Dr. Sun Yat-sen was just then busying himself with the task of drawing up projects for the further economic development of China with international participation, and I corresponded with him. In one of my letters I considered how rapid and sweeping the industrial transformation of China should be. I wrote:
I believe that we should at all times keep in mind the fact that we are not dealing with a new country, but with one in which social arrangements are exceedingly intricate and in which a long-tested system of agricultural and industrial organization exists. It is to my mind most important that the transition to new methods of industry and labour should not be sudden but that the old values should be gradually transmuted. It is highly important that artistic ability, such as exists, for instance, in silk and porcelain manufacture, should be maintained and protected, and not superseded by cheaper processes. The one factor in modern organization which the Chinese must learn to understand better is the corporation, and the fiduciary relationship which the officers of the corporation ought to occupy with respect to the stockholders. If the Chinese cannot learn to use the corporation properly, the organization of the national credit cannot be effected. Here, too, it is necessary that the principle of personal honesty which was fostered under the old system should not be lost, but transferred to the new methods of doing business. So, at every point where we are planning for a better and more efficient organization, it seems necessary to hold on to the values created in the past, and not to disturb the balance of Chinese society by too sudden changes.
Among his suggestions for constructive works, Dr. Sun Yat-sen had spoken of a northern port, somewhere on the coast of Chihli Province, which should have water deep enough to admit large ocean-going ships. The port of Tientsin is not adequate: it is far up river, and lacks satisfactory anchorage where the river empties into the sea. Chinwangtao is a far better port, but so exposed that enormous expenditure would be needed to improve it; and its capacity, even then, would be too small. I asked Mr. Paul P. Whitham, special commissioner of the Department of Commerce, to go to the Chihli coast to see whether about half way between Tientsin and Chinwangtao a satisfactory port site might be found. He succeeded in finding a site where, with comparatively moderate expense, a deep-sea port could be built. It was easy to see the transformation in north China commerce that this would bring about. Here would be an outlet for a rich and extensive hinterland, including the Province of Chihli and all the region to the north and northwest of it, particularly inner Mongolia and western Manchuria. I talked the matter over with the civil governor and other provincial leaders of Chihli Province, also with the representatives of Governor Li Hsun of Nanking, besides certain members of the Central Government. They greatly favoured the project, and before many weeks preliminary surveys were made. It was to be known as the Great Northern Port.
I visited Sir John Jordan on August 14th telling him of my resignation, at which he expressed regret; but he admitted that he could understand why I wished to return to the United States. He, too, wished to be relieved of his duties as soon as possible. I had on that day a very full talk about Shantung with Mr. Yoshizawa, Japanese Chargé, in which we considered ways which might render the Shantung arrangement more satisfactory, especially if Tsingtao should be made into a genuine international settlement. But I emphasized the importance of the return of the railway.
The negotiations for the new Consortium had been going on for some time. The Japanese proposed that the Consortium should not apply to Manchuria and eastern Mongolia. The Japanese-controlled press had attacked the first proposal of this Consortium, as Japan purposed during the war to achieve complete leadership of foreign finance in China. If the United States would join the old Consortium, Japan would have been pleased, for there she led. But ordinarily the financial power of Japan is of distinctly secondary importance, and the abnormal conditions of the war could not last. Now Japan approved of the new Consortium in principle, but continued to procrastinate when a decision on details was required.
My resignation was accepted in a cablegram received on the 18th of August, the President expressing formally his regret that I should find it necessary to insist upon relinquishing my post. Even now, when I knew how decidedly the President had misjudged the Chinese situation, notwithstanding my insistent and detailed warnings, I had no desire to advertise differences in policy. The Japanese press, I knew, would consider my resignation due to the defeat of my "policy" to have America maintain her honourable and trusted position in China. I did not wish to favour this sort of interpretation by a controversy with the administration.
The Chinese understood the situation quite completely. When I told the President, the Minister for Foreign Affairs, the Premier, and non-official Chinese friends, they seemed discouraged at the prospect of my leaving China at this juncture. I had the good fortune to make many friendships in China with men whose loyalty and truthfulness could be relied upon. Though seemingly distressed at the idea of my going, they knew I only hoped it might enable the work of developing close relations between the two countries to continue more effectively. I wished to bring about positive practical action. The spirit of the American policies and declarations was admirable, but not enough individual and specific American activity in China accompanied them.
Mr. Fu, Acting Minister of Education, and a number of his associates visited me on the 25th of August, to consider arrangements for exchange professorships in American and Chinese universities. I had always favoured bringing young Chinese scholars into lectureships in American universities, to make accessible to the American public the treasures of Chinese literature, philosophy, and art. President Yuan Shih-kai had supported this idea, and, but for the unfortunate monarchical movement, would have done much to promote intellectual contact between the United States and China. His successors shared his sentiments, and only the turmoil in Peking's political life prevented their working out plans in detail.