GUARDING THE "OPEN DOOR"
Negotiations had been proceeding all through the autumn of 1916, between the Corporation and the Chinese Government, concerning the modifications which the former desired to introduce into the Grand Canal contract signed in May. The negotiations on the part of the Chinese were in the hands of the Minister of Agriculture, and of Mr. Pan Fu, a young Shantung capitalist and official of progressive ideas. As the Minister of Agriculture was not well disposed, it was found difficult to get him to agree to the additional advantages which the Corporation desired to secure before finally ratifying the contract. Shortly before Christmas, however, a basis of agreement had been reached. Just at this time there came from America the astonishing news that the American corporation had invited Japanese capitalists to coöperate in this contract, on condition that such coöperation would be acceptable to the Chinese Government.
The representatives of the American corporation in Peking had no thought nor inkling whatsoever of this change in policy. The step had been taken without warning and without consulting either the American Government or the representatives of the company in China. It may be imagined in what position it left the latter, to whom the Chinese had entrusted these important rights solely because of the confidence they had in Americans, both as to their ability to carry through an enterprise of this kind, and as to their complete freedom from all political afterthought. Unmindful of the fiduciary relationship which their representatives had established in China, the American corporation, without first sounding the Chinese and without giving any intimation to the American Government—through whose approval and support they had been able to gain these rights—turned around and made an agreement to bring the subjects of another nation into the contract. It is to be doubted if the nationals of any other country would have acted in this manner.
If the action had been taken out of deference to rights which the Japanese might claim in the future as a part of a sphere of influence to be asserted in Shantung, then indeed it was one of superlative international courtesy. New York bankers, however, were at this time still notoriously the most timid beings known to experience, when it came to matters of foreign investment. To make up for this they did, when they once got started, throw away American money in amazing quantities on reckless foreign enterprises in Europe and South America.
What made this action so inexcusable was not that Japanese coöperation had been invited or accepted, but that the one enterprise selected for such coöperation was the one in which America, through the National Red Cross, had long been interested and which had been committed to Americans as a special mark of confidence. One might have thought that goodwill to the Japanese might have been amply demonstrated had our people declared their complete readiness to coöperate on any one of the numerous unfinished enterprises which the Japanese controlled in Manchuria and elsewhere.
It was no easy task for the representatives of the American corporation to tell the Chinese what had been done in New York. The proviso that the arrangement was conditional upon its being acceptable to the Chinese was of course pathetically ineffectual, because after the arrangement made in New York the Chinese could certainly not refuse to accept any outside partners without giving very serious offence to them. I told the Chinese that we wished them to act with perfect freedom and consult their own best interests in dealing with the American corporation. But the Premier met all my explanations with: "What can we do? The corporation has tied our hands."
The Chinese had shown special favour and bestowed their contracts upon the American nation; by their own act Americans had changed this disposal in such a way as to let in a third party. Personally, I had not the least objection to the Japanese or any other nation; although it seemed that in China coöperation with the Chinese would be the normal method. Yet my experience with the Hukuang railways had made me very doubtful of the practical advantages of international coöperation in industry. It is a cumbersome, expensive way of doing business, full of delay and circumlocution. I felt that the different nations should mutually facilitate each other's enterprises and coöperate in constructive planning from which all might derive advantage; but I felt strongly that individual enterprises should be managed by a particular group or corporation without complicated international machinery.
The railway concessions made to the Siems-Carey Company, which were to be financed by the American International Corporation, were also making trouble. Protests were made by the Russian Legation with regard to the alignment from Tatungfu toward Lanchow; these rested upon an old assurance given by the Chinese to Russia that any line northward or eastward from Peking and Kalgan should first invite Russian capital. But the protests had a weak leg to stand on, for the proposed line led southwestward from Kalgan, away from Russia's dominions. They had the less force in that the European Powers could not at this time furnish money for the construction of the much-needed railways which had been committed to their care; the more need, therefore, that America, which had means, should build other necessary railways to provide China with inter-provincial transit.