Indeed, completion of such an enterprise would far transcend mere business. What the Chinese needed was the organization of their national life. In every particular this depended upon communications—trunk lines north and south, east and west—which would have largely overcome obstacles to Chinese progress. The nation's mind, instead of being focussed on building up, unifying, and organizing the different parts of the country, remained localized and scattered. A thousand times the energy needed to achieve this unique work was spent by us in Europe. That is part of the cost of war.
Mr. Charles Denby, interested in automobile manufacture, called one morning and asked that I take a motor ride up the Tartar City Wall—a thing which had never before been attempted. I yielded to the idea, and without further inquiry joined him, together with the commandant of the guard, Colonel W.C. Neville. Leaving the rear gate of the Legation and approaching the broad ramp leading up to the wall, I was surprised to see gathered there all the American marines, as well as many other people, including motion-picture men. I had not counted on this publicity; it was, however, too late to have any regrets, so we were whisked up the steep incline and took a ride on the top of the great wall. This first automobile ascension of the monumental structure excited a good deal of attention. A British paper tried to raise a laugh by ironically criticizing the British minister for not supporting British industry by taking air flights, or doing other things which might serve to attract attention to national products. I did not mind what was said, as I had enjoyed the excitement of the ride.
Mr. Carey's party had by this time finished its survey. Laborious negotiations had gone on for an acceptable contract to improve the ancient Grand Canal. Mr. Carey also sought a contract for the building of railways. These matters were entrusted to Mr. Roy S. Anderson, who carried on the detailed negotiations. I had given Mr. Carey an introduction to the various officials concerned, and had from time to time supported his efforts, but did not take part in the details. The business was carried on with Mr. Tsao Ju-lin, the Minister of Communications, while the canal matter lay with Mr. Chen Pan-ping, Minister of Agriculture and Commerce, a younger man, educated in Japan and a member of the Christian Church. Mr. Chow Tsu-chi, the Minister of Finance, and Mr. Liang Shih-yi, wielded a directing influence in the negotiations. I was careful to abstain from anything which could possibly savour of pressure, or a desire to take advantage of the difficult financial necessities of the Government. The contracts were made not on the basis of any temporary or local interest, but to furnish a foundation for long-continued constructive work.
The Chinese Government gave to the American concern the right to build fifteen hundred miles of railway, to be selected from five alignments mentioned in the contract. Mr. Carey started for America on May 18th, to secure ratification of the agreements. With him he took the most favourable concessions which the Chinese Government had ever granted to foreigners. All the most advantageous provisions of former contracts had been embodied; the American contractors were to get a commission of 10 per cent. on the cost of construction and equipment, and were to share, also, in the profits of operation. A broad policy of development was adopted, embracing the encouragement of industries along the railways to be built.
The Chinese Government, accustomed to financial support from nations which had valuable concessions, hoped that the Americans would now offer such assistance. The concessions were in no sense made dependent upon loans, but collateral loan negotiations were proceeding, and Mr. Carey took with him proposals concerning loans and securities offered. His associates made every effort to secure a loan to China, but as they now turned over their holdings to the American International Corporation, and as the latter was negotiating to take over the American group agreements with Great Britain, Russia, France, and Japan, the matter became hopelessly tangled up with international affairs and no action resulted. The Americans understood that Japan would coöperate in a joint loan but would oppose any separate action by the United States. American finance was still too provincial to act independently in such a matter. Also it would approach each piece of business as a separate unit, not ready to exert itself in behalf of a loan in order to create a more favourable situation for other transactions. European and Japanese combinations in China took a different view; they were organized to represent a broad national interest in Chinese business. While the attitude of individual American corporations corresponded to the individualism of our business, yet the national commercial interest of America was bound to suffer because an organization did not exist which was broadly representative, which would look upon all parts of Chinese commerce and finance in their interrelation, and gather from every individual exertion favourable cumulative effects in other fields of enterprise.
In yet another respect American practice was unsuited to the conditions of business in China. After negotiating in a painstaking manner for months, the corporation's representatives had finally signed a formal agreement that was more advantageous than any ever granted before. The results of this successful negotiation were set before the home office, which took the position that its hands were still completely free. The provisions of the contract were minutely reëxamined; on several points it was concluded that still more favourable arrangements might be made. The representatives were instructed to reopen the negotiations, making the consent of the home corporation dependent on the acceptance of these additional terms.
Such a method could not be used in China more than once. The Chinese expect that when an agreement is arrived at with business representatives in Peking, it will be adhered to, unless very radical changes of conditions occur. They have been dealing on this basis with the agents of European corporations, whose experience is considered by their home offices as entitling them to handle the details of the negotiations without reporting minutely to home officials far less informed than they. To disavow the activity of a local representative in China, except under absolute necessity, is to discredit the whole negotiation. The representative who should wield great influence is suddenly reduced to the dimensions of a clerk with whom the Chinese will not take up anything of importance thereafter.
That the Americans would not make a loan disappointed the Chinese officials. They were used to looking for financial support to powerful groups, who desired or had obtained concessions. When, in addition, proposals came for many changes in the signed contracts, the displeasure of the Chinese knew no limits. The storm broke just before the funeral of Yuan Shih-kai. I was appealed to for aid in predisposing the Chinese officials to look upon the new proposals with more favour. The Minister of Communications as well as Mr. Chu Chi-chien, the Minister of the Interior, whom I interviewed, were dejected because the loan had been so abruptly refused. They had counted on America to take part in Chinese finance, in order that the Chinese Government might not be entirely at the mercy of the Five-Power Consortium, or rather of Japan, which was now the only active member of that group. I tried to explain the action of the Americans on the basis of sound business practice. I pointed out that in the United States, capital, industry, and commerce are not mobilized for foreign enterprise as is the case with the big foreign banking institutions of Europe. I tried to encourage them to set American firms to doing constructive work in China, and assured them that out of such relationships there would naturally grow a readiness to afford financial support.
They did not dispute my point, but, in the words of Cleveland, they felt themselves confronted by a condition, not a theory.