Chinese Government, or between any other Government and 
 the Chinese. It can be definitely stated that the United States 
 Government did not mean to imply that foreign control of the 
 collection of revenues or other specific security pledged by mutual 
 consent would necessarily be objectionable, nor would the appoint- 
 ment under the terms of some specific loan of a foreign adviser, 
 ... as, for instance, to supervise the introduction of Currency 
 Reform." 
 
 Now, whatever may be said for this method of 
 procedure as a temporary expedient, hardly anybody 
 will argue that a perpetual protectorate can serve the 
 interest of China. Consequently there has been always 
 in the background of the current discussion of the Con- 
 sortium a vague assumption that some day, when the 
 affairs of the Republic are nicely straightened out, the 
 Powers will retire, and leave China to enjoy in full 
 sovereignty the fruits the Consortium has borne. This 
 assumption may be well grounded in an inherent faith 
 in the goodness of humanity and the righteousness of 
 nations; but what other reason anyone can have for 
 accepting it, it is hard to see. Just in proportion as 
 the Consortium-groups succeed in rehabilitating China, 
 in that proportion the value of the country as a field 
 for investment will increase. On the whole, then, it 
 seems that the likelihood of a peaceful withdrawal of 
 the Powers must vary inversely with the prosperity of 
 the country. 
 
 Of course it may be argued that even under these 
 conditions, material prosperity is not bought at too high 
 a price. Let the Powers but develop the resources of 
 
 [14] 
 
China sufficiently, and the country will be strong enough 
 to rid herself of her guardians, if they will not go of 
 themselves. In the chain of logic that leads to this 
 conclusion, there are weak links in plenty, and the con- 
 clusion itself is not likely to be put forward by the 
 friends of the Consortium as an argument in favour of 
 their enterprise. Nevertheless, the development of 
 China's material strength seems to offer the only pos- 
 sibility of escape from the Consortium, once it is estab- 
 lished; and this means that the period of tutelage may 
 be extended indefinitely. 
 
 To say this Is to say that In the Chinese themselves 
 is the only hope of China. To believe anything else 
 is to cling to a child-like faith which is hardly justified 
 by the history of Western imperialism in the Orient. 
 Any effort upon the part of the Chinese themselves to 
 keep alive such a faith in foreign beneficence, is the 
 worst sort of nonsense. The wants and needs of the Chi- 
 nese people are their own particular business; any other 
 belief promises to keep the Chinese everlastingly where 
 the Powers want them — In the class of international 
 dependents, defectives, and delinquents. 
 
 III. WILL CHINA MUDDLE THROUGH? 
 
 If China is compelled to accept the kind offices of 
 the Consortium, it will be the chief concern of the inter- 
 national mortgagees to hasten the revolutionary econo- 
 mic changes which are already under way in the Celestial 
 Republic. Nowadays, of course, the Industrial Revolu- 
 
 [15] 
 
tion is commonly thought of as a finished episode of his- 
 tory, ready to be analysed, evaluated, and shelved along 
 with such antiquities as the Crusaders, the Renaissance 
 and the Reformation. As a matter of fact, it may be 
 said with at least a show of reason that the Industrial 
 Revolution is still in full swing in Western Europe and 
 in the United States; and certainly it is true that the 
 thousand million inhabitants of the continent of Asia have 
 as yet been hardly touched by its influence. If this 
 revolution is destined to produce in China and elsewhere 
 in Asia a series of changes as fundamental as those which 
 have already occurred in Europe, then as a world-move- 
 ment it has no more than begun, and the discussion of 
 its most important effects is still the business of the 
 prophet rather than the historian. 
 
 In the material conditions of Asia there is the prom- 
 ise of early developments of the most profound signifi- 
 cance. Of the five factors named by Mr. J. A. Hobson 
 as necessary for the rise of the system of production 
 which has characterized the Industrial Revolution, three 
 are already present in varying measure in the East, the 
 fourth is being supplied by Europeans, and the fifth 
 factor alone remains an uncertain quantity. The con- 
 ditions already fulfilled in Asia are : first, the produc- 
 tion of wealth not required to satisfy the current wants 
 of its owners; second, the existence of a labour-surplus, 
 here more abundant than that created in England by 
 the Enclosures; and third, the presence of large and 
 accessible markets. The fourth factor includes all those 
 mechanical devices and industrial processes which have 
 
 [16] 
 
been so highly developed In the West, and the fifth is 
 an Imponderable which Mr. Hobson has called *'the 
 capitalistic spirit." 
 
 Since Asia has long possessed by inheritance the 
 three comparatively static prerequisites for the Revolu- 
 tion — wealth, labour and markets — and is now accept- 
 ing, under pressure of economic necessity, the first of 
 the new dynamic factors, it may be said that all the ma- 
 terial conditions for the Revolution are already present. 
 Thus, the Orient Is being swept Into a movement, the 
 character and results of which seem to depend almost 
 entirely upon the quality of Asia's non-material impor- 
 tations from Europe, and upon the extent to which 
 Asiatic and European influences operate to modify in 
 Asia the spirit which tolerated all the horrors of the 
 earlier stages of the Industrial Revolution in the West. 
 
 Although it is true that economic changes may re- 
 store the balance which has held against Asia since the 
 Middle Ages, and thus set once more in motion towards 
 Europe *'the rising tide of colour," such a result would be, 
 after all, a by-product. The question of primary and 
 planetary Importance Is this: what will be the direct 
 effect of the new material civilization upon the life of 
 the Asiatics themselves? For the future history of the 
 world as a whole. It Is perhaps Impossible to frame at 
 this time a question more profoundly significant than 
 this. 
 
 In the attitude of the four representative peoples 
 of Asia towards the material and non-material achieve- 
 ments of the West one may discover some hint as to 
 
 [17] 
 
the use that the Orientals will ultimately make of the 
 tremendous new forces that are now in process of gen- 
 eration. The following remarks on this subject are put 
 forth In the full consciousness that it is Impossible for 
 any casual commentator to speak with authority in such 
 broad terms and upon such uncertain Issues as these; 
 and yet it does seem that in common report and the 
 common understanding of Asiatic affairs, evidence of 
 certain broadly significant tendencies may be discovered. 
 
 It Is extremely unsafe to hazard any generalization 
 which refers to the people of India as one people, and 
 yet It may be said with tolerable certainty that India has 
 submitted to, rather than desired, the importation of 
 new machines and new methods of production, while the 
 articulate elements of her population have shown them- 
 selves somewhat Interested In Western ideas of political 
 democracy, though comparatively indifferent to the re- 
 mainder of European thought. If this tendency holds, 
 the natural result will be a long period of political ex- 
 perimentation, first under British sovereignty and then 
 perhaps by the natives, during which time India will 
 enjoy more than a full measure of all the evils that 
 England suffered early In the nineteenth century. 
 
 Of dismembered Turkey, one can say nothing definite, 
 although the situation was fairly clear in ante-bellum 
 days. At that time, the dominant group was extremely 
 hospitable to European materialism, and more specific- 
 ally to the industrial efficiency and the political centra- 
 lization of Germany. With Japan, the case was, and 
 Is, much the same, except that here the initiative has 
 
 [18] 
 
come definitely from the native governing class, who 
 have borrowed Indiscriminately such elements of Euro- 
 pean civilization as promised to serve their interests. 
 In the case of Japan, more clearly than in that of Turkey, 
 the tendency has been to import the mechanism and the 
 materialism of the Industrial Revolution, with none of 
 the correctives that bitter experience has suggested to 
 the Europeans of the present generation. Thus It Is 
 perfectly natural that the Japanese people should be 
 undergoing at the present time a plague of progress and 
 poverty, very much like that which once devastated Lan- 
 cashire and Yorkshire. Nor is there any substantial 
 relief in prospect, for in Japan more even than in Ger- 
 many, the Industrial Revolution is the work of the Gov- 
 ernment, and the remedies most likely to be tried, when 
 conditions become altogether unendurable, are obviously 
 those of State-socialism. 
 
 With China the case is hardly so clear. Here the 
 new machines and the new methods of the West have 
 not hitherto had a single official promoter, like the British 
 Government in India or the Autocracy in Japan, although 
 the Consortium now promises a somewhat similar spon- 
 sorship; Indifference to politics is said to be once more 
 rather general, as a consequence of the disappointing 
 experiences of the revolt against the Manchus; and upon 
 the whole the country seems to exhibit still that easy and 
 natural anarchism in economic and political affairs which 
 Is considered to have been always somewhat charac- 
 teristic of the Chinese. 
 
 [19] 
 
Under such circumstances, partly of its own crea- 
 tion, it is only natural that the Chinese student-move- 
 ment should have turned from its early political Inter- 
 ests to miscellaneous adventures of the intellect. In 
 19 19 there were only one or two journals published in 
 the Chinese vernacular, while to-day there are more than 
 three hundred. This change does not involve the aban- 
 donment of a classic international language, such as Latin 
 once was In Europe; It means the substitution of one 
 Chinese language understood by millions, for another 
 that is read by a comparatively small class. The stu- 
 dents have interested themselves also in the importation 
 of a variety of European ideas which have as little as 
 possible to do with the working out of the Industrial 
 Revolution according to the old and ruinous plan. The 
 journals of the student-movement teem with articles on 
 socialism, communism and anarchism, as well as on more 
 erudite subjects, and indeed the students seem to have 
 centered their attention upon those particular phases of 
 Western life and thought that have been most studiously 
 avoided by the Mikado's official Importers. 
 
 If the students of China are only left free to con- 
 centrate their attention for a while upon these non-ma- 
 terial offerings of Europe, they will discover some evi- 
 dence of discontent with the use that has been made of 
 the vast powers generated there by the Industrial Revo- 
 lution, and an occasional expression of doubt concerning 
 the ability of the political State to control these powers 
 for the public good. They will know in advance, as 
 Europe could not have known, that an increase in pro- 
 
 [20] 
 
ductivlty Is not always accompanied by an Increase in 
 well-being, but sometimes by its exact opposite. When 
 they have meditated upon these things, and have consid- 
 ered also the demonstration of the Russian Marxians 
 themselves that nothing is inevitable, not even the course 
 of Marxian evolution and revolution, they may be 
 tempted to seek earnestly for economic solutions of the 
 economic problems that rest with steadily Increasing 
 weight upon the shoulders of the Chinese people. 
 
 IV. America's course of empire. 
 
 If the serviceability of the Consortium to China Is 
 at least questionable; If the active and increasing par- 
 ticipation of this country in Asiatic affairs has gained for 
 America the Ill-will of Japan; It should at least be dem- 
 onstrable that the Far Eastern policy of the United States 
 Is "pro-American" — that Is, It should be so. If this policy 
 Is to be held worthy of support on any grounds. 
 
 Some effort has already been made to show that. In 
 so far as It was effective at all, the Open Door policy did 
 actually serve the interest of the United States, since It 
 helped to open Chinese markets to American goods, with- 
 out at the same time Involving the country In political 
 entanglements. On the other hand, It would be difficult 
 to demonstrate that the Lansing-Ishii agreement could 
 possibly have brought good results of any sort to 
 America. The surrender of Shantung is so involved with 
 the other doings of the Peace Conference that Its effect 
 — if It had any effect, other than the evil It worked to 
 
 [21] 
 
China — Is hardly capable of appraisal. Likewise It is 
 still to be proved that any good has come of American 
 meddling In Siberia; the Japanese went In first with the 
 consent of the American State Department, and the pros- 
 pect Is that they will stay, In spite of American protests, 
 until the Russians are able to put them out. 
 
 But to-day the Consortium is the most important fac- 
 tor In the Far Eastern situation, and by its results the 
 Asiatic policy of the United States must be judged. All 
 discussion of this project has hitherto been conducted 
 upon such a high moral plane, and the interests of China 
 have been so long and so carefully considered, that one 
 may hardly turn now without an apology to a minor 
 phase of this laboured subject — the interests of America. 
 If such a shift of emphasis gives evidence of a selfishness 
 altogether out of keeping with the spirit of this mission- 
 ary enterprise, any attempt to open up the matter still 
 further by drawing distinctions between the Interests of 
 the Individual promoters of the Consortium, and those 
 of the balance of the American citizenry, must be re- 
 garded as even more unseemly. To say that these pro- 
 moters have put American interests above the interests 
 of China, is to attribute to them a type of selfishness 
 most easily condoned. But to assert that America can 
 not profit by the high position here given her, is to in- 
 timate that her gentlemen-adventurers are serving no 
 interests but their own; and this Is indeed to assault the 
 last trenches of their altruism. 
 
 Next to China and Japan, America is the nation most 
 concerned in the Consortium-negotiations, but unlike 
 
 [22] 
 
China, America has been a party to these negotiations 
 from the beginning. Not only did the American Gov- 
 ernment take the initiative In this affair, but It appears 
 likely that most of the financial operations under the Con- 
 sortium will be conducted by American financiers. Such 
 a contingency is provided for In certain paragraphs of the 
 agreement, officially summarized as follows: 
 
 ^'Articles 3 and 4 provide for complete equality among the 
 groups in all business undertaken by the Consortium, and reserve 
 freedom to each group to decline to participate in any business 
 which it does not desire to undertake. 
 
 "Article 5 provides that, so far as possible, the parties to any 
 operation shall not be jointly liable, each of the groups undertaking 
 to liquidate its own engagements. 
 
 "Under Articles 6 and 7, any group not desiring to make an 
 Issue In Its own market may request the other groups to include 
 its share in their own issue." 
 
 The extent to which the American banking-groups 
 may be expected to take advantage of these conditions 
 Is indicated In the following statement by Mr. Thomas 
 Lamont of J. P. Morgan and Company, head of the 
 American group, and the most prominent figure in the 
 public transactions of the Consortium: 
 
 "Owing to the war [says Mr. Lamont], the British and French 
 markets may be unable for some years to come to purchase any 
 large amount of foreign securities, either of China or any other 
 nation. [Mr. Lamont might also have referred here to the panic 
 in Japan, and the consequent Inability of that country to make 
 heavy loans abroad.] The American group, therefore, has by force 
 of circumstances jumped from an Inconspicuous position In the 
 old consortium to one of prime Importance In the new. 
 
 "In this, America, as represented by the group, should be 
 equipped to play a very Important part. If so equipped, she will 
 
 [23] 
 
be able to envisage the situation so as to lay out, with her exper- 
 ienced partners, Great Britain, France and Japan, a sound and 
 comprehensive plan for the economic and financial development of 
 China . . . Through her representatives at Peking, she will be able 
 sympathetically to wield influence upon the present confused 
 elements." 
 
 From the language of this statement, one gathers that 
 Mr. Lamont does not take very seriously the provision 
 in the official agreement for "complete equality among 
 the groups in all business undertaken by the Consortium." 
 When read in connection with the other provisions al- 
 ready quoted, this clause seems to provide only for an 
 equality of opportunity for investment; not a very real 
 equality, when only one of the Powers has funds to spare; 
 and the provision that each group shall undertake to 
 liquidate its own engagements would seem to indicate that 
 control over China's assets, and consequently the power 
 exercised in that country, is to be proportional to in- 
 vestment. 
 
 The "representatives" of whom Mr. Lamont expects 
 such novel achievements can hardly be the members of 
 our diplomatic corps, who have been carrying on their 
 obscure affairs in China these many years. The classic- 
 fication seems to apply more accurately to the ambassa- 
 dors of the American banking-group, of whom the first 
 is Mr. Frederick W. Stevens, formerly of J. P. Morgan 
 and Company. 
 
 In the paragraphs just quoted, no specific informa- 
 tion is furnished as to what Mr. Stevens's duties will 
 be, although one may infer that his attention will not 
 be confined to matters of a non-political and routine na- 
 
 [24] 
 
ture. As the representative of the principal creditors 
 of China, Mr. Stevens will probably be held responsible 
 for such a political and financial rehabilitation of the 
 country as is necessary to secure the safety of the Ameri- 
 can loans. His duties may turn out to be somewhat like 
 those of a British Resident in India, with this minor dis- 
 tinction, that the Britisher is responsible to his Home 
 Government, while Mr. Stevens is responsible to a group^ 
 of private individuals who happen to have money to 
 lend. 
 
 In sum, then, and in its simplest elements, the situa- 
 tion is substantially this: Against China's great need, 
 there is opposed the Consortium's great power. The 
 Chinese Government must have funds, but it can not 
 furnish the ordinary security for repayment. The chief 
 lenders, being in combination, are in a position to de- 
 mand the most substantial guarantees. Only by a greater 
 or less participation of the lenders in the soverign con- 
 trol of China, can these guarantees be made really ef- 
 fective. The American banking-group is the only lender 
 in a position to make large advances, and in the natural 
 course of events this group will control the major share 
 of this peculiar security. In the handling of this security 
 — that is, in the exercise of a certain measure of control 
 over the affairs of China — the American financiers will 
 have the full support of their Government; for proof of 
 this last statement, doubting readers are referred once 
 more to the note which opened the Consortium-negotia- 
 tions, wherein it was stated that ''the American Govern- 
 ment will be willing , . , to take every possible step 
 
 [25] 
 
to insure the execution of equitable contracts made in 
 good faith by its citizens in foreign lands." In this con- 
 nection, it should also be remembered that the Harding 
 Administration has now underwritten the scheme which 
 the Wilson Administration formulated with so much care. 
 If the American holders of Mexican bonds had made 
 their investments with the backing of such a promise 
 as this; if they had banded themselves together, under 
 the sanction of the State Department, for the purpose 
 of maintaining at Mexico City a Resident whose busi- 
 ness it was to "co-operate" with the Mexican authorities 
 in keeping the country in a prosperous condition and 
 ready to meet her obligations; if the Mexican Govern- 
 ment had then chosen to take some measures which the 
 American Resident considered unfavourable to the inter- 
 ests of his employers; or if the revolutionists had tum- 
 
 . bled over the Government and the Resident together; 
 where, in all probability, would the matter of interven- 
 tion stand to-day? What is meant by the American Gov- 
 ernment's promise to take every possible step to ensure 
 the execution of contracts, if it is not a promise to use 
 force, when necessary, for the maintenance of that par- 
 
 • tial American control of China which must be Ameri- 
 ca's only substantial security for loans to China? How 
 would one demonstrate to a Japanese patriot the dif- 
 ference between a dominant financial interest so sup- 
 ported, and an American protectorate? What answer 
 would one make to the statement that England and 
 France, secure in the possession of their old spheres, and 
 in spite of the opposition of Japan, have given America 
 
 [26] 
 
what Is left of China as her share of the spoils of the 
 war? 
 
 But here again the names of nations do duty where 
 the names of Governments and financial groups should 
 stand. Substitute for metaphysical terms those which 
 correspond with the facts, and new questions suggest 
 themselves; this time for domestic application. Where, 
 for instance, were the anti-Leaguers when the Govern- 
 ment and the financiers pledged the country to this grand 
 adventure in one of the most troublous regions on earth? 
 Who will provide for an increase of American credit 
 facilities, already far short of business needs, when more 
 millions have been drawn off for use in this new imperial- 
 ist enterprise? How can the proceeds of the Chinese 
 loans be as widely distributed as the cost of armaments, 
 and the risks of war that are involved? Whose Con- 
 sortium is this? Does it belong to the people who share, 
 its profits, or to the people who bear its risks? And if 
 the good folk of the latter class could once get their 
 hands on this scheme, how long would it last? 
 
 [27] 
 
Pamphlets 
 
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 tant matters briefly. These neatly printed paper-covered books 
 are good enough for the best library, but it is hoped that, because 
 of their low price, readers will pass them on so that every copy 
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 Russell, George W. ("iE"), The Economics of Ireland (25c). 
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 bility and 
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 discussion 
 
 JUN 22 Iggg 
 
 
 )mics. In 
 
 
 
 t:al events, 
 
 
 
 
 
 
 ■ sentiment 
 i unifying 
 
 
 
 ) grounded 
 performed 
 
 ...nr ;^,7 1939 
 
 
 and that a 
 ) no better 
 
 ^nMiir'61 WJf 
 
 
 
 
 
 espect the 
 uracy, im- 
 
 ^ ^ 
 
 
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 resume of 
 
 
 
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 ing a large 
 
 
 
 
 
 
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