The political interests of these two groups were obviously in conflict. But after 1912 there had been big changes. The gentry were largely in a process of decomposition. They still possessed the basis of their existence, their land, but the land was falling in value, as there were now other opportunities of capital investment, such as export-import, shareholding in foreign enterprises, or industrial undertakings. It is important to note, however, that there was not much fluid capital at their disposal. In addition to this, cheaper rice and other foodstuffs were streaming from abroad into China, bringing the prices for Chinese foodstuffs down to the world market prices, another painful business blow to the gentry. Silk had to meet the competition of Japanese silk and especially of rayon; the Chinese silk was of very unequal quality and sold with difficulty. On the other hand, through the influence of the Western capitalistic system, which was penetrating more and more into China, land itself became "capital", an object of speculation for people with capital; its value no longer depended entirely on the rents it could yield but, under certain circumstances, on quite other things—the construction of railways or public buildings, and so on. These changes impoverished and demoralized the gentry, who in the course of the past century had grown fewer in number. The gentry were not in a position to take part fully in the capitalist manipulations, because they had never possessed much capital;
their wealth had lain entirely in their land, and the income from their rents was consumed quite unproductively in luxurious living.
Moreover, the class solidarity of the gentry was dissolving. In the past, politics had been carried on by cliques of gentry families, with the emperor at their head as an unchangeable institution. This edifice had now lost its summit; the struggles between cliques still went on, but entirely without the control which the emperor's power had after all exercised, as a sort of regulative element in the play of forces among the gentry. The arena for this competition had been the court. After the destruction of the arena, the field of play lost its boundaries: the struggles between cliques no longer had a definite objective; the only objective left was the maintenance or securing of any and every hold on power. Under the new conditions cliques or individuals among the gentry could only ally themselves with the possessors of military power, the generals or governors. In this last stage the struggle between rival groups turned into a rivalry between individuals. Family ties began to weaken and other ties, such as between school mates, or origin from the same village or town, became more important than they had been before. For the securing of the aim in view any means were considered justifiable. Never was there such bribery and corruption among the officials as in the years after 1912. This period, until 1927, may therefore be described as a period of dissolution and destruction of the social system of the gentry.
Over against this dying class of the gentry stood, broadly speaking, a tripartite opposition. To begin with, there was the new middle class, divided and without clear political ideas; anti-dynastic of course, but undecided especially as to the attitude it should adopt towards the peasants who, to this day, form over 80 per cent of the Chinese population. The middle class consisted mainly of traders and bankers, whose aim was the introduction of Western capitalism in association with foreign powers. There were also young students who were often the sons of old gentry families and had been sent abroad for study with grants given them by their friends and relatives in the government; or sons of businessmen sent away by their fathers. These students not always accepted the ideas of their fathers; they were influenced by the ideologies of the West, Marxist or non-Marxist, and often created clubs or groups in the University cities of Europe or the United States. Such groups of people who had studied together or passed the exams together, had already begun to play a role in politics in the nineteenth century. Now, the influence of such organizations of usually informal character increased. Against the returned students who often had difficulties in adjustment, stood the students at
Chinese Universities, especially the National University in Peking (Peita). They represented people of the same origin, but of the lower strata of the gentry or of business; they were more nationalistic and politically active and often less influenced by Western ideologies.
In the second place, there was a relatively very small genuine proletariat, the product of the first activities of big capitalists in China, found mainly in Shanghai. Thirdly and finally, there was a gigantic peasantry, uninterested in politics and uneducated, but ready to give unthinking allegiance to anyone who promised to make an end of the intolerable conditions in the matter of rents and taxes, conditions that were growing steadily worse with the decay of the gentry. These peasants were thinking of popular risings on the pattern of all the risings in the history of China—attacks on the towns and the killing of the hated landowners, officials, and money-lenders, that is to say of the gentry.
Such was the picture of the middle class and those who were ready to support it, a group with widely divergent interests, held together only by its opposition to the gentry system and the monarchy. It could not but be extremely difficult, if not impossible, to achieve political success with such a group. Sun Yat-sen (1866-1925), the "Father of the Republic", accordingly laid down three stages of progress in his many works, of which the best-known are San-min chu-i, ("The Three Principles of the People"), and Chien-kuo fang-lüeh ("Plans for the Building up of the Realm"). The three phases of development through which republican China was to pass were: the phase of struggle against the old system, the phase of educative rule, and the phase of truly democratic government. The phase of educative rule was to be a sort of authoritarian system with a democratic content, under which the people should be familiarized with democracy and enabled to grow politically ripe for true democracy.
Difficult as was the internal situation from the social point of view, it was no less difficult in economic respects. China had recognized that she must at least adopt Western technical and industrial progress in order to continue to exist as an independent state. But the building up of industry demanded large sums of money. The existing Chinese banks were quite incapable of providing the capital needed; but the acceptance of capital from abroad led at once, every time, to further political capitulations. The gentry, who had no cash worth mention, were violently opposed to the capitalization of their properties, and were in favour of continuing as far as possible to work the soil in the old style. Quite apart from all this, all over the country there were generals
who had come from the ranks of the gentry, and who collected the whole of the financial resources of their region for the support of their private armies. Investors had little confidence in the republican government so long as they could not tell whether the government would decide in favour of its right or of its left wing.
No less complicated was the intellectual situation at this time. Confucianism, and the whole of the old culture and morality bound up with it, was unacceptable to the middle-class element. In the first place, Confucianism rejected the principle, required at least in theory by the middle class, of the equality of all people; secondly, the Confucian great-family system was irreconcilable with middle-class individualism, quite apart from the fact that the Confucian form of state could only be a monarchy. Every attempt to bolster up Confucianism in practice or theory was bound to fail and did fail. Even the gentry could scarcely offer any real defence of the Confucian system any longer. With Confucianism went the moral standards especially of the upper classes of society. Taoism was out of the question as a substitute, because of its anarchistic and egocentric character. Consequently, in these years, part of the gentry turned to Buddhism and part to Christianity. Some of the middle class who had come under European influence also turned to Christianity, regarding it as a part of the European civilization they had to adopt. Others adhered to modern philosophic systems such as pragmatism and positivism. Marxist doctrines spread rapidly.