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(Hsinya Co.) which is authorized to act as an agent of the
Chinese Treasury in rivalry with the Bank of China. The
capital of the Bank is nominally equally divided into Chinese
and Japanese shares, but as the shares allotted to .China are
supplied by the proceeds of a loan advanced by Japan, the
whole capital is practically subscribed by Japan. Although
it is provided that the management will be in the hands
of a joint board on which the representatives of the two
countries have equal powers, the practice will always be like
that experienced in similar joint-enterprises, like the Yalu
Timber Company, in which the control is entirely in the
hands of the Japanese.^

In connexion with these loans, Japan appoints auditors,
accountants, and engineers for railways, electric companies,
and other industrial concerns over which they exercise con-
trol. They will not only promote the economic interests
of Japan, but will also extend her political influence by
making her investments a pretext for interference in Chinese
administration. In case of default of payment of interest
and principal they will probably claim the right to seize
the property, although they are not justified in doing so
according to the terms of contract. In times of internal
disturbance, Japan may even claim the right to dispatch
troops under the pretence of protecting the interests of her
capitalists.

In addition to these loans, Japan has extended her political
^ See chapter 8, pp. 230 et seq.



Ascendancy of Japan in the Far East 287

influence in China by ignoring the treaties. As an instance,
it may be pointed out that, although it is stipulated in the
191 5 treaty that Japanese subjects in South Manchuria and
Eastern Mongolia will submit to the laws and regulations
of the Chinese police, she has set up police boxes of her
own in Manchuria. This police not only interferes in
disputes between Japanese, but also in those in which one
party is Chinese. In the province of Shantung, although
it is avowed that Japan only desires to inherit the German
rights and concessions, she has, in spite of the protest of
the Chinese Government, established civil administration
centres which find no counterpart under the German
regime.

Treaties are necessarily brief and sometimes vague, and
their effect on the parties concerned depends on their inter-
pretation. The usual rule is that they should be considered
not only in letter but in spirit, but Japan in many instances
has interpreted her treaties with China in such a way that,
so far as the letter is concerned, she commits no violation,
but according to the spirit she secures to herself many
advantages which were not anticipated when the treaties
were made.

As co-belligerents in the present war, China and Japan
have concluded a secret treaty relating to their intervention
in Siberia. It will be recalled that shortly after the Bol-
sheviks came into power in Russia, the Chinese Government
had already dispatched a large force to the Russo-Manchurian
frontier to maintain order and to protect the Russians in
Harbin and along the Chinese Eastern Railway. When the
Allied intervention in support of the Czecho- Slovaks was
about to be decided, China and Japan concluded a military
convention for common action. The convention remains



288 New Problems since the War

secret, and its contents are not published, but according to
an unauthorized report it contains the following articles :

(i) China and Japan shall take common measures of
defence against German invasion and for the security of
their position and power in the Far East,

(2) To realize the object of (i), the action of the two
countries shall be considered from time to time by a Military
Commission.

(3) The expeditionary force of China and her troops in
co-operation with Japan for defence shall be organized and
commanded by Japan.

(4) The two countries shall help each other in military
equipment and arms.

(5) The two countries shall exchange their military maps.

(6) The two countries may act for each other in making
plans and in moving, training, and directing troops.

(7) Japan may establish military posts and station troops
in suitable localities in' China.

(8) Japan may erect potteries on suitable spots in China.

(9) The Japanese army may issue military notes in China.

(10) The Chinese Government shall prohibit any actions
injurious to the Japanese army.

(11) Japan may help China by loans to organize her
finances in order to meet the requirements of the expedi-
tionary force. The terms of the loans shall be concluded
separately.

(12) Japan shall freely open the mines not yet conceded
to her and also those already assigned to Japan.

(13) The arsenals and dockyards of China shall be con-
trolled by Japan.

(14) Japan may temporarily control the Railways of China
for the convenience of military transport.



Ascendancy of Japan in the Far East 289

(15) For the education of Chinese Army Officers, the
Japanese language shall be used and Japanese teachers
employed.

(16) Japan shall organize the Chinese Police system.

(17) In Inner and Outer Mongolia, "in Manchuria and in
Shantung, Japan has the power to establish administrative
bureaux and to share with Chinese officials the administra-
tion of civil affairs.

(18) The above articles are valid in peace time.

(19) The above articles, after being agreed upon by the
diplomatic officials of the two countries, shall be ratified by
the two Governments before they become binding. But the
two Governments shall be responsible for their permanent
secrecy.

(20) If either party wishes to revise or terminate the
above articles, six months' notice is necessary. Where one
party does not agree to revision or termination, they shall
continue to be binding.

I have no means to verify these clauses with the original
text, but both the Chinese and the Japanese Governments
have denied their accuracy. According to their statements,
the Convention is only valid for the duration of the war
and will cease to be in force as soon as peace is signed ; but
the rumour is current that, in spite of the conclusion of the
armistice in Europe, the two Governments are prepared to
renew the Convention. If it is confirmed, it will place
China exactly in the same position as Korea before the
annexation by Japan in 191 1. It can only be hoped that
there is no truth in the unauthorized report, and that
neither the authorities in Tokyo nor those in Peking will
launch such a momentous policy, which would inevitably
destroy the independence of China.

1832.13 U



290 New Problems since the War

§ 5. The Policy of the United States

The policy pursued by the United States towards China
during the war is consistent with the principles which it
has observed for many years in dealing with Far-Eastern
problems. It will be recalled that in 1898 the policy of
' the open door ' for China was enunciated for the first
time by President McKinley ; and that seven years later,
when, after the Russo-Japanese War, Manchuria was
threatened with annexation by Japan, the proposal to
neutraHze the railways in that province was suggested by
Secretary Knox to the three Governments concerned, the
Japanese, the Russian, and the Chinese, In 1908, President
Roosevelt, with the motive of providing educational facili-
ties for the Chinese, refunded the American share of the
Boxer Indemnity to China on the condition that it should
be used for the dispatch of her youth to the United States
to receive a modern education. All the^e actions are
prompted by the desire that China, in her efforts to intro-
duce reforms and resist the aggression of foreign Powers,
should be assisted both morally and materially, and have
time to develop her resources and to establish her govern-
ment on a solid base, with a view to taking a place in the
' Family of Nations ' appropriate to the extent of her
territory and to the glory of her past achievements.

Early in the war, President Wilson was afraid that the
attack on Kiaochow by Japan might involve China in serious
controversies with her neighbour, and that its capture
might affect the status quo in the province of Shantung,
in which Kiaochow was situated. As the head of a neutral
State, he had, of course, no power to dictate to Japan 5r to
speak for China, but interested in the peace and tran-



The Policy of the United States 291

quillity of the Far East, he made an informal inquiry into
the motives and plans of Japan. Having received a reply
outlining the aims and limits of the Japanese military
operations against Tsingtau, he reiterated them in a note
throwing into relief the sincerity and goodwill with which
he conducted his diplomacy with the most populous and
yet the most impotent country in the East. The note, full
of dignity, is worded as follows :

' The Government of the United States notes with
satisfaction that Japan is not seeking territorial aggrandise-
ment ; that Japan has promised to restore Kiaochow to
China, maintaining the integrity of the Chinese Republic and
acting in accordance with the Anglo-Japanese Alliance, the
object of which is to preserve equality for the commercial
interests of all the Powers in China ; and that in the event
of disturbance in the interior of China, Japan would consult
the United States before taking steps beyond the boundaries
of Kiaochow.'

The fall of Kiaochow, as already noted, was followed by
a series of demands presented by Japan to China. So far as
written documents go, the United States Government kept
a watchful and cautious attitude towards the negotiations
between China and Japan, but it is believed that it extended
wise counsel and friendly advice to both countries, asking
the one to modify or withdraw some of the more serious
demands and advising the other to accept proposals of no
great consequence. It should, however, be emphasized
that the United States had no power to intervene in
a negotiation between two independent Governments and
had to confine its activities within the limit allowed by its
position as a Power interested in the integrity and inde-
pendence of China, which it had pledged to maintain by
treaties and understandings with Japan and other Powers.

u 2



292 New Problems since the War

For the first three years of the war, China, like the
United States, was neutral, but the cordial relations that
existed between the two States made many observers
believe that she, in international matters, would always
follow the example of the leading neutral on the other
side of the Atlantic, and that should he enter into the
war, she would probably take the same course. This
belief was subsequently borne out, and the fact that China
was the first neutral State to support Mr. Wilson, was clear
evidence that, in spite of the absence of any treaty of
alliance or other kind of understanding, China and the
United States would take common measures of war and
peace. It was further believed that the President of the
United States, in asking China to join him, was not so
much influenced by any expectation of military assistance
from China as by the consideration that the adhesion of
China to the Allied Cause would win for her the sympathy
and respect of the Allies and would eventually improve her
international status.

The question of war on Germany led to the outbreak
of an internal insurrection which, as already explained, led
to the Manchu Restoration and the armed conflict between
the North and the South. President Wilson, alarmed by
the situation, addressed the following note to China :

' The Government of the United States learns with the
most profound regret of the dissension in China and desires
to express the most sincere desire that tranquillity and
political co-ordination may forthwith be established.

'The entry of China into war with Germany — or the
continuance of the status quo of her relations with that
Government — are matters of secondary importance.

' The political necessity for China is to resume and
continue her political entity, to proceed along the road



The Policy of the United States 293

of national development on which she had made such
marked progress.

' With the form of Government in China or the per-
sonnel which administers that Government, the United
States has an interest only in so far as its friendship impels
it to be of service to China. But in the maintenance by
China of one Central United and alone responsible Govern-
ment, the United States is deeply interested, and now
expresses the very sincere hope that China, in her own
interest and in that of the world, will immediately set
aside her factional political disputes, and that all parties
and persons will work for the re-establishment of a co-
ordinate Government and the assumption of that place
among the powers of the World to which China is so justly
entitled, but the full attainment of which is impossible in
the midst of internal discord.'

This note, while it produced very little effect on the
internal politics of China, created a stormy sensation in
Japan. It was construed as an interference with the
domestic matters of China, and its author was accused of
indulging himself in an inappropriate act which he had
always attempted to prevent Japan from doing. Further,
it was contended that as Japan is the leading Power in the
Far East and especially interested in the welfare of China,
she should be consulted before any advice is extended to
her neighbour. These contentions may be reasonable from
the point of view of Japan ; but for the Chinese the Govern-
ment of the United States is the only Government that is
in a position to address such a message without arousing
their suspicion, because they believe in its sincerity and
goodwill, whereas a similar message from Japan, or a joint
message signed by her and other States, would be taken
by them as an attempt to interfere with their internal
administration. Of all the treaty States, America is the



294 New Problems since the War

only one who holds no territorial concession in China and
has proved not only by words but also by deeds that she
is ready to help her ; and in consequence she can do many
things which it would be useless for other States to attempt.
Within a few months from the dispatch of the note,
Japan sent a special Mission to America with a view to
settling some of the outstanding problems, such as the supply
of steel by America and the construction of ships in Japan,
and to defining the policy of the respective Governments
towards China. On November 15, 191 7, the following
note was exchanged between Secretary Lansing and
Viscount Ishii :

' The Governments of Japan and of the United States
recognise that territorial propinquity creates special rela-
tions between countries, and consequently the United
States recognises that Japan has special interests in China,
particularly in that part to which her possessions are con-
tiguous.

' The territorial sovereignty of China nevertheless
remains unimpaired, and the Government of the United
States has every confidence in the repeated assurances of
the Imperial Japanese Government that, while geographical
position gives Japan such special interests, it has no desire
to discriminate against the trade of other nations or to
disregard the commercial rights heretofore granted by
China in the treaties with other nations.

' The Governments of Japan and of the United States
deny that they have any purpose of infringing in any way
the independence or territorial integrity of China, and
they declare furthermore that they always adhere to the
principle of the so-called " open door " or equal oppor-
tunity of commerce and industry in China.

' Moreover, they mutually declare that they are opposed
to the acquisition by any Government of any special rights
or privileges that would affect the independence or terri-



The Policy of the United States 295

torial integrity of China, or that would deny to the subjects
or citizens of any country the full enjoyment of equal
opportunity in the commerce and industry of China.'

The essential point that makes this declaration different
from the notes exchanged between America and Japan in
1909 ^is that the former now recognizes the special interests
of the latter in China, especially in regions to which the
possessions of Japan are contiguous. It is obvious, however,
that all States whose territories are adjoining have mutual
interests, such as the control of cross-frontier traffic and
the enforcement of rules of sanitation. A mutual protection
of these interests by the States concerned is a condition of
their normal life and needs no recognition by a third Power
who is separated from either of them by a vast ocean.
Moreover, if Japan has special interests in China, China
has equally special interests in Japan, and a recognition of
these interests should be extended to oite of these two
States as much as to the other. The note under our
consideration, however, takes no notice of this mutual
right : it says nothing of the special interests of China in
Japan, while it grants recognition to the special interests
of Japan in China. The explanation of this unilateral
arrangement is found in the fact that neither America nor
Japan meant by ' special interests created by territorial
propinquity ' those interests that I have just mentioned —
interests arising from adjacent or conterminous boundaries —
but those acquired by Japan, not because of the accidents
of territorial contiguity, but because of her deliberate and
aggressive policy of encroaching upon the territorial rights
of China. Such are her interests in Manchuria, in Mongolia,
in Shantung, and in Fukien. On the surface of it, the
^ See supra, chapter 5, p. 172.



296 New Problems since the War

recognition of these interests by the United States is
unfortunate because most of them are only granted by
China under duress, and it is hoped that they will be
taken away from the hands of Japan as soon as the Western
Powers have time to redress the injustice inflicted on China
by her neighbour, who has taken advantage of their pre-
occupation in the war.

The term ' special interests ' is exceedingly vague, and
it is not clear whether it is confined to those already
obtained by Japan or can be extended to those that may
be acquired by her in the future. Should it happen that
Japan, in pursuance of her policy of expansion, exacts from
China further territorial and economic acquisitions in
regions contiguous to her leased territory or where her
economic interests are already strong, would the Govern-
ment of the United States be obliged to recognize her
claims and support her demands ? Such a recognition or
support would not only reverse the friendly attitude which
has characterized its diplomacy towards China, but would
also be inconsistent with the noble ideals of right and
justice so loudly pronounced by President Wilson. More-
over, there is almost no limit to the rights and interests
Japan might claim under the phrase ' territorial propin-
quity '. The different islands that constitute the Japanese
Empire stretch for a distance of twenty-eight degrees of
latitude and are situated in a curved line parallel to the
coast of China. Should she enforce her claims to the full
extent, Japan might assert that the United States should
recognize her special interests in all the coastal provinces of
China — from Manchuria to Canton. In time, she would
be able to control the greater part of China, as it has been
her intention to do. Such a condition would be destructive



The Policy of the United States 297

of the principle of ' the open door ' and equal opportunity
for the commerce of all nations. The only thing that has
hitherto reconciled that principle with the possession of
spheres of influence by different Powers is that, in all
these spheres and in leased territories, the same tariff rates
should be enforced as in any other part of China, and
the most favourable treatment should be accorded to the
subjects of all States. The experience in South Manchuria
has, however, shown that, irrespective of what the treaties
and laws may provide, Japan will always grant greater
facilities to her own merchants in the spheres under her
control than to those of other nationalities. This should
have been taken into account by the United States Govern-
ment when it exchanged the new note with Japan.

It is, however, a comfort to the Chinese that the American
Minister in Peking, in his note to the Chinese Government
informing it of the note mentioned above, translated the
term ' special interests ' by a Chinese phrase which in
diplomatic usage corresponds more closely to ' special
relations ' than to ' special interests ', indicating thereby
that his Government did not attach much importance to
the recognition of ' special interests ', while it reaffirmed
the policy of ' the open door ' and ' equal opportunity '
for all nations. In fact, it is believed in authoritative
quarters that the conclusion of the new agreement alters
nothing in the American diplomacy towards China, and
that in the future when occasion arises, the State Depart-
ment at Washington will assert its right to interfere with
the movements of Japan by saying that they trespass on
the limit of ' special interests ' recognized by America in
this agreement, which limit will be fixed by her in such
a way as to affect as small an area as possible. These are



298 New Problems since the War

of course no more than beliefs, and it can only be hoped
that they are not unfounded. For all these troubles China
herself is to blame, because she is so neglectful of her
military preparations that she cannot defend herself against
the aggression of Japan and must allow herself to become
an object of agreement between two other States without
her participation in it. Informed of the conclusion of the
new agreement, she declared that she was not bound by
any agreement entered into by other nations, ' but that
she consistently respected the rights which the treaties
gave to friendly nations, including those relations between
countries created by the fact of territorial contiguity '.
The declaration was not out of place, but it was the voice
of a weak man who, feeling aggrieved, was powerless to exact
a remedy for his grievance. It is only through the restora-
tion of her internal unity and the increase of her material
power that China will maintain her independence without
being guaranteed by any other Power, and abolish all the
special rights which no other nation should enjoy on her
territory.



10

Conclusion

§ I. Political Outlook
In this concluding chapter, it is proposed to discuss
a few guiding principles which should be grasped by
Chinese statesmen ; but before doing so, let us summarize
in tabular form the Constitutional plans suggested and
recommended in the first part of this volume.

{a) A strong Executive, the President having power to

dissolve Parliament, and a Cabinet responsible to

Parliament, and yet in control of it ;
{b) A nominative Senate through which the Executive

can control the lower House ;
{c) A lower House elected by direct election and on

a franchise limited by educational and property

qualifications ;
{d) A Judiciary independent of the Executive ;
{e) Devolution of enumerated powers on Provincial

Governments ;
(/) Centralization of Army Control ;

{£) Separation of the central from the provincial finances;
{h) Representative Government in the province with its

Governor appointed by the Central Government ;
(i) Representative Government in the district (Hsien)

with the magistrate appointed by the Governor.

The success of a Government depends as much on its
system as on its administration. It may be exceedingly



300 Conclusion

pleasant for a practical politician to sing the verses of

Pope :

For forms of government let fools contest,
Whate'er is best administered is best ;

but it should be noted that a public servant is as much
influenced by his personal integrity and administrative
ability as by the system of government under which he
works. The system of government and the efficiency of
administration are indeed interdependent, and he who
drafts a Constitution should make it productive and pro-
motive of honesty, vigilance, and straightforwardness on
the part of administrators.

In the past the Civil Servants of China were recruited by
a literary and classical examination which was open to all
candidates, whether they were graduates of an academic
institution or not. That system has been altered since


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