The business methods which have developed in Korea since intercourse with foreigners began are the natural outgrowth of the circumstances and of the practices prevailing before that time. Reference is not here intended to ordinary commercial transactions, but to that species of business which has its rise in government favors and thrives by government patronage. In a country where the Government is the fountain-head of favors of every description, it was perhaps inevitable that the results should be those which we see in Korea. Viewed from the most favorable standpoint they certainly leave much to be desired. The Government, or, as has really been the actual fact, the Emperor, has been persuaded to enter into a number of business enterprises, both public and private, not a single one of which has been successful and every one of which has been the occasion of loss either to the public treasury or to His Majesty’s privy purse. Undertakings of various kinds—wooden manufactories, glass factories, railways, etc.—have been projected, but have gone no further than the stage of involving the employment of foreign directors, assistants, and the like, and have stopped there. Sometimes foreign experts have been employed who were really capable of conducting the business for which their services were secured. They have come to Korea, only to discover that no preparations have been made to carry on the enterprises with which they were to be connected. In other cases, the persons engaged to oversee the projected enterprises have been notoriously incompetent, and the whole affair has smacked largely of fraud from beginning to end. It would require too much space to recount the various undertakings of a public nature which have been attempted and have ignominiously failed. The result has been monotonously the same in every instance—namely, the payment by the Korean Government of large sums of money for useless material and for services never rendered. Another source of heavy loss has been the contracts made on behalf of the Government for all sorts of things—rice that was never needed, arms and ammunition which were worthless, railroad material which was never delivered, and so on through the long list of wasteful expenditure of the public funds. It is something hardly capable of direct proof, but there is no reasonable doubt that almost every one of these enterprises had its inspiration in the desire for illicit gain by one or another of the officials interested. The explanation of the foreigners interested may be summed up in the phrase, “that is the way business is done in Korea.” The Empire has been the happy hunting-ground for the foreign business man not over-scrupulous as to the methods by which money was to be made. Equally it has held out golden opportunities to the promoter and hunter for “concessions.” This does not include those foreigners who are willing to take the chances of success and the pecuniary risks inseparable from enterprises like mining, for example, but that other class of promoters who desire to get something for nothing, and then sell it to others. The gentlemen who have so much to say about “enlisting foreign capital” in the development of Korea’s resources will generally be found upon investigation to be prepared only to “enlist” some one else’s capital. The promoter has his uses, no doubt, and, as a pioneer in new fields, unquestionably accomplishes good in some cases. Unfortunately, in Korea the results of his activities can hardly be classed in this category.... Especially is this true of those enterprises with which His Majesty has been most prominently identified as an investor. As before said, they have invariably resulted in heavy losses to the privy purse. Various explanations have been given for this, but the fact remains and cannot be disputed. Others have prospered, but so far as His Majesty is concerned, the balance has always been on the debit side of the ledger.
If it were necessary to multiply instances of the injury done to the economic interests of the Korean people, and of the difficulty of adjusting in any half-satisfactory way the claims of foreign promoters and concessionaires, it could easily be done upon good evidence. But mention of a few such instances only—with the suppression of names and details, for obvious reasons—will suffice to convince the reader, however “patriotic” in such matters, who has even the semblance of a candid mind. Prominent among examples is that of a foreign company of contractors, who have obtained from the Korean Government a variety of claims, such as public-utility franchises, and a mining concession. Of the former, one franchise had cost the Privy Purse of the Korean Emperor not less than 600,000 yen up to 1902; and when it was sold to satisfy a mortgage held by these same contractors, although Mr. J. McLeavy Brown, at the time Commissioner-General of Customs, who had been appointed to audit the accounts, recommended that items aggregating 1,100,000 yen should be disallowed, and gave his judgment to the effect that foreclosure would be a grave injustice to His Majesty, the latter was induced to buy one-half of the property at 750,000 yen. The whole of the same property not long before had been offered at 800,000 yen! This public utility still fails to yield a dollar in dividends to the royal investor.
Another franchise of this same company has been sold, without any investment of capital on their part, to an English company for £15,000 cash and £50,000 in fully paid-up ordinary shares. Under the apparent impression that they have even yet not sufficiently profited from the Privy Purse of the Emperor and the national treasury of this poverty-stricken land, the same company is bringing all possible “influence” to bear in order to validate their claims to a “Mining Concession.” With regard to this last claim, which is still contested, it is enough for our purposes to say that it was surreptitiously obtained; that the stipulation which required a capital of $1,000,000 fully paid up at the time of incorporation has been violated; and that the provision which guarantees that no other mining concession should be made to any one, native or foreign, until these concessionaires had made their choice, is plainly contra bonos mores. Moreover, negotiations have been entered into by this company for the sale of this concession to another foreign syndicate.
The mining claim of these foreign promoters, although it has not yet been wholly adjusted is, indeed, a cause célèbre on account of the large sums involved; but it only illustrates a special combination of the elements which are found, with a difference of mixture, in all the cases of this general character. There was the foolish and wanton Emperor, who has little intelligent care for the material or other interests of his people; the crafty and corrupt Koreans, officials and ex-officials; the land rich in unexplored and undeveloped resources, and the “enterprising” foreigner, unscrupulous as to his methods and ready to utilize—either truly or falsely—his alleged “influence” with the officials of his own Government. Another case, in which all the participants were Koreans with the exception of one foreigner, has also been charged to the account of the Japanese Government on the debit side. This foreigner, having put forth the claim to be a mining engineer (he was in truth only a miner—a so-called “three-yen-a-day” man), associated himself with a Korean, popularly known as “Pak the liar,” and through the latter obtained the assistance at Court of a powerful official and his friends. A “company” was formed, which obtained from the Emperor an elaborate document of the “franchise” sort, giving them the exclusive right to find coal-oil where no coal-oil was, to bottle mineral water from springs which have no valuable qualities to their water, and to export coal which was totally unfit for export. Appeals were constantly made, and answered, for funds to further this enterprise, until His Majesty became tired, and the whole affair was wound up. This was done by paying the foreigner 12,000 yen claimed as back pay. He then departed to his native land to complain that the Japanese were inimical to the investment of foreign capital in Korea. The net result was a few thousand tons of coal taken from one small mine—sold, but the proceeds never accounted for; an expenditure from the Privy Purse variously estimated at from 300,000 yen to 400,000 yen; and the enrichment of certain Korean officials and ex-officials. For all this Mr. Megata, the Japanese Financial Adviser, had to provide the money. The “Poong Poo” Company itself never had any money to put into its “promoting” schemes.
That the charge of favoring their own countrymen in the matter of concessions and monopolies, which has been somewhat freely made abroad against the Japanese Government in Korea, is not justifiable, the following proof may be cited. At some time between January 15 and January 29 of 1905, Mr. Yi-chai-kuk, then Minister of the Imperial Household of Korea, recognized and signed no fewer than twenty-three concessions granted to one Yi-Sei-chik, a Korean, and his four Japanese associates. These concessions included the consolidation of taxation on land, the utilization of the water-ways for various purposes, and state monopolies of tobacco, salt, kerosene, etc. Imperial orders were secretly given to the same Yi to raise a foreign loan of several million yen for the purpose of detecting the secrets of the Military Headquarters stationed in Korea, as well as of the Tokyo Government, and to make reports about them.[80]
These iniquitous transactions in which Koreans and Japanese were concerned were made, when discovered, the occasion of a memorandum of protest. This memorandum reminded the Korean Government and Court that they have often been unfaithful to the “general plan of administrative reform,” based upon the compact made between Korea and Japan, by granting to foreigners various important concessions in secret ways. With a view of putting an end to any further recurrence of such complications, an express Agreement was entered into, August, 1904, by which “it was stipulated that, in case of granting concessions to foreigners, or of making contracts with foreigners, the Imperial Governments should first be informed and consulted with.” The memorandum then goes on to express profound regret that “His Majesty and his Court” had attempted by these concessions, “in defiance of this provision, a breach of faith.” Then follows the demand upon the Minister for Foreign Affairs of Korea to take the following steps:—
1. The Minister for Foreign Affairs, after stating to His Majesty the above facts and reasons, shall announce in a most public way under the Imperial order that the concessions above mentioned are null and void, as they have failed to observe the provisions of the Agreement between Korea and Japan.
2. It shall also be most publicly announced under the Imperial order that, in any case of granting concessions to foreigners, either the Korean Government or the Court shall first consult with the Imperial Government.
This memorandum bears date of July 11, 1905. But this instance of the most decisive steps taken by the Japanese Government to prevent its own subjects from profiting by secret and corrupt alliance with Korean officials, for the obtaining of concessions and contracts, is by no means an isolated one. In truth, the Japanese Protectorate is more severe in dealing with such cases where Japanese are concerned, than where other foreigners have the chief interests. And repeatedly has the Resident-General assured his own countrymen that they must expect no favors in business schemes for exploiting Korea to their own advantage, but to the injury of the Koreans themselves. Indeed, he has publicly declared to all such Japanese: “You have me for your enemy.”
More recently effective measures have been enacted and put into force to make impossible the recurrence of the old-time ways of robbing Korea by schemes for “promoting” her business enterprises and by secret ways of obtaining concessions. Among such measures is the safeguarding of the “Imperial black seal” (the Emperor’s private seal), which could formerly be used to plunder the treasury without the knowledge or consent of its legalized guardians, or even of the Emperor himself. Under the new regulations, the black seal cannot be legally used except with the knowledge and attestation of the Minister of the Household and his Imperial Treasurer.