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THE BREAK-UP 
OF CHINA 



WITH AN ACCOUNT OF ITS PRESENT 
COMMERCE, CURRENCY, WATERWAYS 
ARMIES, RAILWAYS, POLITICS 

AND 

FUTURE PROSPECTS 



BY 



LORD CHARLES BERESFORD 



WITH PORTRAITS AND MAPS 



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NEW 


YORK 


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LONDON 


HARPER & 


BROTHERS 


PUBLISHERS 








1899 





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PREFACE 



The break - up of an Empire of four hundred 
millions of people is an event that has no parallel 
in history. When I undertook the Mission con- 
fided to me by tKt President of the Associated 
Chambers of Commerce, I frankly admit that I 
did not fully grasp the dimensions of a problem 
the solving of which is only possible by clear 
^ thought and decisive action — qualities that have 

1 been conspicuously absent from our dealings with 

China during the late difficulties in the Far East. 
Although my Report deals mainly with trading 
and commercial questions, it cannot exclude con- 
siderations of high policy, and I am compelled to 
travel outside the limits originally defined for the 
scope of my Mission. In framing my Report it 
is impossible to ignore conditions inseparable from 
the Commercial Question — viz., matters relating 
to international, racial, and political complications. 
The British and American public have been quite 
bewildered by the controversy which has raged 
during the last year over the relative merits of the 
" Open Door " and the " Sphere of Influence." 



Ill 



PREFACE 

Investigations on the spot have convinced me 
that the maintenance of the Chinese Empire is 
essential to the honor as well as the interests of 
the Anglo-Saxon race, and I hope that when the 
British and American people are acquainted with 
the facts as a whole, they will be similarly con- 
vinced. 

The Diplomatic and Commercial prestige of 
Great Britain has been affected by the events^ in 
Northern China, but only in a slight degree when 
compared with the loss of good name involved by 
forcing concessions from China when she is pros- 
trated by involuntary surrenders to Powers stronger 
than herself. Hitherto our policy has been to be- 
friend weaker nations. It cannot be said that this 
policy has lately been followed in the Far East. 
We have taken advantage of the impotence and 
distress of the authorities and people of China to 
advance our own interests, and consequently China 
has become suspicious of Great Britain; this is 
not only natural but inevitable. 

Our proceedings are certain to encompass the 
doom of China, and equally certain to produce 
international strife. Mastery in Asia unjier a 
system of " Spheres of Influence " will not be de- 
termined by effusion of ink. A straightforward 
recognition of the principles of freedom, fair 
dealing, and equality of opportunity which have 
made our position in the world, coupled with reso- 
lution and vigor in carrying these principles out, 
will not only preserve the integrity of the Chinese 

iv 



PREFACE 

Empire, but will conduce more largely to our 
interests than the present plan of taking what 
does not belong to us because other Powers are 
doing the same. Unless a definite settlement of 
the problem in the Far East is thought out and 
brought into efifect, war is certain, and the whole 
civilized world may be compelled to share in the 
conflict 

No one knows better than myself the inherent 
deficiencies of this Report. I claim for it, how- 
ever, the single merit of being an honest endeavor 
to examine and set forth the conditions under 
which war will alone be avoided, and will at the 
same time secure the trading and commercial 
interests not only of the British, but the whole 
Anglo-Saxon race. 



INTRODUCTORY 



I HAVE thoroughly investigated the matters 
referred to me by the President of the Associated 
Chambers of Commerce, in his letter to me of 
August I, 1898 {vide Appendix), and in further- 
ance of that object I have obtained a very large 
amount of information connected with trade in 
China, which I trust will be interesting to the 
commercial communities of Europe and America. 

I have not attempted to give these rough notes 
of travel any literary style. There has only been 
time to make a plain statement of valuable facts 
for immediate use. My professional life has not 
qualified me to give anything more than what I 
consider to be a common-sense judgment on the 
finer issues of financial and commercial questions. 
I have tried to see the interests of the trader in 
China through his own eyes, and with my own I 
have looked for the reasons which he has given 
me for his statements. 

I arrived at Hong Kong 30th September, 1898, 
and left Shanghai 9th January, 1899. During that 
time I visited those places in China where British 



Vll 



INTRODUCTORY 

communities reside, and wherever there was a 
Chamber of Commerce, convened meetings, ob- 
tained the opinions of the members, and received 
a number of resolutions {vide Appendix). 

I enclose copies of these resolutions, together 
with the names of the places. 

With the exception of three so-called armies, I 
inspected the whole military force of China, and 
by permission of the generals put the troops 
through various movements, in order to ascertain 
their efficiency. 

I visited every fort, every arsenal, with one 
exception, and all the naval and military schools, 
also the ships of both the Chinese fleets — viz., the 
Peyang and Nanyang squadrons, and the one 
dockyard. 

A Report on all these matters is enclosed. I 
have not, however, entered fully into the degrees 
of effectiveness which came to light, as it would 
not be courteous to the Chinese Government, who 
frankly asked me to inspect the whole of their 
naval and military organization, and to inform 
them in what particulars they were inefficient or 
ineffective, and, further, asked me what suggest- 
ions I would make as a remedy. But enough 
will be found in the Report to show that no se- 
curity at present exists for the future development 
of British trade in China. 

At Peking I was received on two occasions by 
the Tsung-li Yamen, and visited Prince Ching 
and his Excellency Li Hung Chang* 

• • • 

vm 



INTRODUCTORY 

I also visited six of the eight Viceroys of the 
Great Provinces. 

Everywhere the Chinese authorities received 
me with extreme courtesy and ceremony, the great 
Mandarins, Governors, Generals, Admirals, Taotais, 
and all officials treating me with marked distinc- 
tion. This was owing to a keen appreciation on 
their part of the power and influence of the trad- 
ing and commercial communities of Great Britain, 
which they were aware I had the honor to repre- 
sent. 

Everywhere friendliness towards Great Britain 
and her people was freely expressed, and con- 
siderable interest exhibited as to the Report I 
should be able to render to the Associated Cham- 
bers of Commerce in London. 

Although the Mission I undertook was essen- 
tially commercial, I found that it was absolutely 
impossible to ignore political issues. In China 
commercial and political questions cannot be sep- 
arated. I have, therefore, endeavored to show in 
my Report that future commercial success and 
prosperity depend entirely upon the treatment of 
the present political situation. In my humble 
opinion — an opinion strongly supported by every 
British community in China — the policy adopted 
by the British Government now will determine 
the life or death of British trade with China in 
the future. 

As the trading interests of Japan and the United 
States are identical with those of Great Britain, 

ix 



INTRODUCTORY 

with regard to the future development of trade 
with China, I travelled home through those two 
countries in order to obtain the opinions of the 
various. Chambers of Commerce on this important 
matter. 

An account of the result of my inquiries in those 
countries is herewith enclosed. 

I have endeavored to give detailed facts, as per- 
sonally investigated or seen, in order to illustrate 
all statements contained in the Report. 

In my Report I have confined myself to those 
points which affect British trade as a whole. 
Whenever individual industries are touched upon 
it will be found that other British trading interests 
are interlocked with such individual industry. I 
have touched very lightly on statistics connected 
with Returns of Trade or Trade Reports, such 
being already in existence either in able Consular 
Reports, or in the Returns Imperial Maritime Cus- 
toms China (Statistical Series), or in the valuable 
report of the Blackburn Chamber of Commerce, 
1 896- 1 897. 

I have had numerous interviews with Chinese 
officials on questions connected with British trade 
and commerce. A summary of such interviews 
will be found under the names of the localities 
where they occurred. 

No opportunity has been lost on my part of 
seeking interviews with representatives of all 
foreign nations holding trading interests in China. 
Consuls, merchants, engineers, etc., belonging to 



INTRODUCTORY 

Russia, France, Germany, America, Japan, etc., 
have been visited, and every efiFort has been made 
on the part of your Mission to promote friendly 
feeling, and to prove that the policy of Great 
Britain, as expressed in the "Open Door," is not 
a selfish policy for the British Empire, but one 
which must equally benefit the trade of all nations. 

That the Mission has been successful in promot- 
ing friendship is evinced by the fact that, on the 
evening of the day before I left China, I was enter- 
tained by the whole of the Foreign Communities 
of Shanghai, when a resolution (pide Appendix) 
was passed by these communities proving the re- 
spect and interest held with regard to the proceed- 
ings of the Mission. 

Through all this undertaking I have known that 
my Report might be seen by two classes of per- 
sons interested in China — namely, those who have 
already invested capital in that country, and those 
who may be going to invest I am aware that the 
interests of those two classes cannot always be 
identical. I have met the merchant who says 
"Speak out," and I have met the financier who 
says " Speak gently." My duty is a simple one — 
to speak the truth. I have seen men in China 
representing every class of commercial interest, 
and have recorded here, as accurately as I could, 
the ideas they hold, and the reasons which they 
give for holding them. 

The thanks of the Associated Chambers of Com- 
merce are due to the following gentlemen, who 



INTRODUCTORY 

rendered me most valuable assistance during my 
travels: Mr. Thomas Jackson, Chief Manager of 
the Hong Kong and Shanghai Bank, who kindly 
made all arrangements for my comfort at every 
place I visited where there was a branch of the 
Hong Kong and Shanghai Bank. 

Mr. W. Cartwright, late Commissioner of 
Customs, who accompanied me on my journey 
up the Yangtse Valley, and by his perfect knowl- 
edge of the Chinese language, and of the Chinese 
themselves, largely contributed to the success of 
my interviews with the Viceroys and other officials. 

All H.B.M. Consuls with whom I came in con- 
tact, and particularly Consul-General Brenan, Con- 
sul Bourne, Consul Fraser, and Consul Hosie. 

Mr. C. W. Kinder, Chief Engineer of the Chinese 
Imperial Railway from Peking, via Tientsin, to 
Shanhaikwan; Messrs. Jardine & Matheson, and 
Messrs. Butterfield & Swire, who placed their 
steamers at my disposal whenever opportunity oc- 
curred. 

The thanks of the Association are also due to 
my secretary, Mr. Robin Grey, for his untiring 
energy and hard work during the whole of my 
travels — work rendered more difficult by the fact 
that one of my secretaries, Mr. McDonald, nearly 
died of fever at Hankow, which necessitated my 
leaving him behind during the most important 
stages of the journey. The Report would have 
been rendered before but for this mischance. 

• « 
Xlt 



CONTENTS 



PREFACE 



Dimensions of Problem — Impossibility of Ignoring Political Questions — 
Present Policy Certain to Encompass the Doom of China — War Cer- 
tain if Continued — Report's Deficiencies and Aims P<igi iii 

INTRODUCTORY 

Scope of Mission — Report not Literary: Common-sense Judgment on Facts 
— Convened Meetings of Chambers of Commerce — Visited Armies, Forts, 
Viceroys, etc. — Everywhere Friendliness to Great Britain — Travelled 
Home via Japan and America — Industries Touched Upon, and Why — 
Interviewed Chinese Officials and Foreign Traders — Knew Report 
Might be Seen by Two Classes — Present and Future Investors — Persons 
to whom Thanks are Due for Assistance vii 

CHAPTER I PEKING 

Arrival, and Visits to Foreign Ministers — Invitation to Visit Port Arthur- 
Visit to Tsung-li Yamen — Prince Ching's Friendliness to Great Britain 
— Pointed Out that Commercial Communities Wanted Trade, not Ter* 
ritory — No Real Protection for Trade without Reorganization of Chinese 
Army— Britain, with 64 Per Cent, of Trade, Anxious about Security — 
British Officers Should be Employed — Other Nations to Help — Tsung-li 
Yamen Praises Sir Robert Hart — Return Visit of Tsung-li Yamen — 
Emperor and Empress Agree to Suggestions — Two Thousand Troops 
to be Drilled in Yangtse Valley — Viceroy Chung Chi Tung Ordered to 
Confer — Official Interpreter: Why Employed — Interview with His Ex- 
cellency Yung Lu in re Army Reorganization — Pressed to Remain for 
Further Interviews — Hu Yen Mei*s Fears for China — Interviews with 
Li Hung Chang and Sir Robert Hart — British Prestige Below Rus- 
sian — British Influence is in Inverse Ratio to British Trade I 

CHAPTER II — TIENTSIN 

Arrival at Tientsin — Protest of Chamber of Commerce Against " Spheres 
of Influence ** — Trade of Tientsin Increasing — Energy of British Mer- 

• • • 

Xlll 



CONTENTS 

chants Responsible for it— Memorandum of British Merchants Com- 
plaining of Lack of Policy — Anxiety of Merchants, and Unwillingness 
to Invest Farther Capital — Not Afraid of Legitimate but of Military 
Diversion of Trade by Russia — Alienation of Chinese Territory would 
Ruin Trade built up by British — Interview with His Excellency Yu 
Lu, and the Taotai Li — Helplessness of China — Good Feeling Between 
British and German Merchants in Tientsin Page 14 

CHAPTER III — TONGSHAN 

Particulars of the Shanhaikwan-Newchwang Railway — A Further Extension 
to Sin-min-thun to Join Russian Line Projected — Interesting Work- 
shop and Locomotive Statistics for Railway Men — Why American En- 
gines are Preferred to English — Automatic Couplings are used — En- 
gines Building in China — Particulars of a Coal-mine at Tongshan. . 23 

CHAPTER IV — NEWCHWANG 

Arrival at Newchwang — British Merchants' Alarm for Future — Trade of 
Newchwang Compared with Yangtse Ports — Meeting of British Mer- 
chants — Fears of Annexation by Russia — British Concession Wanted 
— Mineral Wealth of Manchuria — Russian Military Position, and 
Evasion of Chinese Customs — Nothing to Prevent Russia Marching 
into Chihli — Letter of Merchants — Reforms Necessary for Opening up 
Interior Suggested — Merchants' Complaints and Needs — Great Coal- 
fields, etc., in Manchuria — British Consular Agent should be Sta- 
tioned at Kirin — Ways in which British Trade may be Damaged — It 
should not be Abandoned — Manchuria a Splendid Country — British 
Trade Considerable, Russian Nil — Manchuria Russianized would be 
a Prelude to a March on India — British Capital Invested in Manchuria 
would Strengthen Our Position — Russia in Manchuria, and Her Rail- 
way Material not Paying Duty — Importance of this Exemption to 
Foreign Bondholders, as it Curtails the Income Hypothecated to For- 
eign Countries — Russian Flag Hoisted in Manchuria — Treatment of 
Chinese Peasants — Their Railway, Mainly Strategic, will take Five 
Years to Complete — Material Being Bought in America — How Rail- 
way will Affect Newchwang — Land Dispute Between Russians and 
British at Newchwang — Treatment of Chinese — British Missionaries* 
Fears — *' Manchuria Russian in all but Name" — Troops Pouring 
into Manchuria — The Russian Railway Agreement — Open Door in 
Manchuria Depends on Russian Good-will — Assurances (of no Value) 
Against Military Strength — Newchwang Key of Position — Customs 
Revenue at Newchwang Increasing — Foreign Imports — British Trade 
and Indian Yarn Going Up^English Cotton-Goods Losing Ground in 
Favor of American — Metals and Kerosene — Russian Oil Sold as 
American — Exports of Silk — Bean and Opium Trade — Mineral Wealth 
Very Great, Coal and Gold Found in Large Quantities — Silver-mines 
in Manchuria — Factories Started — Review of Trade in 1898: Figures 
not yet Published — Opening of new Chinese Railway Expected this 

Year. 32 

xiv 



> 



CONTENTS 



CHAPTER V — CHEFOO 

Arriya) at Chefoo— Memorandum of British Merchants — Field of Devel- 
opment in Cotton Goods — Gold and Coal Mines in Province — Com- 
plaints of Apathy Displayed by British Consuls — Alarm of Merchants 
Lest Kiao-chow Should Divert Trade — Shantung: One of the Few 
Provinces where Railways will Pay at Once — Visits to Factories and 
Men-of-war — Opposition of Chinese to Machinery P<^g^ 65 

CHAPTER VI — ^WEI-HAI-WEI 

Visit to Wei-hai-Wei — Opinion as to Its Naval Capabilities — A Good 
Mercantile Port, but for Our Consent to Germany Closing the 
Door 71 

CHAPTER VII — KIAO-CHOW 

Invitation from Prince Henry — Opinion as to Capabilities— Land Regula- 
tions at Kiao-chow 73 

CHAPTER VIII — SHANGHAI 

Arrival at Shanghai — ^Anxiety of British Merchants for Future — Disadvan- 
tages of New Navigation Laws — Right of Interior Residence Denied — 
Viceroys Complained of Interference with Provincial Revenue — China 
Association Meeting — Reasons for Limited Expansion of Trade with 
China Set Forth — No Complaint Against Imperial Maritime Customs 
— Treaties Imperfect — Transit-pass System — Intentions of Lord Elgin 
— Result an Utter Failure — In Many Parts Transit Passes Ignored — 
Merchants Tired of. Complaining — Trade in South Has Shifted from 
British to French Route owing to French Energy — Right of Residence 
in Interior Forbidden, which Hinders Trade — China's Necessities In- 
creasing — Tariff to be Revised, but no Reforms Proposed — China 
Wants Money, but Foreign I^enders Want Security, which China Can- 
not Offer — A Strong Government in Peking a First Necessity — British 
Government Ought to Have a Policy — Whether China Remains Intact 
or be Partitioned, Necessity for Reforms are the Same -— Dangers of 
Partition Policy — Great Britain Should Lead the Movement for Reform 
— Difficulties Great, but Other Nations Should be Asked to Co-operate 
— Chambers of Commerce Meeting — Points in Address Affecting 
Trade — Bank of China Case, Affecting Validity of All Contracts with 
Chinese — Should be Dealt with Promptly by Home Government — 
Chinese Officials at Fault — Cotton Trade of Shanghai : Chiefly Amer- 
ican in Origin but British-owned — America Increasing Her Interest 
and Competing Seriously with Lancashire — British Trade not Injured 
so Much as British Manufacturer — Few American Firms, and 60 Per 
Cent, of American Trade British- owned and Under Our Flag — Three 
Interviews with Marquis Ito, Who Supported *'Open Door" Policy — 
Thought Corea Should be Included — Reorganization of Army Neces- 

XV 



CONTENTS 

sary— Interviewed His Excellency Kwei Chun : Conversation r^ China's 
Condition — Extension of Settlement — French Pretensions and Opposi- 
tion — Origin of Extraordinary French Claims at Shanghai — Informed 
Viceroy of Nanking, if French Claims Granted, would Cause Trouble — 
Disturbances Fatal to Trade would Follow — Dangers of French Policy 
— French Demands at Paotung — Resolution of Foreign Community- 
Interviews with Taotai, and also Missionaries — Interchange of Views- 
French Jesuits in Favor of ** Open Door" Policy, and Declared no Dif- 
ficulties in it Page 76 

CHAPTER IX — NANKING 

Arrival at Nanking in Chinese Cruiser — Received with Great Pomp — 
Viceroy Afraid of Disturbances — Distress from Floods and Anti- 
foreign Feelings — Thought Reorganization of Army would Lead to 
Dismemberment of China — Commercial Understanding would Assist 
China, but Russia would not Permit — Correspondence with His Ex- 
cellency on Army Question — Change of Views — Description of Naval 
and Military Colleges — Money Well Expended : Waste of Money, how- 
ever, on Naval College in Country with no Fleet — Interesting Letter 
from the Viceroy Liu Kwen Yi 106 

CHAPTER X — ^WUHU 

Visit to Wuhu — Memorandum in Favor of "Open Door" — Merchants 
Nervous — Coal in Locality, but Authorities will not Allow it to be 
Worked 115 

CHAPTER XI — KIUKIANG 

Visit to Port — Received by Residents — Principal Export Declining — Min- 
eral Riches, Property of British and Americans, not Allowed to be 
Worked 117 

CHAPTER XII— CHINKIANG 

Visit to Chinkiang — Useful Memorandum of the Chamber of Commerce — 
Trade of Chinkiang — Success of Transit-pass System Here — Exports 
Must be Developed — New Inland Navigation Rules Defective — Cargo 
has not been Conveyed Owing to Defects in Rules — Condition of 
Grand Canal Bad — Rioting with Connivance of Authorities — British 
Flag Should be Allowed by Consuls on All British Merchants' Launches 
— Right of Residence in Interior Necessary to Push Trade — Com- 
plaints as to Yangtse Regulations and Preferential Rights — Serious Com- 
plaints as to British Consuls at Chinkiang — Also as to Native Officials 
Who Delay Business to Their Own Advantage — Suggestions by Mer- 
chants for Reform of Abuses Complained of — British Prestige at a Low 
Ebb — Gunboats Wanted on Waterways — Charges Against Consuls 
Hl^ve Some Foundation in Fact — Trade of Chinkiang in 1898 Shows 



CONTENTS 

General Decrease All Round — Reasons for Such Decline: Insecurity, 
Scarcity of Capital, and Floods — Factories and Local Trade — ^Japanese 
Steamers Subsidized — Second Visit to Chinkiang — Interview with 
Admiral of Yangtse Page I20 

CHAPTER XIII — KIANGZIN 

Interview with General Li, who was Unhappy About China*s Future — He 
was Afraid Russia would Prevent England from Assisting China. . 138 

CHAPTER XIV — HANKOW 

Found the British Community Very Anxious as to Future Security, Ow- 
ing to Rebellions Such as Yu Man Tsup — Origin of Rebellion, which 
has Lasted Twelve Years— Merchants* Resolution — Weakness of Local 
Officials — Incendiarism Rife — Importance of Opening up Waterways — 
New Navigation Law's Defects — French and Russian Seizures of Brit- 
ish - owned Property at Hankow, which was Registered at Consulate, 
but French Tore up Boundary Stones — British Firms Published Pro- 
tests, but French Consul Absolutely Sold Land — Russian Armed Inter- 
ference with British on Land Bought in 1862 — Consul Feared British 
Firm would not be Supported by H.M.'s Government — Cases Should 
be Inquired Into — Hankow Land Certain to Increase in Value — To 
Exact Compensation from China — Cowardly as She is Powerless — Vice- 
roys would be Glad to See Gunboats on Yangtse — Rapids no Difficulty 
— Steamers on Yangtse — Nationality and Numbers — Coal - fields and 
Iron-mines in Hupeh — Visit to I^atter at Wong Chi Tong — Tea Busi- 
ness at Hankow Declining — Freight Principally British — Summary 
of Interviews with Chung Chi Tung, the Viceroy — He was Afraid of 
Disturbances, as He had not Enough Troops to Quell Them — His Ex- 
cellency Suggested Employment of American and Japanese Officers 
for Army Reorganization, but Saw Insuperable Obstacles to his Or- 
ders, as to Drilling Two Thousand Men, Especially on Financial 
Grounds — At a Second Interview the Viceroy Raised Fewer Difficulties 
— Visit to His Excellency Sheng, Who Thought Russia Too Strong, 
and China Might Have to Throw in her Lot with Russia — Visit to 
the Iron and Steel Works at Hanyang — The Rich Province of Hunan 
Most Anti-foreign in China — Gold-mines with Modem Machinery in 
Hunan — Accounts of Various Foreign Factories Started in Hankow — 
Hankow the Chicago of China in the near Future 139 

CHAPTER XV — FOOCHOW 

Arrival at Foochow — British Merchants* Complaints of Likin — British 
Capital could be Profitably Employed Here — State of the Min River 
— Trouble with the Chinese Officials — Friction as to What Constitutes 
the Area Free from Likin — Interview with the Viceroy HsU Jung 
Kwei — His Views on the Provincial Armies System — ^Visit to the Tar- 
tar General Tseng Chee — Finances of Fuhkien Province— Difficulty in 
Paying Wages at Arsenal 169 

xvii 



CONTENTS 



CHAPTER XVI — SWATOW 

Arrival at Swatow— Resolution of British Merchants — Officials Afraid of 
the People — Province Decimated in 1872 — Opposition of Natives to 
Machinery — British versus American Goods — Restrictions Fatal to 
Trade — Vide a Railway Proposed Here — No Chance at Present for 
Development of Trade Page 177 

CHAPTER XVII — AMOY 

Arrival at Amoy— Tea Trade Nearly Extinct Here — Suggestions of Cham- 
ber of Commerce for Improving Tea Trade — Imposition of Likin Ac- 
counts for General Decline in Trade — Cases Given me of Flour, Brick- 
making, and Other Trades Killed by Likin — Salt Monopoly Abuses — 
Causes of Famine in China Examined : Proved to be Due to Grain not 
Being Allowed to be Moved — Captain Fleming*s Report on Coal Area 
of Kwangtung — Emigration to Singapore — Respect of Chinese for 
Queen Victoria 182 

CHAPTER XVIII — HONG KONG 

Arrival at Hong Kong and Interview with Reformer Kang Yu Wei — 
The Reform Party Crushed, but not Killed, in China — They Favor 
Extension of Western Trade with China — Reformers not Practical 
Enough: Theoretically Sound in Views — Opinions of Chinese Com- 
pradors and British Merchants — Disturbances Great Drawback to 
Trade — France in the South — Trade of Hong Kong with Kwangsi 
and Kwangtung: Tables, Ditto — Chinese Custom House in a British 
Colony an Anomaly — Its Effect on the Junk Trade — Blockade of Hong 
Kong — The Opium Trade at Hong Kong — Particulars and Figures — 
SjTstem not Fair to Chinese Government — Memorandum Showing Cus- 
toms Views on Question of Custom House — Resolutions of Chamber 
of Commerce, Hong Kong, on this Subject — Views of the Chamber 
on the '• Open Door" Principle — Address from the Chinese Residents 
at Hong Kong — Humiliating Regulations of British Government — 
Their Views on Reform 191 

CHAPTER XIX— CANTON 

Arrival at Canton — Presented with Memorandum by Merchants — 
Definition of the Area of the Treaty Port Wanted — Transit Passes 
and Piracy on the West River — French Claims to Sphere of Influence 
Unjustified by Amount of their Trade — Reply to British Merchants* 
Memorandum — Copies of Documents Showing Correspondence be- 
tween British Minister, Consul, and Chinese Authorities re the Area 
of the Port Exempted from Likin — Piracies on the West River— -Ac- 
count of Tung Kong Case — British Launch Boarded, and then Com- 
pelled to Tow Pirates — Scarcely a Day but Flagrant Cases Occur which 
Impede Trade — Forty-one Cases of Piracy Reported by Local Press— 

• • • 

XVlll 



CONTENTS 

Officials Should be Made Pecuniarily Liable for Losses — Extraordinary 
Story of Piracy on a Hong Kong Junk : Two Hundred Dollars Dam- 
age Done, and People Thrown into River — Statement of Police as to 
Condition of Junk After Fight — Case of Piracy on the Chung On : 
Captain Shot and Mutilated After Death by the Pirates — Comparison 
of English, German, and French Trade in Kwangtung and Kwangd — 
French Sphere of Influence would be Detrimental to British Trade — 
Interview with His Excellency Kwei Yun — Mineral Resources of 
Province — Effect of Disturbances on the Integrity of Chinese Em- 
pire Page 232 

CHAPTER XX — WUCHOW 

No Time to Visit Wuchow, but Mr. Hosie (Consul) Came Down to Can- 
ton — New Navigation Laws Imperfect — Suggestions for a Railway — 
Chinese Guards of British Consul had One Rifle Between Them.. 264 

CHAPTER XXI — CHINESE ARMIES AND NAVIES 

Chinese Armies and Navies: Full Account of Each Visited — Reported 
Position of Russian Troops in Eastern Siberia and Manchuria.... 267 

CHAPTER XXII — FORTS AND ARSENALS 
Forts and Arsenals — Full Reports of Visits to All but One 290 

CHAPTER XXIII — RAILWAYS 

Wide Difference between Built, Building, and Projected — Account of 
those Built — ^Account of Railways Building, with Nationality, etc. — 
Account of Railways Projected or Suggested in China — Particulars of 
Kind of Railways Required in China — We may have to Concede 
Spheres of Railway Interest 304 

CHAPTER XXIV — WATERWAYS 

Antiquity and Convenience of Waterways, but Peculations of Officials Ren- 
der Useless — The Yangtse River, 3500 Miles Long : Rapids First Navi- 
gated by Mr. Little — Account of Distances and Condition of River 
from Hankow to Ichang — Gorges of Yangtse neither so Difficult nor 
Dangerous as Supposed — Steamers Required to Navigate Them — Rise 
and Fall of River— British Civil Engineers Wanted — Probable Cost of 
Improving Rapids — French Claims to Sphere of Influence in Yangtse 
Valley — H.M.S. Woodcock^ Shallow- draught Gunboat on Yangtse — 
Steamers Badly Wanted for Towing — Account of Grand Canal: 
Showing its Condition, and how it would Add to Trade of Chinkiang 
— Account of West River Trade — How French Claim would Interfere 
with it— Routes Taken to Avoid Likin via Pakhoi Instead of Hong 
Kong — ^Junks Flying no Flag Nominally Owned by British — Leads to 
Evasion of Likin — Unfair to Chinese Customs — Differential Treatment 

xiz 



CONTENTS 

and Restrictions on West River — British Ship-owner has Direct In- 
terest in Goods to Destination, Merchant has not — Necessity for Secur- 
ing Equality of Treatment for all Goods — Yellow River : Account of 
its Changes of Bed — Cause of These Inundations, and Damage They 
Do — Navigation Difficult, Owing to Lowness of Water and Swiftness 
of Current — The Wangpoo River — Way in which the Woosung Bar 
Affects Shanghai — Pei Ho River : Difficulties of Navigation, Cause, 
and Proposed Remedy — Liao River Closed by Ice in Winter — Ship- 
ping at Time of Visit — The Han River — Account of the Big " Bore" 
— Smaller Rivers Silting Up— Dredges Necessary — Gold in Rivers — 
Tung Ting Lake and Siang River — Poyang Lake — Roads in China — 
Suggestions for Reform — Lighting of Peking Page 318 

CHAPTER XXV — THE BRITISH CONSUL IN CHINA 

Merchants Too Hard on Consuls — Defects in System, not in Men — Com- 
plaints of Merchants Tabulated — Consuls Themselves Admit Defects — 
Some Duties of British Consuls Specified, Showing Nature — A Com- 
mercial Attache Wanted — Present Appointment a Farce — Training of 
Consuls Deficient, and does not Make Them Business-like — Foreign 
Nations Give Their Nationals Better Consular Support — British 
Government Must Move with the Times and Assist Merchants — British 
Subjects Better Recommended by American than by their Own Consul 
— Charge for British Transit Passes Places Merchant at Disadvan- 
tage — Remedies Suggested: More Men, Better Pay, Earlier Retire- 
ment 348 

CHAPTER XXVI — FINANCE AND CURRENCY 

Recognizing Difficulty of Subject : Made a Collection of Currency — List of 
Coins, Etc., in the Collection — Weak Financial Position of China Due 
to Military Weakness — Revenue Squandered in Expenses of Collection 
— List of Loans — Guarantees on Railway Loans Bound to Hamper 
China Later — Why the Mandarins Misappropriate Revenue — Days for 
Loans Gone — Guides to Investors in this Country — Proposal for In- 
creasing Revenue — How Spheres of Influence would Affect Foreign 
Bondholders — No Security Without Adequate Military and Police Pro- 
tection — The Value of the Different Taels in China — Dollars Used — 
Subsidiary Coinage and Copper Cash — Paper on Relation Between 
Copper Cash and Silver — Memorandum on Chinese Copper Cash — 
Reply to Two Questions as to Gold Standard: Is it Possible? and 
How has Rate of Exchange Affected Price of Commodities ? — Re- 
forms Suggested to Improve Finance and Currency — List of Banks in 
China 359 

CHAPTER XXVII — TRADE, TREATIES, AND TARIFFS 

Changed Conditions and Competition Telling on British Trade — New 
Markets Opening — Machinery Especially Required — Unpublished Re- 



CONTENTS 

turns of 1898 Trade Showing Net Decrease — Export Trade has Suf- 
fered from Disturbances, etc. — Railways will Help British Trade if 
Chinese Integrity is Maintained — Customs Duties : Request for Increase 
— British Treaties: Nanking Treaty, Tientsin Treaty of 1858, Prin- 
cipal Articles and Intentions — Sir Rutherford Alcock's Unratified Con- 
vention of 1868 — Sir Robert Hart's View of Alcock Convention — Che- 
foo Convention . Principal Articles and Intentions of Framers — Article 
VII. of Customs — Tariff Opposed to Treaty — New Customs Rules as 
to Transit Passes — Information not New, but is a Useful Short Sum- 
mary — Illegal Taxes: Names and Descriptions — Dual Customs Con- 
trol (Imperial and Provincial) Hinders Trade — Difficulties of Transit 
Pass System Explained — Merchants* Suggestions to Remedy Abuses 
— French Firm Action has Benefited British Trade — Salt Monopoly 
and Land-tax Abuses — The Chinese Side of the Questions Presented — 
Revision of Tariff: Increase Merchants will Consent to — Reforms 
Asked as a quid pro quo — How Treaty Revisions can be Carried Out 
Fairly — The Marquis Ito's and the Merchants' Suggestions — Future 
Trade Prospects — Japan and China Compared — Summary of Points 
and Necessities of Situation Page 389 



CHAPTER XXVIII — JAPAN 

Invitations to Visit Japan — Arrival at Nagasaki — Machinery the Trade 
Most Likely to be Developed with Us — Arrived at Kobe and Osaka — 
Visit to Arsenal and Factories — Iron and Steel Works, Metal Fac- 
tories, etc. — Meeting of Merchants — Electric Plant at Kioto which 
Hauls Boats Overland — No Country which Uses Electricity to Such 
Advantage — Arrival at Tokio — Views of Japanese on **Open Door'* 
Policy — Japanese Think Chinese would Make Good Soldiers — ^Visits 
to Military and Naval Schools, and Parade of Troops — Address to Jap- 
anese Chamber of Commerce — Interview with Emperor of Japan — 
Visits Paid to Dockyard and Fleet — Japan Must Have an Export 
Trade — China Market Nearest 419 



CHAPTER XXIX ^THE UNITED STATES 

Arrival at San Francisco — Visit to Ship-building Works — Address to 
Chamber of Commerce at San Francisco^Chicagor Visit to Public 
Institutions, and Speeches Made — Buffalo — Account of Niagara Elec- 
tric Works — Visit to Washington — Mr. Whitelaw Reid on Philippine 
Policy — Arrival at New York : Address to Chamber of Commerce — 
Interest Taken in the Mission in America — Policy of ** Ojjen Door " 
Supported in the States — Question of British Ownership of American 
Goods — Friendship to Great Britain — American Trade with China 
More Important than Apparent — Interests of Great Britain and Ameri- 
ca Identical , 43^ 

xxi 



CONTENTS 



CHAPTER XXX OBSERVATIONS 

Review of Report — Points out Difficulties and Dangers of Sphere of In- 
fluence Policy, and Offers Suggestions for Reforms to Remedy Present 
State of Affairs Page 448 

APPENDIX 

Letter Authorizing Mission, and Resolutions of Chamber of Commerce 
and Other Bodies in China — Summary of Trade Statistics in China. 459 

INDEX 485 

zxii 



THE BREAK-UP OF CHINA 



I 

PEKING 

The estimated population is 1,300,000 

I ARRIVED in Peking on October the i6th, 1898. 
Having heard that there was some misunderstand- 
ing as to my status, it having been asserted that I 
was an emissary from the British Government, I 
paid my respects to all the foreign Ministers ac- 
credited to Peking, and explained clearly to their 
Excellencies what position I held. I spoke of 
the reference given to me by the President of the 
Associated Chambers of Commerce, Sir Stafford 
Northcote, which showed that I had been asked 
to come out to make a report on British trade 
and commerce, its future development, and what 
security existed throughout the Empire for such 
trade and commerce. 

During my visit to M. Pavlofif, the Russian 
Charg€ d' Affairs, he told me that he would be 
delighted if I could find time to visit Port Arthur. 
He also declared his regret that, whereas nearly all 



THE BREAK-UP OF CHINA 

nations had sent officers to look at Port Arthur 
since the Russians had occupied it, Great Britain 
had not proposed to do so. 

THE TSUNG-LI YAMEN 

On October 20th I visited the Tsung-h* Yamen 
by appointment. I was received at the entrance 
with great courtesy and ceremony by the mem- 
bers, and conducted to the audience-hall, where I 
was presented to Prince Ching, the President of 
the Tsung-li Yamen. The whole of the mem- 
bers were present, which, I was informed, was un- 
usual. After the customary Oriental formalities 
and compliments, I informed their Excellencies 
that I was in no sense whatever an official repre- 
sentative of the British Government, but that I 
had been deputed by the Associated Chambers of 
Commerce of Great Britain to proceed to China 
to report upon the condition of British trading 
interests. 

His Highness, and other members of the Tsung- 
li Yamen, spoke of Great Britain in very friendly 
terms. They said they were aware that Great 
Britain's principal interest was trade, and that she 
and China had for many years conducted trade to 
mutual advantage. 

I informed them that those connected with the 
China trade at home were anxious to develop this 
trade between Great Britian and China, but that 
there was great anxiety as to the future, principally 



PEKING 

on account of the want of security for capital and 
vested interests. 

The commercial classes were also much exercised 
in their mind at the manner in which the Chinese 
have ignored treaties, the main object of which was 
the protection and furtherance of trade and com- 
merce. 

I pointed out to their Excellencies that unless 
China herself took in hand the organization of a 
military and police force in order to give that 
security for trade and commerce which the great 
trading nations had a right to demand, circum- 
stances were certain to be produced which would 
inevitably lead to foreign countries adopting a 
policy embodied in the expression " Spheres of In- 
fluence," in order that their trade and commerce 
might be preserved and adequately protected. I 
further pointed out that the last thing that the 
British commercial communities, and indeed the 
whole British people, desired was any addition 
being made to the British Empire, either in the 
nature of dominion, sphere of influence, or protec- 
torate. That which the commercial communities 
earnestly desired was free and uninterrupted op- 
portunities for trade, not selfishly for the British 
nation alone, but with equal rights and privileges 
for all the nations of the world; in other words, 
what is described as the "Open Door" for the 
trade of all. 

In order that this should be effective and as- 
sured, I submitted to their Excellencies that it was 

3 



THE BREAK-UP OF CHINA 

essential that China^hould maintain her integrity. 
I further added that if, owing to the break-up of 
China and the necessity of protecting foreign trade, 
European countries were forced to adopt the pol- 
icy of "Spheres of Influence," it might possibly 
cause considerable irritation and unwished-for com- 
plications between those countries, but it most 
certainly would bring about the fall of the Chinese 
Empire. 

Prince Ching remarked that the members of 
the Tsung-li Yamen quite appreciated all I had 
said, but asked me how I thought trade and com- 
merce could be better protected than it was at 
present. 

I informed the prince that real and effective 
protection could be given to property by a thor- 
ough and complete reorganization of the Chinese 
Army as a whole; that the present system of having 
provincial armies had proved itself, over and over 
again, ineffective; that a vast amount of property 
had been destroyed, and that many lives, of mis- 
sionaries and others, had been sacrificed, all owing 
to the want of efficient military and police; that 
these losses of life and property had caused im- 
mense inconvenience and expense to the Chinese 
Government itself ; that if a tenth part of the sum 
that the Chinese have had to pay as indemnity for 
the loss of life and property had been devoted to 
military organization, such losses would not have 
taken place. 

I also pointed out that even if the sum supposed 

4 



PEKING 

to be devoted for military purposes in the prov- 
inces were expended as intended, China would 
have an army of from two to three hundred thou- 
sand men, without a penny of extra taxation be- 
ing placed upon the people. 

Prince Ching replied that he did not think it 
would be possible to alter the old-established cus- 
tom and practice of having provincial armies to 
maintain order in China. I remarked that the 
Chinese Government had lately had a very excel- 
lent illustration of the result of the provincial sys- 
tem when carried out with regard to the fleet. If 
the two fleets — ^the Peyang fleet and the Nanyang 
fleet — had been a national fleet under one com- 
mander and organization, it would have been im- 
possible for the Japanese to have obtained the 
brilliant and easy victories which they achieved in 
the late war, and China would not now be in the 
deplorable position, politically and financially, in 
which she finds herself at present. 

Their Excellencies commenced discussing this 
point among themselves, and I was informed that 
some of them entirely agreed on this point. 

I then suggested that as Great Britain had 64 
per cent, of the whole foreign trade of China, she 
was naturally anxious as to its adequate security, 
and, being on very friendly terms with the Chinese, 
it might be possible that the British Government 
would allow an officer to help the Chinese to put 
their army in order, if the Chinese Government 
applied to the British Government for assistance 

5 



THE BREAK-UP OF CHINA 

of this description. I further said that I had no 
authority whatever to make this statement, but in 
the interests of British trade and commerce, as 
well as on account of the friendly feelings that I 
had towards China, I made it as a suggestion, in 
order that something practical might be proposed 
to remedy the present unsatisfactory state of 
affairs. 

I reminded the Prince that the Chinese Govern- 
ment had already had extensive experience of the 
loyalty and utility of British subjects when employ- 
ed as Chinese servants, and referred to General 
Gordon, who had been the means of keeping the 
present dynasty on the throne ; and to Sir Robert 
Hart, who, by his able and excellent administra- 
tion over the maritime customs, had produced the 
only certain available asset they possessed in the 
whole Empire. 

Several of the Ministers present here said that, 
though there might be difficulties, they agreed 
with my remarks. They also spent some little 
time in strong eulogies of General Gordon and 
Sir Robert Hart. I may mention, as an interest- 
ing fact, that during the many interviews and con- 
versations which I had with Viceroys and other 
high Mandarins, they invariably asked me if I 
knew what Sir Robert Hart's opinion was on the 
question which we were discussing. This com- 
plete confidence in Sir Robert will naturally ex- 
cite feelings of pride and satisfaction among his 

countrymen at home. 

6 



PEKING 

I further remarked that, in the event of the 
Chinese Government contemplating such an idea, 
it might be well to invite those nations who had 
large trading interests with China to lend a few 
officers and non-commissioned officers to work 
with the British in the reorganization of the army. 

The Prince said that they had already had Ger^ 
man officers to drill some of their troops, and also 
Captain Lang, a British naval captain, to organize 
their fleet. In both cases the work had been done 
to the entire satisfaction of the Chinese Govern- 
ment. 

Prince Ching repeated that the Tsung-li Yamen 
thought my remarks very sound, and that they 
would like to see me again in a few days, when 
they had had time to think over my suggestions. 
He said the Tsung-li Yamen were satisfied with 
the integrity of Britain's motive, that they knew 
she did not want territory, but would do all in her 
power to promote trade. 

The interview, which had lasted three hours, 
then closed with the usual Eastern compliments 
and ceremony. 

On October 2 2d, Prince Ching and some mem- 
bers of the Tsung-li Yamen paid me the compli- 
ment of visiting me at the British Legation. 

Prince Ching immediately referred to the pre- 
vious interview, and said that they had seen the 
Emperor and the Empress Dowager, who con- 
sidered that the suggestion I had made appeared 
to be good, and that they recognized it was in the 

7 



THE BREAK-UP OF CHINA 

interests of China to offer proper protection for 
trade and commerce. 

They informed me that a special edict had been 
issued on the previous day to his Excellency 
Chung Chi Tung, the Viceroy of Hunan and 
Hupeh, ordering him to have 2cxx> of his troops 
in readiness, in order that they should be put 
under a British officer for drill and organization 
as a trial. A thousand of these troops were to be 
Chinese, and were under the immediate command 
of his Excellency Chung Chi Tung, and the other 
locx) were to be Manchus, who were under the 
command of the Tartar General Hsiang Hing, at 
Ching Chou. 

Prince Ching said that the drilling of the 2000 
troops would be tried as an experiment, and that, 
if successful, it might lead to the organization of 
the army as a whole. I pointed out to the Prince 
that I was in no way authorized to take any re- 
sponsibility with regard to this matter, that I had 
only made a suggestion in the interests of the pro- 
tection of trade, and that any action taken on the 
part of the Tsung-li Yamen must go through the 
proper channel — i.e., through the British Minister 
to the British Government. 

Prince Ching said it was the intention of the 
Tsung-li Yamen to at once inform Sir Claude 
MacDonald, the British Minister, of their wishes, 
as well as the fact of the edict having been sent 
to his Excellency Chung Chi Tung, and also to 
telegraph to his Excellency Lo Fen Lu, the Chi- 

8 



PEKING 

nese Ambassador in London, a similar communi- 
cation. 

Prince Ching said they would telegraph to 
Chung Chi Tung that I was shortly going to visit 
the Yangtse, and ordering him to confer with me 
on the matter. 

I remarked that I would be delighted to confer 
with the Viceroy, but that the matter must be one 
to be settled between the two governments, and 
that I had no right or authority whatever to med- 
dle with the matter. 

The interview ended in an expression of thanks 
from Prince Ching, in which he declared that the 
Tsung-li Yamen looked upon me as the friend of 
China. 

Since leaving Peking I have been in communi- 
cation with Prince Ching, and have received letters 
from him. 

The gentleman who was good enough to inter- 
pret for me at both these interviews was Mr. Ful- 
ford, of the British Legation, who helped me to 
impress on the Tsung-li Yamen that my remarks 
had reference only to questions connected with 
commerce, and that there was nothing of a political 
character in any of the suggestions that I made. 

It was wise to employ the interpreter to the 
British Legation, for in the East verbal communi- 
cations are continually the cause of grave misun- 
derstandings. By taking this precaution all that 
passed between myself and the high officials in 
Peking was made known to the British Minister. 

9 



THE BREAK-UP OF CHINA 
HIS EXCELLENCY YUNG LU 

While at Peking I paid a visit to his Excellency 
Yung Lu, at present one of the most powerful and 
influential men in the Chinese Empire. 

He conferred with me relative to the interviews 
I had had with the Tsung-li Yamen. He said the 
principle of reorganizing the Chinese Army under 
British and foreign officers and non-commissioned 
officers was going to be adopted, and that an edict 
had already been sent to his Excellency Chung 
Chi Tung. His Excellency Yung Lu was most 
anxious that I should give him details as to how 
the principle should be carried out. This I con- 
sented to do, after impressing upon him that what 
I said was my own private opinion, and that all 
the details connected with such a scheme must be 
discussed by the two governments, and not by 
private individuals. 

I explained to his Excellency that naturally 
Great Britain would be anxious to help China, not 
so much for the sake of China herself as for the 
sake of British interests with regard to the further- 
ance of trade. 

His Excellency asked me a direct question — 
whether if China put the whole of her armies 
under British officers, Great Britain would assist 
China in any quarrel that might arise between her 
and any other Power. 

I remarked that I would not enter into any 
political questions, but that the last thing Great 

lO 



PEKING 

Pritain wanted to do was to mix herself up in 
quarrels which might arise between other coun- 
tries. I asked his Excellency if I might see the 
military forces at present quartered around Peking. 
His Excellency replied that he would be very glad 
if I would visit those armies which were properly 
drilled and effective, but that it would be no use 
my seeing the two armies that were composed of 
coolies, and were not smart or properly drilled. 
An account of the armies I saw will be found in 
another chapter. 

Before leaving, his Excellency pressed me to 
remain longer in Peking, and to see Prince Ching 
and the Tsung-li Yamen again, with the object of 
going further into details connected with the or- 
ganization of the Chinese Army. I remarked that 
that was impossible, and that if the Tsung-li Ya- 
men thought seriously of the matter, their proper 
course was not to discuss it with me but with the 
British Minister. 

I also called upon his Excellency Hu Yen Mei, 
Director of Railways and Governor of Peking, a 
most energetic and enlightened Mandarin. He 
professed himself very friendly to the British, and. 
said that when China was opened up by railways 
it would surely make for the benefit of China and 
the trade of all nations. He, however, was very 
anxious as to the immediate future of his country, 
and said that he earnestly hoped the Chinese Gov- 
ernment would shortly create an efficient army, as 

if disturbances occurred European countries would 

II 



THE BREAK-UP OF CHINA 

be very likely to take large slices of territory as 
compensation for life or losses, which China in her 
present position was powerless to prevent 

His anxiety was based greatly on what had 
occurred while I was there. Two of the British 
engineers, making the line near Fungti, had been 
badly beaten and shot at by some of the Kansu 
troops. 

While at Peking I paid a visit to his Excellency 
Li Hung Chang. I found him very old and in- 
firm. The conversation was of no interest to 
this Report. 

I called upon Sir Robert Hart, the Inspector- 
General of Customs, and upon Mr. Bredon, the 
Deputy Inspector-General, and had some conver- 
sation with them relative to the Customs adminis- 
tration at Hong Kong. 

The subject matter of this interview will be 
found under the chapter of this Report headed 
" Hong Kong." 

Sir Robert Hart expressed an opinion that it 
would be for the benefit of trade and commerce, 
as well as of China herself, if she would create an 
effective military force for the protection of her 
trading interests. 

From my conversation with Chinese authorities, 
foreigners as well as British in Peking, an opinion 
was distinctly formed in my mind that British 
prestige is certainly below that of Russia. I hardly 
ever made a suggestion to any prominent Chinese 
official which I thought might tend to the security 

12 



PEKING 

of Anglo-Saxon trade and commerce, that I was 
not met with the question, " But what would Russia 
say to that ?" or words to that effect. 

The idea is gaining ground all over China that 
Great Britain is afraid of Russia. Whenever I 
expressed astonishment at such a thought being 
entertained, the individual or individuals to whom 
I was speaking referred to some of the following 
recent events — ^viz., Great Britain being afraid to 
support Japan when Japan was ordered out of 
Corea and the Shantung Peninsula; the objec- 
tions which prevailed against Great Britain ad- 
vancing the loan to China; the Talienwan and 
Port Arthur incidents, and the Shanhaikwan Rail- 
way incident. 

A prominent bank official summed up the situa- 
tion very tersely by saying, " sixty-four per cent 
of the whole foreign trade with China is British. 
There should be a corresponding percentage of 
influence, but British influence is in inverse ratio 
to British trade." 



II 

TIENTSIN 

The estimated population is i,ooo,ooo- 

TRADE STATISTICS 

The total value of trade in 1897 was Hk. taels 551059,017 
(nearly j^8,ooo,ooo). 

The total tonnage of shipping entered and cleared in 1897 
was 1,326,663, of which 574,177 was British. 

I ARRIVED at Tientsin on the 15th of October, 
1898. Soon after my arrival I attended a meet- 
ing of the Chamber of Commerce. The chairman, 
Mr. W. W. Dickinson, a British merchant, opened 
the proceedings by expressing thanks on behalf 
of his Chamber to the Associated Chambers of 
Commerce in London, for having sent a mission 
out to China to inquire into the state of trade. 

This Chamber vehemently protested against 
what is described as a Sphere-of- Influence policy, 
and declared that the future trade of Tientsin 
would be entirely dependent upon preserving the 
integrity of China, as well as some guarantee for 
the policy of the Open Door. 

They pointed out also that Tientsin is a great 
trading and distributing centre of North China 

14 



TIENTSIN 

and Manchuria; it is also the natural outlet for 
the provinces of Chihli, Shansi, Kansuh, part of 
Honan, and Northern Shantung, as well as of 
Eastern and Western Mongolia. 

TRADE 

The Customs Returns bear testimony to the 
steadily increasing volume of trade at Tientsin. 

But these returns by no means show the full 
amount of duty paid by the trade of the port, as a 
very large proportion of the import duty on foreign 
goods is collected in Shanghai, and goes to swell 
the returns there. 

The amount of duty collected in Tientsin in 
1888 was 591,494 taels, about ;^84,499; in 1897, 
973,000 taels, about ;^ 139,000; an advance in nine 
years of nearly 65 per cent. 

The total value of imports and exports of 
Tientsin in 1887 was 32,724,499 Haikwan taels, 
about ;^4,674,928. Ten years later, in 1897, the 
total value amounted to 64,644,21 1 Haikwan taels, 
about ;^9,2 32,030, being an increase of no less than 
99 per cent. 

This increase of prosperity has not been ob- 
tained without great labor, severe losses to in- 
dividuals, and many disappointments, suffered al- 
most entirely by the British merchants whose 
energy opened up the country. 

The capital required has been very large, and 
has up to the present time been increasing. This 

15 



THE BREAKUP OF CHINA 

IS borne out by the fact that though eighteen years 
ago there was no bank at Tientsin, there are now 
four — viz.: i. The Hong Kong and Shanghai 
Banking Corporation, established in 1881 ; 2. The 
Deutsch Asiatische Bank, established 1890; 3. 
The Chartered Bank of India, Australia, and Chi- 
na, established in 1895; 4. The Russo - Chinese 
Bank, established in 1897. 

The amount of capital employed by the branch- 
es of these four banks at Tientsin has been esti- 
mated at about eight millions of taels, or about 

;^I,ICX),OCX>. 

A very large proportion of cargo arriving and 
leaving this port is carried in foreign vessels, prin- 
cipally British. 

These vessels have to be specially constructed 
for this particular trade, owing to the difficulties 
connected with the bar, which makes them very 
much more costly than ordinary coasting steamers. 

BRITISH CHAMBER OF COMMERCE 

The British section of the Chamber wrote me 
the following memorandum, which they desired me 
to transmit to the Associated Chambers of Com- 
merce : 

" The British section of this Chamber has care- 
fully followed the action of her Majesty's Govern- 
ment over matters afifecting China for some con- 
siderable time, and has observed with constantly 

increasing anxiety the infringements of the in- 

16 



TIENTSIN 

valuable Treaty of Tientsin, under which trade has 
flourished. They consider the existing deplorable 
state of affairs in North China is very largely, if 
not entirely, due to the absolute absence of any 
definite policy, the complete apathy shown to, or 
the apparently vague idea possessed of, the extent 
of British and other interests now placed in jeop- 
ardy. Protected by the Treaty referred to, we have 
not hesitated to invest money in China; but in 
view of the recent violation thereof by China's 
northern neighbor, we naturally feel that any fur- 
ther development is accompanied by undue risk, 
and there remains a distinct feeling of unrest and 
apprehension regarding the safety of capital already 
locked up." 

These remarks appeared to me to be of so start- 
ling a character that I asked for some evidence to 
take home to the Associated Chambers. 

Two leading British merchants both personally 
told me they had capital they were anxious to in- 
vest in China, but that they intended to keep it 
until they saw a definite line of policy proclaimed 
at home. They both declared that the Shan- 
haikwan Railway incident had practically shown 
that the British Government had admitted the 
right of the Russian Government to interfere in 
matters of purely commercial enterprise. They 
stated that the incident had completely demoralized 
all capitalists in the northern part of China. 

These views were supported by the whole Brit- 
ish community present. 
B 17 



THE BREAK-UP OF CHINA 

Again, the representatives of the Taku Tug and 
Lighter Company, whose property is worth about 
;^ 1 40,000, informed me that though they wanted 
to invest a large amount of capital in alterations 
and improvements in the lighter system, the un- 
certainty which existed as to the Russian position 
in the North rendered it imprudent for them to 
invest any more capital for the development of 
their property. 

Several British merchants told me they would 
not invest any capital in the North, now that 
Russia has been allowed to secure positions which 
place her at the advantage of being able at any 
moment to create circumstances which would de- 
preciate the value of capital invested. 

They said that events in the North had pro- 
duced that want of confidence which was fatal to 
financial or commercial enterprise and the devel- 
opment of trade and commerce. 

The merchants also expressed great fear as to 
the security of the trade they already possess. 
The reasons given for their anxiety were the fol- 
lowing : 

The heavy trade in wool, skins, hides, furs, and 
bristles, etc., comes principally from Lanchau, on 
the borders of Tibet and Hsi-ning, farther north- 
east. These goods come right up the Yellow 
River, and through two passes, Khaupingkhau and 
Nankhou. Both these are dominated from Pe- 
king. There is no other pass for hundreds of 

miles to the south of these two. The whole of 

18 



TIENTSIN 

the trade named, which now comes through these 
passes to Tientsin, could be diverted to the North 
by any power dominant in Peking. 

The merchants pointed out that building rail- 
wa)rs will often divert trade, but that would be 
gradual, and the British would also be building 
railways in competition; but they look forward 
with great apprehension to the future, owing to 
the dominant military position of Russia, which 
in a few years would enable her suddenly to di- 
vert trade. 

The merchants impressed on me the necessity 
of assisting the buying power of the people occu- 
pying the scattered and undeveloped northern dis- 
tricts, by giving facilities for the free export of their 
products. They pointed out how easily a hostile 
northern power might divert the trade of these 
districts from the routes of egress already created 
by Anglo-Saxon traders in Manchuria. 

With a fair field and no favor, or the Open 
Door, the merchants declare that they were per- 
fectly prepared to face any difficulties which they 
might meet through the diversion of trade by rail- 
way enterprise or by legitimate competition. 

The merchants protested most vigorously against 
their interests being sacrificed, as they would be 
if the Treaty of Tientsin were disregarded and a 
Sphere-of-Influence policy adopted in its stead. 

They explained that nearly the whole of their 
trade came from the far-oflf interior, and from the 
Northeast, and that also in the North and the 

19 



THE BREAK-UP OF CHINA 

West their energy, enterprise, and capital had 
made those countries a valuable asset; and for the 
trade of those localities they had found markets 
abroad. Any alienation of part of China proper, 
or its outlying dependencies, to a Power likely to 
erect Customs barriers, or to impose differential 
tariflfs, would absolutely ruin their trade ; and the 
sources of supply being curtailed would be acute- 
ly felt in many important industrial centres of 
Great Britain, the United States, Germany, and 
Japan. 

They declared that with an Open-Door policy 
not only guaranteed but secured, they would have 
no fear of the future. 

They committed a resolution to my care for 
transmission to the Associated Chambers of Com- 
merce. ( Vide Appendix.) 

THE CHINESE AUTHORITIES 

The high Chinese authorities at Tientsin paid 
me every courtesy and ceremony, meeting me at 
the station and making every arrangement for my 
comfort in the train or on steamers, when travel- 
ling to Peking, or Tongshan, or Hsiao-Chau one 
of them usually paying me the compliment of ac- 
companying me. 

While at Tientsin I had interviews with his 
Excellency Yu Lu, the Viceroy, and the Taotai 
Li. Their Excellencies were aware that I repre- 
sented the Associated Chambers of Commerce. 

20 



TIENTSIN 

They both expressed great friendliness towards 
Great Britain ; they declared they were very anx- 
ious as to the future of their country, that at pres- 
ent China was helpless, and that all the Eu- 
ropean countries were taking advantage of this 
fact, and by bullying China were making her ac- 
quiesce in schemes to which she was naturally 
averse. 

They said that Russia insisted on China giving 
concessions which she was helpless to refuse, and 
that Great Britain immediately demanded why 
such concessions were given, and either made 
China pay heavily, or give an equivalent which 
China was equally helpless to refuse. 

On my informing their Excellencies that under 
present conditions I could see nothing but the dis- 
integration of China, and giving my reasons for 
such a statement, they replied that I had been very 
frank, that they appreciated it, and that they in- 
tended to communicate their views on the subject 
to the proper authorities. Their Excellencies were 
perfectly clear that my remarks had reference 
solely to the future development of Anglo-Saxon 
trade and commerce, and its security. 

I found the relations between the British and 
German merchants here upon a most sympathetic 
and satisfactory footing. I was entertained by the 
leading German merchant, where I met all the 
principal merchants of the place, of different 
nationalities. The remarks made by the Germans 
showed how thoroughly they appreciated that it 

21 



THE BREAK-UP OF CHINA 

was Anglo-Saxon energy, enterprise, and capital 
which had originally made a platform for trade in 
China, and had given an equal opportunity to the 
trade of all nations. 



Ill 

TONGSHAN 

On October 25, 1898, I paid a visit to Tong- 
shan, proceeding thither from Tientsin by the 
Shanhaikwan Railway. This railway has been 
engineered and built by Mn Kinder, a British 
subject of great ability and energy. 

It may be well to give a description of this rail- 
way and its intended extension, as the money has 
been found by a British Corporation. It is the 
railway that has evoked considerable public inter- 
est, owing to the serious misunderstandings which 
have occurred between the British and Russian 
Governments with regard to the nature of the 
securities given by the Chinese Government. 

The railway at present is opened for traffic from 
Tientsin to Chunghouso, forty miles beyond the 
Great Wall, a distance of three hundred miles, 
and will shortly be opened to Kinchow, a farther 
distance of about seventy-six miles. 

On the security offered by the Chinese Govern- 
ment, between two and three millions of British 
capital were subscribed towards the construction 
of this railway to the port of Newchwang. 

The form of the original security was altered 
altogether, in deference to the vigorous protests 

23 



THE BREAKUP OF CHINA 

of the Russian Government, and it was agreed 
that those who had subscribed towards the loan 
should have a lien, not upon the extension of the 
railway, as originally intended, but upon its re- 
ceipts, and, further, that the engineer and those con- 
nected with the accountant branch should be British. 

It has been agreed between the Chinese Gov- 
ernment and the British Corporation to make an 
extension of the railway from Kinchow to Sin-min- 
thun, a farther distance of one hundred and twelve 
miles. In addition to this, it is intended to make 
two branch lines, one of fifty-five miles length, be- 
tween the junctions fixed on the main line, about 
ten miles to southeast of Kwangnin and Yingkau, 
near Newchwang. The other branch line is in- 
tended to go to the Nan-Paian coal-fields, from a 
place called Kaobhaio, about thirty miles to the 
northwest of Kinchow. 

In the future it is intended to bridge the Liao 
River near Sin-min-thun, and carry the line to 
Mukden, where it might join the Russian main line 
to the north, about thirty miles from the Liao River. 

The Chinese railway gauge is 4 ft. 8^ in., the 
Russian gauge is 5 ft. 

The total extension of the railway, after the line 
to Kinchow is finished, will be : 

To the Nan-Paian collieries 30 miles 

From Kinchow to Junction for Yingkau . 45 " 

From Junction to Sin-min-thun .... 67 " 

From Junction to Yingkau 55 " 

Total 197 " 

24 



TONGSHAN 

The coal-fields at Nan-Paian are very large, and 
the coal is of excellent quality. There are also 
very rich coal and iron deposits in Kwangnin. 
From the high quality of these deposits, their 
proximity to the sea, the splendid climate (very 
similar to Canada), and available labor, it becomes 
a question of argument whether any other similar 
deposits in China would be as profitable as these 
in the immediate future. 

I visited, in company with Mr. Kinder, the Tong- 
shan workshops, where I elicited the following facts: 

WORKSHOP AND LOCOMOTIVE STATISTICS 

Native employes engaged in connection with the 
Tongshan Railway workshops, about one thousand. 

Annual cost of the maintenance of native staff 
amounts to ;^ii,c)00. 

Foreign staff employed consists of one locomo- 
tive superintendent, one accountant, one drafts- 
man, one store-keeper, one shop foreman, one 
boiler-maker, the yearly salaries of which amount 
to ;^i866. 

Average construction of rolling-stock for one 
year: 

Various ten-ton cars 146 

" twenty-ton cars 216 

Passenger cars — 

First-class 10 

Second-class 28 

Brake vans (eight-wheeled) 10 

Cars rebuilt — 

Various fifteen-ton cars 8 

" twenty-ton cars 4 

25 



THE BREAK-UP OF CHINA 

Approximate cost of running the shops per 
year, including rent to mining company, water, 
gas, fuel, salaries of foreign employes, wages of 
native empIoy& and workmen,;^ 14,100. 

The approximate value of the Tongshan work- 
shops, with their present equipment of machinery, 
is estimated at ;^48,ooo. 

One thousand and fifty square yards comprises 
the covered area of shops. 

The entire area of the works covers seventeen 
acres. 

The total consumption of fuel, as consumed by 
the workshops, is as follows per annum : 

No. 5 quality 16 tons. 

"9 " 50 " 

" 5 dust 200 " 

" 9 " 2234 " 

" I coke 186 " 

" 2 **........ 151 " 

Statistics for Locomotive Department from 
Tientsin to Chunghouso, covering a distance of 
two hundred and thirteen miles. 

Locomotives chiefly used — Dubs's, manufact- 
ured in Glasgow. The others are Baldwin's 
(American). 

Average per month : thirty-six locomotives run- 
ning. 

Mileage : 

Train 42,453 miles. 

Shunting ^Sf^S^ " 

Construction 9,666 ** 

26 



TONGSHAN 

Light 142 miles. 

Total engine mileage 67,411 " 

Consumption of coal 3,681,683 cwts. 

" per engine mile . . 54 " 

Working of Engines : 

1 . Wages of native drivers and 

cleaners, etc., including 

overtime Taels 2290 = £$24. 

2 . Wages of foreign inspectors 

and drivers, including 

overtime " 940 = 133 

3. Fuel " 5225 = 740 

4. Stores (foreign and native) ** 316= 44 

5. Lubricants (foreign oil and 

native oil) " 750 = 106 

6. One-third of salaries of for- 

eign officials, clerks, etc. *^ 520 = 75 

;fl422 

Repairs to Engines: 

7. Materials for repair of en- 

gines, with proportion of 

shop expenses .... Taels 1778 = ;^25i 

8. Wages for repair of en- 

gines, with proportion of 

shop expenses .... " 1578 = 223 

9. Stores consumed by steam 

sheds " 121 = 17 

10. Miscellaneous coolie hire, 

etc " 274 = 38 

Total expenditures of Locomotive Department, £tgs i 

27 



THE BREAK-UP OF CHINA 



EXPENSES PER MILE IN STERLING 





Engines per Engine Mile. 




Working Expenses. 


Nos. 7, 8, 9, 10. 
Total cost of repairs. 


Total cost of repair- 
ings and workings. 


X898. 

October 31st. 


Nos. I, 3, 6. 

Salaries of 

f orei^ officials, 

native clerks, 

drivers, etc. 


No. 3. 
Fuel. 


Nos. 4, 5. 

Oil, 
stores, etc. 


Total 

cost of 

working. 


Average per 

month taken from 

the working of 

the past SIX 

months. 


£^d. 
If 


£s,d 
2f 


£ s. d, 

oj 


£s,d 
005 


£s,d 
If 


006} 



During the past twelve months four locomotive 
boilers were retubed, five locomotive fire-boxes re- 
placed, and two locomotive boilers replaced. 

The average life of boiler-tubes in China extends 
over a period of two years ; boilers, fifteen years ; 
fire-boxes, five years. 

The oldest engine now running is the " Rocket 
of China," manufactured by C. E. & M. Co., 1880. 

The oldest imported engines are from Stephen- 
son, Newcastle, and came to China in 1883. 

I found Mr. Kinder was employing engines of 
American manufacture — Baldwin's. On inquiring 
why he was giving up using English engines, he 
gave me the following facts : 

He had applied to several English firms, but 
they could not deliver according to his specifica- 
tion, either as regards price or time. The English 

price was ;^28oo, with twenty-four months to de- 

28 



TONGSHAN 

liver. The American engines were only ;^i85o, 
and four and a half months to deliver. 

He said the American engines were not so 
good, but quite good enough for his purpose. 
The Americans use steel instead of copper and 
brass for various fittings, and instead of turning 
the axle down to get a collar for the wheel, as the 
English do, they simply screwed a collar on to the 
axle. 

Mr. Kinder was building engines himself, which 
he estimates will cost ;^i6oo each. I saw the first 
engine nearly complete. He makes everything 
at the works excepting wheels and axles. Mr. 
Kinder's great difficulty was in getting skilled 
labor. 

The couplings used throughout the North China 
railways are the American automatic coupling, 
costing ;^io per car. 

The railway from Peking to Shanhaikwan (3CX5 
miles) cost ;^6ooo a mile, everything included — 
!>., rolling-stock, workshops, etc. 

This line is laid with 85-lb. steel rails as far as 
Lukowchiao. From Tientsin to Chunghouso it 
has 70-lb. rails for thirty miles, and 60-lb. rails for 
the remainder. All of the rails are of Sandberg 
design and inspection. At present the average 
age of rails is about five years. 

I obtained the above statistics, and have set 
them out here at some length, because I thought 
they would be of service at home to those inter- 
ested in Chinese railway enterprise. The figures 

29 



THE BREAK-UP OF CHINA 

give the original cost, outlay, and care and main- 
tenance charges for what is at present the only 
railway in China, excepting the seventeen miles 
between Shanghai and Woosung. 

COAL-MINE AT TONGSHAN 

I visited the coal-mine at Tongshan. The out- 
put is two thousand tons a day. It could be more. 
This mine pays a high dividend now. It was ten 
years before it paid at all. 

There are one thousand men employed. The 
Chinese make first-rate miners under European 
foremen. The coal costs from gs. to 1 2S. a ton at 
the pit's mouth. 

I saw a new shaft being sunk, which will event- 
ually be from 15CX) to 1700 feet in depth. The 
Germans got the contract for this shaft and all 
the machinery connected with it, although their 
tender was ;^20(X> more than any English tender. 
I was told this was to promote friendly feeling. 

I found the following further details connected 
with this mine : 

Total output of coal, 1896 . . • Tons 488,540 

1897 ... " 538,520 

1898 (estimated) '^ 650,000 
Total output since commencement 

to end 1898 (estimated for 1898) . " 4,524,119 

The above outputs include the Company's 

mines at Tongshan and Liusi. 

30 



« C( « « 

It « « (( 



TONGSHAN 

Proportion of lump coal, about 35 per cent. 
" " dust " " 65 " " 

Total output of coke, 1895 • • • • Tons 11,136 
" " " " 1896 .... " 24,097 
«• " «" 1897 ... . " 29,428 

N.B. — There has been so far no serious at- 
tempt made to manufacture coke by European 
methods. 

Average number of hands, between 4000 and 
5000, inclusive of surface hands. 

There are three shafts in Tongshan — 

Shaft No. I . . . . 600 feet deep 
" « 2 .... 300 " " 
" " 3 . . . . 1300 " " 

now being sunk, to be eventually brought to a 
depth of 1 500 or 1 700 feet. 

Water pumped 80 to 100 cubic feet per minute. 

Liusi Colliery, near Kuyeh, raises about 450 
tons per diem ; shaft, 300 feet deep. 



IV 

NEWCHWANG 

The estimated population is 60,000 

TRADE STATISTICS 

The total value of trade in 1897 was Hk. Taels 26,358,671 
(over ;^3,7oo,ooo). 

The total tonnage of shipping entered and cleared in 1897 

was 730,964, of which 363,922 was British. 

I ARRIVED at Newchwang November 4, 1898. 
On landing I was met by a number of the British 
residents, who expressed themselves most grateful 
to the Associated Chambers of Commerce for hav- 
ing sent out a representative to inquire into the 
state of British trade and its future security in 
Manchuria. 

They declared themselves much alarmed for the 
future, since they regarded Manchuria as really a 
Russian province, owing to the heavy garrisons of 
Russian troops scattered throughout the country. 

They said that though the Russians might not 

impose a tariff on goods just at present, they were 

placing themselves in such a powerful military 

position that they would be able to do so in the 

near future. 

32 



NEWCHWANG 



TRADE 



The port of Newchwang is one of the most im- 
portant in China to the British merchant. British 
trade has increased there far more in proportion 
during the last few years than anywhere else. 

Butterfield & Swire, with thirty-five steamers, in 
1897 made two hundred and fifty trips in and out 
of Newchwang. 

Jardine & Matheson made about an equal num- 
ber of trips. 

Memorandum showing increased value of trade 
in foreign goods at the Northern as compared 
with the Yangtse ports during the ten years 
1887-1897. 



FOREIGN GOODS IMPORTED FROM FOREIGN COUNTRIES 

AND CHINESE PORTS 





1887. 


1897. 


Newchwang . 


• • 2,745,636 taels. 


^95,929 taels. 


Tientsin . . 


. . 13,741,010 " 


30,212,260 " 


Chef 00. . . 


. . 4,630,536 " 


11,066,410 " 




21,117,182 " 


50,274,599 " 




(About ;f3,ooo,ooo) 


(About ;^7,ooo,ooo) 


Chungking . 




8,443,947 taels. 


Ichang . . . 


• • i,9SS»3S3 taels. 


647,902 " 


Hankow . . 


. . 10,528,981 " 


17,172,351 " 


Kiukiang . . 


• • 3,329,937 " 


6,563,311 " 


Wuhu . . . 


. . 2,094,036 " 


3,700,373 " 


Chinkiang . 


. . 9,084,409 " 


13,285,419 " 




26,992,716 " 


49,813,303 " 




(Nearly ;f 4,000,000) 


(About ;f 7,000,000) 


c 


33 





THE BREAK-UP OF CHINA 

When I was there, twenty steamers and over 
two thousand junks were lying in the river at the 
port. 

It must be remembered that there are only two 
doors open to the sea for importing trade into the 
vast province of Manchuria, one is Newchwang, 
and the other is Talienwan. 

Talienwan is closed at present; and, even if 
opened in the future, is, I am informed, being 
made so powerful that it could be closed at will. 

The backbone of the Chinese coasting trade 
under the British flag is the Newchwang coasting 
trade — beans, bean-cake, pease, and kindred stuffs. 
If Newchwang is closed the whole coasting trade 
would be very materially affected. 

A point to be noted is that the Liao River at 
Newchwang will allow vessels to load to a draught 
of 17 ft. 6 in. at neap tides, and 18 ft. 6 in. at 
spring tides ; while at Taku the draught of water 
is only from 8 ft. to 1 1 ft. 

At a meeting of the British merchants and resi- 
dents, called in order that they might have an op- 
portunity of laying their views before me, I elicit- 
ed the following opinions. I would first observe 
that all the speakers at this meeting, without ex- 
ception, spoke as if Manchuria had been, or was 
going to be, annexed by Russia. This is worthy 
of comment, as these gentlemen reside on the 
spot. 

They declared their wish to be friendly with 
the Chinese, and to work cordially as traders with 

34 



NEWCHWANG 

them. They unanimously expressed an opinion 
that with this object in view they would not ask 
for mining or other rights in place or under condi- 
tions which would interfere with Chinese prejudice. 

They were most anxious to obtain a concession 
on the north bank of the river opposite to the 
town, and, indeed, looking to the increasing value 
of Anglo-Saxon trade and commerce in this port, 
this desire appeared necessary and reasonable, 
more particularly as most of the old concessions 
granted to the British had subsided into the river. 

The concession asked for is the only available 
bit of ground, and the merchants expressed fears 
that, if it does not become a British concession, it 
certainly will become a Russian concession. 

The merchants also desired that the east end of 
the town should be formed into a foreign settle- 
ment, with equal rights to the representatives of 
all nations who might reside there. 

The three provinces of Manchuria are known 
to be very rich in minerals, and the merchants 
held that they should have the right of working 
mines in all of these provinces, where any foreign- 
ers, or the Chinese themselves, have the right at 
present. 

The valleys have rich alluvial soil, capable of 
producing immense crops of cereals, and there are 
extensive forests, besides vast coal areas. Gold 
was exported to Shanghai in the year 1897 to the 
value of ;^ 300,000. Manchurian coal is decidedly 
superior to Japanese coal. I have seen both. 

35 



THE BREAK-UP OF CHINA 

They also called attention to the restrictions 
placed upon the new privilege of navigation on 
the waterways — i.e., that steamers are only allowed 
to ply within the area of the port where they are 
registered, thereby nullifying the advantage that 
might be gained by a free navigation of the rivers. 

The merchants complained that they had no 
right to take steamers up the Liao River as far 
as Kirin. They declared Russians had the sole 
privilege. I think this is incorrect ; but, anyway, 
it should be tested. They also hoped that a Brit- 
ish Consul would be stationed at Kirin. Looking 
to the rapid manner in which events are develop- 
ing in Manchuria, it would appear reasonable that, 
for the sake of the interest of British trade, there 
should be some Consular authority in that vast 
country — twice as large as France. At the present 
moment there is not a single British Consul north 
of Newchwang. 

These merchants also complained that the Rus- 
sians were landing railway material without exami- 
nation or payment of duty, although the Customs 
are allocated to pay the service on the British 
loan. 

They appeared to be very anxious as to the 
future with regard to the large and increasing 
military forces which Russia continues to pour 
into Manchuria. As Russia has no trade with 
Manchuria, other than across her frontier, the 
merchants considered their trade threatened by 

such exhibition of military power. They de- 

36 



NEWCHWANG 

scribed the proceeding as the practical annexa- 
tion of the country going on under their very 
eyes. 

They also complained that there was no Russian 
Consul at Newchwang, which, under the circum- 
stances, appeared to them to invite complications, 
as no immediate attention could be paid to various 
difficulties certain to arise under the curious con- 
dition of local affairs, that only could be settled by 
Consular Agents resident in the place. 

They also pointed out that there was noth- 
ing to prevent Russia marching into Chihli, if she 
met no more opposition or remonstrance than 
she has already received with regard to Manchu- 
ria. 

The British merchants wished me to point out 
to the Associated Chambers of Commerce that the 
security of Anglo-Saxon trade in the north of 
China must rest on something more definite than 
assurances and promises from a power rapidly 
placing herself in strong military positions, to 
which the British Government have offered no 
counterbalance whatever. 

A number of resolutions, embodying the fore- 
going ideas, were unanimously passed and handed 
to me for transmission to the Associated Cham- 
bers of Commerce. (For copy j^^ Appendix.) 

About six weeks after my departure from New- 
chwang I received the following letter, in support 
of the foregoing resolutions, from the merchants of 
Newchwang : 

37 



THE BREAK-UP OF CHINA 

"Newchwang, 2 2d December^ 1898. 

**My Lord, — We trust you will excuse our addressing you 
on the subject of the resolutions passed by the British resi- 
dents on the occasion of your recent visit to this port, as the 
matter is of vital importance to us, and does not seem to be 
properly appreciated by the Government and the public at home. 

" I. As to the north bank, we need only say that the eflforts 
of our Consul and our Minister have been successful, and that 
a British concession has been granted, opposite to the present 
town and eastward of the recently granted Japanese concession. 

*^ 2. The formation of the east end of this town into a for- 
eign settlement would be very desirable, not only from its 
intrinsic merits, but also as maintaining our rights on this side 
of the river, which might otherwise be considered to have 
lapsed with the grant of concessions on the north bank. 
Moreover, as the carrying and import trade is practically 
monopolized by Great Britain, Germany, the United States, 
and Japan, the co-operation of the citizens and subjects of 
these Powers in the proposed settlement would be another 
step in the direction of commercial alliance, and would in- 
crease the interest of those Powers with us in keeping ' open ' 
the port of Newchwang and the country behind it. 

'^ 3. The establishment in the interior of industrial enter- 
prises, such as filatures, oil-mills, and iron-works, would lead 
to a great development of trade, to the introduction of British 
machinery and skilled labor, and to the profitable employ- 
ment of British capital. 

'' But an indispensable preliminary is the right to acquire 
by purchase — or, to speak more correctly, on perpetual lease 
— land in the interior, on which these and other commercial 
enterprises can be uninterruptedly carried on. 

'^ Unless we can hold land on these terms we are liable to 
be prevented from renting for definite periods, and to hav6 
our tenure abruptly terminated owing to pressure applied by 
an unfriendly or timorous magistrate. 

'* In fact, without this right it would be futile to expect 
capitalists to invest their money. 

38 



NEWCHWANG 

'' Missionaries exercise the right of holding land in the in- 
terior on perpetual lease, and erecting buildings thereon for 
the furtherance of Christianity; why should not similar rights 
be extended to merchants for the furtherance of trade ? 

*' 4. Equally important is the right to work mines in these 
provinces on as favorable terms as other foreigners and Chi- 
nese. 

" At present we can only mine under Chinese names, and 
though our doing so is winked at, we are liable to be stopped 
at any moment by unfriendly magistrates or competing Chi- 
nese. 

" We wish to be allowed to mine under our own names, and 
as a matter of right, not of favor, subject, of course, to the same 
dues and duties as are paid by Chinese mining companies or 

individuals. 

« 

" This b not a small matter ; the mineral wealth of these 
provinces is great, gold is worked in many parts in a primi- 
tive manner, lead and silver are also found, and there are 
traces of tin, copper, and petroleum. Iron abounds, and in 
some places close to coal. 

" Most important, however, are the large deposits of coal 
of various descriptions — anthracite, semi-anthracite, bitumi- 
nous, etc — only requiring machinery to develop a large ex- 
port trade, and compete in the Shanghai market with Tientsin 
and Japan. 

'* If we neglect this opportunity, you may rely upon it that 
the Russians will not be so foolish. In a very few years they 
will have acquired all available rights by purchase, lease, or 
otherwise — edging out us who have tried to be the pioneers 
of British enterprise — and then, when England awakes to the 
value of these mineral treasures, there will be little or nothing 
left unappropriated. 

''6 and 7. A British Consular Agent at Kirin would watch 
over British interests, seeing that British manufactures were 
not subject to any discriminating dues or other disadvantages ; 
would observe and report upon the political state and com- 
mercial prospects of the North, and the movements of Rus- 

39 



THE BREAK-UP OF CHINA 

sians and others ; and would be in a peculiarly favorable posi- 
tion for obtaining prompt redress for any infringement of the 
Treaty rights of British missionaries and merchants. 

'^ 5 and 8. The port of Newchwang is the natural, and has 
thus far been the actual, outlet and inlet for the trade of the 
three Manchurian provinces, and of part of Chihli and Mon- 
golia. Its position at the mouth of the River Liao gives it 
the advantage of cheap water carriage to distribute imports 
and collect produce for export. 

" The freight carried by boats in the summer is borne in 
the winter by carts, carrying on an average 22 cwt, which take 
advantage of the frozen ground to bring down loads of beans, 
oil, maize, millet, and grain, spirits, hemp, leaf -tobacco, and 
general produce ; and taking back to the North cotton, wool- 
len, and silk piece-goods, cotton yarn, raw cotton, kerosene- 
oil, metals, especially iron ; sugar, matches, needles, glass, and 
other imported goods. 

" Besides this, the smaller inland towns on the Liao and its 
branches, which, during summer, sent produce to and receive 
imports from this port by river, are, during the winter, each 
of them the scene of similar activity, though on a somewhat 
smaller scale. 

'* This trade has been principally developed by British en- 
terprise. Great part of the imports are of British and Colo- 
nial origin, and 50 per cent, of the tonnage employed in the 
carrying trade is under the British flag. 

" The value and volume of this trade is annually increasing, 
and will continue to increase if no artificial obstacles are inter- 
posed. 

" But it may be diminished, or entirely destroyed, in any 
one of the following ways : 

*^ By prohibitory transit dues levied at various points on the 
principal land and river routes leading to this port. 

'' By admitting goods free of duty by rail into these provinces. 

** By granting a drawback on goods of Russian origin, or 
passing through Russian hands. 

40 



NEWCHWANG 

" It is necessary, therefore, to guard against the possibility 
of such action, by keeping ' open ' not only this port, but the 
whole of Manchuria; for an 'open door' leading to a closed 
country will be of no more use to merchants than would a 
Barmecide's feast be to a starving man. 

'*We append some figures and further facts in support of 
our contention that our rights in Newchwang and Manchuria 
should not be lightly abandoned, as if they were of no present 
or future value. 

"The value of the trade in 1897 was 26,358,671 Haikwan 
taels, being an increase of 3,500,000 taels over 1896, which 
again was 5,000,000 taels in excess of any previous year. 
The returns for the current year are not yet made up, but it 
is an open secret that there is again an increase over the 
values for 1S97. 

" If then the trade, under present circumstances, is capable, 
year by year, of such great expansion, it is natural to suppose 
that it will increase to an enormous extent when this country, 
with its great grain-growing areas, mineral wealth, forests, etc., 
is opened up by railways. 

"Why should this magnificent country, with an area of 
390,000 square miles, be looked upon as a Russian preserve ? 
What excuse is there for the tendency at home to consider it 
as such } 

" Russia, so far from needing Manchuria as an outlet for 
her surplus population, has not yet been able to colonize so 
much as one-half of her own possessions in the north of Asia. 
As to trade, she has little in the north of Manchuria, and none 
in the south, except the proverbial cargo of sea-weed, which 
has duly arrived this year. 

"In 1897 British shipping amounted to 181,961 tons, half 
of the whole. Russian shipping amounted to 713 tons, jf^ of 
the whole. 

" From the opening of the port to the present time the for- 
eign resident merchants have nearly all been Britishers, and 
the foreign-owned land in the proposed settlement and else- 
where is largely in British hands. 

41 



THE BREAK-UP OF CHINA 

''To carry on the trade, British merchants have invested 
large sums in land, houses, godowns, wharves, etc.; nor must 
it be forgotten that, in common with other Treaty ports, New- 
chwang was opened by the expenditure of British blood and 
money. 

" We also desire to point out the importance, from a na- 
tional point of view, of not allowing Manchuria to be annexed 
by Russia , for should Manchuria pass into the hands of that 
Power, not only would this *door' be 'closed,' but British in- 
terests in China proper would be seriously menaced, and the 
unopposed absorption of these provinces, with their hardy and 
spirited peasantry, would inevitably be the prelude of a suc- 
cessful march southwards towards India. 

*' In conclusion, we trust that you will use your great in- 
fluence to impress on the British Government and people the 
importance of British interests in Manchuria, and how serious- 
ly those interests are menaced at the present moment 

"We are. My Lord, 

" Your Obedient Servants, 
" Bandinel & Co. 
" Bush Bros. 
" Pro Butterfield & Swire, 

" Daesutt. 
"J. Edgar. 
" To Rear- Admiral the Right Honorable 
" Lord Charles Beresford, C.B., 
" London." 

With regard to the above observations of the 
British merchants, it may be well to mention 
here things which came within my own knowl- 
edge. 

With respect to Observation 2, the request for 

a foreign settlement for all nationalities appeared 

to me to be most reasonable in the interests of 

equal opportunity, and the " Open Door " policy 

42 



NEWCHWANG 

for all nations. Newchwang is certain to be the 
distributing centre for the north. 

The Chinese authorities I spoke to on this mat- 
ter were most friendly, and heartily in sympathy, 
and promised to do what they could to forward it. 
The Chinese even went so far as to say that they 
would grant money to make roads. This great 
friendliness dates from the Chi no- Japanese war, 
when the British had a Red Cross hospital for the 
northern Chinese armies, and tended 10,000 of the 
wounded. In return they built a hospital entirely 
out of Chinese money at Newchwang. Dr. Daly, 
a British subject, now manages it. I went Over 
the hospital, and found its arrangements excellent. 

With reference to Observation 4, viz., the grant 
of mining rights, this would unquestionably fur- 
ther the policy of the " Open Door," as it would 
give all nations a chance of profiting by the de- 
velopment of the enormous latent mineral riches 
of Manchuria. I, however, pointed out to the 
merchants that as matters at present existed there 
was nothing whatever to prevent them acquiring 
properties in Manchuria, and that the best thing 
they could do would be to invest capital in Man- 
churia, so as to give the British Government some 
right to demand security for vested interests. I 
showed that there was nothing at present which 
excluded them from equal opportunity in obtain- 
ing concessions in Manchuria. 

Again, as to Observation 5, the merchants here, 
as in all other places, called attention to the restric- 

43 



THE BREAK-UP OF CHINA 

tion placed upon them by the new navigation laws, 
which materially interfere with trading progress. 

With respect to Observation 6, it appeared to 
me to be imperatively necessary that there should 
be a British Consul stationed at Kirin, in order 
that some official account could be rendered of 
what the Russians are really doing in Manchuria. 
At present all accounts come from missionaries or 
merchants, and, under the circumstances of the 
case, might be minimized or exaggerated. 

As regards the free landing of Russian railway 
plant, referred to in the merchants' Resolutions 
given in the Appendix, and in their observations 
to me, I may say that I myself saw steamers pass 
the Custom -House and proceed to the Russian 
landing-place, called Newchiatung, without any 
examination on the part of the Custom- House 
whatever. When I was at Newchwang already 
thirteen large Russian steamers had passed with- 
out examination. I questioned the Chief Com- 
missioner of Customs on this point, and he in- 
formed me that he had orders from Peking that he 
was in no way to interfere with these steamers. I 
was informed that they contained railway material. 
It would be as well here to mention the exact 
terms of the contract. They are shortly as fol- 
lows : The railway is being built by the Russians 
under a contract with the Chinese Government, 
nominally yi7r China. After eighty years China is 
supposed to take it over. Russia in the mean- 
time makes the line, advances the cost, and under- 

44 



NEWCHWANG 

takes its maintenance, working, and protection. 
The Russians made it a condition of their con- 
tract that all material and plant used in the work, 
and brought from abroad, is to be landed in China 
free of duty. 

Thirty-six thousand tons of railway material, 
among which were thirty Baldwin engines, have 
been shipped to Newchwang. 

It is only fair to point out here that the Imperial 
Chinese Railway now continuing its line from 
Shanhaikwan to Newchwang, under an agreement 
with a British corporation who have advanced the 
capital, have also been granted the right of land- 
ing their material and plant duty free ; but the 
cases are not practically the same, although they 
may appear so theoretically. The Trans - Man- 
churian Railway is admittedly a strategic railway ; 
it is financed, built, protected, and administered 
solely by Russians, and is supposed to revert to the 
Chinese in eighty years. The Shanhaikwan Rail- 
way is not strategic, but is built to open up the 
trade of the country; it is financed by a British . 
corporation, built, protected, and administered by 
Chinese, and is to revert to them when they have 
repaid the borrowed money. 

The exemption of railway materials from duty 
is a matter of considerable importance to bond- 
holders, in that it affects the value of their security 
for the loans made to China. Till 1897 there was 
no railway in China, except that running from 
Peking via Tientsin and Shanhaikwan ; the ordi- 

45 



THE BREAK-UP OF CHINA 

nary materials, sleepers, rails, etc., required for this 
line, it was customary to pass duty free under 
Government certificate. Whether such a proced- 
ure was thoroughly equitable is open to question, 
seeing that the foreign Customs revenue had been 
almost entirely hypothecated. The subsequent ex- 
tension of this procedure certainly seems inequi- 
table. Even under the old procedure machinery 
imported by this railroad had been required to 
pay duty, and machinery was held to include loco- 
motives ; but towards the end of 1897 the director- 
in-chief of the Peking-Tientsin-Shanhaikwan Rail- 
way, Hu Yen Mei, protested to the Throne against 
the levy by the Tientsin Customs of the duty 
on locomotives. He obtained Imperial sanction 
to everything required, by his railroad being ex- 
empted from Customs duty. Since then many 
contracts have been entered into for the construc- 
tion of very extensive lines of railroad, and in sev- 
eral of these contracts it is explicitly stated that 
the duty treatment in regard to materials for the 
Shanhaikwan line shall apply to materials required 
for these new lines. The result will be that ma- 
terials and machinery required for most, if not all 
the lines to be hereafter contracted, will be ex- 
empted from payment of duty. Were the foreign 
Customs revenue unencumbered, such a system 
would not perhaps be of much moment, because 
collection of duty would simply amount to taking 
money from the coffers of one Government De- 
partment to pay it into those of another, but it is 

46 



NEWCHWANG 

a different question to curtail the source of in- 
come of the foreign Customs after more than the 
whole of that income has been hypothecated to 
foreign countries. On the other hand, some 
bond-holders may be glad enough to risk this, in 
order to give facilities for opening up the country. 

With regard to the apprehension expressed by 
merchants as to the increasing number of Russian 
troops in Manchuria and the addition of military 
posts, as far as I could gather from those in a 
position to know, there are about 120,000 Rus- 
sians in Eastern Siberia and Manchuria. 

I was informed that the Russian flag is hoisted 
at Lunkkin, twelve miles this side of Kinchow. 
I was also informed that the Chinese flag had 
been originally hoisted alongside the Russian. 

I saw many armed Cossacks in Newchwang, 
both in the town and along the railway. They 
were placing a telegraph line in the middle of the 
main street, the poles of which blocked the traffic. 

There can be no question that the Russians are 
at present in a position of tremendous military 
advantage in the event of anything occurring 
which might involve a warm argument as to what 
was necessary for the proper security of British 
trading interests. 

It is not unnatural for the British merchants to 
ask why these forces are there, and what they are 
going to do. British trade with Manchuria is 
over ;^ 3,000,000, with an upward tendency. Rus- 
sian trade with Manchuria is nil, except a very 

47 



THE BREAKUP OF CHINA 

limited amount over the land frontier, and three 
cargoes of sea-weed which I found had been im* 
ported from Vladivostock since the year 1897. 

I found not only the British merchants but the 
Chinese themselves were much exercised at there 
being no Russian Consul at Newchwang. The 
Chinese were excited, as their crops were fre- 
quently destroyed by Russians when preparing the 
ground for railway embankment. As there has 
been no Consular authority for them to apply to, 
there have been constant disturbances on this 
question, the more serious trouble being at a place 
called Shiung Yo. 

One of the cases that came to my own knowl- 
edge was that of a Chinese servant in the employ 
of Messrs. Butterfield & Swire, whose land was 
appropriated for railway purposes, and no price 
paid as compensation. The servant applied to 
the British Consul, who, of course, could do noth- 
ing, and the servant suffered because there was no 
Russian Consul to refer it to. 

The proposed Russian-Manchurian Railway is 
mainly military and strategic. The Chinese have 
no voice whatever in its management or direction. 
It is built by Russians with Russian capital, and 
protected along its entire route by armed Cossack 
guards. 

As far as I could gather from those who were 

in a position to give me solid information, there 

will be rough but effective rail communication 

from Russia to Port Arthur, certainly in five years 

48 



NEWCHWANG 

from the present date, but most probably in less 
time. 

When I was there, the branch line of fourteen 
miles, from Newchwang to the main line, was prac- 
tically finished, and there were about one hundred 
miles of the main line nearly ready for the metals. 
The bridge at Liao-Yang would not be finished 
for another eight months — />., till June or July, 
1899. There are some extensive tunnels to be 
made through the mountains, and till these are 
completed the trains will zigzag over the hills. 
I observed tremendous activity for the speedy 
completion of the line. 

The rolling stock and railway material is landed 
on the Russian ground at Newchiatung by means 
of a floating eighty -ton pair of shears, built at 
Southampton, England. All rolling stock, and 
rails and sleepers, etc., come from America. With 
the exception of these shears there will not be 
;^ 10,000 worth of expenditure which will go into 
English pockets. The Russians have determined 
not to purchase anything in England unless it is 
unavoidable. 

This railway will pass between fourteen and 
seventeen miles of Newchwang. The natural fear 
of the merchant of Newchwang is that the whole 
of the Manchurian trade may be diverted from 
Newchwang to Talienwan, when the railway is 
complete. 

The Russian camp at Iching, fourteen miles 

from Newchwang, commands all the roads. 
D 49 



THE BREAK-UP OF CHINA 

For report on this railway, see chapter on " Rail- 
ways." 

This railway will pass through Mukden, and 
have a branch line to Kirin, and will tap the great 
bean-growing districts in the north and northwest; 
it also taps the large coal-fields in the neighbor- 
hood of Liaoyang, eighty miles north by east of 
Newchwang (Yingtzu) ; and if it can get hold of 
the bean traffic, which now comes by river, the 
trade of Newchwang would suffer very consider- 
ably. With the short branch the railway can 
either use Newchwang or pass it. This might 
kill the trade of Newchwang, although it would 
still be an open port under treaty. 

However, the Chinese Imperial Railway, which 
is to run up the River Liao to Sin-min-thun, near 
Mukden, from Shanhaikwan via Kinchow, should 
be able to provide the competition necessary to 
prevent monopoly. 

There was some disagreement between Russian 
and British merchants with regard to the owner- 
ship of land in the place where the Russian railway 
station was to be located. 

Some British merchants offered £\ a mou 
(|th of an acre) more for the land than the Russians 
were prepared to give. The Chinese accepted the 
British offer, and the land became British, and the 
title-deeds were registered in the British Consulate. 
Although these deeds were so registered, the 
Russians declared the British had no right to the 
land, and induced the Taotai, the Chinese authori- 

50 



NEWCHWANG 

ty, to refuse to recognize the sale. A serious dis- 
pute was avoided by the promptitude and deter- 
mination of Mr. Allen, the British Consul, who 
went to the Taotai's Yamen and would not leave 
until the deeds were stamped. 

I saw land that had been taken from the natives 
by the Russians at the rate of ten taels per mou. 
when identical land marching with it was bought 
by them (the Russians) for loo taels a mou be- 
cause it belonged to foreigners. 

There is no doubt that the proceedings of the 
Russians in the neighborhood of Newchwang 
have been of a very high-handed character. They 
took their present settlement without leave from 
anybody, and paid the natives at nominal rates for 
the land. I was shown where the railway had gone 
through growing crops without compensating the 
natives, who were greatly incensed, but were ad- 
vised to keep peaceful by the authorities. 

I have mentioned the foregoing instance in order 
to add my personal testimony to the statement 
made by the British merchants resident in New- 
chwang as to the dominant position of the Rus- 
sians in Manchuria. 

But I wish it most emphatically to be understood 
that in these remarks, or in any remarks I may 
make with regard to the present position of Russia 
in Manchuria, I merely made them as a plain state- 
ment of fact, and with no aggravating or irritating 
intention. My views may be pro- British; they 
are certainly not anti-Russian. 

51 



THE BREAK-UP OF CHINA 

It would be ungenerous of me if I were not to 
mention here the extreme kindness, courtesy, and 
civility with which the Russians treated me at 
Newchwang. 

Dr. Greig, of the Manchurian Protestant Mis- 
sion, was very much exercised as to the rights of 
the Protestant Missions in Manchuria and their 
property. These missions have been established 
thirty years, they have over forty European agents 
in Manchuria, and about 10,000 native Christians; 
they have valuable properties at all the missions, 
including school and hospital. The hospital at 
Kirin cost ;^ 1,600 to build. Dr. Greig declared 
that both himself and all his missions looked upon 
Manchuria as Russian in all but name. He showed 
that under the Treaty of Tientsin, and by special 
edict of the Emperor in 1 891, his missionaries 
had a right to reside among the people, to teach 
the Christian religion and make converts and carry 
on medical work without let or hindrance. 

Dr. Greig had quite lately travelled all through 
Manchuria. He was extremely anxious as to the 
future position of himself and his coadjutors with 
regard to the present military absorption by Russia 
of Manchuria. I recommended Dr. Greig to refer 
the matter he had brought to my notice to his 
Presbytery. 

Mr. Sprent, and other missionaries, who know 

the whole of Manchuria well, informed me that as 

late as June, 1897, there was not a single Russian 

at Kirin. At the date when I was at Newchwang, 

52 



NEWCHWANG 

November, 1898, I was told there was a large es- 
tablished camp. 

Mr. Sprent said he had seen parties sent out to 
survey the mines in Manchuria. He believed the 
parties were subsidized by the Government. 

Since the end of 1897 the Russians have been 
pouring troops into Manchuria ; every month the 
numbers are increasing. There is feverish activity 
in the preparations of the railway. Under these 
circumstances, the future development and security 
of Anglo-Saxon trade must entirely depend upon 
the good-will of the Russians. 

It is only necessary to read the agreements rela- 
tive to the Russo- Manchurian Railway and Port 
Arthur and Talienwan, signed by M. Pavloff on 
behalf of the Russian Government, and Chang 
Yin-huan and Li Hung Chang on the part of the 
Chinese Government, to see how completely and 
entirely Russian authority is dominant in Man- 
churia. These papers are to be found in the China 
Association Report for 1898. 

At Newchwang, and generally throughout China, 
I found the British merchants regarded equality 
of opportunity — or, as it is expressed, the policy 
of the " Open Door " as regards Manchuria — as 
entirely dependent on the good-will of Russia. 

The reason they advanced was the interference 
of Russia with a purely commercial enterprise con- 
nected with the Shanhaikwan Railway, in which 
case the Russians refused to allow an agreement 
made betweep a British corporation and the Chi- 

53 



THE BREAK-UP OF CHINA 

nese Government to be ratified. The original 
agreement was relative to the question of mort- 
gaging a portion of the railway line as security 
for capital advanced, to build the whole line from 
Shanhaikwan to Kinchow and down to New- 
chwang. 

As the merchants expressed it, the Door is more 
effectually closed by determined interference with 
purely commercial enterprises than it would be by 
the interposition of a tariflf or preferential rate. 

The merchants throughout China were most 
determined in their opinion that, though Russia 
might keep the door open in Manchuria until the 
completion of the Siberian Railway, the immense 
military preparations, the rapidity with which 
powerful fortifications are being pushed on, can 
have but one meaning, which is, that when Russia 
has her hold on Manchuria strengthened, prefer- 
ential rates will be imposed in favor of Russian 
trade. 

The British merchants begged of me to impress 
as forcibly as I could upon the Associated Cham- 
bers of Commerce of Great Britian, that assur- 
ances with regard to the future liberty of trade 
and commerce in Manchuria were of no value 
whatever under present circumstances, where 
enormous military preparations are apparent on 
one side, with no trade to protect as an excuse for 
such preparations ; while on the other side there 
is an immense and increasing trade, with no pro- 
tection or security whatever. 

54 



NEWCHWANG 

The British merchants further pointed out that 
if Russia openly annexes Manchuria, Corea is cut 
off, and entirely at her mercy. Mongolia would 
easily be absorbed, and the great horse-breeding 
ground for the whole of China with it. This 
would give Russia control over the hordes of ir- 
regular cavalry that have before now overrun the 
whole of China, and also give them control of a 
hardy and stalwart population of many millions, 
that only need to be drilled and disciplined to 
make as fine soldiers as any in the world. They 
also pointed out that if Russia were once in this 
position there would be nothing to prevent her 
sweeping down from the north of China to the 
centre, and from the centre to India, thus paralyz- 
ing British trade and commerce. They further 
expressed a hope that the powerful Associated 
Chambers of Commerce would demand from the 
British Government where the line was to be 
drawn of Russia's advance to the south ; and, 
further, what steps are going to be taken to keep 
that line intact. 

As Newchwang is the key of the position with 
regard to the question of the Open Door in the 
future, and as fears are expressed as to the ulti- 
mate intentions of Russia, I have entered very fully 
into a detailed trade report connected with that 
place. 

The settlement at Newchwang (Yingkow) lies 
on the south bank of the Liao River, and is dis- 
tant about fifteen miles from the river's mouth. 

55 



THE BREAK-UP OF CHINA 

From the end of November to the end of March, 
navigation is entirely stopped owing to the river 
being frozen over, the ice being from seventeen to 
nineteen inches in thickness, and admitting of 
heavily laden carts crossing over it. 

The trade of Newchwang is almost entirely in 
native hands, the foreign merchants being no more 
than agents for the Chinese. The American Trad- 
ing Company is the only firm which actually im- 
ports goods on its own account. There are three 
British firms ; but these are chiefly or (it may be 
said) wholly engaged in shipping business. Dur- 
ing the last ten years the trade has been steadily 
increasing, and the figures published annually by 
the Customs show the immense importance of 
Newchwang as a port of commerce. 

During 1895, Newchwang was in the hands of 
the Japanese, and the value, therefore, of the trade 
in that year need not be taken into account ; but 
in 1896 the value of the trade was over 22,000,000 
taels, and in 1897 i* exceeded 26,000,000, showing 
in one year an increase of over 4,000,000 teals 
(about ;^5 70,000). In 1887 the revenue collected 
was 405,000 teals, while ten years later it exceeded 
568,000 teals, showing a gain of over 40 per cent, 
when comparing the figures of 1897 with those of 
1887. The revenue collected in 1897 was in ex- 
cess of all previous years, with the exception of 
1 89 1, when the collection exceeded 583,000 taels. 
But while in 1891 the collection was over 28,000 
taels on Foreign Opium, the receipts under this 

56 



NEWCHWANG 

head in 1897 were just over 3,cxx) taels, showing 
that, notwithstanding the almost total disappear- 
ance of Foreign Drug from Newchwang trade, the 
receipts from miscellaneous goods have steadily 
improved. 

FOREIGN IMPORTS 

The trade with foreign countries is confined to 
Hong Kong, Japan, and Russian Manchuria. 

The only article imported from the latter coun- 
try is sea-weed, which is used as a vegetable by the 
Chinese. The quantity imported has not varied 
for many years. The trade with Hong Kong has 
increased enormously. In 1891, from that colony 
goods to the value of 304,000 taels were obtained, 
while in 1897 ^^^ value had increased to 1,238,000 
taels, showing an advance of no less than 307 per 
cent 

Formerly Indian cotton yarn reached this port 
via Shanghai; now it comes direct from Hong 
Kong, a fact which will account largely for the 
increase. 

The chief items which are imported from Hong 
Kong are cotton yarn, sugar, and old iron. 

Japan is advancing fast, the value of the im- 
ports reaching 280,000 taels in 1897, while in 1891 
it was only 22,000 taels. The principal articles 
imported from Japan are cotton yarn and matches, 
and the value of these in 1897 was as under: 

Cotton yam 8,000 piculs. 

Matches 224,000 gross. 

57 



THE BREAK-UP OF CHINA 

The greater part of the Newchwang foreign 
trade is carried on through Shanghai. 



COTTON GOODS 

The principal items are American drills, Ameri- 
can and Indian sheetings, gray and white shirtings, 
and cotton lastings. Of late years, English-made 
goods have been losing ground, while American 
have been advancing: 



American drills, 1893 

" " 1897 

" sheetings, 1893 

" " 1897 

English drills, 1893 

" " 1897 

" sheetings, 1893 

" " 1897 



100,000 pieces. 
349,000 
252,000 
566,000 
80,000 



71,000 
10,000 



Shanghai-manufactured goods are also finding 
a market here, 11,000 pieces having been im- 
ported during 1897. Cotton yarn was first im- 
ported in 1882, 120 piculs finding its way into the 
port. Of this quantity, however, 24 piculs did not 
find a market here, and had eventually to be re- 
exported. In 1888 no less than 48,000 piculs were 
imported, the bulk of it being English-made yarn. 

Latterly English yarn has receded and Indian 
yarn has come to the front. During 1897 the 
importation of yarn reached 164,000 piculs, over 
140,000 of which was Indian yarn. From Japan 
about 18,000 piculs were received, and of Shanghai- 

58 



NEWCHWANG 



manufactured yarn there were imported 4500 
piculs. There were, however, only 700 piculs of 
English yarn imported. 



WOOLEN GOODS 

These are of little importance in the trade of 
this port, the poor natives using wadded clothes 
during the cold season, and the rich, fur clothing, 
furs being comparatively cheap. 

METALS 

The only metals worth mentioning are nail-rod 
iron and bar iron. During 1897 28,000 piculs of 
the former and 5500 piculs of the latter were im- 
ported. A large quantity of old iron is imported, 
and is used chiefly for making junk anchors, horse- 
shoes, etc. 

KEROSENE 

A large quantity of both American and Russian 
kerosene enters the port each year, the American 
oil finding much more favor than the Russian. In 
1896, 527,000 gallons of American were imported, 
while in 1887 the quantity exceeded 2,000,000 
gallons. During 1897, 15,000 gallons of oil were 
imported into the port direct from Japan, the oil 
being entered in the Customs Returns as Japanese 
oil. The Russian oil does not compare in any re- 
spect with the American oil ; but to make its sale 

59 



THE BREAK-UP OF CHINA 

practicable, Chinese often transfer the Batoum oil 
to cases which have contained American oil, and 
thus many are led to suppose that when they have 
bought a case of oil with the word " Devoc " on it 
they have obtained the genuine article. 

EXPORTS 

The staple exports are beans, bean -cake, and 
bean oil. The other items on the export list are 
felt, deer-horns, ginseng, skins, and wild raw silk. 
Deer-horns and ginseng are highly prized by the 
natives for their medicinal properties, and fancy 
prices are accordingly paid for them. The in- 
crease in the export of wild raw silk merits notice. 
Ten years ago — that is, in 1887 — the export of this 
article was valued at 647,000 taels, while last year 
its value was 1,374,000 taels, showing an advance 
of no less than 112 per cent. Until recent years 
the bulk of the beans and bean-cake trade was 
carried on with the south of China ; but since the 
Chino-Japanese war an extensive trade has been 
carried on with Japan ; in fact, Japan has out- 
stripped China altogether, as the following figures 
will show: 

1891 1897 

Exports to Japan . . 460,000 taels. 5,079,000 taels 

(about ;^7 00,000). 
" " Swatow . . 2,727,000 " 2,438,000 taels 

(about ;£^34o,ooo). 
" " Canton . . 1,751,000 " 2,338,000 taels 

(about ;^334,o3o). 
60 



NEWCHWANG 

Beans are sent to Hong Kong and Canton for 
food, and bean-cake is sent to Swatow for manure. 



OPIUM 



The foreign product has almost disappeared 
from the list of imports, the native drug being 
extensively cultivated all over Manchuria. 



MINERALS 

The mountains in Manchuria are reputed to be 
rich in minerals. Copper and lead have been 
found, and iron -mines exist in the vicinity of 
the coal-mines near Liaoyang. 

The demand, however, for the iron produced is 
on the wane, owing to the cheapness of the foreign 
article. Coal is mined in a very primitive way, as 
the Chinese have no efficient pumping gear, and 
thus the water stops operations after a certain 
depth has been reached. There being no water- 
way near the mines, and the roads being very bad, 
there is little business done during the summer, 
but in the winter, when the roads are good, bus- 
iness is brisk, and as many as two to three hundred 
carts— each cart carrying one ton and a half — are 
employed every day in carrying coal away from 
the mines. Some of the coal reaches the port — 
for foreign use only — the bulk, however, is used 
by natives in Liaoyang, or round about Mukden. 

The coal costs about 14^. a ton at the pit's mouth. 

61 



THE BREAK-UP OF. CHINA 

By the time, however, that it reaches the port 
its cost is nearly doubled. There are also several 
coal-mines near Kirin, the coal from which is used 
by the large arsenal which has been established 
there. 

GOLD 

This mineral is found in many of the valleys in 
Central and Northern Manchuria, the principal 
valley being that through which the Moho (a trib- 
utary of the Amoor) runs. The gold is obtained 
by the washing process. The Moho Mining Com- 
pany, who are exploiting the country, have also 
some stamping machinery, and appear to be doing 
a large business. The value of the gold exported 
in 1897 was 2,029,000 taels (nearly ;^300,ooo). 
When the country is opened up and developed, 
mining will be worked on European lines, and 
thus in course of time we may expect to find that 
Manchuria is rich in gold. 

SILVER 

There is a silver-mine about sixty miles to the 
west of Hunch'un, where foreign machinery is 
employed in mining operations ; but no informal 
tion can be procured respecting the mine. 

PIGS' BRISTLES 

An extensive trade is done in bristles, the value 

of which during 1897 was 36,000 taels (about 

62 



NEWCHWANG 

;^500o). A fact worthy of note is that the trade 
in bristles was started by a Protestant missionary, 
who wanted to find employment for his converts. 
The bristles are sent from here to Shanghai, and 
are thence exported to England and other foreign 
countries. 

FACTORIES 

In 1868, a steam bean-mill was started here; 
but, owing to native opposition, it was not allowed 
to work, and thus the experiment came to an end. 
In 1896 Messrs. Butterfield & Swire erected a 
bean-mill, and with satisfactory results, the profit 
accruing from the making of bean-cake in this way 
being enormous. The mill is worked by Chinese 
only, and is practically Chinese-owned. 

Other mills are shortly to be erected, and their 
erection will greatly enhance the importance of 
Newchwang as an open port. 

1898 

It is somewhat too early to review the trade of 
the present year, as the figures for the year have 
yet to be summarized and examined ; but it may 
be fairly said to have been a year of great com- 
mercial activity, and its results will no doubt show 
an increase over 1897. The port did not open 
until the first week in April, and thus there was no 
trade at all to chronicle for the first quarter of the 

year. In spite of this fact, however, favorable re- 

63 



THE BREAK-UP OF CHINA 

suits, as remarked above, may be looked for. Most 
noticeable in the trade was the enormous demand 
which came from Japan for Manchurian produce. 
Instead of British vessels coming in from Chinese 
ports to load for Chinese ports, Japanese vessels 
arrived from Japanese ports and loaded beans and 
bean-cake for Japan again. 

The market was completely drained of the staple 
commodities, and prices went up to fabulous fig- 
ures. It is not, however, unlikely that the ship- 
ments to Japan exceeded the quantity required, 
and that losses may accrue at the end of the year. 

The year will be a notable one in the annals of 
Newchwang, as being the year in which the railway 
to connect the port with Mukden in the north, 
and with Talienwan in the south, was started. 
The Russians have the railway entirely in their 
own hands, notwithstanding the fact that the 
undertaking is styled the " Eastern Chinese Rail- 
way." So far, only sleepers and part of the rails 
had arrived; but the rolling stock was expected 
in the course of a few days, and the line as far as 
Haiching should be opened in the spring of 1899. 



CHEFOO 

The estimated population is 32,876 

TRADE STATISTICS 

The total value of trade in 1897 was Hk. Taels 22,051,976 
(over ;^3, 100,000). 

The total tonnage of shipping entered and cleared in 1897 
was 2,385,301, of which 1,327,559 was British. 

I PAID two visits to Chefoo, the first on October 
13th, and the second on November 9th. 

The British merchants at this place handed me 
the following memorandum : 

"Chefoo, October 15, 1898. 

"My Lord, — We take the liberty of addressing you with 
regard to the prospects of trade at this port, and solicit your 
great influence on behalf of vested British and other interests 
which are threatened here ; the opening of Kiao-chow with the 
prospective railways and alleged sole right of German control 
in the claimed sphere of influence, which embraces nearly the 
whole province, being likely to have a very adverse effect on 
the port generally. 

" Shipping.— The tonnage entered and cleared last year 
amounted to 2,385.301 tons, of which about 56 per cent, was 
imder the British flag, and we may mention that after Shang- 

E 65 



THE BREAK-UP OF CHINA 

haiy this place claims to be the second in this Empire for the 
amount of sea -going tonnage visiting the port. The total 
annual value of the trade amounts to nearly ;^3,ooo,ooo 
sterling. 

"Cotton Goods. — ^There is a vast field for development 
in this direction, the high price of transport throughout the 
province enhancing the cost so much that foreign cottons are 
practically placed beyond the reach of the poorer classes of 
the province, the population of which is about 30,000,000. 

" There are valuable gold and coal mines in the province, 
and if only concessions could be obtained to work these, the 
result would be a great boon to commerce generally and 
would create a demand for machinery of all descriptions. 

" The recent opening of inland waterways will be a valu- 
able help, as, under the regulations, foreign-built steamers are 
now allowed to trade to any of the subsidiary coast ports, 
but there are no navigable rivers in the province, and unless 
some cheap inland means of transport can be devised, the 
trade of the port is bound to suffer. Nearly the whole of the 
traffic from this port is carried on by pack-mules, which is 
not only slow and very expensive, but likewise injurious to 
the cargo carried. 

"We would suggest thai a concession be obtained for a 
railway to run from Wei-hai-Wei and Chef 00 to Che-nan-foo, 
with a loop-line branching from Chefoo via Lai- Yang, and 
joining the main-line at, say, Wei-hien. The traffic, we are 
confident, would be immense, and the benefit to trade general- 
ly could not be overestimated. If this could be put in hand 
promptly, any adverse infiuence that might accrue from the 
opening of Kiao-chow would be counteracted. 

" We would further ask that our Consuls be strongly urged 
to look after British interests, and adopt the same policy 
as is taken up by foreign Consuls, whose eagerness to for- 
ward the interests of their nationals is in strong contrast to 
the apathy displayed by most of our Consuls in China. 

" Trusting that you will use your great influence on behalf 
of the matters above alluded to, 

66 



CHEFOO 

" We have the honor to be, my Lord, your Lordship's most 
obedient servants, 

*' A. M. ECKFORD. 

" P. F. Lavers. 
" E. E. Clark. 
" Henry J. Clark. 
" J. P. Wake. 
" A. J. Cooper. 
" T. A. Cooper. 
" J. Silverthone. 
" Jas. McMullan. 
" A. L. R. Donnelly. 
" C. Ornabe & Co. 
** Fergusson & Co. 
'^Gardner & Co. 
" T, M. Armstrong. 
'' A. Parkhill. 
'' The Right Honorable 

" Lord Charles Beresf ord, 
" Peking." 

I think, perhaps, the merchants were unneces- 
sarily alarmed as to the position the Germans have 
assumed at Kiao-chow. A country generally 
works with due regard to its own interests, and it 
certainly would not be to the interest of German 
trade, as a whole throughout China, if she eventu- 
ally carries out a policy of exclusiveness in the 
province of Shantung. 

Kiao-chow has been declared an open port, and 

when the proposed German railway to Tsinan is 

finished, development of trade in that part of China 

is certain to follow, and though it might, under 

some reftiote contingencies, inflict damage to the 

67 



THE BREAK-UP OF CHINA 

port of Chefoo, still it is certain to increase the 
volume of trade in China, which will benefit the 
trade of all nations, but particularly that of the 
British. With reference to the concession which 
the merchants suggested should be obtained, I in- 
formed them that I did not think there would be 
the slightest difficulty if a responsible company 
made application through the British Minister, as 
since his appointment Sir Claude MacDonald had 
given his support to every application of a bona 
Ade nature. I further said that the clause in the 
memorandum referring to "the adverse influence 
that might accrue from the opening of Kiao-chow " 
did not express the line of policy which was unani- 
mously declared to be the best for Anglo-Saxon 
trade — t.e., the " Open Door " policy and equal 
opportunity for all nations, and that Great Britain 
could not expect to have everything, and as long 
as the "Open Door" policy was the policy in 
force in China, British merchants ought to view 
with satisfaction the efforts of other countries to 
open up China, and so increase the volume of 
trade. 

I made some inquiries about the resources of 
the Province. 

There is a gold-mine at Chou Yuan, sixty miles 
from Chefoo, which now employs one thousand 
men working for Chinese with Chinese capital. 
The most primitive methods are used for extract- 
ing ore. 

There is another gold-mine at a place called 

68 



CH EFOO 

Phing-tu worked in the same manner. I could 
get no particulars about it. 

It is one of the few provinces in China where 
the waterways are not navigable, and, therefore, 
railways will be a paying interest as soon as com- 
pleted. All merchandise is carried on mules, or 
by coolies. 

The merchants here declared their trade was . 
suffering through want of security and general 
uneasiness caused by the recent position taken by 
Russia in the North. 

I found an interesting illustration here of the 
methods lately employed towards the Chinese 
Government, which I can only describe as un- 
chivalrous and unmanly to a Government and 
country in its helpless condition. 

A Mr. Fergusson, a British subject, bought a 
property which included the right of pre-emption 
to the foreshore, although the foreshore belonged 
to the Chinese Government. 

The Chinese were induced to sell the foreshore 
to a Russian Company. Instead of arguing out 
the point in a friendly manner with the Russian 
Government, the British Government insisted on 
the Chinese paying 30,ocx) taels (over ;^40oo) for 
granting a concession, which, owing to their weak- 
ness, they were powerless to refuse. 

The merchants here begged me to bring to the 
notice of the Associated Chambers the importance 
of getting a concession from the Chinese Govern- 
ment for permission to have right of residence in 

69 



THE BREAK-UP OF CHINA 

the interior of China. They declared that without 
such right It was useless to think that British trade 
and commerce could be materially developed in 
the future. 

I visited one of the silk filatures. About one 
thousand hands were employed here, mostly chil- 
dren. 

The machinery of the plant was all modern, 
made in Germany, and very good. The capital 
and the direction were Chinese. I was told by the 
Chinese that it paid very well. 

I also visited a bean-factory for pressing the oil 
out of the beans ; it was the most primitive process 
conceivable. The beans were placed in receptacles 
made of grass, which in their turn were put into 
perforated iron vessels. The pressure was pro- 
duced by wedges, driven home with slung stones, 
the bearings being solid trees with the heart cut 
out to make a guide. ( 

The Chinese have generally set their faces 
against machinery for this industry. Messrs. Jar- 
dine & Matheson have imported machinery which 
would carry out the work far cheaper and better, 
but I was told the Chinese merchants had boy- 
cotted both the bean-cake and the oil, and that 
the mill had to be closed. 

While here I visited and thoroughly examined 
one of the three cruisers, sister-ships, lately come 
from Germany, lying in the roads. ( Vide chapter 
" Armies and Navies.") 



VI 

WEI-HAI-WEI 

The estimated population is 4000 

As the utility of this place for the protection of 
Anglo-Saxon trade and commerce has been much 
called in question, perhaps an opinion of it from a 
naval officer may be of interest. 

Messrs. Butterfield & Swire kindly placed a 
steamer at my disposal in order that I might visit 
this place. 

I consider it an immense acquisition to our naval 
strength in the China Seas, as with but a compara- 
tively small expenditure of money it could be made 
a most efficient and powerful naval base. 

There are three camps, which were formerly oc- 
cupied by the Japanese, on the main-land in excel- 
lent order. The island could be fortified at small 
expense, and it would be unnecessary to fortify any 
point on the main-land, except perhaps one posi- 
tion which commands the western entrance. The 
old emplacements on the island and at the position 
referred to are in good order. All that is wanted 
is that the guns be placed in position. 

At this moment there is noplace in Chinese waters 
where battleships can anchor so close to the shore. 

71 



THE BREAK-UP OF CHINA 

At present, Wei-hai-Wei is in no way to be com- 
pared in power to Port Arthur, only eighty miles 
off, at which place seventy guns have been mounted 
since it passed into the possession of the Russians, 
while not a single gun has as yet been mounted at 
Wei-hai-Wei. 

It is an easy place for shipping to make, and 
with some dredging and wharfing might become by 
far the finest and safest harbor in the North of China, 

Mercantile steamers could load and unload safely 
to leeward of the island at any time or in any wind, 
though at present there is no breakwater, but as 
the British have consented to close the door, as far 
as railway facilities are concerned, it is unlikely 
that Wei-hai-Wei can ever become a great mercan- 
tile port. 

One steamer, the Hanchow, was fourteen days 
loading 1800 tons of cargo in a northern port. 

Another steamer took forty-eight hours to dis- 
charge 100 tons of cargo, owing to the swell at this 
same northern port. Such delays are very fre- 
quent, owing to continual rough weather. 

I found the people at Wei-hai-Wei very friendly 
to the British. 

The island is two-thirds the size of Gibraltar. 
It is the best place in China to build a sanatorium 
for the fleet. 

In the event of the British desiring to help the 

Chinese to organize their defensive forces, this 

place would be most suitable for commencing to 

train them, whether naval or military. 

72 



VII 



KIAO-CHOW 

I RECEIVED an invitation from Rear-Admiral 
H.R.H. Prince Henry of Prussia to visit Kiao- 
chow. Messrs. Jardine & Matheson kindly placed 
a steamer at my disposal for this purpose, and I 
put into that port 14th November, 1898, on my 
way from Chefoo to Shanghai. This place would 
have great capabilities as a mercantile port in the 
future, provided very large sums of money are 
spent upon it. A breakwater will have to be 
built in order to make it a good anchorage and 
to defend it from easterly seas, and the inside har- 
bor will have to be extensively dredged in order to 
give sufficient water. 

It is not an easy place for vessels to make, par- 
ticularly in foggy weather. 

When the railway is finished from Kiao-chow to 
Tsinan, Kiao-chow is certain to become a mercan- 
tile port. 

Some fears were expressed by the merchants at 
Tientsin and Chefoo that when Kiao-chow became 
a mercantile port the shipping industries of those 
places would suffer. I assured them that, in my 
opinion, if the policy of the Open Door was main- 

73 



THE BREAK-UP OF CHINA 

tained while railways developed the latest resources 
of China, there would be ample room for more 
mercantile ports, and I also pointed out to them 
that if other nations help by building railways to 
develop China the volume of trade as a whole 
would be certain to increase, and with equal oppor- 
tunities the Anglo-Saxon merchants must benefit. 

The Anglo-Saxon merchant, however, need not 
fear much competition from Kiao-chow if the reg- 
ulations as to land remain as they were when I 
visited that place. 

The Government owns the land. If it is bought 
by private individuals or firms, all sales by auction 
or otherwise have to be registered. Six per cent, 
is charged on the assessed value of the land, and 
it is to be reassessed every twenty-five years for 
the above tax. 

If the land is sold at a profit at any time, one- 
third of that profit is to go to the Government. 
The Government claims the right, as a safeguard 
against fraud, to take over any piece of land them- 
selves at the price stated by the seller and pur- 
chaser to be the selling price. 

To explain : If two men come to register a sale, 
one to the other, for a piece of land at $10,000, the 
Government can say to the seller, " Here is your 
$10,000, less the one-third profit on what you 
originally expended," and the intending purchaser 
thus loses his bargain. 

The Germans were very actively employed on 
shore clearing the ground, building barracks, mak- 

74 



KIAO-CHOW 

ing parade-grounds, and preparing emplacements 
for guns in the most commanding positions. The 
place could be made into a very strong naval base, 
but this would entail a further large expenditure 
of money, owing to its configuration. 



VIII 

SHANGHAI 

The estimated population is 405,000 

TRADE STATISTICS 

The total value of trade in 1897 ^^s Hk. taels 101,832,962 
(over ;f 14,500,000). 

The total tonnage of shipping entered and cleared in 1897 
was 7)969,674, of which 4,591,851 was British. 

I PAID four visits to Shanghai, arriving there 
the first time on October 4th. 

Shanghai is, perhaps, the most important Treaty 
port in the Far East for the Anglo-Saxon trader. 
It is situated at the entrance of the great Yangtse 
Valley, and from the above returns it will be seen 
that British trade is largely predominant. 

The British merchants here were much inter- 
ested in the Mission, and resolved to afford the 
Associated Chambers of Commerce every informa- 
tion in their power. They expressed grave anx- 
iety as to the future, principally based upon the 
want of security in the provinces, the Chinese Gov- 
ernment having no efficient police or military in 
case of disturbances. Rebellion, they said, was 

active in the province of Szechuan, and disturb- 

76 



SHANGHAI 

ances had already occurred in Hunan, in the 
Yangtse Valley, owing to which the Chinese mer- 
chants were refusing to trade with those provinces. 
They represented that this would prejudice Brit- 
ish trade in the near future. The British mer- 
chants also referred to the dominant military 
position of Russia in the North, which, they said, 
must ultimately endanger British trade unless 
some e£fective counterpoise was created to bal- 
ance it. 

It was again brought to my notice that the 
new navigation laws, which should facilitate Anglo- 
Saxon trade, can only partially carry out their in- 
tended benefits owing to the uncertainty which 
exists as to dues, particularly likin and loti-shui. 
Also that a steamer under these regulations can 
only carry cargo within the area of the port at 
which she is registered; she cannot trade to or 
pass any locality where there is a Customs House. 

Such regulations are prohibitory for cargo traffic, 
and the steamers virtually carry nothing but pas- 
sengers. 

An ocean-going cargo-boat can trade all along 
the rivers and pass Customs Houses, but boats 
that are under the new inland navigation rules are 
not permitted to do this. 

To these disadvantages must be added the re- 
fusal of the Chinese authorities to sanction the for- 
eigners' right of residence outside the Treaty ports. 

In support of the view taken by the British 
merchants as to their position here, the Viceroys 

n 



THE BREAK-UP OF CHINA 

Liu Kwen Yi (Nanking) and Chang Chi Tung 
(Hankow) both expressed to me that they were 
sure there would be disturbances in their provinces. 
( Vide chapters on " Nanking " and " Hankow.") 
They pointed out that seven coUectorates of the 
likin in their provinces (;^750,cx)o) were allocated 
to pay the interest of the ;^ 1 6,cxx5,oc)0 borrowed on 
the 8th of March, i898,from England and Germany. 
The Viceroy of Nanking further stated that the 
whole of the additional increase of the salaries of 
the Customs House officials — viz., ;^ 187,500— has 
been levied on the Shanghai Customs House alone. 
Both Viceroys declared that the people were com- 
plaining that their taxation was being paid to the 
foreigner, and that it was impossible to levy further 
taxes, so that the future looked very gloomy. 
They appeared to welcome the idea of British 
gunboats on the Yangtse, provided they were sent 
to assist the Viceroys, and not to undermine their 
authority. 

On October 6th I met a deputation of the China 
Association at Shanghai, who presented me with 
a memorandum couched in strong and definite 
terms. In the discussion which followed, the mem- 
bers gave it as their opinion that there was a gen- 
eral feeling in Shanghai that the Home Govern- 
ment did not support British interests properly, 
and that their views and opinions were shelved 
and not attended to for years at a time. They 
thought the moment had come for a change of 

policy. The memorandum is as follows : 

78 



SHANGHAI 

'' In view of the interest which is now aroused at home in 
matters relating to China, it appears to the Committee of this 
branch of the Association that the opportunity is favorable for 
the publication of some general expression of its views upon 
the question. 

"There has, in the past, been general complaint of the 
want of expansive vitality in our trade with China — a com- 
plaint which has nowhere been more freely voiced than in 
China itself by those actively engaged in the commerce of 
the country. In many quarters, moreover, it has been alleged 
that the fault lay with the British trader himself. It is not 
the object of this memorandum to undertake the defence of 
this charge, but it is merely desired to put forward some state- 
ments of what we believe to be the main reasons for the com- 
parative absence of progressiveness of foreign trade with 
China. The opportunities of the country we, better probably 
than any one else, know ought to be enormous, whether in the 
development of existing trade or pushed into the hitherto un- 
exploited field of China's natural wealth. 

*' We unhesitatingly attribute the limited expansion of trade 
with China to three main reasons — namely: 

(a) The entire absence of good faith on the part of 
China in the matter of her Treaty obligations. 

(6) The absence of security for the investment of 
foreign capital in China anywhere outside the Treaty 
ports. 

(c) The general apathy and want of knowledge 
which have been displayed at home regarding Chinese 
affairs. 
"Reasons (a) and (H) hinge on each other, and reason 
(c) supplies the explanation of the other two. 

"To residents in China it seems superfluous to repeat argu- 
ments in support of the charge made against the Chinese of 
bad faith as regards Treaty obligations ; but so little seems to 
be known at home as to the actual conditions under which 
foreign trade with China is conducted, that a short statement 
regarding them may be permitted. By Treaty China bound 

79 



THE BREAK-UP OF CHINA 

herself to certain regulations for the conduct of her trade, 
import and export, with foreign countries. A Customs tariff 
was arranged by mutual agreement, the duties so agreed upon 
to be collected at the ports which, by Treaty, were opened to 
foreign trade. The collection of these duties, which was at 
first in native hands, came subsequently to be vested in the 
service well known as the Chinese Imperial Maritime Cus- 
toms, a service managed by Europeans, but with its sphere of 
operations confined to the Treaty ports. So far as the collec- 
tion of duties through this source is concerned, there is no 
complaint whatever to be made ; the service, in fact, consti- 
tutes China's only honest source of revenue, and forms her 
main available asset. But beyond this provision for the col- 
lection of duties at the ports, the Treaties went further, and 
aimed at the protection of merchandise, being the subject of 
foreign trade, in its movements in the interior of the country. 
It may be at once admitted that the framers of the treaties 
were very insufficiently acquainted with the loose fiscal arrange- 
ments connecting the governments of China's provinces with 
the Central Government in Peking ; and it is this, no doubt, 
which has been, and is, the main source of the difficulties 
which have arisen. At the same time, however, the condition 
of the relations between Peking and the provinces in no way 
lessened the responsibilities of the Central Government as 
regards the Treaty obligations which it assumed. The ar- 
rangement arrived at in connection with the movement of 
foreign merchandise in the interior was simply that, on the 
payment of an extra half duty, transit passes could be claimed 
from the Chinese Government, under which imports could 
be moved from the port of entry to anywhere in the in- 
terior, and exports could be brought from anywhere in the 
interior to the port of shipment, exempting them (in the words 
of the Treaties) *'from all further inland charges whatsoever,^ 
The wording is clear enough, and the intention of what was 
meant was put beyond all doubt in a despatch from Lord 
Elgin (the framer of the Treaty of Tientsin, upon which the 
Treaties with other countries were based) to the Foreign 

80 



SHANGHAI 

Office in 1855. Lord Elgin, in writing of the newly arranged 
transit dues, defines them as ' a sum in the name of transit 
duty which will free goods, whether of export or import, to 
pass between port of shipment or entry to or from any 
part of China without further charge of toll^ octroi^ or tax 
of any description whatsoever^ And further, in the same 
despatch he writes: *I have always thought that the remedy 
(against arbitrary inland taxation) was to be sought in the 
substitution of one fixed payment for the present irregular 
levies.' Nothing could be clearer, yet to this day — thirty 
years since the Treaty of Tientsin was signed — the transit- 
pass system is an utter failure. It is true that our govern- 
ment has insisted (though largely ineffectually) that the tran- 
sit pass clears goods en route from taxation, but this limited 
interpretation of the treaty is clearly not what was intended, 
the wording being that they are freed from ^all further inland 
taxation whatsoever,^ In many parts of China transit passes 
are altogether ignored, and in others, where they are nominally 
recognized, taxes are levied on transit-pass goods (at desti- 
nation on imports, and place of origin on exports) destroying 
absolutely the immunity from arbitrary inland taxation which 
the Treaties provided for. Ministers and Consuls have con- 
stantly endeavored to obtain for British trade in China the 
freedom from arbitrary taxation which the Chinese Government 
agreed to give. The failure of their attempts can only be attrib- 
uted to want of support at home, the outcome of indifference 
and want of appreciation of the interests involved. The result 
has been that merchants, tired of making futile representa- 
tions of their grievances, have simply contented themselves 
with making the best of such trading opportunities as they 
found open to them. The case is well stated in Mr. Consul 
Brenan's report, issued last year (1897), upon the ' State of 
Trade at the Treaty ports in China.* He writes : * A long 
and painful experience of thwarted efforts has had such a dis- 
couraging effect upon foreigners in China that a condition 
of stagnation has come to be accepted as in the nature of 
things/ 

F 81 



THE BREAK-UP OF CHINA 

*' But if the British Government has allowed the provisions 
of the Treaties to become a dead letter, other nations have 
been less complacent with China in their handling of the 
matter, and it is somewhat humiliating to find the following 
passage in the report of Mr. Consul Bourne, who accompanied 
the recent * Blackburn Mission to China.' Writing upon the 
trade of Yunnan, Mr. Bourne says : * Since my visit to this 
place in 1885, the import trade in foreign goods has almost 
entirely shifted from the West River route via Pose-Ting (i>., 
the British route) to the Tongking route by way of the Red 
River and Mengtzu (/>., the French route). This revolution, 
great indeed if the conservative habits of the Chinese are 
remembered, is entirely due to the energy of the French in 
vigorously enforcing on the Chinese Government their right 
to transit passes to cover goods from Mengtzu to Yunnan-Fu.' 
Again, on the same subject, Messrs. Bell and Neville, the 
members of the Mission, write : ' There is little chance of any 
increase of trade (into Yunnan) by the overland route from 
Bhamo (/>., the Burmese frontier route), for goods coming this 
way are subjected to no less than seven different duties, where- 
as by the Mengtzu route transit passes are recognized, and 
the *j\ per cent, paid to the Imperial Maritime Customs ex- 
empts the goods from any further taxation.' If the French 
have been able to enforce upon the Chinese Government this 
respect of Treaty rights, how is it that we, who hold some 64 
percent, of China's total foreign trade, have so entirely failed ? 
A suggested answer is that our failure is the result of our hav- 
ing treated the Central Government of China too seriously ; 
that our Government has believed that the effective way to 
obtain redress of abuses in the provinces was by representations 
at Peking : China's war with Japan effectually burst this bubble 
of belief in the supposed strength of Peking, and has shown, 
we hope, that the only effective policy with China is that which 
we employed in our earlier relations with the country — namely, 
to deal with abuses where they occur, and to face Peking with 
the fact of grievances already redressed. 

" Again, it may not be generally understood at home that 

82 



SHANGHAI 

the foreigner in China has no liberty of residence for purposes 
of trade except at the Treaty ports; he may ^travel for pur- 
poses of trade/ but may not establish trading stations anywhere 
outside the limits of the ports. This restriction as to residence 
is naturally a hindrance to the development of foreign trade 
and enterprise in the country, and the point has special interest 
at the present time in view of the concession recently obtained 
from China as to freedom of navigation by foreign craft over 
the inland waters of the Empire. The concession is an im- 
portant one, but it is practically valueless unless it is accom- 
panied with the right of foreign inland residence; it is an 
obvious necessity that, for the protection of nu^rchandise trans- 
ported by foreign craft under foreign control, there must be 
established up-country stations and depots, where foreigners, 
or their agents, can reside for the management of the traffic 
and for the storage and delivery of goods. 

'* It is the want of security which is the main reason for the 
stagnation of foreign trade with China, and the dangers of the 
present situation are not only sufficient to hinder further trade 
development and extension of enterprise, but are also a serious 
menace to the trade which already exists. And the danger 
to-day is greater than it ever has been ; the weakness and the 
corruption of the Peking Government stands confessed ; its 
necessitous financial condition requires more help than ever 
from the provinces to meet the foreign obligations to which it 
now stands committed, and at the same time its power over 
the provincial governments is becoming less and less, by reason 
of the disaffection which is making itself apparent in many 
parts of the Empire. What, then, is likely to be the result 
upon foreign trade in the interior of the country ? The revenue 
of the Imperial Maritime Customs, of which the provinces 
have in the past received their share, is now practically wholly 
hypothecated for the service of the foreign loans ; concurrently 
with this the demands from Peking for more money from the 
provinces are increased ; what can be the result other than an 
increase of inland taxation ? As one means of supplying the 
deficiency in her revenue, China has given notice of revision 

83 



THE BREAK-UP OF CHINA 

of the existing Foreign Customs Tariff, but she offers no 
security for the remedying of the abuses of which we have for 
thirty years complained; the proposition put forward by Li 
Hung Chang, during his visit to London in 1896, was merely 
that the existing duties be doubled — an ingenious Oriental 
expedient by which foreign trade should be made to bear the 
expenses of China's foreign loans. Foreign traders in China 
are generally favorably disposed towards a revision of the 
existing tariff in China's favor, but they at the same time most 
distinctly demand that no such concession shall be granted 
unless full security be given for the protection of foreign trade 
in the interior against the abuses experienced in the past. It 
seems plain that such security can only be found in the entire 
reform of the present corrupt system of Chinese government ; 
the undertaking of such a task, no doubt, bristles with 
difficulties, and entails responsibilities which will necessarily 
be complicated by international jealousies ; it is, nevertheless, 
clear that unless the situation be boldly faced, still greater 
difficulties and still greater international troubles will have 
to be faced in the near future. 

"The necessitous financial condition of China, brought 
about by the disaster of her war with Japan, and her obliga- 
tions thereby incurred with European countries, makes it plain 
that a continuance of her policy of exclusion, and contempt 
for foreign ways, cannot longer be maintained. Pressure from 
without, powerfully aided by an empty exchequer within, has 
already persuaded her rulers that the vast natural resources of 
the country can no longer be permitted to remain undeveloped, 
and in consequence there are now put out to the world huge 
schemes of railway and mining enterprise, for the carrying out 
of which foreign capital is invited. It may, however, be taken 
for granted that before responding to the invitation the capi- 
talist will pause to look into the security which is offered ; he 
may reasonably ask : What power has the Central Govern- 
ment at Peking to protect concessions granted in the Prov- 
inces ? What has been the experience in the past as to China's 
good faith in the matter of treaty engagements and contracts ? 

84 



SHANGHAI 

What amount of foreign control and supervision is to be al- 
lowed in the expenditure of the capital asked for ? Is the pres- 
ent prohibition of foreign inland residence to be relaxed in 
order to enable foreign supervision of foreign inland enter- 
prise ? It is clear that in the answering of these questions is 
involved the further one : Is this much-talked-of opening of 
China to be made real, or is it a sham ? If it is to be made 
real it is plainly necessary that strong foreign influence must 
be used to prevent repetition of the chicanery of the past. 
With a weak Government in Peking, open to be played upon 
by the jealousies of competing Powers, no security can be 
looked for, except such as may be found in force ; the es- 
tablishment of a Government in Peking, which is not only 
strong, but which is in sympathy with the wishes and feelings 
of the nation at large, is, we believe, a first necessity if China 
is to be saved from partition. We believe that the teachings 
of progress and reform have been widely accepted throughout 
the Empire. It is plain that wholesale administrative and fiscal 
reform is imperative both for the salvation of China herself, as 
well as for the security of the foreign capital which she is in- 
viting for the development of her resources. Suggestions as 
to methods of reform do not fall within the scope of this 
memorandum ; sufBce it to say that the practical side of the 
question has not been neglected by this Association, and it 
may be fairly claimed that the British Government has re- 
ceived — from its Ministers, Consuls, and Merchants — a suffi- 
ciency of facts, opinions, and suggestions from which a definite 
and resolute policy might long ago have been deduced. 

" For the carrying out of schemes of reform it is clearly 
necessary that there must be some foundation of strength upon 
which to base action ; naturally this ought to be supplied by 
Peking, the Central Government being made an effective 
power for the execution of its commands throughout the Em- 
pire. For it is plain that, in the absence of a dominating cen- 
tra] power — a power strong enough to maintain the Empire^s 
integrity, there need be no further talk about the maintenance 
of the • Open Door ' and equality of trading opportunity, con- 

85 



THE BREAK-UP OF CHINA 

ceming which our statesmen have said so much. Weakness 
in Peking must inevitably mean disruption and partition of the 
Empire, and it may be reasonably suggested that it was 
through some shadowy conception of this fact, and through 
an unwillingness to accept the responsibilities of maintaining 
Peking authority, which brought into being the alternative 
policy to that of the *Open Door' — namely, that of the 
' Sphere of Influence' ; needless to say that the two policies 
are directly opposed to each other. But whether China be 
maintained intact, or whether China be partitioned, the neces- 
sity for reform remains the same, the only difference being 
that whereas in the former case the reform measures would 
emanate from one strong centre, and be applied to the Empire 
at large, in the latter case they would be applied over restricted 
areas by the occupants of the ' spheres.' We submit that the 
jealousies and complications in jurisdictional matters, which 
must inevitably arise between the different occupants, form a 
far more serious danger to the general peace than any which 
is entailed in a bold policy for the maintenance of China's in- 
tegrity with a central point of strength. Great things may be 
judged by small, and the dangers of the ' Sphere of Influence ' 
policy are to-day being illustrated in Shanghai, through the 
claims of one nation to exclusive jurisdiction over parts of 
these Settlements, in which we maintain the door is open 
to all. 

" We say, then, that the one thing wanted for the develop- 
ment of trade, for the protection of capital, and for the exten- 
sion of enterprise in China is security, and we say that such 
security can only be found in the reform of the country, which 
can only be effected through pressure from without ; and we 
further say that the vast preponderance of British interests in 
China clearly demands that Great Britain shall lead and guide 
the movement We attribute the hitherto neglect of the China 
question by our Government, and the policy of drift into 
which we have fallen, to a mistaken estimate of the strength 
of British prestige in the Far East, coupled with a fallacious 
belief in the power of China herself ; other nations, newer in 

86 



SHANGHAI 

the field, and comparatively unhampered by traditions of the 
past, have seemingly been better able to interpret events in 
the light of common experience, and have found opportunity 
in our complaisance and inactivity to exploit the situation 
to our disadvantage. We do not wish to concern ourselves 
with any imperfectly understood catch phrases such as 'Open 
Door * or * Sphere of Influence,' further than to say that Great 
Britain's sphere of influence should be wherever British trade 
preponderates, with the door open for equal opportunity 
to all ; this is an ideal which can never be reached without 
resolute determination on the part of the British Cabinet to 
lead and not to follow in Peking. We do not hide from our- 
selves the difliculties which must be faced in order to bring 
about China's reform, and we therefore urge that Great Britain, 
in leading the movement, should endeavor to obtain the co- 
operation of other great nations who have like aims and in- 
terests with ourselves — that is to say, whose interests lie in 
commercial development, and who are not aiming at terri- 
torial aggrandizement. 

" C. J. Dudgeon, Chairman^ 

Looking carefully into the cases enumerated in 
the memorandum, I am of opinion that in one or 
two particulars the statements are misleading. It 
is not correct to say that the transit passes are " an 
utter failure." They were so until the present 
British Minister, Sir Claude MacDonald, went to 
China; but that cannot be said now, and it is un- 
fair not to recognize his Excellency's e£forts and 
measure of success. The real fault is in adhering 
to the Board of Trade decision of thirty years ago, 
recognizing terminal taxation. 

On the following day, October 7th, a deputation 
of the Shanghai Chamber of Commerce (a cosmo- 

87 



THE BREAK-UP OF CHINA 

politan body representing all nationalities) pre- 
sented me with an address {see Appendix). A 
German member declared that the Commercial 
Mission of Inquiry to China would be for the bene- 
fit of the whole community, whether British or 
foreign. An American member affirmed that the 
trading interests of England and the United States 
were identical, and that the American community 
were very grateful to the Associated Chambers 
for sending out a mission to inquire into those 
questions vitally affecting trade and commerce. 
Points particularly alluded to in this address : 

(i.) Non-observance of treaties on the 
part of China, whereby foreign trade and com- 
merce have suffered. 

(2.) Question of tariff reform. 

(3.) Question of necessity for getting Con- 
servancy Board for Shanghai, in order to pro- 
vide proper harbor accommodation and do 
away with Woosung bar. 

(4.) Necessity for increasing foreign 
settlements in Shanghai by means of exten- 
sion. 

These points are of importance to the trade 
of all nations, but are of especial and particular in- 
terest to that of Great Britain, whose trade is in 
preponderance. 

A very important question affecting commercial 
interests in the future was brought to my notice by 
the Chamber of Commerce and the China Associa- 

88 



SHANGHAI 

tion. It is the question of validity of contracts 
made between Chinese and foreigners. 

The question is illustrated by the foUowingfacts : 
The Bank of China and Japan was incorporated in 
December, 1889, with the nominal capital of one 
million, which was afterwards increased to two 
millions in February, 1891. 

When the Company was found to be doing a 

profitable business a large number of Chinese 
bought shares, but before they were allowed to 
become shareholders they had to sign the follow- 
ing agreement; 

"I hereby request you to register me as the holder of 

ordinary shares of the Bank of China, Japan, and the Straits, 
Limited, transferred to me, and, in consideration of your doing 
so, I agree to pay the calls in respect of all moneys unpaid on 
the said shares at the time and place arranged by the directors 
pursuant to the Articles of Association. 

" And I further agree that all questions between me and 
the Bank shall be decided in accordance with the Law of 
England." 

The bank got into difficulties in 1893, at which 

time the shares had a liability of about j^y los. 

unpaid calls, and it was resolved to call up £ i per 

share. The Chinese shareholders refused to pay, 

notwithstanding the agreement they had signed, 

which was written in Chinese as well as English. 

This action, and the magnitude of the total sum 

involved (upwards of ;^4CX),ooo) forced the bank 

into liquidation and reconstruction. The case 

was tried before his Honor Tsai Chiin, Shanghai 

89 



THE BREAK-UP OF CHINA 

Taotai, and Mr. Byron Brenan, C.M.G., H.B.M. 
Consul, at a special sitting. Notwithstanding the 
protest of Mr. Brenan, the Taotai delivered judg- 
ment in favor of the Chinese. The question 
whether a Chinese, having made such an agree- 
ment, not in conflict with any treaty, may be al- 
lowed to break it when it suits him, is one of grave 
importance to the whole mercantile community in 
China, The British Minister, Sir Claude Mac- 
Donald, has warmly taken up the case, but the 
merchants feel that it is the duty of the Home 
Government to deal effectively and promptly with 
such a serious matter. 

I was informed that the Chinese merchants who 
had taken shares in this Corporation were anxious 
to pay the call demanded, but that the Chinese 
shareholders included several Mandarins and of- 
ficials, and it was these latter who objected to pay 
the call. The merchants are afraid to run counter 
to those in authority. 

COTTON 

I was informed that there were twelve cotton- 
mills, built, building, or projected, at the time of 
my visit to Shanghai. The industry for the mo- 
ment was dull, owing to over-production and the 
large import of Indian yarn. From personal ob- 
servation, I do not think that the Chinese will be 
formidable competitors in the manufacture of cot- 
ton, unless they employ foreign management and 

90 



SHANGHAI 

foremen. They allow nothing for depreciation 
and maintenance, but take all available assets to 
, pay interest and to secure high dividends. 

In the Yangtse Valley generally the Chinese 
are learning to make a cheap yarn, which they 
have been in the habit of importing from Japan 
and India. 

The Japanese and Chinese cotton is too short 
and fragile in the staple. American and Indian 
cotton has to be imported to employ the mills, as 
the Chinese prefer to buy the yarn and make the 
piece-goods themselves. There is only one mill 
(Ewo) in Shanghai that makes piece-goods ; all the 
others are devoted to making yarn. 

I visited the Cotton Mills in October, 1898. 
They were only working half-time, and some of 
the Chinese mills had closed altogether. The 
piece-goods industry is particularized in this Re- 
port owing to the fact that although it appears as 
English trade in the Imperial Customs Returns, 
and although it is owned by the British, and has 
been brought from America in British bottoms, still 
it is American manufactured, and the producer and 
original owner were American. The British mer- 
chants, however, derive a most important and 
lucrative trade by transporting this cotton in 
British ships, and disposing of it to the Chinese. 
It may be remarked, also, that the Chinese want 
the American cotton, particularly in the North, be- 
cause it is made in the width they require, and of 
the thicker texture required in the cold climate. 

91 



THE BREAK-UP OF CHINA 

I asked to be supplied with some details for the 
Associated Chambers relative to cotton imports. 
I append the interesting Table of Comparisons 
that I obtained. {See Table opposite) 

From this Table, which analyzes China's import 
trade in cotton goods and yarns (a trade which 
forms some 40^ of the whole), it will be seen that 
during the last ten years America has increased 
her interest in the importation of plain goods by 
121^ in quantity and 69i^ in value; on the other 
hand, the interest of Great Britain and of India in 
similar goods has decreased 131^ in quantity and 
8^ in value. 

There can be no question that this competi- 
tion of America with Lancashire and India (more 
particularly with the former) will become keener 
as time goes on. Ten years ago America's inter- 
est in the piece-goods trade with China was con- 
fined to her exports of surplus domestic goods — 
that is, of goods manufactured for home consump- 
tion, and which were, for the most part, of too 
high a standard of quality for general Chinese use. 
The circumstances are now, however, altogether 
changed, in that America is rapidly becoming an 
exporting country, and her manufacturers, seeing 
the advantages which their nearness to the China 
market gives them, are directly competing with 
Lancashire for the trade by erecting mills for the 
special manufacture of goods suitable for the Chi- 
nese market. The great difiference between the 

two percentages of increase in quantity and in- 

92 



Pll 



■n* 




SHANGHAI 

crease in value shows that a considerably lower 
standard of goods is being made, which is, of course, 
to meet the Chinese requirement of cheapness. 

A somewhat interesting question is: What part 
are British merchants playing in this development 
of the American piece-goods trade with China? 
The point may, perhaps, be conveniently divided 
into two heads, say: 

( I .) Origin of Goods. 
(2.) Ownership of Goods. 

As regards " Origin," it is, of course, clear that any 
increase in America s share in the China trade is 
so much to the detriment of the British manu- 
facturer. But a wider question is : How does such 
increase affect British trade? This point, I think, 
must be decided on the ground of " Ownership"; 
it is clear that if an Englishman buys (say) cowrie- 
shells in Africa, these cowrie-shells become a sub- 
ject of British trade as soon as they have passed 
into his hands; similarly if he buys American 
piece-goods in New York, these goods in the 
same way become a subject of British trade as 
soon as he is possessed of them — the question of 
origin is an entirely separate one. 

The point is, how much of this trade in Amer- 
ican goods is American - owned, and how much 
^x\\x^-owned? The question is not an easy one 
to answer, but an approximate conclusion can be 
arrived at. There are in Shanghai only two pure- 
ly American firms of standing — ue., firms engaged 

93 



THE BREAK-UP OF CHINA 

in the piece-goods trade;* there are also two 
firms of mixed American and English partnership. 
These four firms do a large business in American 
goods, and we will allow that all such business is 
American-owned ; but on the other hand there are 
numbers of purely British firms engaged in the 
American trade. I was told that fully 60 per cent 
of American Piece-Goods are British-owned, while 
nearly the whole trade is carried under the British 
flag and financed through British banks. If, then, 
the table was arranged from the point of view of 
ownership, it would stand approximately as follows: 



Ownership. 



English and Indian 

605^ of American, 
English-owned . 

40^ of American, 
American-owned 



1887. 
Quantity. Value. 



1897. 
Quantity. Value. 



*( Quantity. 



Jl Value. 



Pes. 

11.037,745 


£ 
3,767,700 


Pes. 

9,517,098 


£ 

3,47o,aoo1 

y 


1. 14 dec. 


1,104,565 


657,300 


2,486.383 


1,048, 800 J 




769,709 


438.200 


1,657.588 


698,720 


115.35 inc. 


12,219,019 


4,863,200 


13,661,069 


5,217,720 


11.80 inc. 



2.12 inc. 



37.30 inc. 
7.29 inc. 



1887. British interest in ownership, 91^. American, g% 
1897. " " " 86.6ijr. " 13.39^ 



* The following are the American firms in Shanghai : The 
American Trading Company (large importers of goods) ; the 
China and Japan Trading Company (large importers of goods); 
Messrs. Macey & Co. (tea only) ; Messrs. Frazar & Co. (prob- 
ably do a small business in goods); Messrs. Fearon, Daniel 
& Co. (large importers; firm half English); Messrs. Wisner 
& Co. (moderate importers ; firm half English); The Stand- 
ard Oil Company (kerosene-oil only). 

94 



SHANGHAI 

In other trades than piece-goods America has 
large interests which are practically all her own, 
say: 

Kerosene-oil. Value, 1887,^^330,000; value, i897,;;^i,oi9,4oo 
Flour. " " 145,000; " " 180,600 

She has also a large interest in Lumber (total 
value, 1887, ;^68,50o; 1897, ;^55»20o), and an 
increasing interest in Machinery {\%%t, £^(},2fiO\ 
1897, ;^402,ooo), though the carrying is largely 
under the British flag. 

Before I left Shanghai on the loth of October, 
I had three interviews with the Marquis Ito, the 
late Japanese Prime-Minister. He expressed the 
greatest friendliness towards Great Britain, and 
the gravest anxiety with regard to the future of 
China, as he declared that unless China supplied 
herself with an efficient military and police, dis- 
turbances were certain to occur which would 
endanger the life and property of the foreigners. 
Foreigners might be called upon to interfere in 
defence of their interests, which would eventu- 
ally lead to the dismemberment of China. The 
Marquis seemed interested in the suggestion that 
a commercial understanding should be consider- 
ed between Japan, America, Germany, and Great 
Britain, based on the integrity of China and equal 
trade opportunities for all nations. The Marquis 
declared that the trading interests of Japan and 
Great Britain were identical in the East, and said 
that each country could materially help the other 

95 



THE BREAK-UP OF CHINA 

He also declared that a policy such as was sug- 
gested with regard to keeping the door open 
would not be a selfish policy, but would benefit 
the trade of all nations. 

He declared that the Chinese Government was 
so weak as to have lost all control, and must 
shortly fall. He agreed that the four trading Pow- 
ers—Great Britain, America, Japan, and Germany 
— might, for the protection of trade and commerce 
of all nations, assist China in the reorganization 
of her forces with the help of foreign officers and 
non-commissioned officers. Marquis Ito said he 
was sure there would be no objection on the part 
of Japan to a British subject undertaking this re- 
organization with the combined help of the other 
Powers, that Great Britain had a good right to 
do this, owing to the preponderance of her vested 
interest, and that the British had proved them- 
selves excellent at leading and organizing Eastern 
peoples. He thought Corea should be included 
with China as regards the question of the Open 
Door. He also declared that the whole commer- 
cial future of Japan and England depended upon 
the policy now pursued. 

It must be remembered that the Marquis Ito 
has been all over China, and knows the Chinese 
better perhaps than any other foreigner. His 
opinions are, therefore, most valuable to the Asso- 
ciated Chambers of Commerce. He heartily up- 
held the opinion that an effective reorganization 
of the military and police forces of the Empire 

96 



SHANGHAI 

would be a sufficient guarantee for the security of 
trade and commerce. 

The Marquis Ito was out of office, and, like my- 
self, was paying an entirely unofficial visit to 
China. 

Hearing that his Excellency Kwei Chun, the 
newly appointed Viceroy of Szechuan, was at 
Shanghai on his way to take up his appointment, 
I called and had two interviews with him. I in- 
formed his Excellency that the Associated Cham- 
bers would take great interest in any suggestion 
he might make for the improvement and develop- 
ment of trade and commerce in the provinces un- 
der his control. His Excellency expressed him- 
self in terms most friendly to England, and said 
he would do what he could to further the develop- 
ment of foreign trade, and to open the country to 
merchants, manufacturers, and miners. He also 
informed me that the provinces he was about to 
administer were extremely rich in coal, iron, and 
many other minerals, none of which had as yet 
been opened up. I took the opportunity of point- 
ing out to his Excellency that, unless China very 
shortly took steps to provide that security, by 
means of military and police, which it was the 
right of foreign countries to demand for the pro- 
tection of their trade and commerce, she was cer- 
tain to fall to pieces, and in such an event was 
equally certain to be split up into European prov- 
inces. On pointing out to his Excellency that 
China might save her integrity by asking Great 
G 97 



THE BREAK-UP OF CHINA 

Britain and the trading nations to organize her 
forces as a whole, his Excellency heartily agreed 
with the proposal, saying he wished it could be 
done, but that such matters rested with the Impe- 
rial Government. 

I was informed that one of the most prominent 
Reformers, Huang Chin, had been arrested, and 
was to be sent to Nanking for execution. Six of 
his associates had just been executed at Peking. 
I told the Viceroy that, in my humble opinion, if 
these political murders continued there were cer- 
tain to be disturbances in China, and as such dis- 
turbances were prejudicial to trade and commerce, 
it might cause the British to interfere ; but that, 
anyhow, the British public mind would be con- 
siderably exercised if these political murders con- 
tinued. I therefore urged the Viceroy to use his 
influence to save Huang's life. Huang, I am glad 
to say, was not executed, but suffered banishment 

The question of the extension of the foreign set- 
tlement is one that is intimately connected with 
the protection and security of foreign life and 
property in Shanghai. The so-called British set- 
tlement is really cosmopolitan, and includes land- 
owning residents of many nationalities. For a 
long time it has outgrown its limits, and many 
requests have been sent to the Chinese Govern- 
ment through the British Minister for its expan- 
sion. No territorial rights have been asked for, 
but merely an extension of the municipal control 

as it exists in the present settlement. The French 

98 



SHANGHAI 

alone hold aloof from the request for a cosmopoli- 
tan extension by demanding an extension of their 
own settlement. It is worthy of remark that a 
short time ago the French Consul - General, as 
Z?^^«, claimed the right to preside over the de- 
liberations regarding matters connected with the 
cosmopolitan settlement, while the French will not 
allow any interference whatever in matters con- 
nected with their own settlement, over which they 
claim supreme control. Practically they claim sov- 
ereign rights over their own settlement ; indeed, 
they claim that it is the " soil of France." As a 
matter of fact, the French Treaties with regard to 
their settlement are word for word identical with 
the Treaties agreed to by the Chinese Government 
with other nations. The French have, therefore, 
no exclusive rights. 

The last claim that was made by the French for 
an increase of settlement in December was for a 
concession of land in Shanghai, including the old 
river frontage of the Chinese city, with its newly 
built stores, warehouses, and wharfage, all lit by 
electric light, in excellent order, and actively em- 
ployed, plus another block on the other side of the 
Chinese city. These two claims, if granted, to- 
gether with the present situation of the French 
settlement, would enclose the Chinese city on three 
sides. The Bund claimed is one of the only Chi- 
nese works of this kind in the Empire, carried out 
on their own initiative. It cost 40,cxx) taels (over 

99 



THE BREAK-UP OF CHINA 

The origin of these claims was a demand for 
compensation by the French Consul-General for 
a riot and disturbance at the Ningpo Joss-house 
burial-ground on the i6th of July, 1898. The 
cause of the riot was a demand by the French for 
the Ningpo Joss-house burial-ground to be included 
in a French settlement under French regulations 
in order to erect a public abattoir. This burial- 
ground contains thousands of graves of all ages. 
The French Consul further demanded that all the 
old coffins in the public cemetery in the Ningpo 
Guild should be removed by the surviving relatives 
of the dead, and in future not a single coffin was 
to be placed in the Joss-house or buried in the 
grounds. The French Consul-General further 
stated that it must be clearly understood that when 
an extension of the Anglo-American (or cosmopol- 
itan) settlement is made, an equivalent extension 
should be made to the French settlement. With ref- 
erence to the question of the Ningpo Guild Joss- 
house, it must be borne in mmd that the Chinese 
pay the utmost reverence to their dead. In fact, 
it may be said the only religion the Chinese really 
possess is a devout worship for their ancestors. 
Besides which Chinese law forbids th.e removal 
of graves except with the consent. of the relatives. 

The riot of i6th of July, 1898, was caused by 
the French landing armed seamen and trying to 
take possession of the Ningpo Guild Joss-house 
ground by knocking down the walls. A mob col- 
lected and commenced throwing stones at every 

100 



SHANGHAI 

foreigner who presented himself. The mob was 
charged by the French blue-jackets and several vol- 
leys were fired, the result being thirteen Chinamen 
were killed outright and thirty wounded, of whom 
four died later. It happened that on my arrival 
at Nanking a French cruiser was lying at anchor 
opposite the town with the French Consul-General, 
M. Bezaure, on board. In the course of one of my 
interviews with the Viceroy, Liu Kwen Yi, his 
Excellency, after stating he knew the British were 
friendly to the Chinese, asked me my opinion of 
the case. I explained to his Excellency, as repre- 
senting British trade and commerce, that if he ac- 
ceded to the demands of M. Bezaure, it was only 
natural a disturbance would be created by the Chi- 
nese; that no one knew to what extent a riot in 
the East, and particularly in China (owing to the 
intense dislike of the Chinese for a foreigner) 
would grow. That if a riot commenced, British, 
American, German, and other cosmopolitan com- 
munities would arm their volunteers, and might 
have to fire on a Chinese mob in defence of their 
life and property, although they had nothing what- 
ever to do with the origin of the disturbance. The 
result would be that it would bring the whole of 
the foreigners on the one side, and the Chinese 
people on the other; although I was aware the 
cosmopolitan community referred to was totally 
opposed to the demands made by the French 
Consul-General. I also told his Excellency that 
if he refused the demands, nothing whatever could 

lOI 



THE BREAK-UP OF CHINA 

happen I pointed out that these disturbances 
were fatal to the interests of trade and commerce, 
and that I thought it unlikely that the French 
Government would be so unchivalrous as to make 
such exorbitant demands; but that what had pos- 
sibly occurred was that the French Consul-General 
had exceeded his instructions, an episode common 
to the agents of all nations in matters of a like 
character. 

On arrival at Shanghai, after my visit to Nan- 
king, I was asked to attend a meeting composed of 
representatives of the trading communities of Ger- 
many, America, Japan, and Great Britain. Having 
been informed by members of the Shanghai 
Chamber of Commerce that these French claims 
were seriously interfering with trade owing to the 
disquietude in the minds of the Chinese, and also 
on being asked to give an opinion, I repeated 
what I had said to the Viceroy, holding that no 
one section of a cosmopolitan community had any 
right to take action certain to bring about dis- 
turbances which would jeopardize the lives and 
property of the remainder of such community. 
As it was known that I was the representative of 
the British Associated Chambers of Commerce, I 
think it right to report this circumstance. 

The French further demanded an exclusive 

claim to a large area known as Paotung, on the 

opposite side of the river from Shanghai city, a 

locality in which they have no interest whatever. 

There are warehouses, factories, wharves, docks, 

1 02 



SHANGHAI 

and extensive business properties at Paotung, but 
all owned by British and American subjects. If 
the French extension took place as the French 
Consul -General demanded, it would include a 
quantity of English land registered in the British 
Consulate. 

On the night before the final departure of the 
Mission from China I was entertained at a farewell 
dinner. This fact is notable on account of the 
strongly representative and cosmopolitan character 
of the hosts, who consisted of the following four 
corporations: The Shanghai Chamber of Com- 
merce (a body representing all nations), the Munic- 
ipal Council (ditto), the Shanghai Branch of the 
China Association (British), and the American- 
Asiatic Association. This event will, I feel sure, 
be gratifying to the Associated Chambers. The 
resolution passed at this dinner was to the follow- 
ing eflFect: 

''That our cordial thanks be tendered to Lord Charles 
Beresford for the service he has rendered to the foreign 
communities in China, by personal investigation into the 
conditions of the various interests we represent." 

The speakers to this resolution, representing 
various countries, all dwelt with complete approval 
upon the policy of the Open Door. 

I had several interviews with the Taotai of 
Shanghai, who appeared deeply interested in any- 
thing that concerns the welfare of British trade 

and commerce. He was once thought to be very 

103 



THE BREAK-UP OF CHINA 

friendly to foreigners, but has lately received 
evident marks of displeasure from Peking, which 
apparently have modified his views. He had re- 
ceived an intimation that he would be relieved of 
his lucrative office before the customary time. 
On my pointing out to him that China must in- 
evitably be broken up into European provinces 
unless she provided an army adequate for the pro- 
tection of foreign trade and capital, his Ex- 
cellency cordially agreed, and said that years ago 
he had written memoranda advocating an alliance 
with Great Britain in support of it; but he added 
that late events had proved that Great Britain was 
afraid of Russia, and that in the event of China 
requesting Great Britain to undertake such re- 
organization, he believed she would decline if 
Russia peremptorily forbade such a proposal. He 
also said that he believed most of the Viceroys 
were strongly of the opinion that if England would 
consent to reorganize the Chinese Army the Em- 
pire might yet be saved. 

While at Shanghai, I had several interviews 
with Christian missionaries of all denominations 
and nationalities. They were unanimously of 
opinion that the "Open Door" policy would be the 
only policy to secure the further development of 
trade in China; and, further, that pursuance of 
this policy was the only one which promised 
success for the future of their missionary work in 
China. 

I visited a French Jesuit Mission at Shanghai, 

104 



SHANGHAI 

a most powerful organization that has done grand 
work in China, particularly in connection with 
science. There is no community that knows China 
and the Chinese more thoroughly. I was glad to 
find that these fathers were enthusiastically in 
favor of the policy of equal opportunity in China, 
and the reorganization of her army, to give security 
to commerce and missionary work. The fathers 
saw no difficulty whatever in carrying out this 
policy, as they declared the Chinese were easily 
governed and led. All the enlightened people 
were hoping for reform, and the fathers declared 
it was only the eflFete system of government that 
was barring the way. 



IX 



NANKING 

The estimated population is 150,000 

I ARRIVED at Nanking, which place it must be 
remembered is not an open port, December 9, 
1898, on board H.I.M.S. Nansktn, zndi received a 
salute of fifteen guns. 

The Viceroy, Liu Kwen Yi, sent the Admiral 
commanding the Nanyang fleet, Chen Yi, to call 
on me. He, and those with him, appeared greatly 
exercised at the presence of the French Consul- 
General from Shanghai, Monsieur Bezaure, who, I 
was informed, was at Nanking on board a French 
cruiser, endeavoring to force certain concessions 
from the Viceroy. 

I had two interviews, of very considerable length, 

with his Excellency the Viceroy, Liu Kwen Yi. 

His Yamen is four and one-half miles from the 

landing-place, and the whole route was lined with 

some thousands of troops and banner-bearers. On 

arrival at the Yamen, the Viceroy received me 

most kindly and courteously. I thanked him for 

placing the man-of-war at my disposal in order to 

facilitate the object of my mission, and expressed 

106 



NANKING 

astonishment at the great ceremony and pomp 
with which I was received. His Excellency re- 
plied that he was anxious to show in every way 
his friendship for Great Britain. 

I explained to the Viceroy the object of my 
mission, and pointed out that the mercantile com- 
munities at home were very anxious as to the fut- 
ure security of Anglo-Saxon trade and commerce 
in China. His Excellency, like the Viceroy Chung 
Chi Tung at Hankow, said that he himself was 
afraid of disturbances in the near future. On my 
asking him why, his Excellency gave me the fol- 
lowing reasons : 

1. That the likin collectorates had been taken 
away from the finances necessary for provincial 
administration, and were now devoted to paying 
the interests on a foreign loan : further taxation 
would be necessary to carry on the government. 

2. That the people were annoyed at their taxes 
being paid to the foreigner.* 

3. Because it was necessary to reduce his mill- 
tary forces, owing to want of money. 

He added that there were a very large number 
of poor and homeless refugees coming into his 
province from the northern part of Kiangsu, flooded 
out by the Yellow River, and that he had not 
enough troops to maintain order among them. 

I pointed out to his Excellency that, under pres- 
ent conditions, there were two sorts of disturbances 

* This inference is incorrect. The likin is only pledged as se- 
curity for foreign loans. 

107 



THE BREAK-UP OF CHINA 

likely to occur in China, either of which would be 
fatal to the interests of trade and commerce — one 
was a rebellion against the Government in its 
present weak condition, and the other a general 
rising against the foreigner. His Excellency de- 
clared that there was no chance of the former, but 
that if taxes had to be levied in order to provide 
for provincial administration, owing to deficiencies 
caused by the new allocation of the likin, he was 
certain there would be disturbances based upon 
dislike of the foreigner. 

On my suggesting the reorganization of the 
Chinese Army under British and foreign officers, 
in order to preserve the integrity of China" and 
provide security for foreign trade, his Excellency 
at first demurred to such a novel procedure, say- 
ing that he thought the old system of provincial ar- 
mies, if properly organized, was far better. When 
I pointed out to him that China had been so com- 
pletely beaten in the late war on account of the 
independence of her two fleets, the Peyang and 
Nanyang squadrons, his Excellency considerably 
modified his opinion. 

His Excellency asked me to draw up a memo- 
randum showing what I thought was necessary for 
a reorganized Chinese Army, as well as details for 
finance. This I did, and later on I received a letter 
from his Excellency, thanking me very warmly 
and intimating that he would memorialize his own 
Government on this matter. 

His Excellency informed me that he was aware 

io8 



NANKING 

that the Viceroy Chung Chi Tung had been or- 
dered to place 2000 men at my disposal for or- 
ganization. He said that such a proceeding, if 
carried out, would lead to the dismemberment of 
China, as other countries would insist on acting 
similarly in various parts of the Empire. 

He also added that, in the provinces under his 
control, a short time ago the name of Britain was 
better respected than that of any other nation, but 
that now the name of Russia was most feared. 

His Excellency took a different view from that 
of other Viceroys on the question of China asking 
Great Britain for assistance. He said that Russia 
would not allow China to do anything of the sort. 

His Excellency declared that personally he 
would like to see the British with greater influ- 
ence in China, and he pointed out the experience 
that the Chinese already had of British officials 
serving as Chinese servants. He mentioned Gen- 
eral Gordon and Sir Robert Hart, and said that 
Chinese people could never repay the debt their 
country owed to those Englishmen. 

The Viceroy thought that a commercial under- 
standing between Great Britain, Germany, Ameri- 
ca, and Japan would go a long way to secure the 
integrity of the Chinese Empire in the future, 
provided none of those countries wished to ac- 
quire territory as a quid pro quo for their support 

When asked if it was possible that there might 

be disturbances throughout the Chinese Empire, 

he said yes, that the whole country was so un- 

109 



THE BREAK-UP OF CHINA 

settled by late events it was possible there might 
be disturbances, but no rebellion. I pointed out 
to him that in the event of disturbances the pros- 
pects of trade would be very bad, and future de- 
velopment impossible for a long time to come, and 
that if they did occur it would be more than like- 
ly that foreign countries would perforce have to 
adopt a policy known as the Sphere of Influence 
in order to protect their trade and commerce. The 
Viceroy remarked that if such an event occurred 
it would be the end of the Chinese Empire. 

The second interview with his Excellency was 
chiefly taken up with a discussion on the French 
claims at Shanghai. This I have fully reported 
under Shanghai. At this interview his Excellen- 
cy considerably modified his opinion with regard 
to having provincial armies under separate ad- 
ministrations instead of one army under one ad- 
ministration for the whole Empire. He said he 
agreed with the arguments I had adduced in the 
memorandum I had sent him at his request, and 
that he would memorialize his Government to or- 
ganize the Chinese Army as a whole under for- 
eign officers. He further said he should repre- 
sent to his Government that if this was not done 
the Chinese Empire would fall, as foreign coun- 
tries could not afford to allow their trade and com- 
merce to be damaged because the Chinese did not 
provide them with security. 

Before I left Nanking in H.I.M.S. Nanshin, 
Taotai Hwang Cheng Yi and Tao Taotai and 

no 



NANKING 

Mr. Ku and Marquis Seng came to see me, bear- 
ing messages of farewell from the Viceroy and a 
letter containing a private memorandum concern- 
ing the reorganization of the Chinese Army, a 
copy of a communication he was sending to the 
Government at Peking. The translation would 
show the very satisfactory result of my mission in 
this case. 

The Viceroy asked me to inspect his army, his 
fleet, the fort under his command, his arsenal, and 
naval and military colleges. 

A report on the army, fleet, and arsenal will be 
found elsewhere. 

The Imperial Naval College, which I visited, 
was commenced in the year 1890. There are sixty 
students, between sixteen and twenty years of age, 
under an English mechanical engineer. The 
school is fitted with an excellent workshop, with 
all tools, machines, and appliances for repairing 
and making boilers and engines. All these were 
British made. The students looked cheery and 
well set up, and were very interested in their work. 
I was informed by Mr. Halliday, the British in- 
structor, that they are extremely quick at picking 
up any sort of mechanical engineering. At the 
end of their five years' study they can all talk Eng- 
lish. All the students are sons of gentlemen. 

There are carpenters' and joiners' shops also in 

the school ; everything in the whole establishment 

is in excellent order and ship-shape, and the money 

expended is well spent. It shows what could be 

III 



THE BREAK-UP OF CHINA 

done for mechanical trading development of the 
Chinese if properly directed by a foreigner. 

As the Chinese have no navy worthy of the 
name, it is a curious anomaly that they should 
have two such excellent colleges for naval officers 
at Nanking and Tientsin, 

I visited the Military College. It was started 
in the year 1895. There is room for one hundred 
and twenty students ; there were only seventy 
there at the time of my inspection. They are di- 
vided into three classes, according to the status 
of their knowledge. The first class get six taels, 
the second four taels, and the third two taels per 
month, together with their food and clothes. They 
are all the sons of gentlemen. They remain there 
three years, and are then liable to be drafted to 
different armies about the Empire, but most of 
them go into the Liang Kiang provinces — i.e., 
those provinces under the administration of the 
Viceroy Liu Kwen Yi. 

I asked to have them put through company 
formation and other drill — they were very good 
indeed. They had been instructed by a Chinese 
officer, who had originally been taught by a Ger- 
man officer. 

They had modern Mauser rifles, bought in Ger- 
many. They were a remarkably fine, smart lot 
of young men, aged between sixteen and twenty. 
Most of them came from Hunan. 

It is another instance of what may be done by 

the Chinese, if properly organized. 

112 



NANKING 

A part of the Budget is subscribed by the 
Peking Government. The usual anomaly, always 
to be found in China, exists with regard to these 
two colleges. The Budget for the Naval College 
is a heavy one, though not too heavy for what it 
turns out. The Budget for the Military College 
is a very light one. As China has no fleet or 
dock -yard, it must be waste of money to train 
naval officers so highly. It would appear wiser to 
devote the money on military reorganization, of 
which the Empire is so sorely in need. 

I left Nanking in H.I.M.S. Nanshiuy on 12th 
December, and received a salute from the Nan- 
yang Squadron. I proceeded to visit the power- 
ful forts on the Yangtse River at the Viceroy's 
request. 

Shortly after my departure from Nanking I 
received the following letter from his Excellency 
the Viceroy, which proves the interest taken by 
his Excellency in British Trade and Commerce. 

Letter from Liu, Viceroy of Nanking, 

TO 

Admiral Lord Charles Beresford. 

" A respectful reply to your kind letter. After the honor 
of your Lordship's visit, when I was so unable to adequately 
carry out the duties of a host, I must express my sincerest 
thanks to you that you nevertheless have had the goodness 
to feel grateful to me, and send me your photograph, which 
will enable me to always have you near me, as if we were still 
conversing. 

'* My heartfelt wish is, that the most friendly relations may 
H 113 



THE BREAK-UP OF CHINA 

exist between Great Britain and China, in order that when 
any difficulties may occur we may be mutually helpful in ful- 
filling your noble idea that China should preserve the integ- 
rity of her Empire, while England protects her own commer- 
cial interests. 

*'The fourteen suggestions I had the honor to receive from 
you regarding the training of troops I have already sent to 
the Tsung-li Yamen, and to his Excellency Yung-lu, and beg 
to convey to you my sincerest thanks again. 

" Card and Compliments of Liu Kwen Yi." 



X 

WU H U 

The estimated population is 79,275 

TRADE STATISTICS 

The total value of trade in 1897 was Hk. Taels 8,888,361 
(over ;f 1,200,000). 

The total tonnage of shipping entered and cleared in 1897 
was 2,867,485, of which 2,159,307 was British. 

WuHU was declared an Open Port by the Chefoo 
Convention, 1877. It is situated on the Yangtse 
River, about half-way between Chingkiang and 
Kiukiang, and owing to its proximity to numerous 
waterways is certain to become an important trad- 
ing centre if China is opened up. 

The British and American merchants handed 
me the following memorandum : " In order to help 
commerce in China, the doors already opened must 
be kept so, and the whole country, from one end 
to the other, should be thrown open, so that mer- 
chants, manufacturers, miners, etc., can live in any 
part and transact their business. If this was done, 
the trade of Europe and America would treble in 
a very short time. 

The British community here expressed them- 

"5 



THE BREAK-UP OF CHINA 

selves as nervous with regard to disturbances in 
the near future, the people having begun to grum- 
ble at the likin being collected by the foreigner. 

The British and American communities were 
anxious that the foreign concession should be ex- 
tended in area. 

There is a large trade in timber from Hunan 
here, and the rafts do much damage to the front 
of the present small concession. They often carry 
away the cables of the hulks lying in the stream. 
This timber trade is in the hands of the Chinese. 

There is much coal in the locality; but I was 
told that the natives do not work it with any profit 
to themselves. A Chinese firm have started a 
mine, with a capital of 22,000 taels (over ;^300o), 
but it is not paying. There is a range of moun- 
tains about forty-five miles from Wuhu which is 
full of coal. Some of the properties there have 
been bought by Americans and English ; but un- 
less the obstructive attitude of the local Chinese 
authorities is overcome there is no chance of this 
property being developed at present. 

On my second visit to Wuhu I found that his 
Excellency the Viceroy of Nanking, Liu Kwen Yi, 
had sent his principal provincial officers, Taol Sen 
Kia, Ku Chih Yen, and Tung Tai, in a man-of- 
war cruiser, the Nanshiuy to place the vessel at my 
disposal for as long a time as I might find con- 
venient. On my embarking on board H.I. M.S. 
Nanshin a salute of fifteen guns was fired. In 

this vessel I proceeded to Nanking. 

116 



XI 

KIUKIANG 

The estimated population is 53,101 

TRADE STATISTICS 

The total value of trade in 1897 was Hk. Taels 14,865,563 
(over ;f 2,100,000). 

The total tonnage of shipping entered and cleared in 1897 
was 2,656,552, of which 2,004,298 was British. 

KiUKiANG, a port situated on the Yangtse 
River, near the outlet of the Poyang Lake, is some 
185 miles distant from Hankow, and 445 miles from 
Shanghai. 

There is a small British and American com- 
munity. The principal export is black tea, which 
is in the hands of two Russian merchants. An- 
other tea is a peculiar sort of green tea, and I was 
told that the total export is declining. 

There was an excellent feeling between the Eng- 
lish and Americans, both of whom were strongly 
in favor of maintaining the " Open Door." 

I was received by a deputation of residents, who 
handed me certain resolutions {vide Appendix). 
They were particularly anxious that a British Con- 

117 



THE BREAK-UP OF CHINA 

sul should be sent to Changsha — a wish that was 
expressed at many other places that I visited. 

To show how little chance there is at present 
for developing trade by opening up the mineral 
resources of China, I quote the following case : 

A British subject had bought a property in the 
locality containing coal. His title and register are 
not contested; they bear the stamp of the Ya- 
men. On this gentleman asking for permission 
to work the coal, the Taotai of the locality refused, 
giving as his reason that the working of coal-mines 
was not provided for in the Treaty. 

The people of the district are perfectly agree- 
able that this gentleman should open up and work 
the mine. Some of the Chinese themselves are 
deriving a good income near here by working 
surface coal. 

There is a company composed of English and 
American residents here, and at Wuhu, who have 
bought certain mining properties, and are in pos- 
session of the Chinese deeds duly executed and 
stamped by the local native authorities with the 
official seal. One of these deeds states that the 
properties were bought for mining purposes, and 
the other states that the properties may be put to 
any use the owner likes, yet the senior provincial 
authority will not allow these gentlemen to work 
their mines. This is another case which shows 
how necessary it is, if trade is to be developed, to 
secure by treaty such rights and privileges as will 
permit capital to be invested. 

ii8 



KIUKIANG 

This port might increase its trade very consider- 
ably if light -draught steamers and launches for 
towing were put on the Poyang Lake and the 
tributary rivers, which would open up the adjacent 
district and allow goods to be water-borne from the 
province of Kiangsi. 



XII 

CHINKIANG 

The estimated population is 135,220 

TRADE STATISTICS 

The total value of trade in 1897 was Hk. Taels 24,145,341 
(over ;£^3,4oo,ooo). 

The total tonnage of shipping entered and cleared in 1897 
was 3»S3S»739» ©^ which 2,353,702 was British. 

Chinkiang, which was declared open to foreign 
trade by the Treaty of Tientsin in 1858, is an im- 
portant city, owing to its position on the Yangtse 
River and proximity to the Grand Canal. But full 
advantage of this position is not taken. 

An account of the Grand Canal, the present con- 
dition of which affects the trade of Chinkiang, will 
be found in the chapter on " Waterways." 

Having asked the Chamber of Commerce at Chin- 
kiang to supply me with a memorandum showing 
their views as to what they considered necessary 
for the further development of British trade, in 
order that I might transmit these views to the As- 
sociated Chambers of Commerce, they presented me 
with the following lucid and practical suggestions, 

which I append in their entirety : 

120 



CHINKIANG 

" Memorandum regarding Trade and other mat- 
ters for presentation to Lord Charles Beresford, 
C.B., M.P., by the Chinkiang Chamber of Com- 
merce. 

"TRADE OF THE PORT 

"The value of the trade of the Port for 1897 
was Hk. Tls. 24,000,000. 

"Revenue Hk. Tls. 8ii»ooo 

"Transit Dues " 197,000 

"An important feature in the trade of Chin- 
kiang is the distribution of foreign goods under 
the transit-pass system. 

"Cities in the provinces of Kiangsu, Anhui, 
Kiangsi, Shantung, and Honan are supplied from 
this centre. 

" The port may claim always to have held the 
premier position among Treaty Ports in this 
branch of trade, and of the total transit dues col- 
lected last year about 25 per cent, were received 
at Chinkiang. 

"Commencing in 1868, through the energy of a 
British merchant, when H.M.'s war vessels were at 
Nanking, the system has year by year continued 
to flourish, in spite of illegal exactions and not in- 
frequent detentions of cargo en route. 

" The other branch of the transit -pass system, 
that by which goods are brought from the in- 
terior, influences in no small degree the general 

exports. The rules in vogue here are peculiar 

121 



THE BREAK-UP OF CHINA 

to the port, and are known as *The Chinkiang 
Rules; 

" Specially framed to admit of foreigners being 
interested in native business, the system works 
satisfactorily, but certain restrictions, the most 
important of which is the arbitrary limitation of 
articles, require modification. 

" It is a matter for regret that it is the custom 
of H.M/s Consuls to minimize the importance of 
this branch of the system. 

" It appears to the Chamber that if China is to 
take British goods on an increased scale, her ex- 
port trade must be largely developed, and, with 
the assistance of inland navigation, this can in no 
way be better accomplished than by the fostering 
and extension of the outward transit-pass system. 

"INLAND NAVIGATION 

" British merchants here having been the first 
in the field in China to take advantage of this 
most important concession so ably secured by 
H.M.'s Minister, prominence is given to the 
matter. 

" After meeting with considerable opposition at 
the hands of the officials, from the Viceroy down- 
ward, permits were granted to run launches in 
inland waters on the 2 2d June, 1898. 

" The route first selected was to Tsing-kiang-pu, 

an important trade centre on the Grand Canal, 

distant some 120 miles north from this port. 

122 



CHINKIANG 

Later, launches were despatched to Soochow, the 
capital of the province of Kiangsu, situated at 
about a similar distance on the southern section 
of the canal. 

" Other routes leading to large marts by adja- 
cent waterways have also been selected and are 
being worked. 

" In all some thirty launches under flags of vari- 
ous nationalities are engaged. 

" While it was fully expected the natives would 
heartily welcome a quick means of transit, the re- 
sults have exceeded general expectations. During 
four months, returns give the number of passen- 
gers arriving at and leaving the port as 60,000, 
but these figures are considered under the 
mark, and probably, with the wayside traffic in- 
cluded, the total number can be little short of 
100,000. 

" It is an important feature, however, that 
up to the present time no cargo has been con- 
veyed. 

" Trade during the year has, from various causes, 
been exceedingly dull, but probably the principal 
reason this branch of the business has not been 
availed of is the, as yet, incomplete system of rules, 
the administration of which is not yet effective. 
Certain regulations regarding duties, etc., are to 
be published before the end of next January, from 
which good results are hoped. 

" It is to be pointed out that Rule 7 (Regula- 
tions [amended], 1898) provided that steamers are 

123 



THE BREAK-UP OF CHINA 

only permitted to tow on the Yangtse under spe- 
cial Customs papers, and it is suggested this clause 
should be struck out. 

" Mention should be made of a trial shipment 
of oil by a British merchant under transit -pass 
last July, consigned to Tsing-kiang-pu. The voy- 
age lasted twenty-five days, whereas it should only 
have occupied forty hours. All along the line 
exactions were demanded, and detentions ensued. 
At the Huai-kuan barrier, near Tsing-kiang-pu, 
aptly described as the greatest hinderance to trade 
in North China, the 'Shroff' in charge was subject 
to gross outrage, the circumstances of which were 
reported to H.M/s Minister. It is clear to all who 
have made a study of trade in this and adjoining 
provinces that the administration of affairs at this 
barrier should form the subject of strong repre- 
sentation. 

"It is considered important that pressure should 
be brought to bear on the officials for the better 
preservation of the Grand Canal. 

" Between Chinkiang and Soochow, in the best 
season, difficulties in passage are met, and for the 
greater part of the year launches drawing only 
three feet are unable to get over shoal parts. The 
northern section is in a somewhat similar condi- 
tion,and for want of slight dredging launch traf- 
fic will here probably be interfered with for four 
months in the year. 

" As an enormous revenue is set apart annually 

for the preservation of the Canal, and, in addition, 

124 



CHINKIANG 

tonnage dues are paid by launches, it is urged that 
representations be made. 

"On the 28th June, 1898, rioting occurred at 
Yangchow, distant about fifteen miles, and other 
places in connection with the launches. It was 
stated that trouble originated with discontented 
boat people, but it was abundantly proved that the 
authorities, if not actively abetting, certainly con- 
nived at, the attack and pillage on launches and 
passenger stations. 

" H.M.'s Minister, acting with promptitude, ar- 
ranged for the despatch of a man-of-war to this 
port, and on the arrival of H.M.S. Phcenix, Cap- 
tain Cochran, with Messrs. Scott and Twyman, 
had an interview with the Taotai, who at once 
guaranteed security from further trouble and a 
speedy settlement of claims for compensation. 
These latter, although amounting to a quite insig- 
nificant sum, are still unpaid. 

"BRITISH FLAG 

'* British merchants complain, and it appears 

with justice, that they are at a great disadvantage 

in being prevented from flying the national flag on 

all launches, whether owned or chartered. It is 

contended that the chartering of vessels by British 

merchants should entitle them to all privileges, 

and at a time when British prestige should be 

strongly maintained in this region of the Yangtse 

Valley, and the British flag, as far as possible, be 

135 



THE BREAK-UP OF CHINA 

predominant, it is urged that rules bearing on the 
matter should receive a liberal interpretation at 
the hands of H.M.'s Consuls. 



"EXTENSION OF CONCESSIONS 

" It is abundantly clear that the area of the 
British Concession in Chinkiang, only some 700,- 
000 square feet, is too limited for the purposes of 
residence and trade, and an extension in the form 
of a Settlement is urgently required, in order that 
foreigners may have space for manufactures and 
the preparation of raw material for export. Re- 
garding the acquisition of sites for residences on 
adjacent hills, the local authorities have ever 
maintained a hostile attitude, and it is to be re- 
gretted that H.M.'s Consuls are unable to remedy 
this. 

"RESIDENCE IN THE INTERIOR 

"As regards the better development of trade in 
China, having now secured the right to navigate 
inland waters, the next and most important step 
appears to the Chamber to be the abrogation or 
modification of the restrictions relating to foreign 
residence in the interior. 

" In no other manner, it would seem, can for- 
eign trade be so satisfactorily pushed, and goods 
reach the consumer free of illegal and local exac- 
tions. At the present time great obstruction is 

being offered in certain districts in the province 

126 



CHINKIANG 

of Kiangsu to the circulation of British goods by 
an enforced exaction termed * loti,' or what may 
be described as a Maying down tax.' If this is 
permitted unchecked, the benefits of the transit- 
pass system disappear. Nothing can better illus- 
trate the necessity of foreigners themselves ac- 
quiring the right to reside in the interior and 
establish their own places of business. 

"CHINKIANG AND SOOCHOW 

" The canal route between the Treaty Ports of 
Chinkiang and Soochow should, it is suggested, 
be thrown open as an international route. 

"YANGTSE REGULATIONS 

" The proposed revision of the Yangtse Rules 
and Regulations appears to have been unneces- 
sarily delayed. 

" The Chinkiang Pass, a frequent cause of vex- 
atious detention to shipping, should be abolished, 
and it is suggested that the compulsory payments 
of duties on foreign goods at Shanghai destined 
for River Ports should be altered, also that the 
collection of duties as between the River and 
Coast should be assimilated. 

"PRODUCTS OF MILLS IN CHINA 

"An arrangement which appears to have official 

sanction permits the products of native mills in 

127 



THE BREAK-UP OF CHINA 

Shanghai to be sent into the interior under a Free- 
Transit Pass, an Import duty having first been 
paid. The passes are issued at the mills in an 
irregular manner under the authority of Taotai 
Sheng. 

"As a like privilege is denied by the I. M. Cus- 
toms to products of the foreign mills, it is urged 
that the injustice should be represented; consid- 
erable quantities of the native goods are going 
inland here under the above favorable conditions. 



" CONSULAR REPRESENTATION 

"From time to time this Chamber has felt it 
incumbent to ventilate this important matter. 

" Taking a period of three years to last Septem- 
ber, it is found that officials in charge of H.M. s 
Consulate have been changed no less than twelve 
times. Such a condition of things precludes sus- 
tained effort to promote the welfare of British mer- 
chants. H.M.'s Consuls appear averse to take up 
mixed cases on behalf of merchants, and, if such 
are commenced, to press for settlement. 

"It is not unusual for matters arising out of 
flagrant breaches of the transit-pass regulations to 
hang over for years, the patience of the merchant 
being thus probably exhausted, in addition to 
which the transit-pass system suffers in reputa- 
tion. 

" Reference has been made to certain claims by 

British merchants in respect of the launch riots in 

128 



CHINKIANG 

June. In spite of H.M.'s Consul having specific 
instructions from H.M.'s Minister that these claims 
are to be satisfied, they are permitted to drag on 
month by month. In a case such as this the entire 
absence of a firm demand to the officials is, in the 
Chamber's opinion, all that stands in the way of an 
immediate settlement. 



"NATIVE OFFICIALS 

" Here, at Chinkiang, the relations between the 
Consul and the native authorities appear to call 
for comment 

" Practically all the business relating to British 
subjects and Chinese is carried on between the 
Consul and a Wei-yuan, locally styled the * Foreign 
Business Deputy.' Some years ago the present 
incumbent was employed as writer in the British 
Consulate, from which post he was dismissed. 

" With a change of Consul the man was quietly 
invested with the office above described, partly 
owing to his knowledge of foreign affairs, but 
chiefly it would appear as a studied insult to the 
Consulate. He has since been received by H.M.'s 
Consul, and in return receives him. 

"He systematically delays all business to his 
own advantage, and at times important matters he 
is supposed to represent to the Taotai do not go 
further than that ofiicial's permanent secretary — 
one Wu-shu-ping — the most notoriously anti-for- 
eign Chinese in the port. This man for the past 
I 129 



THE BREAK-UP OF CHINA 

ten years has persistently retarded and obstructed 
every Consular case put before the Taotai; his 
conduct is now specially noticeable, as the present 
Taotai is a Manchu, and has had no experience of 
foreign officials. 

"PROSPECTS OF THE PORT 

" With railways, in the near future, converging 
at Chinkiang from the north and the south, com- 
bined with the undoubted success which must at- 
tend the navigation of inland waters, towards the 
prosecution of which the situation of this port pe- 
culiarly lends itself, the Chamber has every con- 
fidence in the future prosperity of Chinkiang. 

"CONCLUSION 

" The suggestions now submitted for considera- 
tion are : 

" I. Strict and immediate enforcement of 
the inland navigation rules. 

" 2. Right of foreigners to reside in the in- 
terior, unfettered as regards trade, and to buy 
land in the vicinity of Treaty Ports. 

" 3. Amelioration of condition of certain bar- 
riers in Kiangsu, notably that at Huaikuan, on 
the Grand Canal. 

" 4. Revision of the Yangtse Regulations. 

"5. A more hearty and willing co-opera- 
tion on the part of H.M.'s Consuls for the 

130 



CHINKIANG 

furtherance of trade and protection of British 
interests. 
" The Committee of the Chinkiang Chamber of 
Commerce, 

" E. Starkey, Chairman. 
" F. Gregson, Hon. Secretary. 
^"^ November 22, 1898." 

The points I should like to comment upon in 
this memorandum are the following : 

The excellent position this port holds with re- 
gard to the transit system of foreign goods, owing 
to the energy of a single British merchant as far 
back as the year 1868. 

A further instance of the energy of the British 
was shown in the fact that they managed to force 
their right to run launches on the waterways, not- 
withstanding the opposition of authority, with tri- 
umphant result as far as increase of traffic is con- 
cerned. 

The incident referred to, which took place on 
June 28, 1898, regarding riots of Yangchow in 
connection with the starting of steam-launches, 
is worthy of great attention, as it shows how Brit- 
ish gunboats on the Yangtse would further the 
development of trade and commerce by assisting 
the Viceroys and authorities to stop or prevent 
disturbances, such disturbances being fatal to trade 
and commerce. 

In this Report I have frequently called the at- 
tention of the Associated Chambers of Commerce 

131 



THE BREAK-UP OF CHINA 

to the necessity of placing British floating patrols 
on the waterways. This will not only secure the 
development of trade, but it will place the British 
in the position of being first in the field, a not un- 
important matter, with equal opportunity to all. 

Moreover, it would not be a selfish policy, as 
the British gunboats, by giving security, would 
really help the trade development of all nations. 

British prestige was at a low ebb all through 
China at the places I visited ; not one, but every 
Chinese authority I spoke to continually referred 
to the fear with which Britain regarded Russia. 

The suggestion as to the right of residence be- 
ing permitted is one of the utmost importance for 
the development of Anglo-Saxon trade, and has 
been frequently alluded to in this Report. 

With regard to the fact mentioned in the memo- 
randum of the loti-shui tax in Kiangsu, this tax is 
distinctly against Treaty, and steps should be im- 
mediately taken to remove this great obstruction 
to trade. 

With regard to the free-transit pass being per- 
mitted for products from the native mill at Shang- 
hai, this privilege has lately been revoked, with 
the result that one or two of the native mills in 
Shanghai had stopped working while I was there. 

The merchants appeared to me to have just 
cause of complaint at the unnecessary delay over 
the revision of the Yangtse Rules and Regulations, 
but since my departure this matter, I am informed, 
has been at last settled. 

132 



CHINKIANG 

The remarks in the memorandum concerning 
those in charge of H.B.M/s Consulate at Chin- 
kiang appear somewhat drastic. I found that the 
Consuls had been changed twelve times in three 
years, which would probably give good reason for 
British subjects to complain that their trading in- 
terests do not receive that attention which they 
should command. 

With regard to the complaint made by the 
Chamber of Commerce as to the relations between 
the present British Consul and the Chinese Official 
called the " Foreign Business Deputy," I informed 
those gentlemen that I could not take uj) this 
question; that the proper procedure for them, if 
they thought H.B.M.'s Consul was neglecting their 
trading interests, was to write a letter of protest 
to the Consul, setting forth clearly what their com- 
plaint was, and to forward a copy of the letter and 
reply to the British Minister at Peking. This 
procedure appeared to me to be fair to the British 
Consul as well as to the merchant. 

I found a steady but decided decline in the 
trade of this port, and asked the British merchants 
if they could give me a reason for this. They sent 
me the following memorandum: 

" SUPPLEMENTARY MEMORANDUM 

"Trade, 1898 

" During the nine months, ending September 
30th, there has been a steady decline in the trade 

of the port. 

133 



THE BREAK-UP OF CHINA 

" Foreign imports, which may be considered a 
reliable index, have su£Eered all round. 

Opium .... decrease . . Taels 150,000 

Cotton goods . . . '^ ... 1,100,000 

Woollen .... " ... 100,000 

Sundries .... " ... 500,000 

(jC^ITiOoo) Taels 1,850,000 

" The value of foreign imports for the whole of 
1897 was i3,ocxD,ooo taels. 

" The transit-pass trade has naturally declined 
in sympathy, the number of passes issued being 
nearly 1000 less than during the corresponding 
period in 1897. 

" Exports also show a considerable decline in 
value, of which, as directly regards foreign trade, 
silk, hides, and wool may be mentioned. 

** Transit passes surrendered for cargo brought 
from the interior are 750 less than the number for 
the corresponding period last year. 

" In this branch of trade British merchants are 
at a disadvantage as compared with American 
merchants, in consequence of exemption of fees." 

[This question is thoroughly ventilated under 
chapter on " Consuls."] 

" The factors which, in the opinion of the Com- 
mittee, have contributed to the decline, may be 
classed under three headings, viz. : 

"(a) Insecurity, owing to political compli- 
cations. 

134 



CHINKIANG 

" (6) Scarcity of capital. 
" (c) Floods in Shantung, 
"(a) Creating serious uneasiness, showing no 
signs of abatement, and most prejudicial to trading 
interests. 

" (6) The scarcity of money, which is very real 
and apparent, has arisen from various causes, chief- 
ly, however, connected with the political situation. 
" I. Extensive withdrawals from native 
banks by wealthy depositors. 

" 2. Enforced * loans ' from the wealthy 
classes by the Government to pay off the 
Japanese war indemnity. 

" 3. Further exactions for special purposes 
at Peking. 

"4. Curtailing of current loans to native 
banks by foreign banks, 
"(r) The provinces of Shantung and Honan, 
which take a large portion of goods, have suffered 
largely from the disastrous Yellow River floods, 
in which, it is reported, millions of people have 
lost their lives. Districts are infested by robbers, 
against whom there is no protection, and it is 
quite unsafe to move either goods or treasure. 

" It should be added that native trade is disor- 
ganized by the arbitrary and unreasonable period- 
ical prohibitions of movement of grain ; and this in 
turn reacts seriously on British shipping interests. 

F. Gregson, //i7». i&^. 
" Chinkiang Chamber of Commerce, 
''December, 1898." 

135 



^ I 



THE BREAK-UP OF CHINA 

There is a (large) export from this place of goat- 
skins, silk, hides, and wool. 

There are two silk filatures and one albumen 
factory (German), and a cotton-mill in course of 
erection, with Chinese capital and management 

Besides foreign trade, there is a large local trade 
between Hankow and intermediate ports. This is 
a native trade, but it is carried principally in Brit- 
ish steamers. The Japanese have two steamers in 
this trade. They are at an advantage, being sub- 
sidized by their Government Being small, they 
are, however, not serious rivals ; but I heard that 
there is to be an increase in their number this year. 
The Germans are about to start a line of steamers 
for this trade. The British merchants say that 
these steamers are to be subsidized also. 

The merchants here were of opinion that what 
was immediately wanted to develop trade was 
steam-launches for towing in the interior water- 
ways, as that would prevent the obstruction and 
squeezes at present so easily affected on sailing- 
junks. 

Here again I was impressed with the necessity 
for patrol boats. The likin coUectorate having 
been allocated for the service of foreign loans, pro- 
vincial officials, it was said, would certainly attempt 
higher squeezes to cover deficiencies in finance for 
provincial administration. 

On my second arrival at Chinkiang, on board 

the Chinese cruiser Nanshin, I was received with 

a salute of fifteen guns, and the principal native 

136 



CHINKIANG 

authorities visited me. Among these authorities 
was the Admiral of the Yangtse, Hwang by name, 
a most intelligent official, a Hunanese. He seemed 
a thoroughly patriotic Chinaman, and was most 
anxious for the future of his country. He dwelt 
particularly on the complete want of organization 
of the Chinese force during the late war with 
Japan, and told me that he himself had seen pistol 
ammunition supplied to men with rifles. On my 
pointing out to Admiral Hwang the necessity for 
China to organize her army as a whole if she 
wished to maintain her integrity, and also that if 
Great Britain was asked to assist her it is possible 
she (Great Britain) would consider the question 
for the security of her own trade and commerce, 
he remarked that he wished it could be so, but he 
was certain that Great Britain would never insist 
on helping China if Russia raised an objection. He 
also said that he considered that his country had 
been given away to Russia. 

I visited all the forts situated in the locality, an 
account of which will be found in the chapter on 
" Forts and Arsenals." 



XIII 



- KIANGZIN 



I STOPPED a few hours at Kiangzin before pro- 
ceeding to examine the forts and inspect the troops 
in that district. 

I had an interview with General Li, a very dis- 
tinguished soldier, who wore the yellow jacket. 

On discussing the future security for Anglo- 
Saxon trade and commerce, he expressed great anx- 
iety. He said that on account of the scarcity of 
money he had been obliged to disband many of his 
men, and would have still further to reduce them. 
He said it would be impossible to impose further 
taxes, as disturbances would certainly accrue. 

He expressed himself as very unhappy about 
the future of his country, and, on my making the 
proposal relative to the British helping to put the 
Chinese Army in order, he said he was afraid it 
never could be done, that Russia would object, and 
that England was like an old man with plenty of 
money, who risks nothing to provoke a disturbance, 
knowing that he has neither the energy nor the 
power to protect his riches. 



XIV 

HANKOW 

The estimated population is 800,370 
TRADE STATISTICS 

The total value of trade in 1897 was Hk. Taels 49,720,630 
(over ;f 7, 100,000). 

The total tonnage of shipping entered and cleared in 1897 
was 1,783,042, of which 1,109,853 was British. 

I FOUND the British community very anxious 
as to the future security of Anglo-Saxon trade 
and commerce in this city, owing to the lack of 
military and police, both in number and efficiency, 
in its adjacent provinces. Disturbances had al- 
ready broken out in the province of Szechuan, and 
the merchants had received intimation that there 
would be determined resistance offered to any 
attempt to develop Anglo-Saxon trade in the vast- 
ly rich province of Hunan, through the Tung 
Ting Lake and tributaries. Although the water- 
ways have been thrown open, there is no direct 
foreign trade at present with this rich province. 
The situation in Szechuan is fully explained by a 
letter which arrived at the British Consulate while 

I was at Hankow in the beginning of December. 

139 



THE BREAK-UP OF CHINA 

The following copy of this letter is here ap- 
pended : 

"You have probably heard by this time that 
Fleming of C I. M. was murdered 4th November 
at Pang Hai, 300 li east of Kwei Yung Fu. I 
only heard the i6th, the wire having taken six 
days from Kwei Yung Fu here, and even now I 
am quite without details, though I have little doubt 
it was the work of a band of brigands who have 
been pillaging and vowing vengeance on the for- 
eigner in those parts. The bad characters have 
been much stirred up by Yu Man Tsu's proclama- 
tions, and the Kwei Chou officials have been doing 
nothing at all to stop the trouble. You may very 
possibly be getting news of that part of the world 
quicker than I, via the Yuan Riven Where is 
Wingate t he was to pass that way, and I am very 
anxious about him. It would have been much 
safer for him to come this way. 

" Yu Man Tsu has gone home to Ta Tsu with 
his bands, now equal to about io,ocxD men, laden 
with the spoil of all the rich Catholics of Central 
Szechuan, over 4000 houses burned, including 
about thirty Mission chapels, over 20,000 Catholics 
homeless and destitute, and damages at least 
6,000,000 taels (over ;^850,ooo). What is to hap- 
pen, or how it is to be paid, I cannot tell ! At 
present the rebels are quiet, and are being /^j^-o^ by 
the Cheng Tu officials, who have not taken a step 
to suppress them, or to prevent pillage and murder. 

It is a most melancholy a£Eair, and has dealt a 

140 



HANKOW. 

blow to foreigners from which they will not re- 
cover for years. Of course the matter is not de- 
cided at all yet. The rebels may break out again 
at any moment that the Cheng-tu people do not 
pay them enough. They have utterly destroyed 
all the Catholics in Central Szechuan, and will 
have to begin on the heathen now. Hitherto 
they have only levied contributions on these latter. 
The new Treasurer and Viceroy have come at 
last. The former seems a good man, but he 
brings no troops, and good troops, used with deci- 
sion and energy, are the only solution of the ques- 
tion." 

It may be interesting to insert here the origin 
of the Yu Man Tsu disturbances. Twelve years 
ago there was a dispute about land between Yu 
Man Tsu, a wealthy Chinese, and a Christian 
Catholic Chinese. The priest of the locality, 
Pere Pons, took the side of his co-religionist, who 
won the case. There was very strong feeling ex- 
hibited in the locality, because it was given out 
that the Chinese authorities are afraid to give 
judgment against a Chinese Christian if the priest 
of the district takes his part. Yu Man Tsu's son 
got a few hundred men together, and created a dis- 
turbance among the Chinese Catholics. The au- 
thorities surprised and surrounded him at a place 
called Tatsu, sixty miles northwest of Chungking, 
and cut ofiE his head. Yu Man Tsu, being at the 
time in prison, was helpless ; but on coming out he 

vowed vengeance against every Catholic Chinese. 

141 



THE BREAK-UP OF CHINA 

When I left Hankow, Yu Man Tsu had a priest 
called Pere Fleury a prisoner. The Viceroy Kwei 
told me he was afraid he would not be able to 
quell the rebellion, as if he attempted to do so Yu 
Man Tsu would cut off the priest's head. 

A point of very considerable importance to be 
noted with regard to this question is, that the 
whole of the property mentioned as having been 
destroyed belongs to French Catholic Missions. 
The province where this piratical devastation 
occurred is reported to be the richest province 
situated in the Yangtse Valley. After recent dec- 
larations with regard to the Yangtse Valley, there 
would appear to be a large field for political com- 
plications in the event of the French wishing to 
land troops to protect the remnant of their property. 

At a meeting of the British merchants held at 
Hankow, strong resolutions {vide Appendix) were 
passed, a copy of which I was asked to forward to 
H.M. Government as well as to the Associated 
Chambers of Commerce. 

The merchants declared that the local Govern- 
ment was quite unable to control the people. This 
was due to the want of money to carry on adminis- 
tration, owing to seven collectorates for likin being 
allocated to pay interest on the Anglo -German 
Loan of March 8, 1898. As a proof that the mer- 
chants were correct, within a few days of my arrival 
at Hankow, late in November, a disastrous fire 
occurred, which devastated an area of over two 

miles, burned over icxx) people, and destroyed prop- 

142 



HANKOW 

erty to the estimated value of ;^ 1,300,000. This 
fire was known to be the work of incendiaries, as 
the authorities had received warning that the town 
would be burned in order to create a disturbance, 
and as a protest against the people's taxes being 
paid to the foreigner. 

Two smaller fires occurred while I was there, 
also the work of incendiaries. 

The British merchants declared that Anglo-Sax- 
on trade and commerce was seriously hampered, 
as the Chinese merchants refused to do any busi- 
ness under these circumstances, and that future 
development of trade was impossible. The whole 
question resolved itself into the want of military 
and police. 

The British merchants here also called atten- 
tion to the importance of opening up the water- 
ways and tributaries of the Yangtse River, more 
particularly with regard to the Tung Ting Lake, 
which is the gate of the rich province of Hunan. 
To carry out this, it was suggested that a British 
Consul should take residence at Changsha, the 
capital of Hunan, a great trading centre on the 
Siang River. 

It was pointed out that, though the opening of 
the port of Yohchau will be most beneficial to 
trade, it is not the great distributing centre of the 
province of Hunan, whereas Changsha is. 

They also pointed out that the new navigation 
laws were to a very large extent nullified in utility 
by foreigners being denied the right of residence 

U3 



THE BREAK-UP OF CHINA 

in the country ; and, further, by steamboats, under 
the new privilege, only being allowed to carry 
cargo within the area of the port of registration. 

The British merchants here also dwelt upon the 
very unsatisfactory position in which British sub- 
jects find themselves with regard to the rights of 
property — z>., as to land bought outside the British 
concession and registered at the British Consulate 
under Chinese title-deeds. The complaints made 
were relative to the position taken up by the 
French and Russian authorities in Hankow, who 
have seized upon properties which not only the 
registers, but stones delineating the boundaries, 
prove to belong to British subjects. There is no 
doubt that British subjects have been deliberately 
deprived of their property by the action of the 
French and Russian Consuls. 

As this question is creating the keenest interets 
in all Anglo-Saxon communities in China, it may be 
well to enter rather fully into it in this Report. The 
matter is well known to the Minister at Peking 
and to the Foreign Office. I will report on the 
case as I found it. The British Companies prin- 
cipally affected were Messrs. Greaves & Co., act- 
ing on behalf of various owners, including Sassoon 
and others, Messrs. Evans, Pugh & Co., and 
Messrs. Jardine & Matheson. 

In March, 1896, the boundaries of the new 
French and Russian concessions were settled be- 
tween those two Governments and the Chinese 

Government. In both these concessions British 

144 



HANKOW 

subjects owned land. Immediately the bounda- 
ries of the French and Russian concessions were 
so settled, all British owners of land within these 
concessions protested to the British Government 
against their property being included. The For- 
eign Office answered through the British Minister 
in China that " owners of British property could 
not be included within these concessions without 
their consent." 

The French Consul repudiates the validity of 
all the title-deeds presented by Messrs. Greaves 
and Giddes & Co., on behalf of their clients, which 
title-deeds accompanied their protest against their 
property being included in the French settlement 

The proofs of the ownership are : 

1. Register of title-deeds to be found at 
British Consulate. 

2. Boundary-stones engraved with owners' 
initials, some of which had been in position 
for thirty years. These stones I saw myself. 

3. The fact that the land has been owned 
for thirty years, whereas Chinese law gives a 
title conclusive after ten years' ownership or 
occupation. 

In addition to the proof of British ownership 
shown by registers in the British Consulate, there 
were boundary-stones bearing the initials and Chi- 
nese name of either the owner or his firm. Some 
of these boundary-stones have been removed by 
the order of the French Consul, notwithstanding 

the protest lodged by the British Consul. 
K 14s 



THE BREAK-UP OF CHINA 

And yet the Russian and French Consuls have 
put up their own boundary-stones, in spite of the 
protest of the British Consul, and absolutely de- 
cline to consider any proposal with reference to 
British-owned property over which their conces- 
sions were to extend. 

January i, 1898, the French Consul advertised 
a sale of land within the French concession. 
Among the lots advertised was land owned by 
Messrs. Greaves and Giddes and other British 
subjects. 

Messrs. Greaves immediately protested by pub- 
lishing the following advertisement : 

" Notice. 

" The whole or portions of Lots 5, 6, and 7, of the 19 parcels 
of land on the plan advertised at the French Consulate, Han- 
kow, for sale on the 7 th April, is the property of A. D. Sas- 
soon, under a title-deed registered on page 586 of the British 
Consular Register, measuring 520 feet on river and road, with 
an original depth of 400 feet, more or less (Chinese measure), 
part now washed into the river. The owner has not author- 
ized the sale. 

" Greaves & Co. 
" (Agents for Arthur D. Sassoon). 

"Hankow, March 27, 1898." 

On account of this advertisement Mn Greaves 

was refused admittance to the auction-room where 

his client's property was being sold without his 

consent Further, an action for defamation of 

character was instituted against him by the 

French Consul, but afterwards withdrawn. 

146 



HANKOW 

The result of the auction was that the French 
Consul absolutely sold certain lots owned by Brit- 
ish subjects without their consent. 

Under such circumstances it will be seen that 
there are no rights of property, or security for 
British ownership, in the new French and Rus- 
sian concessions. 

The next case is that of Messrs. Evans, Pugh 
& Co., who own land in the new Russian conces- 
sion. 

The land was originally bought by this firm in 
1862, and registered at the British Consulate in 
1864. In 1887 the hide business was commenced 
on this property, and there proceeded uninter- 
ruptedly ever since. 

April 4, 1896, the concessions referred to were 
conceded to Russia and France. 

Messrs. Evans & Pugh immediately entered the 
strongest protest against their properties being in- 
cluded in the Russian concession. 

July, 1896, the Foreign Office telegraphed to 
Messrs. Evans & Pugh, through the British Min- 
ister, " British-owned property cannot be included 
in Russian concession without consent of owner." 
This message was sent twice — once in March and 
once in July, 1896. 

Between April, 1896, and December, 1898, 
Messrs. Evans & Pugh forwarded nineteen pro- 
tests, stating they would not consent to have their 
property included in the Russian concession. In 

July, 1898, Messrs. Evans & Pugh received a com- 

147 



THE BREAK-UP OF CHINA 

munication from the Russian Consul warning them 
that their hide business must be discontinued on 
January i, 1898, or it would be prohibited. 

On January 2, 1899, Cossacks forcibly interfered 
to prevent hides being taken into Messrs. Evans & 
Pugh's establishment, and also seized the hides al- 
ready in the store and threw them out On Messrs. 
Evans & Pugh appealing to the British Consul, 
and asking permission to enroll special constables 
for the protection of their property, the British 
Consul advised them to do nothing of the sort, as 
he (the British Consul) was afraid the firm would 
not be supported in such action by H.M.'s Gov- 
ernment. 

Messrs. Evans & Pugh are perfectly willing to 
relinquish their hide business in the locality owned 
by them, provided they are reinstated in some 
other suitable locality for their trade, and receive 
compensation for damage to their trade, as well as 
the claims they will have to pay for not fulfilling 
certain contracts, owing to their trade being tem- 
porarily suspended. An offer has been made to 
Messrs. Evans & Pugh of a locality, but they were 
asked to pay a very high price for it, and no com- 
pensation was named to meet the loss on their en- 
forced removal. 

The views of H.B.M.'s Consul on the question 
are expressed in the following manner. He re- 
marks that both firms had their business premises 
where they now are previous to the granting of 

the Russian concession by the Chinese authorities. 

148 



HANKOW 

It seems unfair, therefore, even if their business 
should prove to be a nuisance, that they should 
suffer the severe loss which they will inevitably 
incur if they are forced to leave their present prem- 
ises. There is, he continues, absolutely no other 
suitable site which they can obtain, and any money 
compensation will be comparatively valueless in 
view of the certain injury which will be done to 
their business, even if it is not completely stopped. 

Another case of a similar character is that of 
Messrs. Jardine, Matheson & Co., who bought 
eight lots of land between October i8, 1862, and 
March 26, 1864. The registers and deeds of sale 
of these lots are in the British Consulate at Hankow. 

This case is something similar to that of Messrs. 
Greaves and Giddes, and the Russian Consul de- 
nies the validity of the deeds registered in the 
British Consulate at Hankow. 

At present the whole of Messrs. Jardine & 
Matheson's property, comprising the eight lots 
which they have owned for over thirty years, is 
included in the Russian concession, notwithstand- 
ing many protests on the part of the firm, and a 
distinct intimation from the British Foreign Office 
"that no British-owned land should be included 
in the Russian concession without the consent of 
the owner." 

In the interest and protection of British prop- 
erty at Hankow, it must be well if the Associated 
Chambers of Commerce were to ask for the whole 

of the correspondence on these cases. 

149 



THE BREAK-UP OF CHINA 

Hankow, in the near future, is certain to be in 
a position of great wealth and trading interest, 
therefore land in and about the city is daily in- 
creasing in value, and the questions mentioned 
here seem to require immediate attention. 

Although it is true the British have lately been 
allowed to extend the area of their concession in 
Hankow city, it must not be forgotten that the 
Russian and French concessions have not been 
limited to the city itself, but that they have further 
obtained a large frontage on the Wuchang side of 
the river, a property which will be invaluable by- 
and-by, and of great commercial importance. 

The towns of Hankow, Hanyang, and Wuchang 
may be considered as the gates of nine provinces 
of China. Hankow is divided from Wuchang 
by the Yangtse River, and Hankow is divided 
from Hanyang by the Han River. In case of dis- 
turbances these towns could easily be defended by 
small gunboats. 

Some suggestion has been made that the British 
Government should force the Chinese to pay a 
heavy compensation for having conceded land to 
the Russians and French containing British-own- 
ed property. This is a cowardly and unchivalrous 
practice, which has been resorted to lately, under 
similar circumstances, by all foreign countries 
with regard to China. China being prostrate, one 
European power, at the point of the bayonet, de- 
mands concessions which China has neither the 

right to give nor the power to refuse. Immediate- 

150 



HANKOW 

ly, another European power, at the point of the 
bayonet, compels China to pay heavy compensa- 
tion for acceding to demands which she had no 
means to resist. No more effectual means could 
be invented to undermine the authority of the 
Chinese Government and disintegrate the Em- 
pire. 

For the protection of existing Anglo-Saxon trade 
and commerce on the Yangtse River, and to give 
security for its future development, it is absolutely 
necessary that shallow-draught gunboats, similar to 
those in use on the Nile, should be sent there as 
soon as possible to patrol the upper reaches of the 
river above the rapids, the Poyang and Tung Ting 
Lakes, and the Siang and Han Rivers, the latter in 
direct communication with the rich province of 
Shensi. There would be no difficulty or danger 
whatever, as is generally supposed, in steaming up 
the gorges above Ichang to Chunking, provided 
the steamer had speed of from thirteen to fifteen 
knots. This could be done at any time of year, 
although the Yangtse River rises in the summer 
in some places from sixty to one hundred feet. I 
spoke to the Viceroys, Liu Kwen Yi and Chung 
Chi Tung, on this matter, and they both told me 
that they would be very glad to see such gunboats, 
as they greatly feared disturbances ; and, owing to 
scarcity of money, they had been obliged to dis- 
charge many of their troops, and were not paying 
the others full and fair wages. It might be pos- 
sible, in order to encourage friendliness, and help 

151 



THE BREAK-UP OF CHINA 

authority, to fly the British and Chinese flags on 
board such gunboats. 

Mr. Archibald, an American missionary, said 
that he had hoped the British would shortly put 
gunboats on the Yangtse River and Tung Ting 
Lake, as the American railway from Wuchang to 
Canton was going to pass right through Hunan, 
the most anti- foreign province in China. He 
thought that, unless some such precautions were 
taken, serious disturbances would arise. 

As the country is very disturbed in the province 
of Szechuan, no delay should occur in sending a 
gunboat through the gorges ; and, as the water is 
rising in April and May, delay is unnecessary. 

The following number of steamers on the 
Yangtse River were trading between Shanghai, 
Hankow, and Ichang during December, 1898. 

Between Shanghai and Hankow : 

3 Jardine & Matheson. 

3 Butterfield & Swire. 

4 China Merchants. 
4 Greaves & Co. 

2 Japanese. 
2 MacBean. 

Total.... IE 

Between Ichang and Hankow : 

I Jardine & Matheson. 

1 Butterfield & Swire. 

2 China Merchants. 

Total .... 4 

152 



HANKOW 

No steamer at present plies higher than Ichang. 

When Szechuan, Hunan, and the other prov- 
inces bordering on the Yangtse are opened for 
trade, the present number of steamers will be 
greatly multiplied. 

Two steamers are being built in Germany to be 
placed on the Yangtse River shortly. 

Something has already been done towards the 
development of mineral wealth in this district 
by his Excellency Chung Chi Tung, Viceroy of 
Hunan and Hupeh, who possesses numerous coal, 
iron, and other mineral fields in the two provinces. 
His Excellency began by working a coal-mine, 
and an iron-mine, situated at a long distance from 
each other. To these he added two blast-furnaces, 
but placed them, under indifferent management, 
so far from both the coal and the iron that an enor- 
mous amount of capital was lost, and in the end 
it was found better to hand the whole thing over 
to a company, which I am told is now working 
with some success. 

I visited the iron-mines, which furnish the blast- 
furnaces. They are seventy-six miles from Han- 
kow. They are very ably managed by a Grerman 
gentleman. They supply three kinds of ore — 
brown, magnetic, and hematite. Some of the ore 
was very good, yielding from 70 to 75 per cent, of 
iron. The individual mines would last about six 
years more at the present rate of progress, but the 
whole district was filled with similar mines. The 
mines would pay extremely well if the Chinese 

153 



THE BREAK-UP OF CHINA 

managing director was honest. The mines are at 
Wong Chi Tong. 

The German manager could deliver ore at Han- 
yang at one tael (50 cents) per ton, including care 
and maintenance and every possible charge. The 
Mandarin who administers the mine, however, 
debits the same coal at three taels a ton, and it is 
not apparent what becomes of the difference. 

The whole province of Hupeh is very rich in 
minerals, but this is the only instance of mineral 
riches being developed in that locality. 

The ore is put on trucks, which run on an in- 
clined plane worked by a steel-wire hawser and 
an engine. At the bottom of the plane the ore is 
transferred into railway wagons. It is then taken 
down to the river by rail, whence it is water-borne, 
and towed up a distance of seventy-six miles to 
the furnace at Hanyang. All the railway plant 
was British. 

The tea business at Hankow has been referred 
to fully in the Consular Reports. The British 
interest is gradually becoming smaller. The 
whole business may be said to be Russian; and, 
in fact, most of the tea bought by British mer- 
chants is for Russian account. 

Three years ago the Russians started charter- 
ing steamers, other than British, to take their tea 
from Hankow. The venture proved disastrous, 
and they returned to the firm of Butterfield & 
Swire to carry their trade. 

There was naturally some complaint among the 

154 



HANKOW 

British merchants at the decline of the tea trade 
with Great Britain ; but they readily admitted that 
it was a question of demand and supply, and that, 
owing to the favor shown for Ceylon and Assam 
tea at home, the Chinese tea had been supplanted. 
The question resolved itself into one of taste. 

British trading interest is, however, well repre- 
sented in the Russian tea trade, for the freight is 
at present almost entirely in British hands, and the 
British companies make many thousands each 
year by carrying Chinese tea for the Russian mer- 
chants to Russia. 

British trading interest is further represented 
in Hankow by the fact that the British flag covers 
cargoes which are really Chinese. About 1500 
tons of shipping a week, covered by the British 
flag, conveys Chinese trade. 

If proper security were given, and the Chinese 
allowed foreign enterprises for developing mineral 
industries, it is impossible to calculate what the 
water-borne traffic of the Yangtse would become. 
Both Chinese and missionaries, well acquainted 
with the fact, constantly informed me that the prov- 
inces of Szechuan and Hunan contain large areas 
of very great mineral wealth; but Hunan enjoys 
no foreign enterprise whatever, and Szechuan has 
it to only a very limited extent. 

Elsewhere I make a proposal of how I think 
this security might be obtained and these locali- 
ties developed. 

I may mention here that I received the greatest 

«55 



THE BREAK-UP OF CHINA 

kindness and courtesy from the Russian merchants 
resident in Hankow, who took me over their works 
and showed me the manner in which brick-tea is 
made. 

Their management appeared to me to be quite 
excellent. Their works were well organized and 
in beautiful order. The engineer in .charge of 
their works was a Scotsman. 

While at Hankow I had two long and inter- 
esting interviews with his Excellency Chung Chi 
Tung, the Viceroy of Hunan and Hupeh. This 
Viceroy is celebrated for his friendly and courteous 
bearing to all foreigners, and also for his enlight- 
ened views as to the necessity of opening up 
China by means of developing her great mineral 
resources as well as by means of improving the 
system of administration throughout the Empire. 

His Excellency, although holding these ideas, is 
a thoroughly loyal and patriotic Chinaman, with a 
great affection and devotion for his country. 

A summary of the interviews will, I think, be 
interesting to the Associated Chambers of Com- 
merce. 

The first interview lasted four hours. I was re- 
ceived with great pomp, ceremony, and hospitality. 
I stated clearly to the Viceroy the anxiety felt by 
the British trading communities generally as to 
the security of their trade and commerce in China. 
I also pointed out that, owing to want of security, 
Anglo-Saxon investors would not be inclined to 

find fresh capital for the purpose of further de- 

156 



HANKOW 

velopment of trade in China, a question which 
concerns Chinese welfare as well as Anglo-S^on 
enterprise. With regard to the first question, the 
Viceroy was perfectly outspoken. He said that 
he was afraid of disturbances in the provinces un- 
der his control; that if disturbances became serious 
he had not enough troops to quell them, owing to 
his finances being insufficient; that Likin Collec- 
torates in his provinces, usually allowed for pro- 
vincial administration, had been allocated to pay 
interest on loans contracted by the Chinese Gov- 
ernment with foreign nations. He questioned the 
wisdom of this act, as such loans were for the 
benefit of the Chinese Empire as a whole. The 
service of the loans, he thought, should be secured 
by the whole Empire, instead of falling on the 
Collectorates situated In the Yangtse Valley. 

On being asked why he feared disturbances, he 
said the people had got it into their heads that 
they were taxed in order to pay the foreigners. 
This had kindled the latent hostile feeling, always 
existing among the Chinese towards foreigners. 

I asked his Excellency whether, as a patriotic 
man, he was not nervous as to the future of his 
country. He replied he was very unhappy about 
it ; that he did not see how China was to save her 
integrity unless she made some effort herself. I 
then suggested that if the Chinese Government 
were to request the British Government to or- 
ganize the Chinese Army as a whole, the British 

Government might possibly agree under certain 

157 



THE BREAK-UP OF CHINA 

conditions. His Excellency asked what conditions. 
I replied, conditions embracing matters which his 
Excellency had already referred to, such as the 
opening up of China's mineral resources, reformed 
administration, tariff revision, and fiscal reform, 
embracing the whole Empire. 

Although his Excellency was entirely in sym- 
pathy with the proposal that the British should 
organize the Chinese Army, he asked whether I 
thought it would be possible to employ American 
and Japanese officers as well as British. I replied 
that I saw no difficulty whatever, but thought it 
an excellent proposition, and suggested that some 
German officers might be employed as well, as they 
had already drilled some ten thousand men most 
admirably. I further pointed out that the British 
people had no desire whatever to dominate China, 
either by control of the military or by any other 
method. That it was to the interest of the great 
trading nations to maintain the integrity of the 
Chinese Empire, so that the policy of the " Open 
Door " and equal opportunity for trade to all na- 
tions should be assured. His Excellency asked 
me to draw up a scheme containing proposals both 
as regards organization and finance. This I did, 
and received his warmest thanks. 

His Excellency was quite open in expressing 

his anxiety as to the Russian military domination 

and position in the North. He said that even if 

the Chinese asked the British to reorganize the 

army, and the British agreed, that, in the event of 

158 



HANKOW 

Russia objecting, which she certainly would, Great 
Britain would retire from the agreement, as she 
was afraid of Russia, and had proved this by her 
actions in the North. 

The Viceroy informed me that he had received 
letters and telegrams from the Tsung-li Yamen at 
Peking to place two thousand men at my disposal, 
in order to commence the nucleus of a Chinese 
army in his provinces drilled by British officers. 
* I informed his Excellency of my interviews, col- 
lectively and individually, with the members of the 
Tsung-Ii Yamen (which will be found under chap- 
ter on "Peking"). His Excellency said he saw 
two insuperable obstacles to the proposal of the 
Tsung-li Yamen. They were : First, and most im- 
portant, the certainty that, if the plan were carried 
out as proposed with two thousand men in the 
province under his administration, it would im- 
mediately cause other countries to undertake a 
similar drilling and recruiting of Chinese in locali- 
ties which other countries were pleased to call 
their Sphere of Influence. Such action would 
tend to lead to the dismemberment of China. 
Second, that the Manchu and Chinese troops 
could not possibly be placed together to work 
under one lead, and that he had no power to give 
orders to the Manchu troops, who were under a 
separate command and administration. I entirely 
agreed with his Excellency as to the first objec- 
tion, but said I did not believe the British Gov- 
ernment would undertake the organization of sep- 

'59 



THE BREAK-UP OF CHINA 

arate provincial armies, but that they possibly might 
of the Imperial Army as a whole, as British trade 
and commerce existed in all parts of the Empire, 
Anyhow, I should have no authority to even un- 
dertake the drilling of two thousand men without 
the sanction of the British Government. The 
question could not be entered into for settlement 
between his Excellency and myself; it was one that 
would have to be settled between the two Gov- 
ernments. 

The Viceroy also contended that there would 
be great difficulties about finance. As I was con- 
versant with the different Budgets for defence for 
the different provinces nearly all over the Empire, 
I proved to him that China could have a very effi- 
cient army without any extra taxation if the money 
allowed was spent as intended. A large proportion 
now finds its way into the pockets of the officials, 
most of the remainder being wasted in the arsenals 
in making useless and obsolete war material. 

In the second interview, which lasted about two 
hours, the Viceroy appeared very anxious to know 
what communications I had had originally with 
the Tsung-li Yamen, and also what further cor- 
respondence I had had with them from Hankow. 
He was more strongly in favor of a reorganization 
of the Chinese Army by foreign officers, and raised 
fewer difficulties. I took particular care to impress 
upon his Excellency that my suggestions were 
solely made in the interests of protection of foreign 

trade and commerce and with regard to their future 

160 



HANKOW 

development, and that it had nothing whatever to 
do with political questions. 

His Excellency asked me to inspect the arsenal 
under his control, and to give him my views of the 
work turned out. An account of this arsenal will 
be found in the chapter on " Arsenals." 

I received while at Hankow two visits from the 
Taotai Yu ; he was in charge of the Chinese Cus- 
toms. He expressed himself as being very friendly 
to the British, and hoped that the policy declared 
by the British Cabinet with regard to keeping the 
door open to the trade of all nations would be ad- 
hered to, as he said it meant a declaration in favor 
of maintaining the integrity of China. He, how- 
ever, declared that he was nervous on this point in 
the future, as he thought that China and the Brit- 
ish Government were afraid of Russia. 

He brought me letters from the Viceroy Chung 
Chi Tung concerning my proposed army scheme 
for providing security for trade and commerce. 

While here I twice visited His Excellency Sheng, 
a Director of Railways of the Chinese Empire, a 
remarkably shrewd, clever, and enterprising China- 
man. He was much concerned as to the future 
of the Chinese Empire, declaring he thought it 
would shortly fall to pieces. He said he had on 
several occasions in years gone by written memo- 
randa to his Government begging it to take in hand 
their army and navy, and organize them under 
British officers. He had pointed out that there 
would be no danger in this, as the British were 

L l6l 



THE BREAK-UP OF CHINA 

traders, and, while wanting a Chinese army to pro- 
tect that trade, they could not utilize the army for 
political purposes, as the officers would be Chinese 
servants, like Sir Robert Hart. * He said it was no 
use taking provincial armies in hand for this pur- 
pose, as that might invite other countries to do the 
same thing, and, if done at all, it should be done as 
a whole. 

His Excellency was very interested in all ques- 
tions connected with finance, and begged me to 
use what influence I could with the Associated 
Chambers of Commerce towards getting a revision 
of the tariff. I said that I was certain that Britain 
would entertain no such question unless the whole 
fiscal system of the country was taken in hand at 
the same time. Anglo-Saxon trade and commerce 
is severely handicapped by the present unequal 
system of the likin and loti-shui taxes, as well as 
the uncertain time at which these taxes may be 
enforced. 

His Excellency also expressed his opinion that 
England did not take the initiative in China be- 
cause she was afraid of Russia. He said : " Many of 
our people are saying, * What is the use of think- 
ing about the English to help us ; they never do 
anything; the Russians do something; they are 
much the stronger nation. It is wiser for us to 
make friends with them.' " I asked his Excellency 
if this opinion was held by a large number of the 
influential Chinese. He said : " There are some 

who thought it might save their country if China 

162 



HANKOW 

were to boldly throw in her lot with Russia, as by 
doing so it would certainly be a protection against 
the predatory action of other Powers. China 
would certainly break up if the millions of its in- 
habitants perceived its Government was powerless 
to prevent any European Government from claim- 
ing and annexing any part of the Empire." His 
Excellency entreated me to remain longer at Han- 
kow, with the object of further discussing the plan 
of reorganizing the Chinese Army as a whole. I 
declined to have anything to do with this matter, as 
the initial step promised by the Tsung-li Yamen to 
me on October 22, 1898 {see chapter on " Peking ") 
— viz., that the Chinese Government would ask the 
British Government to undertake the reorgani- 
zation of the Chinese Army for the protection of 
trading interests— had not been complied with. 

His Excellency thought it might be for the 
benefit of China if the Viceroys in the Yangtse 
provinces brought the matter before their Govern- 
ment. His Excellency asked me to proceed to 
Wong Chi Tong to see his iron -mines, which 
formerly belonged to Chung Chi Tung, now 
worked by His Excellency Sheng and a company. 

I visited Wong Chi Tong as invited, an ac- 
count of which will be found on p. 153. 

His Excellency Sheng has opened a coal-mine, 

Tingsham, in Hunan. The coal is very good for 

making coke, and is used in the iron and steel 

works at Hanyang. 

His Excellency Sheng also invited me to visit 

163 



THE BREAK-UP OF CHINA 

the iron and steel works at Hanyang; the man- 
agement was under two Belgian gentlemen ; a 
British mercantile captain was in charge of all 
transport from the mines to the furnaces. The 
original capital, ;^750,cxx), was all Chinese. The 
works have been in active progress for seven years, 
originally under British management. There are 
two large blast-furnaces, both British made, from 
Tees-side Ironworks, but only one has ever been 
used. The present output is 75 tons a day. There 
is also a complete Bessemer plant, which can turn 
out 80 tons a day. The whole plant was employed 
when I was there in making rails for the Shan- 
haikwan Railway, and 120 tons of rails could be 
turned out in a day. The works employ 1000 
hands. The machinery is mostly British. The 
coal used from Tongshan comes in junks from the 
Hunan Province, 200 miles away. It is very good, 
but is only worked with picks and shovels on the 
surface and by the Chinese. The whole province 
of Hunan abounds with coal of very good quality, 
both anthracite and bituminous. 

All the outcroppings are within distance of 
small but navigable waterways. 

If the British and Belgian gentlemen were al- 
lowed absolute control and management, these 
works would pay very high dividends. All that I 
saw showed want of management and waste of 
money. Sometimes the furnaces are stopped for 
want of coal, sometimes for want of ore. Often 

there is a glut of both. 

164 



HANKOW 

I was told that coal costing 3CX5 cash per ton — 
e>., about ^\d. — at Hsainghua, is worth 9 dollars, 
or 18^., at Hankow, a distance of about 400 miles. 

I found one company at Hankow doing very 
profitable business in antimony, junk-borne from 
Hunan, and two Chinese merchants also doing 
very well with zinc and copper ore, brought from 
the same district 

Lead and tin are also constantly brought down 
from Hunan and Hankow, specimens of which I 
saw. 

If foreigners were allowed to open up this 
province of Hunan by enterprise and capital, and 
a royalty was paid to the Chinese Government on 
the output for each undertaking, large fortunes 
could be made for the companies, and the Chinese 
Government would derive a new and extremely 
profitable source of revenue. 

At present the province of Hunan, though very 
rich and the people very well-to-do, is the most 
anti-foreign in China. Foreigners who penetrate 
into Hunan, even with the help of the Mandarins, 
by means of a military escort, do so at the risk of 
their lives. This I was told by missionaries and a 
gentleman who barely escaped. 

In the year 1897 an English missionary named 

Sparham went as far as Hengchau. There has 

been a French mission in this place for over one 

hundred years, and Mr, Sparham saw the cross on 

their chapel, but he was not allowed to land. 

A British Consul has just been sent to Yohchau, 

165 



THE BREAK-UP OF CHINA 

a new Treaty port at the mouth of the Tung Ting 
Lake — a move in the right direction. Before any 
steps can be taken to open up Hunan proper, a 
British Consul should be sent to Changsha, the 
capital and most important town of the province, 
on the Siang River, a clear blue- water river, about 
two hundred and ninety-six miles from Hankow, 
It is a great rice - distributing centre, rice being 
much cultivated in the surrounding districts. Tea 
is also largely exported from Hunan, cowhides 
and gall-nuts and very good silk. 

There are already six small steam-launches be- 
longing to the Chinese plying between Hankow 
and Hunan. They are principally used for pas- 
sengers, and sometimes for towing junks. 

Silver and gold are also brought down in small 
quantities. 

When I was at Hankow reports came of an ex- 
tensive gold-field in this province, but the Chinese 
were very reticent as to its locality. That they 
are determined to keep foreigners out of Hunan 
if possible is proved by the following fact: In 
June, 1898, a company of Hunanese Chinese 
bought from an American firm enough plant to 
erect several works for gold-milling. It cost jC^Or 
000, and is the newest and most intricate machin- 
ery for extracting gold (called the Huntingdon 
mills), the motive power being centrifugal force. 
The firm that sent it out wanted to send men to 
erect it, and put it into thoroughgoing order, but 

the Chinese would not hear of this. In Decem- 

166 



HANKOW 

ber last, the firm sent out an American gentleman 
(whom I met) to see how the mill was going on. 
The Chinese declared it was working very satis- 
factorily, but would on no account allow him to go 
and see it. 

The Hankow and Canton Railway is to pass 
through Changsha, the capital of Hunan. It is 
certain to be valuable ; but if the very large num- 
ber of waterways in this province were conserved, 
and their trade protected by gunboats, an enor- 
mous trade would be insured. 

There were two very profitable albumen manu- 
factories; they were started with foreign capital 
and in foreign hands, but not British. 

There is also a large match factory, doing an 
excellent business, started July, 1897, with a cap- 
ital of 300,000 taels — about ;^40,ooo — entirely 
Chinese capital and management. 

There is also a very large trade which goes by 
the curious cognomen of the "muck-and-truck" 
tiade. It is very profitable, and consists princi- 
pally of hides, bristles, bones, etc. This trade is 
nearly all in the hands of the Germans. The 
British, however, are now beginning to see the 
importance of this industry. 

Another trade is the bamboo trade, from the 
interior, which comes via the Tung Ting Lake. 

There is also a trade in wool and feathers. 

There is a large trade in foreign goods with 

Hunan, all in the hands of the Chinese. It is 

one of the best markets in China for Lancashire 

167 



THE BREAK-UP OF CHINA 

goods, which would be even more increased if the 
country were opened up. The goods are all 
bought at Shanghai. 

Hunan fully illustrates the necessity of foreign- 
ers having the right of residence if they wish to 
increase and develop their trade. 

There is a cotton-mill at Hankow started by the 
Viceroy, Chung Chi Tung. It was said to be a 
paying concern, but there is a great deal of waste 
and interference on the part of the managing 
Mandarin. There is no doubt it would pay ex- 
tremely well if put under the sole management 
of the able Englishman who is there. 

Owing to the geographical position of Han- 
kow, in that it will become the railhead from the 
north and south, and also that it is the great dis- 
tributing centre for the whole of the waterways 
in the heart of China, it is certain in the future 
to become the wealthy and prosperous place that 
Chicago has for similar reasons become in 
America. 

At the Viceroy's request I visited the Arsenal 
and Military School, and inspected his troops. 
For remarks on these, see chapter on " Forts and 
Arsenals." 



XV 

FOOCHOW 

The estimated population is 636,351 

TRADE STATISTICS 

The total value of trade in 1897 was Hk. Taels 13,556,- 
494 (;^i,9oo,ooo). 

The total tonnage of shipping entered and cleared in 1897 
was 641,795, of which 470,239 was British. 

I ARRIVED at Foochow on December 20, 1898. 
The Committee of the Chamber of Commerce 
handed me some resolutions, which they asked 
me to transmit for the information of the Asso- 
ciated Chambers of Commerce. (See Appendix.) 

The city of Foochow was made an open port 
by Article 11. of the Treaty of Nanking, 1842, but 
up to the present time only a very small portion 
of the island Nantai has been regarded and treated 
as a Treaty Port. 

The British merchants complained very warmly 
of the taxes put upon their trade by means of likin. 

The city of Foochow proper, and all its suburbs, 
are not considered by the Chinese authorities as 
coming under Treaty Rights. 

The merchants claim that all imports, after hav- 
ing submitted to the Custom-House examination 

169 



THE BREAK-UP OF CHINA 

and having paid their duty, should be allowed free 
admission to Foochow City proper and its suburbs. 

The city and its suburbs, however, are treated 
as if they were in the interior, and a heavy likin 
tax is levied on goods which have to pass between 
the island of Nantai and the city, a distance of 
about three miles. 

This likin tax being imposed is most detrimental 
to the progress of trade and commerce in this port. 

Some of the British merchants here were en- 
gaged in the tea-trade, the staple trade of the port, 
and pointed out that the heavy likin tax referred 
to formed an insuperable barrier to competition 
with the teas of India, Ceylon, or Assam. 

The present system of taxation is rapidly dimin- 
ishing the tea-trade, and if it continues will prob- 
ably destroy it altogether. 

There were six steam-launches running on^the 
River Min between Foochow and Sueykow, but 
none, that I could gather, running on the Yuenfoo 
River. 

There is no doubt that Anglo-Saxon capital 
could be profitably invested in steamboats for ply- 
ing on these rivers were it not for the restrictions 
to which my attention was called here as at other 
ports — viz., that a steamer, under the new inland 
navigation laws, can only carry cargo within the 
area of the port of registration. 

The launches that were running, with one ex- 
ception, were worked with Chinese capital, man- 
agement, and crews. 

170 



FOOCHOW 

The question of the state of the River Min was 
brought to my notice. I observed that it was 
silted up very considerably, and I was informed 
that the silting is rapidly becoming worse. This 
impedes trade, as steamers cannot come up the 
river to load or discharge at the settlement, and 
even steam - launches are often delayed, owing to 
insufficiency of water, which prevents them run- 
ning between the settlement and the Pagoda 
Anchorage. The Anchorage is nine miles from 
the settlement, and the settlement about thirty- 
four miles from the sea. 

From what I saw of the Min River, I should say 
that if its conservation is not taken in hand very 
soon between the Pagoda Anchorage and the settle- 
ment, water-borne traffic will soon be suspended. 

The people have been allowed to run out fishing- 
stakes, enclose banks, dump down rubbish and 
ballast, until there remains only a narrow winding 
channel, which at spring-tides gives barely eleven 
feet. 

At the middle ground below Pagoda Anchorage 
and above the Kimpai pass, the river has shoaled 
two feet in the last seven years. 

Another great hinderance to business brought to 
my notice is the existence of a board of Interna- 
tional Trade, which consists of the Tartar General 
Tsung Chee and two Taotais. 

All international business is intrusted to these 

gentlemen by the high authorities. As they have 

no regular status, the local officials pay little or no 

171 



THE BREAK-UP OF CHINA 

heed to their "requests": they are not entitled to 
give orders. 

The British Government has never formally rec- 
ognized this Board, but in practice the Board con- 
stantly intervene between the British Consular 
authority and the Viceroy. 

It can easily be imagined what a very diflferent 
effect an order under the Viceroy's seal, such as 
given at Canton, Wuchang, or Nanking, etc., has 
on a prefect or magistrate, compared with a note 
from two Taotais making a request. This method 
of conducting business has already produced fric- 
tion between the Consular authority and the Vice- 
roy, and the length of time it occupies is unques- 
tionably adverse to the interests of trade. 

On going to the British Consul in order to get 
proof of this, and representing to him that any- 
thing he could tell me with the object of helping 
forward the development of Anglo-Saxon trade 
and commerce would certainly be interesting to 
the Associated Chambers, he allowed me to see 
the following letter, which was written to the 
Nantai likin office : 

" By Article 11. of Nanking Treaty. Foochow 
is one of the cities and towns open to trade where 
only the just dues and duties promised by the 
Treaty are payable on foreign trade. Such dues 
and duties are simply the import and export duties. 
Your office, however, proposes to interpret the city 
of Foochow into the foreign hongs along the south 

bank of the river two miles from the city gate. 

172 



FOOCHOW 

" Moreover, the object of British merchants in 
importing foreign goods is to sell them to Chinese, 
and the framers of the Treaties understood this, 
and provided a tariff accordingly. Your office, 
however, proposes to make the import duty a 
charge' which merely enables goods to be landed 
into a British hong — a contention obviously in- 
consistent with the wording and meaning of the 
Treaties," — July 12, 1898. 

The Consul's efforts are to extend the area 
exempted from the likin. At present the area 
only consists of the British hongs mentioned in 
the letter. 

While at Foochow I paid a visit to his Excel- 
lency the Viceroy Hsu Jung Kwei. He received 
me with great ceremony and honor. 

After the usual formalities common in China, I 
informed his Excellency that I was entirely un- 
official and non-political, and that my mission was 
to report on the prospects of British trade and 
commerce, to suggest what I could for its future 
development, and to inform the Chambers of 
Commerce what security existed for its develop- 
ment. His Excellency expressed his friendship 
and good feeling towards Great Britain. I pointed 
out to his Excellency that this feeling was thor- 
oughly reciprocated at home, that the earnest 
wish of the British people was that friendly rela- 
tions should be maintained, and that such rela- 
tions were necessary to develop and extend trade 
and commerce, the great interest of the British 

173 



THE BREAK-UP OF CHINA 

people. His Excellency said that the good-will 
of England had been clearly proved, and that she 
was the only Power that had not tried to annex a 
portion of the Chinese Empire, and he hoped that 
she would endeavor to keep the Chinese Empire 
in its integrity. His Excellency further said that 
he thought China should have an army, in order 
that she might defend herself. I suggested that 
if China were to ask the four Powers who at pres- 
ent hold her foreign trade to help her to reorgan- 
ize her army, I thought it very possible the four 
Powers might accede to that request, under cer- 
tain conditions. His Excellency asked what the 
conditions were. I replied, reform of administra- 
tion, alteration of taxation, and free permission to 
open up the great latent resources of the Empire 
by means of promoting industries with foreign 
capital, and other reforms necessary, in order that 

the modern requirements inseparable from the 
development of trade and commerce should be 
complied with. 

I pointed out that the present system of pro- 
vincial armies was inadequate, extravagant, and 
totally ineffective, and referred to the China-Japan 
War as an illustration of the disastrous results of 
having such disjointed organizations under various 
Viceroys. 

His Excellency seemed to be of the opinion 
that the provincial system was best for China, be- 
cause it had lasted for so many years. When I 
pointed out to him the excellent services rendered 

174 



FOOCHOW 

to the Chinese Empire by Sir Robert Hart, in his 
cosmopolitan administration of the Maritime Cus- 
toms, which was not provincial but Imperial, his 
Excellency seemed to modify his ideas, saying that 
was very true, and that if it answered in one de- 
partment it was quite possible that it might an- 
swer in another. After some considerable con- 
versation, his Excellency went so far as to say he 
would memorialize the Central Government on 
the matter. His Excellency asked me if I would 
inspect his troops, and visit the dock -yard and 
forts, that he would make all arrangements to 
send me in his launch down the river to the forts, 
and also send high officials to conduct me over 
them. He asked also if I would write to him and 
tell him what I thought would make them more 
efficient. This I did. 

His Excellency appeared anxious about the 
future of his country, but not to such an extent 
as other Viceroys that I had visited. He had 
only been one month in office. 

After visiting the arsenal {see " Arsenals"), I called 
upon the Tartar General Tseng Chee, who enter- 
tained me most hospitably. His Excellency is in 
sole charge and in command of this arsenal, and 
it was by his permission that I was enabled to go 
over it. I spoke to him about the condition of 
the arsenal at some length, pointing out the waste 
of money going on in that establishment. I also 
told him that, in my opinion, it was no use for 
China to think of committing the extravagance of 

175 



THE BREAK-UP OF CHINA 

having a fleet, at any rate at present, and that she 
ought to devote her attention to organizing and 
making an efiicient army for police purposes 
throughout the Empire, in order to give that 
security which would invite foreign nations to 
develop their trade and commerce with China. 
His Excellency asked me if I would write him a 
detailed description of what I thought was neces- 
sary in numbers to make an efficient army, and 
also if I could make some calculation as to its 
probable cost. This I did, and received a warm 
letter of thanks in return. The General was most 
intelligent and interested, and very friendly in all 
he said. Later on I went with the General to 
inspect his troops. 

It came to my knowledge that the finances in 
this province are in a very bad way, and there had 
been considerable difficulty in finding funds to 
pay the authorities at the arsenal. As a matter of 
fact, although they ought to have been paid on 
December i, 1898, they were not paid until De- 
cember 23, 1898. 



XVI 



SWATOW 

The estimated population is 40,216 
TRADE STATISTICS 

The total value of trade in 1897 was Hk. Taels 28^398,001 
(over ;f 4,000,000). 

The total tonnage of shipping entered and cleared in 1897 
was 1,917,027, of which 1,655,864 was British. 

Before going to Hong Kong I visited Swatow. 
The European community, including missionaries, 
is about two hundred. 

Swatow was first opened to foreigners by the 
Treaty of Tientsin in 1858. 

At a meeting held by the British merchants a 
resolution was confided to my care for transmission 
to the Associated Chambers of Commerce. {See 
Appendix.) 

The staple trade of Swatow is sugar, but it does 
not appear to be increasing to any extent. 

There was a good tea trade, but that is rapidly 
declining. 

There is a bean-cake factory, which I was told 
was paying very well. 

M 177 



THE BREAK-UP OF CHINA 

The people all round Swatow have always been 
of a very independent character, and the author- 
ities have never been able to impose taxes to 
the same extent as they have in other parts of 
China. 

A short time ago an attempt was made by the 
authorities to increase the likin tax, and a new li- 
kin house was erected. The people immediately 
pulled it down. 

The officials in this locality are afraid of the 
people, and they cannot enforce unjust demands, 
as they have no troops whatever. The result is 
that the likin tax is really less than the two-and-a- 
half per cent, charged for transit passes, and, ex- 
cept for cotton-yarn, I could not gather that the 
transit passes are used at all. Whether it is owing 
to the independent character of the people about 
here or not I cannot say, but there are very few 
representatives of authority in the country adjoin- 
ing. At the town of Chao-Chao Fu, about thirty 
miles distant from Swatow, where there is a popu- 
lation of over one million, the whole constituted 
authority is represented by one fourth-class Man- 
darin and four Yamen runners or police. The 
people there are now perfectly orderly, and far 
better off than in most places in China. The 
reason appears to be found in the fact that be- 
tween 1870 and 1872 a General Fan was sent 
from Peking with troops to quell some disturb- 
ances between the clans which exist in this 

province, who had been fighting for some time. 

178 



SWATOW 

He decimated the whole province, and they are 
now only just beginning to recover. 

I found many reports and beliefs current as to 
the mineral resources of this province (Kwang- 
tung), but no foreigner has prospected or made any 
report on the subject that I could discover, except- 
ing Captain Fleming of the Royal Engineers. 

Some eight years ago a Chinese company was 
formed, and the money subscribed to open up 
some mines, but a story got about to the effect 
that all the women would be barren if machinery 
was introduced and the country opened up. The 
mining projects were in consequence abandoned. 

In contradistinction to Amoy, the natives make 
their own salt Although salt is a monopoly, the 
authorities are unable or unwilling to enforce the 
law in regard to it. There is a large fishing in- 
dustry at Swatow, and as they make the salt them- 
selves it is very profitable. 

Most of the British merchants here appeared 
very satisfied with things as they are. Their busi- 
ness is principally shipping industry. There were 
some steamboats running up the river to Chao- 
Chao Fu and San-Ho-Pa. 

Only one steamer has been added since the 
new navigation laws came into force, owing to 
the restrictions so frequently referred to in this 
Report. 

There is a very large trade between Swatow and 
Newchwang, 90 per cent, of which is carried in 

British bottoms. 

179 



THE BREAK-UP OF CHINA 

British piece-goods hold their own with Ameri- 
can piece-goods here better than they do in the 
North ; but all American goods are brought in 
British bottoms, and are British-owned at time of 
importation. 

It was pointed out to me by the British mer- 
chants that a railway would be certain to pay if 
constructed from Swatow to the native city of 
Chao-Chao Fu, about thirty -five miles distant. 
The line would be easy to make, as it would run 
over very flat plains and not cause an expensive 
outlay. There is a very heavy trade between the 
two places, and at present the whole traffic is 
carried by water on a river that is always shal- 
low, and in the dry season (the winter) falls to 
ten inches. All trade has to be carried on in 
sanpans. 

I asked them why, if the proposal was so 
clearly a good one, they did not subscribe the 
capital and ask for a concession. I was informed 
by Mr. Monroe, who is the head of Bradley & Co., 
that Messrs. Jardine & Matheson had already sur- 
veyed the country as far back as 1888, and found 
out the practicability of the scheme. A year ago 
Messrs. Bradley & Co. applied to the Chinese au- 
thorities at Canton for permission for themselves 
and some Chinese friends with Chinese capital to 
construct the railway. They got no direct reply, 
but were given to understand that there is deter- 
mined opposition to the scheme. 

Another similar case, showing the restrictions 

180 



SWATOW 

fatal to the development of trade, was brought to 
my notice. The same firm, Messrs. Bradley & 
Co., in 1892, were instrumental in floating a 
scheme to provide the town of Swatow with fresh 
water, of which it has none at present, save what 
is drawn from the river, which is brackish and 
muddy. The money required was all subscribed 
by local Chinese, the sun^eys were made, the land 
bought, and everything ready, when the scheme 
was wrecked owing to the opposition of the people 
in the neighborhood. The reason for the oppo- 
sition was never discovered. The Taotai, at that 
time, was actually in favor of the scheme, but he 
gave way, declaring openly that he feared the 
people. 

As matters are at present, there does not seem 
much chance for any substantial development of 
trade in this locality. , 



XVII 

AMOY 

The estimated population is 96,370 

TRADE STATISTICS 

The total value of trade in 1897 was Hk. Taels 12,973,616 
(over ;f 1,800,000). 

The total tonnage of shipping in 1897 was 1,727,251, of 
which 1,417,135 was British. 

On my way from Shanghai to Hong Kong I 
visited Amoy, a port situated upon the island of 
Haimun, at the mouth of the Pei Chi River. 

This port was first opened to foreign trade by 
the treaty of Tientsin in 1858. 

I met the Amoy Chamber of Commerce and 
received from them some resolutions for delivery 
to the Associated Chambers of Commerce. ( Vide 
Appendix.) 

I found that, about twenty years ago, tea was 
the great trading interest of Amoy, but it has de- 
clined so considerably that it is a mere question 
of time before it is completely extinct The rea- 
sons given me were, the competition of the Assam 
and Ceylon teas. 

When I was there, there was a certain amount 

182 



AMOY 

of tea in the hands of tea merchants which they 
told me they did not think they had a chance of 
selling. I asked if anything could be suggested 
to improve the rapid decline of this export, and I 
was given a copy of some suggestions made by the 
Amoy General Chamber of Commerce to the 
Commissioner of Customs in 1896, of which the 
following is a copy : 

Amoy General Chamber of Commerce. 

Extract from a communication to the Commis- 
sioner of Customs, Amoy, dated i8th February, 
1896, in reply to his request for the Chamber's 
views : 

" The decline in the export of Amoy Oolong is 
owing to the competition of Formosa Oolong, and 
also to the steady deterioration of its quality year 
by year. It is quite possible that the quality 
might be improved, and that Amoy Oolong might 
again recover a good portion of its lost position ; 
but this Chamber is of opinion that such improve- 
ment can never be done by the Chinese alone, and 
I am therefore unable to offer any suggestions 
that would be of assistance to you in framing in- 
structions for the guidance of teamen in the interior. 

" I can, however, with the fullest confidence, 
recommend your urging upon the Imperial Chinese 
Government the adoption of the following five sug- 
gestions : 

" I. The obtaining of qualified gardeners 

from India or Ceylon to superintend the re- 

183 



THE BREAK-UP OF CHINA 

organization of the Tea Gardens, and to in- 
struct the native Chinese in the most improved 
methods of cultivation. 

" 2. Improved methods of preparation by 
machinery, etc., inland, with the right of for- 
eign supervision. 

" 3. Collection of likin to be made at the 
port of export. 

"4. Combined export duty and likin not 
to exceed the Japan tariff. 

" 5. Articles used in the manufacture and 
packing of tea to be taxed as lightly as possi- 
ble, and a drawback to be allowed in lead used 
as packing material." 

However, from the remarks made to me, I do 
not think there seems much chance of the tea trade 
being reinstated in the near future. Formosa tea 
comes through Amoy, and this trade has not been 
appreciably hurt by competition with Ceylon. 
Nearly all the Formosa tea goes to America. I 
could not find that there was any tea exported for 
the Russian trade from Amoy. 

It will be observed that this is one of the first 
places I visited where statistics show that trade 
has declined. I endeavored to find a reason for 
this, and elicited the following facts: The mer- 
chants were loud in their complaint relative to 
the imposition of the likin tax around Amoy. It 
was so heavy that no European goods got far- 
ther into the country than twenty miles. After 

184 



AMOY 

that distance local taxation made them too ex- 
pensive. 

I was informed also that local taxation either 
prevents industries being started, or kills them 
when they are started. 

On asking for an instance, Mr. Cass, one of the 
leading merchants of the place, told me that he 
had started some flour-mills for the Chinese, but 
that the local taxation soon killed them. 

Europeans are not allowed themselves to put up 
mills owing to the law forbidding right of resi- 
dence. If the foreigner, as on this occasion, put 
up mills for the Chinese, the Chinese are so heav- 
ily taxed that they cannot continue the business. 
In the case I have mentioned, Mr. Cass was a loser 
as well as the Chinese. The example shows how 
British trading interests are affected adversely un- 
der the present system. 

Another case in connection with Mr. Cass came 
to my notice. There is most excellent clay for 
brick -making near Amoy. Mr. Cass and some 
Chinese wished to put up some brick-making ma- 
chinery, but the Chinese officials, on being applied 
to, said they would protect the old-fashioned plan 
of hand-made bricks. If they had been permitted 
to put up the machinery, Amoy could have devel- 
oped an enormous trade in bricks. 

Another trade that has been killed at Amoy is 
the salt fish trade. Although the Chinese could 
themselves make any amount of salt, the salt mo- 
nopoly is rigidly enforced by the authorities ; the 

185 



THE BREAK-UP OF CHINA 

consequence is they have to import salt fish from 
Singapore at a much larger price than they could 
preserve it locally. It will be seen in the chap- 
ter on "Swatow," that in that place they salt 
their own fish and so possess a thriving industry, 
officialdom not being so powerful in that locality. 
The importation of salt is prohibited by treaty, and 
is a Government monopoly. The result is that 
the cost of home-made salt has become so great, 
owing to extortions, exactions, and squeezes, that 
it is a fact that if salt could be imported, and 50 
per cent, duty put upon it, it would still sell under 
the price paid for home-made salt, and even then 
give the Government a good and sure source of 
revenue. 

I would remark that the salt monopoly, in in- 
creasing the price of food, is a tax on the poor 
and not on the rich, and there can be no doubt 
that it has an effect on the stamina of the Chinese. 
From what I could gather, the insufficiency of salt 
in their food is undoubtedly the cause of the prev- 
alence of much preventable disease. 

While the importation of salt is prohibited, salt 
fish is allowed to be imported under the treaty 
tariff of 5 per cent, ad valorem. Almost all the 
salt fish eaten in the province where Amoy is 
situated is imported from abroad. The coast 
teems with fish, and if the salt monopoly were 
removed a new trade would spring up. 

With regard to the constant famines which take 

place in China, I found here what may perhaps be 

186 



AMOY 

considered an ample reason for the recurrence of 
these disasters. 

Grain is allowed to be imported freely from 
abroad, but it is not allowed to be moved from one 
district to another without special permit from the 
Chinese Government 

Mr. Gardner, who was British Consul at Amoy 
when I was there, and who before that had been 
consul on the Upper Yangtse, gave me some in- 
teresting details proving the prodigality of the 
present system. He remembered rice being two 
dollars a picul at Changchou and Chuan Chou, 
places about thirty miles from Amoy, when rice 
was three dollars a picul at Amoy, but authority 
would not allow rice to be sent from one place to 
the other. 

The growers of rice in the district, only having 
their own neighborhood as a market, naturally 
grow the exact quantity they think will be re- 
quired, and scarcity of rice in the district is a gain 
to the grower because it sends up the price. 

If a crop fails over an extensive portion of the 
country, there being no surplus of other districts 
to supply the deficiency, a famine is the result. 

Mr. Gardner told me that the Upper Yangtse, 

after the summer floods, like the Nile, deposits a 

rich alluvial soil, on which heavy crops of wheat 

can be grown without manure or tillage. The 

seed is simply thrown on the receding water. Yet, 

owing to the prohibition to export grain, this does 

not add to the wealth of the Yangtse Valley. 

187 



THE BREAK-UP OF CHINA 

Mr. Gardner told me he had himself seen whole 
fields of ripe, golden corn wasted, either by driving 
cattle into the fields or by cutting down the eared 
blades and using them as fuel. 

Such maladministration, which inevitably pro- 
duces poverty among a very large section of the 
people, is one of the many causes which hinder 
the development of our trade with China. The 
Chinese can only buy our goods if they have 
money to pay for them, and alteration and admin- 
istration even in this one particular would produce 
a permanent relief to the people of whole districts, 
increase their happiness and contentment, and 
provide them with money to enable them to buy 
many of those foreign goods which, under altered 
circumstances, would become necessaries of their 
existence. 

The merchants informed me that wheat could 
be grown in great quantities in this province ; but 
I have already pointed out that restrictions would 
not make it worth the while of any grower to 
embark in such an enterprise. 

The province of Kwangtung is rich in coal and 
iron. Captain Fleming, of the Royal Engineers, 
as far back as the year 1882, prospected and re- 
ported finding a coal and iron district within forty 
miles of Amoy. The area of the district was over 
fifty miles. Owing to the passive resistance of the 
authorities, no one has been able yet to make a 
start and develop these latent resources. 

If the right of residence was conceded, there 

188 



AMOY 

could be no doubt that large, profitable, and grow- 
ing industries would soon be the result. The 
name of the district where the minerals are to be 
found is Ankoi. 

A small rail or tram would be necessary for only 
a distance of twenty miles to a place whence the 
minerals could be water-borne. 

I was told that the Japanese are trying to get 
hold of these mines, if they can manage to get the 
necessary concession. 

All the points brought to my notice at Amoy 
with regard to the difficulties of developing trade 
were entirely due to the obstinate conservatism of 
the officials. 

The likin tax was perhaps more irksome at this 
place than any other that I visited. The limit of 
the transit passes is really the limit of traffic, and 
that limit is a very confined area. The merchants 
told me they never knew where they were with re- 
gard to likin taxes ; the dates for payment and the 
amount to be paid were continually being altered. 
In this province the likin tax has the extra disad- 
vantage of existing under many other names. 

I found that under the new navigation laws (in- 
land waterways), twelve new steamers had been 
started, six of which were under the British flag. 

About 100,000 Chinese emigrate annually from 

Amoy to Singapore, of whom about 50 per cent. 

remain. Whether or not it is on account of the 

treatment the Chinese receive at Singapore, I do 

not know ; but the feeling towards the British at 

189 



THE BREAK-UP OF CHINA 

Amoy is of the most friendly character. On the 
occasion of the Jubilee of Her Majesty Queen Vic- 
toria, the city of Amoy was gratuitously decorated 
by the Chinese community. 

As an example of the confidence in the British 
displayed by the Chinese, before the Japanese oc- 
cupied Formosa some of these Chinese invited Mr. 
Bruce and Mr. Cass, two British merchants of 
Amoy, to go to Formosa to give advice to the 
people. Upon their recommendation the Chinese 
gave up their arms. 



XVIII 

HONG KONG 

The estimated population is 246,880 

TRADE STATISTICS 

The total value of trade in 1897 was ;£'5o,ooo,ooo. 
The total tonnage of shipping entered and cleared in 1897 
was 15,565,843, of which 8,268,770 was British. 

On my arrival at Hong Kong on September 
30th I found there the leading Reformer, Kang 
Yu Wei, who had just arrived in a P. & O. vessel, 
escorted by a British man-of-war. 

Hoping to be able to get the views of the Re- 
form Party on the possibilities of the opening up 
of China and the consequent development of trade 
and commerce, I asked Kang Yu Wei to come 
and see me. He came under police protection, 
|(io,cxx) having been offered for his head. In an 
interview which lasted some considerable time, 
Kang Yu Wei intimated to me that the great ob- 
ject of the Reform Party was to introduce West- 
em ideas, that if China did not herself introduce 
reforms suitable to modern requirements, it was 
inevitable that she would crumble to pieces, and 

her Empire be divided among the nations of the 

191 



THE BREAK-UP OF CHINA 

earth, that the strongest sentiment in the minds 
of the Reform Party was patriotism, that their ob- 
ject was to keep China an Empire and to support 
the dynasty, but that neither was possible unless 
China saw the necessity of adapting herself to 
Western ideas. He said his Majesty the Em- 
peror was entirely in accord with those sentiments. 
He said that the Reformers had entreated the 
Emperor to get the assistance of Great Britain to 
enable his Majesty to carry out these alterations 
in the system of their administration, without 
which China's condition would be hopeless and 
helpless* 

On asking him why he mentioned Great Britain 
more than other countries, he replied that China 
had known Great Britain longer than any of the 
other Great Powers, that her trade with China was 
larger than any of the other Powers, and therefore 
it was to the interests of Great Britain herself to 
help China, and that the British were honest 
traders, and that the Chinese could trust them. 
Also that in the wars that had occurred between 
Great Britain and China in the past. Great Britain 
had always behaved in an honorable and chival- 
rous manner both during war-time and in the mo- 
ment of victory. 

I asked Kang Yu Wei what position the Re- 
form Party was in at that moment. He replied, 
" Completely crushed, but not killed," and that it 
was certain to assert itself again in the near future. 

The danger was that China might break up be- 

192 



HONG KONG 

fore the patriotic Reformers had time to bring 
about those changes, which were necessary if 
China was to continue an Empire, 

I asked him who were the Reformers who had 
been publicly executed on September 28th. He 
said that there were six, one of whom was his own 
brother. All six were gentlemen of good birth 
and education, and highly cultured. Kang Yu 
Wei himself is one of the best known scholars in 
China. He said that reforms in the East invari- 
ably required martyrs, and that if China was not 
broken up posterity would honor the heroic pa- 
triotism of those six men, who had sacrificed their 
lives in the cause of Reform. 

I asked Kang Yu Wei whether, if the Reform 
Party had come into power, they would have 
opened up China to the trade and commerce of 
the world. He said certainly, as that would have 
made China richer, and strong enough to keep 
herself an Empire. 

He gave me a long list of patriotic men who 

would look upon Reform with favor. I asked 

him if he could give me a reason why so many 

prominent men were in favor of Reform, as the 

general opinion in Great Britain was that those 

who wished for Reform in China were very few and 

far between. He replied that those who were 

educated, and who really understood the question, 

were quite assured that without Reform the Chi- 

nese Empire, which had lasted 4000 years, must 

most certainly crumble to pieces. 
N 193 



THE BREAK-UP OF CHINA 

I reminded Kang Yu Wei that there were 
430,000,000 of people in China, and asked him if 
he could give me an opiaion as to whether there 
were a large number in the country in favor of 
Reform. He answered that he did not think so 
at present, as the people did not understand, but 
many educated and patriotic men who were in 
favor of Reform had been showing the people 
that if the changes they advocated were brought 
about, the country would be very much richer, and 
taxation made equitable. I asked if he thought 
disturbances were likely to occur; he said he did 
not think so for the moment, as the execution and 
degradation of leaders of Reform had for the pres- 
ent checked its progress; but that the doctrines 
laid down as necessary for the preservation of 
China were certain to be supported with increased 
energy before very long. 

There were many other topics on which Kang 
Yu Wei touched, but as they were purely political, 
and had nothing to do with commercial matters, 
they have no place in this Report. 

I was exceedingly impressed by the evident 
loyalty and patriotism of Kang Yu Wei, and his 
unselfish devotion to his country. There could be 
no doubt of his earnestness. It was with very 
great regret that I came to the conclusion that 
the Reformers had been very unmethodical, and 
used too much haste in their efforts to serve their 
country, and had thus defeated their own ends. 

They had been pushing reforms before preparing 

194 



HONG KONG 

the way. Theoretically, all that they urged was 
quite sound, and manifestly for the good of their 
country; practically, they had made no arrange- 
ment or organization for carrying their theories 
into effect. I pointed out to Kang Yu Wei that 
the usages, characteristics, laws, and systems which 
had ruled in an Empire for thousands of years 
could not be revolutionized in a few months by an 
occasional edict from Peking. Kang Yu Wei ac- 
knowledged the truth of this. 

I lost no opportunity of ascertaining the views 
of the compradors attached to the great mercan- 
tile houses in China with reference to the Reform 
movement. These men are among the best edu- 
cated and most intelligent of the Chinese gentle- 
men ; they are also fully conversant not only with 
the affairs of their own country, but with Western 
ideas of civilization and progress. I found several 
of them very outspoken in their opinions as to the 
necessity for Reform; they all were of opinion 
that the Reform movement had been pressed for- 
ward too quickly, and without the organization ne- 
cessary to insure its success. 

My second visit to Hong Kong was on the 
25th of December, 1898. 

During this visit I received a number of Reso- 
lutions passed by the Hong Kong Chamber of 
Commerce, a copy of which will be found in the 
Appendix. 

There are no complete official returns of the 
Imports or Exports, owing to the absence of Cus- 

195 



THE BREAK-UP OF CHINA 

toms, Hong Kong being a free port ; but the value 
of the trade of the port is estimated at about ;^50r 
000,000 per annum. 

The China Association also gave me a number 
of Resolutions, which are to be found in the Ap- 
pendix. 

I found the British merchants in Hong Kong 
very nervous as to the future position of British 
trade and British influence in China. They were 
as strongly opposed to the policy described as 
Spheres of Influence as the whole of the other 
British communities I conferred with during my 
journeys in China. They declared that the late 
policy of the British Government had voluntarily 
acknowledged the exclusive rights of Russia and 
Germany. By the action of her Government, 
Great Britain had acquiesced in a policy of 
Spheres of Influence, the exact counterpart of 
the Open Door policy so determinedly supported 
a short time ago by the members of the Cabinet. 
The merchants were of opinion that the Russian, 
German, and French Spheres of Influence were 
recognized. They pointed out that the policy de- 
scribed as the " Open Door" is the only one under 
which there can be reasonable hope of the future 
prosperity and development of British trade in 
China. They held, however, that it was no use de- 
claring for such a policy unless means were taken 
for carrying it out, and insuring its success and 
continuance. They also gave me as their opinion 

that, even if the policy of the Open Door was in- 

196 



HONG KONG 

sured, some means must be taken for removing all 
chance of disturbances in the country beyond the 
area of the open ports ; that the great drawback 
to the improvement of trade, increase of manufact- 
ures, and development of industries was the rev- 
enue system in China; but that this vital question 
could not be taken in hand until the security for 
trade which the British merchant had a right to 
demand was reigning throughout the Empire. 

The merchants laid stress upon the position oc- 
cupied by France in the South. They declared 
that Great Britain ought to indicate clearly that 
the immense amount of British trading interests 
in the provinces of Kwangtung and Kwangsi were 
such as to make it impossible for her ever to allow 
under any conditions prohibitive tariffs similar to 
those put on in Madagascar and Indo-China. 

Assuming that British trade means : 

(i) Trade with Hong Kong. 

(2) Trade with other places in British ships. 
I asked the British merchants to give me 
some detailed proofs as to the trade exist- 
ing between these two provinces (Kwangsi 
and Kwangtung) and Great Britain, in order 
that the Associated Chambers of Commerce 
might see the reasons for a demand couched 
in such strong terms. 

I was supplied with the following Tables : 

197 



THE BREAK-UP OF CHINA 



TRADE IN BRITISH SHIPS TO TREATY PORTS 
IN KWANGTUNG AND KWANGSI, 1893-1897 





1893 


Name of 

Treaty 

Port 


Tonnage 


Value of Trade with Ports other 
than Hong Kong 




British 


Total 


Imports 


Exports 


Total 

V 


Swatow . 


1.575.966 


1.767,390 


751.819 


1,126,282 


1,878,101 


Pakhoi 




128,271 


27,468 


— 


27.468 


Haihow . 


45.740 


361.478 


488,431 


19.566 


507.997 


Canton 


2,696,829 


3. « 35.983 


59.419 


— 


59.419 


Wuchow . 


— 


— 




— 


— 


Samshui . 


— 


— 






— 


Total . 


4.318,535 


5,393.122 


1. 327. 1 37 


1.145,848 


2,472.985 



British Tonnage = 80^ 

8o{r of Value of Trade = 1,978,388 



Hong Kong Trade, other than Junks — 
Imports .... 18,667,110 
Exports .... 25 



,667,110) 

I =43.745,550 
,078,440 ) 



Hong Kong Trade, Junks — 

Imports .... 18,937,126 



Exports . 



• « ■ 



21,001,594 
198 



= 39.938.720 



HONG KONG 



TRADE IN BRITISH SHIPS TO TREATY PORTS 
IN KWANGTUNG AND KWANGSI, 1893-1897.— 
Continued. 





1894 


Name of 

Treaty 

Port 


Tonnage 


Value of Trade with Ports other 
than Hong Kong 




British 


Total 


Imports 


Exports 


Total 


Swatow . 


I.521.246 


1.673.692 


411,522 


1,435.805 


1.847,327 


Pakhoi . 




86,006 


— 


— 




Haihow . 


51,196 


436.188 


292,878 


1 2,627 


305.505 


Canton . 


2,826,459 


3.370.935 


27,430 


— 


27.430 


Wuchow , 


— 






— 




Samshui . 








— 


— 


Total . 


4.399.901 


5,566,821 


731.830 


1,448,432 


2,180,262 



British Tonnage = %o% 

8oj< of Value of Trade = 1,744,209 



Hong Kong Trade, other than Junks — 
Imports , . . . 18,949,753 
Exports .... 26,418,756 

Hong Kong Trade, Junks- 
Imports .... 19,665,908 

Exports .... 18,765,289 

199 



> =45.368, 



509 



= 38.43^^97 



THE BREAKUP OF CHINA 



TRADE IN BRITISH SHIPS TO TREATY PORTS 
IN KWANGTUNG AND KWANGSI, 1 893-1 897.— 
Continued. 





1895 


Name of 

Treaty 

Port 


Tonnage 


Value of Trade with Ports other 
than Hong Kong 




British 


Total 


Imports 


Exports 


ToUl 


Swatow . 


1,560,630 


1,812,382 


1,988,618 


I.581.273 


3.569.891 


Pakhoi . 


2.780 


100,546 


— 


— 


— 


Haihow . 


52.950 


389.228 


29,617 


20,563 


50,180 


Canton . 


3.035.340 


3,632,634 


3,208,612 


7.680 


3,216,292 


Wuchow . 


— 


— 








Samshui . 






— 






Total . 


4.651,700 


5.934790 


5.226.847 


1,609.516 


6.836,363 



British Tonnage = 80$^ 

80^ of Value of Trade = 5,469,090 

Hong Kong Trade, other than Junks — 

Imports .... 20,544,099) 

\ = 45.640,649 
Exports .... 25,086,550) 

Hong Kong Trade. Junks — 

Imports .... 22,678,090 



Exports .... 25 

200 



,678,090 ) 
.041.325 ) 



= 47,719415 



HONG KONG 



TRADE IN BRITISH SHIPS TO TREATY PORTS 
IN KWANGTUNG AND KWANGSI, 1893-1897.— 
Continued, 





1896 


Name of 

Treaty 

Port 


Tonnage 


Value of Trade with Ports other 
than Hong Kong 




British 


Total 


Imports 


' Exports 


Total 


Swatow . 
Pakhoi . 
Haihow . 
Canton . 
Wuchow . 
Samshui . 


1755.468 

65,058 
3.021,533 


2,129,311 
186,262 

53^^496 
3,696.999 


733.504 

2.314 
1,067 

712.917 


1,669,095 

2,096 

34.836 


2.402,599 
4,410 

35.903 
712.917 


Total . 


4,842.059 


6,551,068 


1.449.802 


1.706,027 


3.155.829 



British Tonnage = 75^^ 

753^ of Value of Trade = 2,366.871 



Hong Kong Trade, other than Junks — 
Imports .... 21.025,663 
Exports .... 24,221,370 

Hong Kong Trade. Junks- 
Imports .... 22,565,590 



Exports . 



* • • 



24,606,390 
201 



= 45.247.033 



= 47.171.980 



THE BREAK-UP OF CHINA 

TRADE IN BRITISH SHIPS TO TREATY PORTS 
IN KWANGTUNG AND KWANGSI, 1893-1897.— 
Concluded, 





1897 


Name of 

Treaty 

Port 


Tonnage 


Value of Trade with Ports other 
than Hong Kong 




British 


ToUl 


Imports 


Exports 


Total 


Swatow . 


1,655,864 


1,917,027 


572.764 


2,100,974 


2,673,738 


Pakhoi 


— 


113.732 


53 


3.917 


3»97o 


Haihow . 


56,672 


547.560 


8.742 


18,616 


27.358 


Canton . 


3,000,571 


3,718,064 


207,763 


1.234 


208,997 


Wuchow . 


41,402 


52,188 


23432 


— 


23.432 


Samshui . 


84.158 


98,984 


112 




112 


Tot^l . 


4.838,667 


6.447.555 


812,866 


2,124,741 


2.937.607 



British Tonnage = Tl% 

7S% of Value of Trade = 2,203,205 



Hong Kong Trade, other than Junks — 
Imports .... 24,807,430 
Exports .... 28,159,946 

Hong Kong Trade, Junks — 

Imports .... 23,024,493 

Exports .... 16,967,118 

202 



= 52,967*376 



= 39.99i»6ii 



HONG KONG 



SUMMARY 



Hk. Tls, 



Average Estimated Value of Trade 
in British Ships with Ports other 
than Hong Kong 2,752,352 

Average Estimated Trade with 

Hong Kong not including Junks 46^593,823 

Average Trade with Hong Kong 

in Junks 42,650,584 

Average Estimated Value of 
British Trade 91,996.759 



A comparison of British and French trade is 

to be found in the chapter on " Canton." 

203 



M I 



THE BREAK-UP OF CHINA 

IMPERIAL CHINESE CUSTOMS IN A BRITISH 

COLONY 

The question connected with the position of 
the Chinese Custom House at Kowloon has for 
some considerable time been exercising the minds 
of all British merchants at Hong Kong. The 
matter has now reached a more acute stage owing 
to the recent extension of the area of the colony, 
which makes Kowloon British property instead of 
Chinese. 

The existing arrangements were made in the 
year 1884, at the request of the Chinese Customs, 
in order to protect Chinese revenue, particularly 
against the opium farmer. The arrangements 
were as follows : 

The Custom House was to be officially at Kow- 
loon, in Chinese territory. All documents were 
dated from that place. As a matter of fact, the 
Customs House is really in Hong Kong, where 
all business is done. 

The name of the Customs House Agent is put 
over the door, but officially the place is not recog- 
nized as a Customs House proper. 

The following points in connection with this 
question were brought to my notice by the British 
merchants at Hong Kong : 

That the original reason for permitting the 
Chinese Customs to establish themselves in and j 

about Hong Kong was the collection of opium 

revenue. Now the Chinese Customs not only col- 1 

204 j 

I 



HONG KONG 

lect the duties on opium for Chinese Imperial pur- 
poses, but also general duties on goods and mer- 
chandise inside the area of the British colony for 
the provincial as well as the Imperial Govern- 
ments. 

They declared that the Customs have practically 
blockaded Hong Kong, and the system employed 
is such as to offer considerable obstruction to the 
development of trade by native traders, principally 
brought about by illegal search without warrants 
in British waters. There is great difficulty in 
proving such cases, because native evidence only 
is available on the British side, while on the Im- 
perial Chinese Customs side European evidence is 
always to be obtained in the person of the officer 
commanding the Customs launch. 

Since the year 1884 the European trade has 
increased in tonnage from 6,859,274 to 12,124,599, 
but the merchants point out that this increase is 
not so much due to development of trade in the 
towns, villages, and country districts of China as 
to increased development of the trade with Japan, 
Formosa, and the Treaty Ports. They point out 
that the Customs House system has kept the junk 
trade almost stationary, it having only increased 
from 3,375,188 in 1884 to 3,441,295 in 1897. 

The Inspector- General of Chinese Maritime 

Customs has lately requested official recognition 

of the Chinese Customs House at Hong Kong, 

which up to now has only been allowed to exist in 

the colony on the understanding that the Hong 

205 



THE BREAK-UP OF CHINA 

Kong Government reserve the right to cancel the 
arrangement. They complain that the fact of 
having a Chinese Custom House on British soil 
is an anomaly which would not be permitted in 
any other colony, and that the absurdity and irri- 
tation of such a system would be well exemplified 
by placing a Customs House within the lines at 
Gibraltar for collecting Spanish Customs dues. 
The merchants were very distinct in stating that 
they wished to do nothing unfriendly to China, 
and to prove this they are prepared to guarantee 
the opium revenue, and to take every precaution 
that the Chinese revenue should not suffer by the 
change. This they were willing to do, although 
they were aware that it would inflict a loss to the 
colony of about ;^38,ooo a year — the sum paid 
by the opium farmer as rent to the Hong Kong 
Government. 

I made it my business to find out the opinion 
of the Chinese traders themselves as to shifting 
the Chinese Customs House from British to Chi- 
nese property, and as far as I could gather they 
were unanimously in favor of such a change. The 
two Chinese members of the Legislative Council 
of Hong Kong — Dr. Ho Kai and Mr. Weityuk — 

were both in favor of this proposed change. It is, 
however, proper to add that I could get no evi- 
dence that the junk masters and Chinese mer- 
chants had actually complained of the Chinese 
Customs House being on British territory. 

It may be interesting for the Associated Cham- 

206 



HONG KONG 

bers of Commerce to have some details respect- 
ing the opium farm. I visited the farm on Decem- 
ber 31, 1898, and saw the manner in which the 
opium was prepared. The present opium farmer 
has a contract with the Government for three 
years at a rent of ;^3ioo a month. He sells an 
average of eight to ten tins of opium a day. The 
tins are about 9 in. by 6 in., and contain about 
£2fi> worth of opium, thus making from ;^7200 to 
;^9000 a month. The trade would appear a very 
lucrative one. 

The opium farmer is known to be the largest 
smuggler of opium into the country. If he did 
not smuggle he could not afford to pay the large 
rent demanded by the Government. 

Thus, indirectly, the Hong Kong Government 
derives a revenue by fostering an illegitimate trade 
with a neighboring and friendly Power, which can- 
not be said to redound to the credit of the British 
Government. It is in direct opposition to the sen- 
timents and traditions of the laws of the British 
Empire. 

Having given clearly the opinions of the British 
merchants in regard to this important question, I 
made it my business to find out the opinions of the 
responsible authorities in charge of the Imperial 
Maritime Customs of China. 

Through their kindness I was able to obtain 

what may be said to represent their views of the 

question. 

They are as follows : 

207 



. I 



THE BREAKUP OF CHINA 

Memo, regarding Chinese Customs at Hong 

Kong — Kowloon. 

1. Hong Kong to formally recognize Kowloon 
Commissioner. His duties to be specified. Facili- 
ties for carrying them out to be given.* 

2. Opium landed to be stored under Colonial 
Bond, only to be allowed to leave with Colonial 
permit and Customs counter-signature. 

Customs to have right to examine go-downs, etc., 
in company with Colonial officer at all reasonable 
times. 

3. Colonial officer to specially supervise opium 
farmer's operations, jointly with Customs man. 
Farmer to report to Colonial officer all opium 
(prepared) intended for shipment, with destina- 
tion, etc. 

4. Munitions of war not to be shipped on junks 
without Colonial permit, countersigned by Customs. 

5. Customs vessels to have national status. No 
seizures to be made on vessels under way within 
Colonial waters. Where questions of seizure in 
doubtful waters arise to be jointly investigated. 

* Establishment to be known as " Kowloon Customs." 
Presence in Hong Kong admittedly by favor of British 
Government. Commissioner to be Englishman. Whole ar- 
rangement liable to withdrawal if head of Chinese Customs 
Service not an Englishman. Great Britain may appoint an 
officer (?) Consular or Colonial to reside in Kowloon. Chi- 
nese officer appointed to Kowloon not to be under a certain 
rank ; name to be submitted to Hong Kong Government be- 
fore appointment. 

208 



HONG KONG 

6. Hong Kong Government to assist Customs 
by its officers to carry out Hong Kong law, and 
not Chinese revenue officers ; and they may be re- 
warded. 

7. Hong Kong Government to legislate as may 
be necessary to give effect to this understanding. 

8. China to give trade facilities in certain direc- 
tions — €,g., in issue of transit passes, inland water 
navigation, direct trade with West River ports of 
call, and in other directions where same may be 
possible. 

9. Arrangement to be liable to modification after 
certain named time or specified notice. 

I also received the following resolutions, passed 
unanimously by the Hong Kong General Cham- 
ber of Commerce, September i. 1898: 

" I. That the Custom Offices be no longer 
permitted to collect duties in the colony or 
its waters. 

** 2. That all opium arriving in the colony 
be accounted for either through the agency of 
bonded warehouses or otherwise. 

"3. That the Government do all in their 
power to protect the Chinese revenue, more 
especially with regard to the opium farmer. 

" That the revenue stations and revenue 
cruisers be removed beyond the limits of 
British territory and British waters." 

The British merchants have represented, over 

and over again, that the Chinese Customs arrange- 
o 209 



THE BREAK-UP OF CHINA 

ments for collecting revenues at Hong Kong work 
seriously to the injury of legitimate trade, that it 
interferes with the freedom of the port, and that it 
is a great impediment to the general development 
of the trade of the colony. 

Both sides, the British community and those 
representing the Chinese Maritime Customs, seem 
anxious to adjust their differences in a friendly 
manner. On the side of the Chinese Customs the 
authorities work in the line which they consider 
best for the interests of the Government they serve. 
On the British side, the merchants have clearly 
pointed out that the present system is harmful to 
the interests of British trade. At the same time 
it must always be remembered that the Customs 
Service is not regarded with any great affection by 
the merchants of any country. If the Associated 
Chambers thought wise to press this question for- 
ward, there can be no doubt that a satisfactory 
settlement would shortly be arranged, and Anglo- 
Saxon trade and commerce materially benefited. 

Before I left Hong Kong Mr. Gray called a 
meeting of the Chamber of Commerce, of which 
body he is Chairman. A summary of the speeches 
made at this important meeting may be interest- 
ing to the Associated Chambers of Commerce of 
Great Britain." The members desired me to thank 
the Associated Chambers of Commerce for having 
sent a Mission to China to inquire into the state 
of British trade and commerce. They said that 
such an inquiry was imperative for British inter- 

2IO 



HONG KONG 

ests under the present condition of affairs in 
China. They declared that every one interested 
in trade in China must regard the Open Door prin- 
ciple as essential to its existence. They pointed 
out that, notwithstanding all the efforts of Consuls 
and Chambers of Commerce, British treaties with 
China were deliberately flouted in the matter of 
provincial exactions; and that trade could never 
expand as long as it was burdened by indefinite 
inland taxes. They also desired me to request 
the Associated Chambers of Commerce to use 
their influence to have the commercial clauses 
of the Treaty of Tientsin carried out in their 
entirety. 

In the Appendix will be found a copy of Reso- 
lutions passed at a meeting of Chinese merchants 
and traders resident in Hong Kong, held at the 
Chinese Chamber of Commerce Rooms, on Sun- 
day, January 22, 1899. 

I received the following address from the Chi- 
nese merchants at Hong Kong after my return to 
England in March, 1899, and place it in the Re- 
port to show the Chinese view of the situation in 
China: 

" To Rear-Admiral Lord Charles Beresford, 
CB., M.P.: 

"Your Lordship, — We humbly crave your 
Lordship's permission to address to you a few 
remarks on the China question, both in its politi- 
cal and commercial aspects, for the satisfactory 

211 



THE BREAK-UP OF CHINA 

solution of which, with noble self-denial and char- 
acteristic energy, you have travelled to the Far 
East, and, while there, have spared neither time 
nor trouble in making personal observations and 
gathering useful information. We, together with 
the leading Chinese merchants and residents, 
should have approached you during your brief 
sojourn in Hong Kong, but we were prevented 
from so doing by two considerations, one of which 
was that your Lordship's already limited time was 
completely occupied with important public and 
social functions in connection with the British 
and foreign communities ; the other was of a far 
more serious character, and, we venture to think, 
deserves the earnest attention of your Lordship 
and of the British Government and Parliament, 
especially at the present juncture in China. It 
was the hidden cause of many apparently inex- 
plicable instances of the backwardness of those 
Chinese who have been accorded the distinguished 
privilege of becoming subjects of the mightiest and 
most glorious Empire the world has ever seen ; it 
has prevented their co-operation with the British 
authorities in all international questions between 
the British and Chinese Empires. It is nothing 
less than the dread of the Chinese mandarins, and 
the total absence of protection from the British 
Government, that has hitherto kept the British- 
born or naturalized Chinese from taking openly 
any intelligent interest or active part in the politi- 
cal and commercial relationship between these two 

212 



HONG KONG 

great nations. For some reason or other the Con- 
sular Authorities representing the British Govern- 
ment in China have persistently refused recogni- 
tion and protection to British subjects descended 
from the Chinese race who happened to be in Chi- 
nese territory, or travelling for commercial or social 
purposes, and they are left to the tender mercies 
of the Chinese officials, who have thus golden op- 
portunities for filling their pockets or paying off 
old scores. 

" This policy on the part of the British officials 
concerned is as enigmatical to us as it is contrary 
to the practice of the Representatives of other 
European Powers — such as the French, German, 
Russian, Portuguese — and American, and even the 
Japanese, who each and all afford the fullest meas- 
ure of protection to their Chinese subjects in the 
open ports or the interior of China. The rule of 
every British Consulate throughout China appears 
to be to make the granting of protection to Great 
Britain's Chinese subjects a matter of extreme 
difficulty, if not of impossibility. They make irk- 
some and, in many instances, impracticable regu- 
lations, and insist upon some stringent and almost 
impossible conditions. By these means they ef- 
fectually block the claim of protection by the 
great majority, if not all, of their Chinese sub- 
jects. 

" As an example, we may mention the rule of 

distinctive dress, where it is provided that a British 

Chinese subject claiming British protection must 

213 



THE BREAK-UP OF CHINA 

cut off his qtieue and change his long-accustomed 
mode of dress. What the effect of such a rule on 
the Chinese would be we can safely leave to your 
Lordship to imagine, and we need only add that no 
other foreign nation in China has thought it fair 
or wise to impose such conditions on their Chi- 
nese subjects. The excuse put forward for these 
unusual proceedings on the part of the Consular 
Authorities is the fear of international complica- 
tions. But, as yet, we are not aware of any single 
case where serious complications have taken place, 
if we except the numerous troubles connected with 
foreign Christian missions. On the other hand, 
even though some insignificant international fric- 
tion might be caused by extending protection to 
Anglicized Chinese, would that not be outweighed 
by the many resulting advantages to British pres- 
tige and influence? After this, your Lordship 
will not be surprised to learn that the Chinese in 
Hong Kong, or elsewhere, being British subjects, 
should prefer silence to healthy discussion, reserve 
to active participation, crafty device to manly de- 
termination, equivocal support to loyal co-oper- 
ation. The close proximity to the main-land, the 
frequent calls M duty or pleasure to the interior,, 
the utter corruption, and squeezing propensities of 
the native officials, their revengeful and arbitrary 
spirit, the close espionage exercised upon the na- 
tives by the Chinese Government, together with 
the want of protection from the British Author- 
ities, must account for all that seemed cold and in- 

214 



HONG KONG 

different in the Chinese respecting topics of mo- 
mentous and international interest. 

" Notwithstanding this, however, your Lord- 
ship's important Mission to the Far East and 
your recent public utterances have aroused uni- 
versal and intense interest among the Chinese, 
especially those who are residing in the open 
ports or under the aegis of the British flag. The 
policy of the ' Open Door,' so ably enunciated and 
advocated by you, met with their cordial approval 
and support, as being the only means whereby 
Great Britain's commerce in China can be pre- 
served and extended, the Chinese Empire kept in- 
tact, and her tradal and political relationships 
with other foreign nations improved. This policy, 
simple and effective though it be, will, we appre- 
hend, be opposed by the many who deem it to be 
national glory when a new territory is acquired 
and a Sphere of Influence gained, utterly disre- 
garding the dangers and evil consequences that 
such acquisition may involve. We have, however, 
the greatest confidence in your Lordship, and we 
are assured that the great British public and lead- 
ing statesmen will readily listen to the wise advice 
of one whose name is a household word, ability 
unsurpassed, courage indomitable, judgment unbi- 
assed, public spirit loyal and enthusiastic, and whose 
discernment, aided by personal experience and ob- 
servation, is true and unclouded. The issue in the 
hands of such an advocate will and must be successful 

in spite of all the opposition that may be interposed. 

215 



THE BREAK-UP OF CHINA 

" We believe the active support of the United 
States of America, of Germany, and of Japan can 
well be counted on, as their interests are identical 
with those of Great Britain, and they cannot hope 
to gain any material advantage by the disintegra- 
tion of China and the restriction of trade in that 
Empire, We are certain also that the Chinese 
will yet fully appreciate the manifold benefits of 
this * Open Door ' policy, and will do their utmost 
to assist in its maintenance. They cannot fail to 
understand that the integrity of their own country, 
nay, their very existence as a nation, depends upon 
the firm adherence to this principle. The devel- 
opment of their commerce, industry, and natural 
resources is equally dependent upon its being up- 
held by the strongest and freest of all nations. 
Besides, the Chinese people, having great apti- 
tude and inclination for trade, have naturally at 
all times a particular leaning towards England, the 
greatest commercial nation in the universe. In 
addition to this, the justice and liberty that char- 
acterize the British laws and constitution, the per- 
fect and impartial protection which Great Britain 
affords to all who dwell or trade under her flag 
(with the one exception already alluded to), make 
her a favorite with the Chinese, so that whenever 
England should give a clear indication that she 
will carry out the policy recommended by your 
Lordship, she will not find the Chinese behind- 
hand in tendering their support and adherence, 

" But what support could China give and of what 

216 



HONG KONG 

value is her adherence to this policy ? Very little, 
indeed, we admit. As has been pointed out, she 
has no army or navy worth recognizing as such. 
She is nearly rent asunder by internal dissensions 
and rival factions. Her officials are the most cor- 
rupt and notoriously incompetent ; her revenue is 
ridiculously insufficient, and already overcharged 
with payment of interest on foreign loans ; her 
land is infested with rebellious bands and lawless 
mobs; her people are ignorant and full of prejudice 
and pride. All these evils, and many more which 
we at present forbear to enumerate, wellnigh 
render the carrying out of this policy on her soil 
a matter of impossibility, and seem to force upon 
the mind of every casual observer the conviction 
that nothing but actual partition would solve the 
problem of her future destiny. This, however, was 
never our opinion, and we are exceedingly glad 
that your Lordship, after careful study on the spot, 
is in accord with us. 

" Great Britain requires in China the * Open 
Door 'and not a 'Sphere of Influence,' and China 
needs radical reform and not absorption by any for- 
eign Power or Powers. But it is quite apparent im- 
mediate reformation must be inaugurated. With- 
out reformation the administration of the Chinese 
Empire will speedily become impossible ; partition 
will become inevitable ; and Great Britain will have 
no choice but to join in the international scramble 
for ' Spheres of Influence.' It is also clear that 

without external aid or pressure China is unable 

217 



THE BREAK-UP OF CHINA 

to effect her own regeneration. For obvious rea- 
sons — personal gain and aggrandizement — those 
who hold high office, those who constitute her rul- 
ing class, do not desire Reform ; those in humbler 
life, forming her masses, wish Reform, but are 
powerless to attain it. In this predicament we 
venture to think that England, having the predom- 
inant interest in China, and being the country most 
looked up to and trusted by the Chinese, should 
come forward and furnish the assistance and apply 
the requisite pressure. This, we are aware, may 
be objected to as being a too stupendous task, 
and beyond the strength of Great Britain ; on the 
other hand, we believe she has the resources to 
enable her to undertake the work, and when we 
recall the magnificent successes achieved in India 
and in Egypt, and other parts of the world, we are 
confident that even greater successes will crown 
British effort and energy in China. 

" We agree with your Lordship that China, in 
order to maintain her integrity and the *Open 
Door,* and to protect property and capital sunk in 
her vast territory, must have an effective army and 
police ; but we humbly submit that, before these 
desirable objects could be attained, some reform 
in other directions should be effected. We have 
not forgotten yet what became of the Ever- Vic- 
torious Army under General Gordon, or the end 
of the once formidable fleet under Admiral Lang. 
We have heard from your Lordship's own lips what 
ridiculous things have been done in the Arsenal at 

2l8 



HONG KONG 

Foochow, which has been established for a great 
number of years under foreign direction, and has 
cost the Chinese Government immense sums of 
money. We also remember your remarks upon 
the forts and magazines at Canton and elsewhere 
in China. Your Lordship has found, as a matter of 
fact, that certain sums of money set aside by the 
Chinese Government for particular objects were 
discovered to be wofully deficient after having 
passed through the hands of the native officials, 
whereas, if properly applied, these sums would have 
been sufficient for the purposes for which they 
were allocated. 

" These facts, and many more, support our con- 
tention that China requires something much more 
urgently than an effective army and police. Sup- 
posing it is possible to furnish China to-morrow 
with a well-disciplined army and a perfectly organ- 
ized police, we are quite certain that neither force 
will be maintained in an efficient state for a year 
and a day. China s corrupt Government and her 
peculating officials would starve out either or both 
of the forces. History will repeat itself. It has 
been pointed out to us that Turkey, although her 
Government is as bad as, if not worse than, China's, 
has been preserved to this day by having a good 
army and a passable navy, and that if we wish to 
maintain the integrity of the Chinese Empire a 
large and well -disciplined army is indispensable. 
But, in our opinion, something else must first be 

done in order to lay the permanent foundation of 

219 



THE BREAK-UP OF CHINA 

a truly useful army, navy, and police. If we are to 
have a reformation at all in China, let it be a thor- 
ough one. Let us begin at the very root. We 
should be very sorry indeed to see China in the 
position of Turkey, bad as her condition is already. 
Even with her army and her navy, China would 
be the continual *sick man ' of the Further East; 
she would be the bone of contention among the 
European Powers, the frequent cause of inter- 
national dispute or even of war. She would be- 
come the scene of atrocities, massacres, and blood- 
shed, and the centre of the most abominable and 
corrupt governments. In fact, she would be, as it 
were, a festering sore in the sight of the civilized 
world. Rather than this, for humanity's sake, we 
would prefer to see China partitioned at once, 
and good government introduced by the dividing 
Powers. National death is preferable to national 
dishonor, corruption, and degeneration. 

" The urgent reforms before others we would 
like to recommend for China's adoption are two in 
number: First, a system of adequate salaries to 
her officials; and secondly, a thorough overhaul 
of her system of collecting her inland revenue, her 
taxes, and crown rents. We recommend further 
that if China be unable or unwilling to undertake 
these absolutely necessary reforms. Great Britain, 
either single-handed or in conjunction with some 
other Power, should render China substantial as- 
sistance, and, if need be, apply firm pressure on the 

Central Authorities at Peking. 

220 



HONG KONG 

" We earnestly assure your Lordship that from 
our intimate knowledge of the Chinese and the 
Chinese Government, their nature and their ways, 
it will be absolutely impossible, failing reform in 
these two particulars, to accomplish any improve- 
ment upon her condition ; to uphold the policy of 
the 'Open Door' — by which we understand the 
maintenance of the integrity of China, the free- 
dom of trade and commerce within her territories, 
without restrictive or protective tariffs, and the 
common participation by all foreign nations alike 
in all the privileges, rights, and concessions ob- 
tained by any one of them. 

" Permit us, my Lord, to give you some facts in 
connection with the wretched pay of the Chinese 
officials and the evils resultant therefrom. It is 
well known to all of us that a high mandarin in 
the capital of China, of Cabinet rank, does not get 
by regulation any more than ;^5o a year as salary. 
In addition to this, however, he has certain allow- 
ances, which may possibly make up his whole 
emoluments to about ;^200 or ;^25o per annum. 
Upon this pittance he is expected to keep up his 
position, his family, his retinue, his staff, secreta- 
ries, advisers, etc., besides entertaining guests and 
colleagues. In point of fact, he requires from ten 
to twenty times the amount to meet all his ex- 
penses. A Viceroy in the provinces has a more 
liberal salary. He gets as his yearly official sal- 
ary about ;^ioo, and allowances amounting to 

about ;^9cx> to £ 1 200 more ; but, unfortunately, 

221 



THE BREAK-UP OF CHINA 

he has to defray out of these sums all his ya- 
men expenses, including stationery, etc., salaries 
and food to his secretaries, writers, and A.D.C, 
his body-guards and general retinue. In addition 
to this, he has to entertain his innumerable guests, 
and send his annual tributes to the various high 
officials in the capital, to say nothing of support- 
ing his high station, his numerous family and re- 
lations. As a matter of fact, to meet all his ex- 
penditure, he would require no less than ;^ 10,000 
or ;^ 1 5,000 per annum. A General in the army 
or an Admiral in the navy gets less than ;^400 a 
year as salary, and out of this is supposed to pay 
for his own personal staff. From these high mag- 
nates downward, the Chinese officials are under- 
paid in the same proportion, until one gets to 
the lowest grade — the petty mandarins, whose 
official pay is scarcely better than that of a well- 
paid Hong Kong coolie, and the soldiers and sail- 
ors, who receive four to ten shillings a month, 
subject oftentimes to various unjust deductions 
and squeezes by their superiors. 

" These generalizations will show your Lordship 
that such underpaid officials, both high and low, 
cannot help but resort to a regular system of cor- 
ruption and peculation, and, in the struggle for 
official existence, honor and honesty are impossi- 
ble. The more fortunate and less scrupulous 
among them amass fabulous wealth, while those 
endowed with a little more conscience have to be 

content with a mere competency, and the upright 

222 



HONG KONG 

mandarin, if such has an existence, is forced to re- 
tire after a short experimental career. From this 
it can readily be seen why an adequate sum of 
money set aside by the Government for a definite 
object is found to be insufficient at the end, or 
why a sufficient sum of money having been ex- 
pended, no satisfactory results can be obtained ; or 
why a handsome amount having been paid for 
superior articles of modern manufacture, the most 
inferior and antiquated objects are bought in sub- 
stitution. 

" In short, your Lordship, ask any independent 
Chinaman you meet with, and he will tell you the 
same story — namely, that when a sum of money 
passes from the Imperial Board of Revenue suc- 
cessively through the various channels to its des- 
tination, like a well-known musical scale, it grad- 
ually diminishes and becomes beautifully less. 
With such a system in vogue, how can China ex- 
pect any reform? All the mandarins in power 
would naturally oppose any measure for reform 
tending to take away their illegitimate though, 
under the circumstances, quite necessary gains. 
How can she expect her officials to refuse bribery 
and blackmail when proffered to them by friends 
or foes ? How can she expect to have a true re- 
turn of her revenue, and recover the seven-tenths 
of it which annually goes into the pockets of her 
officials ? How can she hope to create and main- 
tain a well-disciplined army and an adequate navy 

when the necessary funds set aside for these pur- 

223 



THE BREAK-UP OF CHINA 

poses are liable to diminution by successive pec- 
ulations and illegal deductions? How can she 
inaugurate and accomplish her public works, such 
as the different arsenals, docks, and the embank- 
ment of the rivers, when the necessary expendi- 
ture is subject to the same unfavorable influences? 
How can she make a satisfactory settlement about 
her likin taxes in their various forms, such as loti- 
shui, cho-H, etc., when a great majority of her 
officials look to these sources to eke out their 
income and supplement their meagre salaries? 
And, finally, how can she proceed with her rail- 
ways, open her mines, promote her industries and 
manufactures, increase her commerce, and develop 
her resources generally, when every official in her 
kingdom is bent upon making money out of the 
public funds and revenue, and is resorting to dis- 
honest practices of every description to enrich 
himself at the expense of the State and its humble 
subjects. 

" With the reformation of this unhappy state of 
officialdom in China, it will be possible for compe- 
tent and honest men to enter her service and to 
discharge, honorably and well, the various func- 
tions intrusted to them. It will then be easy for 
her to commence public improvements with some 
hope of success. Now, as things are, the largest 
purse will win the day, either in the civil, military, 
or political arena; and such a condition will not 
suit, in our humble opinion, the honorable, frank, 

and straightforward policy of Great Britain, where- 

224 



HONG KONG 

as, on the other hand, it helps the less scrupulous 
policy of rival Powers, Besides, the reformation 
in this particular direction will receive the general 
approval and support of the Chinese, and, we vent- 
ure to think, of the Chinese officials themselves, 
most of whom are not without some sense of rec- 
titude. With this reform well in hand, the way 
would be clear for the next. All opposition from 
the officials and their underlings having been 
overcome by the raising of their salaries, it will be 
easier then to put China's revenues in order. 

" The revenue system of China is notoriously 
bad. The total revenue received into the Imperial 
Treasury scarcely represents three-tenths of what 
is levied by the officials throughout the country. 
A detailed analysis of the financial arrangements of 
China would occupy too much time and space, but 
we refer your Lordship to the admirable pam- 
phlet written by Consul-General Jamieson on * The 
Revenue of China,' submitted to Parliament in 
1897. In this pamphlet Mr. Jamieson has not ex- 
aggerated the amount actually collected by China's 
officials. Rather has he under-estimated the total, 
and yet from his work your Lordship will learn 
that the revenue of China should at least be from 
three to four times its present amount. This fear- 
ful peculation by the Chinese officials, together 
with the evil habit of the Chinese authorities to 
* farm ' out some of the sources of revenue to minor 
officials or regular 'farmers,' renders the Chinese 

revenue system truly a formidable obstacle to the 
p 225 



THE BREAK-UP OF CHINA 

improvement of international commerce, the in- 
crease of local trade and industry, and the devel- 
opment of all her natural resources. Unless the 
financial arrangements are first reformed, it would 
be useless to attempt anything for the improve- 
ment and advancement of the Chinese Empire. If 
China could be persuaded by a little gentle press- 
ure from Great Britain to place the collection of 
her inland revenue, crown rents, and taxes, in the 
hands of a competent establishment, somewhat 
after the fashion of the Imperial Maritime Cus- 
toms, it would prove the salvation of China as a 
nation. 

" We will not trouble your Lordship with the 
other reforms which are more or less necessary to 
China in her present condition, such as the train- 
ing of an efficient army, navy, and police, the open- 
ing of technical and scientific schools, the placing 
of competent and properly trained men in charge 
of her Government departments requiring special 
and technical knowledge, the opening of all her 
internal waterways and towns to trade, the speedy 
and economical construction of her railways, and 
the opening of her mines, etc. But we will be 
content by addressing you in regard to what we 
consider to be the root and origin of all her politi- 
cal and commercial evils. 

" To sum up, we would strongly urge upon your 
Lordship, and through you the great British pub- 
lic, that this is the time for prompt and decisive 

action in China; that the best policy for Great 

226 



HONG KONG 

Britain and China alike is the * Open Door ' policy 
as understood by us in the sense as above de- 
scribed ; that this policy, good and sound though 
it be, requires careful application and bold deter- 
mination for its enforcement ; that previous to, or 
concurrent with, the carrying out of this policy, 
the reorganization of China's fiscal system is abso- 
lutely essential ; that Great Britain, either alone or 
along with other Powers, should exercise firmness 
in getting the Chinese Government to intrust the 
collection of her revenue to a coUectorate similar 
to the Imperial Maritime Customs; that before 
this is done (or simultaneously) the Chinese offi- 
cials, both high and low, should be assured of ade- 
quate salaries and pensions commensurate with 
their various positions in the Government service; 
that while these reforms are on the way the Brit- 
ish Government should assist the Chinese authori- 
ties in maintaining order within her territories; 
and that all other reforms should gradually be in- 
troduced hereafter as occasion demands or permits. 

" Before we close this letter, we would respect- 
fully bring before your Lordship a matter of some 
considerable importance, although not generally 
recognized. We refer to what we consider to be 
an effective means for the extension of British in- 
terests and influence among the Chinese and the 
promotion of British commerce throughout the 
Empire of China. 

" We think that there is a mighty force available 
for the British Government, a force which has been 

227 



THE BREAKUP OF CHINA 

hitherto lying dormant and undeveloped — either 
willingly neglected or perhaps never dreamed of. 
That force is the unchallenged commercial acumen 
of the Chinese. By a proper system of organizar 
tion and greater encouragement to British subjects 
of Chinese parentage, they can be made an arm of 
strength to Great Britain commercially, and that 
proud position which she has held in China can 
yet be maintained despite the rivalry and under- 
hand schemes of her enemies. We humbly suggest 
that Britain's Chinese subjects be sent to the in- 
terior to occupy every possible source of trade and 
to act as commercial scouts or living channels of 
communication to the different Chambers of Com- 
merce. Well organized and instructed to make 
inquiries within their tradal spheres or to penetrate 
further, if need be, into the interior or any special 
region, these intelligent merchants may perform 
wonders and help to maintain the. commercial 
supremacy of Great Britain. It may be stated as 
an irrefutable fact that, wherever the goods may 
come from, whether Britain, Germany, France, 
America, or Japan, they ultimately reach the Chi- 
nese market through those Chinese merchants who 
know exactly what is needed and the best mode of 
supplying the people's wants. They act the nec- 
essary part of middle-men between the foreign mer- 
chants and the large mass of native consumers. 
They can visit places where Europeans would only 
arouse suspicion ; they can extract information 

where foreigners would only close the natives' 

228 



HONG KONG 

mouths. Where Chinese of the interior would 
willingly interchange views with British subjects 
of Chinese parentage and Chinese dress, foreign- 
ers would have to be content with vague and eva- 
sive answers given grudgingly and with circum- 
spection. 

" With the support and good-will of these British 
subjects of Chinese parentage, with the removal of 
the likin barrier and other obnoxious Customs' 
regulations, British goods, assisted by superior 
carrying powers, can supply the Chinese market, 
and there would be such a ramification of British 
commercial interests in the whole Chinese Empire 
that China, in its entirety, would become a com- 
plete sphere of British influence, which, as Great 
Britain is a nation of free-traders, may be consid- 
ered as synonymous with the *Open Door.' We 
are hopeful of seeing the day when Great Britain 
will emerge from this commercial and political 
conflict with untarnished lustre and unsullied 
glory. 

"In conclusion, we beg to offer your Lordship 
our most sincere thanks and the thanks of all the 
enlightened Chinese for the personal interest and 
trouble you have taken in the Chinese question ; 
for your lucid enunciation of the policy of the 
* Open Door,' and for your strong support of the 
same, which, if maintained, would not only be bene- 
ficial to Great Britain and other nations, but would 
confer lasting benefit upon China herself; and, 

lastly, for your kind reception of this address, im- 

229 



THE BREAK-UP OF CHINA 

perfect as it is. On your Lordship we place our 
implicit reliance, knowing as we do that you will 
champion the cause of commercial and political 
freedom and liberty with the most distinguished 
ability and success. 

" We have the honor to be, 
" Your Lordship's humble, obedient servants, 

"Ho Kai, 
"M.B., CM., Aberdeen ; M.R.C.S. 
England ; Barrister-at-law, Lin- 
coln's Inn; Senior Member of 
Legislative Council representing 
the Chinese. 

" Weityuk, J.P,, 
"Junior Member of Legislative 
Council representing the Chi- 
nese. 
"Hong Yj:^^^^ January 20, 1899." 

This address shows the deep interest, not un- 
mixed with anxiety, with which the great Chinese 
trading community view the present and future 
condition of their Empire. There are many points 
in the address worthy of comment, but I will se- 
lect the following: 

The statement with regard to the position of 
those Chinese who have become British subjects 
is not generally known, and, I submit, calls for the 
earnest attention of the Associated Chambers. It 
cannot add to the prestige of the British Empire, 

nor can it improve British trade and commerce, if 

230 



HONG KONG 

this state of affairs is allowed to continue. There 
can be no possible reason why a Chinese who be- 
comes a British subject should not enjoy all the 
privileges and advantages which are available to 
any other British national. Why should a China- 
man who wishes to become a British subject be 
compelled to submit to what he considers degrad- 
ing and humiliating regulations a bit more than 
those other nationalities and creeds who wear the 
dress of their people, and who form the larger pro- 
portion of the millions who are proud to be the 
subjects of the Queen of England ? 

The Chinese merchants appear to think that 
the first reform necessary is to pay the Chinese 
authorities proper salaries. As things are at pres- 
ent, even if this were possible, I fear the squeezes 
and corruptions would not be less. The idea that 
a reorganized army would be as incompetent and 
inefficient as the present, if left to the Chinese 
themselves, I entirely agree with, but if organized 
by foreign officers with a system of public accounts, 
both economy and efficiency would soon take the 
place of extravagance and decay. No reforms, 
such as a proper system of collecting revenue or 
a better system of administration, can possibly be 
brought about in a country so hopelessly corrupt 
as China until the first and initial step is taken of 
giving authority to those powers which only an ef- 
fective military and police can supply. 

231 



XIX 

CANTON 

The estimated population is 1,600,424 

TRADE STATISTICS 

The total value of trade in 1897 was Hk. Taels 49,934,391 
(over ;^7, 1 00,000). 

The total tonnage of shipping entered and cleared in 1897 
was 3,718,064, of which 3,000,571 was British. 

On the 29th of December, 1898, I arrived at 
Canton. Canton is the capital of the province of 
Kwangtung, and is situated on the Chu-kiang or 
Pearl River. 

At a meeting of the British merchants at Can- 
ton I was given the following Memorandum and 
asked to convey it to the Associated Chambers. 
The merchants informed me that the development 
of British trade and commerce in this port would 
be assured, provided that the disabilities from 
which that trade and commerce were suffering 
were removed. 

Their Memorandum is very clear and to the 

point, and is here inserted : 

232 



CANTON 

"Canton, December 29, 1898. 
" Rear- Admiral Lord Charles Beresford, C.B.: 

" My Lord, — You have been good enough to 
express a wish through her Majesty's Consul to 
receive during your visit here the views of British 
firms trading in Canton concerning the general 
course of trade, and of any disabilities, etc., from 
which British trade is suffering. 

" The Chamber of Commerce here being a 
cosmopolitan body, the British merchants having 
their headquarters in this place, the agents of 
British firms represented in Canton have con- 
ferred together, and are agreed to impress upon 
your Lordship the desirability of — 

" I. A definition of the area of the Port. The 
Treaty Port of Canton was doubtless in the origi- 
nal Treaty intended to comprise the city of Can- 
ton and its suburbs, including the suburbs of 
Honan and Fa-Ti. 

" However, in the Chefoo Convention drawn by 
Sir Thomas Wade, in Section III., Clause i, was 
embodied that, subject to ratification later, 

"*The ground rented by foreigners (the so- 
called concessions) at the different ports be 
regarded as the area of exemption from likin,' 

although by the additional article signed in Lon- 
don, 1 8th July, 1885, it was expressly stipulated 
that this should be reserved for future considera- 
tion. 

233 



THE BREAK-UP OF CHINA 

** The introduction of this point, and its non- 
settlement, have greatly restricted the rights ac- 
corded to British subjects by the Treaty of Tien- 
tsin. 

" The consumption of British goods would, no 
doubt, be much increased if British merchants 
were allowed to sell same in the city of Canton 
and its suburbs without likin being levied. 

" Of late years a likin boat has been moored op- 
posite the Foreign Customs shed, and likin has 
been levied on all goods brought there, to pay the 
duties regulated by Treaty. 

" 2. Transit Passes. — The energetic action of 
H.M.'s Minister, and of the Consuls acting on the 
spot, has done much to clear away the obstruc- 
tions which the Chinese provincial authorities have 
raised to the free transit of goods under these 
passes. 

" It is to be hoped that an opportunity may pre- 
sent itself of pressing for an open transit pass, free- 
ing goods to any point in the two provinces, with- 
out declaration of destination. 

" 3. Piracy. — The last few months piracy on the 
West River and its environs has been rife, and 
many native merchants bringing down silk, cassia, 
matting, and other produce from the different dis- 
tricts to Canton, for delivery under contract to for- 
eign merchants, have suffered serious loss of both 
property and life. There is also constant delay in 
carriage, owing to native craft being afraid to 
travel at night or without escort. 

234 



CANTON 

" It would be well 1:0 impress upon the Chinese 
Government that British subjects, and those em- 
ployed by them, should be protected from such 
losses and from violence of this sort. 

"4. French Sphere of Influence. — It has late- 
ly been put forward in certain newspapers and 
other publications that the French Government 
have come to regard the provinces of Kwangsi and 
Kwangtung as already marked out, under certain 
eventualities, as a sphere of French influence. We, 
the British merchants in Canton, venture to pro- 
test most strongly against such an assumption be- 
ing admitted by our Government. 

" Broadly speaking, the foreign trade of these 
two provinces has been composed principally of 
British goods for many years, combined with a 
good percentage of German and American goods. 

" As regards the exports, which are principally — 

" Raw silk, waste silk, tea, cassia, essential oils 
of aniseed and cassia, matting, canes, etc., it may 
be interesting to your Lordship to know, approxi- 
mately, to what a small extent France has partici- 
pated in this trade in some of the principal exports 
given in tables attached. 

" We can only consider that the claim made by 
the French in some quarters to the bulk of the silk 
trade is based on the fact that the silk is principal- 
ly exported to Lyons, but the trade is not, as is 
shown, in French hands. 

" It will be seen that, if the statement of French 
influence is allowed by H.M.'s Government to pass 

235 



THE BREAK-UP OF CHINA 

without vigorous protest, the whole of a most im- 
portant export trade, and a valuable outlet for im- 
ports, might eventually come under French in- 
fluence, when the trade itself is principally in the 
hands of British merchants. The pretensions of 
the French Government have no support given to 
them, either by the importance of their trade, which 
is very small, or by the number of nationals en- 
gaged in it. 

"5. Preferential Duties. — Attention should 
be drawn to the fact that British-owned steamersf 
have not been able to obtain their fair share of the 
carrying trade in this and the West River, owing 
to the preferential duties accorded by the native 
authorities to native bottoms, and it is probable 
that a successful carrying trade, on the newly 
opened West River, will not be possible until the 
duties are equalized. 

" We have the honor to be, my Lord, 

" With the highest respect, 
" Your Lordship's 

" Most obedient humble servants, 

" DUNDONALD & Co. 

" RowE & Co. 

" Herbert Wemys. 

" T. E. Griffith. 

" Reiss & Co., per Fredk. Jalings. 

" Jardine, Matheson & Co., per F. J. Schiirch. 

" Shewan, Tomes & Co., per E. M. Smith, Jr. 

" P. pro BuTTERFiELD & SwiRE, J. R. Grcavcs." 

236 



CANTON 

It appears extraordinary that so simple a ques- 
tion as a proper definition of the area of the port 
cannot be settled. 

The question has always been an open one from 
the early days of the original Treaty of Nanking, 
and since the year 1885 it has been under con- 
sideration. As it is a matter which so directly and 
intimately afifects the conditions of British trade, 
it would appear that enough time has been given 
for consideration and that something definite 
should be decided upon. 

Being satisfied that the Associated Chambers 
would wish for full particulars on this question, I 
applied to the British Consul for information, and 
got a copy of some interesting documents, which 
I here insert. They show how far this matter had 
proceeded at the time when I left Canton. It will 
be observed that his Excellency the Viceroy is still 
anxious for further consideration on this all-im- 
portant matter, although fourteen years have al- 
ready been expended in this indefinite manner. 
Perhaps the publicity given to the question in 
this Report may hurry on the settlement of a 
point so essential to the development of Anglo- 
Saxon trade. 

Under the existing Chinese regulations there is 
not a single foreign store or shop allowed in the 
city of Canton. The following is an explanation 
of an attempt on the part of the British Consul to 
test a case with regard to our treaty rights : 

237 



THE BREAKUP OF CHINA 

[Copy.] 
From H. B. M. Minister at Peking to Consul. 

" Peking, August lo, 1898. 

" Sir, — It is scarcely necessary for me to inform 
you, in reply to your despatch No. 24 of June 21st, 
that Messrs. Banker & Co. are clearly entitled 
under treaty to establish a shop in the city of 
Canton, and in carrying on the business of such a 
shop, to exemption from all duties and exactions 
that are not authorized by treaty. As foreign 
goods imported into Canton are free, so long as 
they remain within the limits of the port, from all 
taxation except the tariff duty, Messrs. Banker & 
Co, should resist any attempt on the part of the 
Chinese authorities to levy likin on such goods 
within the Chinese city. 

" If likin is levied in contravention of the treaty, 
or if Messrs. Banker & Co.'s business is interfered 
with, it will become your duty to give them every 
lawful assistance and to exercise the utmost vigil- 
ance in defence of treaty privileges. I am, etc., 

(Signed) "Claude M. Mac Donald. 
" R. W. Mansfield, Esq., H.M. Consul, Canton." 



[Copy.] 
From Consul to Viceroy. 

" H.B.M. Consulate, 

"Canton, December 12, 1898. 

" Your Excellency, — The Treaty of Nanking 

in Articles II. and X. opens the city of Canton to 

238 



CANTON 

foreign trade, and provides that foreign goods shall 
pay to the Imperial Maritime Customs import duty 
which shall free them in the port, whence they 
may be conveyed into the interior on payment of 
transit dues. 

" The British firm of Banker & Co. has now 
petitioned that they have opened a shop in the 
city for the sale of piece-goods, and I have now 
the honor to request that your Excellency will 
issue instructions to your subordinates that the 
goods of Messrs. Banker & Co. are not to be in 
any way molested on their way from the steamer 
wharves to their city shop ; nor can any duty be- 
yond the Customs import duty be levied on these 
goods so long as they are in the port or city of 
Canton, whether while in the hands of Banker & 
Co. or of those who purchase goods of them. 

" I have received special instructions from H.M. 
Minister on this subject, and should any of the 
officials under your jurisdiction disregard treaty 
rights and unlawfully detain or seek to levy likin 
or other charges on these goods, such officials will 
assuredly be held responsible for all loss or injury 
to business which the . British merchant may sus- 
tain thereby. 

" I have, etc., 

(Sd.) " R. W. Mansfield, 

" H.B.M. Consul. 

"To H.E. Tan, 

" Viceroy of the Two Kwang Provinces." 

239 



THE BREAK-UP OF CHINA 

[Translation.] 
Viceroy Tan to Consul Mansfield. 

" KuANG Hsu, 247., iim., 4d., 

" December 1 6, 1 898. 

" Sir, — I have the honor to acknowledge receipt 
of your despatch of the 12th inst., informing me 
that Banker & Co. had opened a shop in the city 
for the sale of piece-goods, and requesting me to 
instruct my subordinates to the efifect that Banker 
& Co.'s goods are not to be in any way molested on 
their way from the steamer wharf to the city shop, 
nor can any duty be levied on them so long as 
they are in the city or port of Canton, whether 
while in the hands of Banker. & Co., or of those 
who purchase goods from them. 

" In reply I have to state that the 3d section of 
the Chefoo Convention provides as follows : 

" * With reference to the area within which, ac- 
cording to the treaties in force, likin ought not to 
be collected on foreign goods at the open ports. 
Sir Thomas Wade agrees to move his Govern- 
ment to allow the foreign concessions at the dif- 
ferent ports to be regarded as the area of exemp- 
tion from likin ; and the Government of China 
will thereupon allow Ichang in the province of 
Hupei, Wuhu in Anhui, Wenchow in Chekiang, 
and Pakhoi in Kwangtung, to be added to the 
number of ports open to trade.' 

" A consideration of the meaning of the wording 

of the above shows that, as in former treaties, there 

240 



CANTON 

was no express provision with regard to the area 
within which foreign goods are exempt from likin, 
therefore Sir Thomas Wade agreed to move his 
Government to agree to regard the concessions at 
the various ports as the areas of exemption from 
likin, and in return China added four more treaty 
ports to the existing number; thus the exemption 
from likin only obtains within the concessions, and 
does not obtain without them. With regard to 
this point there is not the slightest doubt. 

" In the present instance, the action of the Brit- 
ish merchant, Banker, in opening a place of busi- 
ness in the city, is clearly not permissible accord- 
ing to treaty, and I must therefore request you to 
at once direct him to forthwith either close or 
remove his shop, so that complications may be 
avoided. This is of the utmost importance. 

" I have," etc., 

(Seal of Viceroy.) 



[Copy.] 
Consul Mansfield to Viceroy Tan. 

"H.B.M. Consulate, 
"Canton, December 19, 1898. 
" Your Excellency, — I have the honor to ac- 
knowledge your Excellency's despatch of the i6th 
inst., to the effect that the action of Banker & Co., 
in opening a place of business within the city, is 
clearly not permissible according to treaty. 

Q 241 



THE BREAK-UP OF CHINA 

"Your Excellency refers to Section III. of the 
Chefoo Convention, but you do not appear to be 
aware that an additional article to that Convention 
was signed on July i8, 1885, in which it is ex- 
pressly stated that the section your Excellency 
quotes requires further consideration, and shall be 
reserved for further consideration between the two 
Governments. Until such further consideration, 
therefore, the Treaties of Nanking and Tientsin, 
which declare the city and port of Canton open 
to foreign trade, must be carried out in their in- 
tegrity. 

" I had already, before I wrote to your Excel- 
lency, referred the matter to H.H. Minister at 
Peking, and his reply was as follows : 

" * Banker & Co. are clearly entitled, under 
treaty, to establish a shop in the city of Can- 
ton, and, in carrying on the business of such 
a shop, to exemption from all duties and exac- 
tions that are not authorized by treaty. As 
foreign goods imported into Canton are free, 
so long as they remain within the limits of 
the port, from all taxation except the tariff 
duty, Banker & Co. should resist any attempt 
to levy likin on such goods within the port. 

" * If likin is levied in contravention of the 
treaty, or if Banker & Co.'s business is inter- 
fered with, it will be your duty to give them 
every assistance, and to exercise the utmost 

vigilance in defence of treaty privileges.' 

242 



CANTON 

" Such being my instructions, I am obliged most 
respectfully to inform your Excellency that I have 
communicated them to Banker & Co., and that 
any attempt to levy likin on his goods, or to in- 
terfere with his business, will oblige me to institute 
claims against any Chinese official who may make 
such an attempt. 

" I have, etc., 

(Sd.) " R. W. Mansfield." 



[Copy.] 
From Consul to Banker & Co. 

" H.B.M. Consulate, 
" Canton, December 21,1 898. 

"Sirs, — The Viceroy having replied, raising 
objections to your opening a shop in the city, I 
have again written to him that you are within 
treaty rights, and that I am so instructed by H.M.'s 
Minister. 

" You are therefore at liberty to open your busi- 
ness as soon as you please. The business must 
be conducted in a perfectly bona fide manner, and 
must be confined to your own firm, and not be on 
behalf of Chinese unconnected with it, that there 
may be no ground for complaint. As long as this 
is the case you may rely upon me to protect your 
treaty rights, which are that the goods dealt in by 
you are free from all taxation between the steamer 
and your shop, and also when they have passed 
into the hands of your customers, so long as they 

243 



THE BREAK-UP OF CHINA 

remain within the city of Canton. You can give 
a guarantee to your customers that you will meet 
all claims for taxation, and you will at once report 
to me any attempt to seize or levy likin on them in 
the area I have named. I presume the authorities 
have the right to examine the goods, if they so 
desire, on the way to your shop, to prevent smug- 
gling of opium or contraband, but should this be 
done in a wilfully vexatious manner, you will report 
to me. 

"I am, etc., 

(Sd.) " R. W. Mansfield. 
" Messrs. Banker & Co., 
" Hong Kong." 



[Translation.] 
Viceroy Tan to Consul Mansfield. 

" KuANG Hsu, 24y., iim., iid., 

''''December 23, 1898. 

" Sir, — I have the honor to acknowledge receipt 
of your despatch of the 19th inst." (quoted at 
length) " with regard to the question of the estab- 
lishment of foreign places of business within the 
city. 

" I find that the additional article to the Che- 

foo Convention contains the following provision : 

* As regards the arrangements proposed in Clauses 

I and 2 of Section HI. of the Chefoo Agreement, 

it is agreed that they shall be reserved for further 

consideration between the two Governments.' 

244 



CANTON 

" Thus the additional article only provides that 
the arrangements shall form the subject of further 
consideration. It says nothing about making the 
original Chefoo Agreement null and void, nor does 
it provide that, until the arrangements shall have 
been finally decided on, action shall continue to 
be taken in accordance with the Treaty of Nan- 
king. Therefore it naturally follows that the orig- 
inal Chefoo Agreement cannot be wiped out. 

" Furthermore, ten years and more have elapsed 
since the additional article was agreed to between 
the British Government and the former Minister, 
H.E. Tseng, and I have not heard of foreign mer- 
chants opening places of business in the native 
cities at the various treaty ports, which is a clear 
proof that the original Chefoo Agreement still 
holds good as of yore. 

" In the present instance, as our respective Gov- 
ernments have not yet come to a definite under- 
standing, I cannot consent to the establishment of 
places of business by foreign merchants outside 
the concession. 

" I have a further observation to make. As 
concessions have been established, it follows that 
the correct procedure is for the foreign merchants 
to reside and transact their business within the 
concessions. This facilitates their being com- 
pletely protected, and Chinese and foreigners can 
secure the blessing of mutual peace. 

" Were the foreigners to live among the natives 
one could never be certain that some trifling cause 

245 



THE BREAK-UP OF CHINA 

might not lead to a serious quarrel. In the inter- 
ests of a lasting friendship between our countries, 
I feel it to be my duty to discuss the question 
thoroughly. 

" I have the honor to request you, with a view 
to the avoidance of further complications, to direct 
Banker & Co., for the time being, either to remove 
or close the shop which they have opened in the 
city, and to defer further action until our Gov- 
ernments shall have decided upon a mode of pro- 
cedure. 

" I have long been familiar with your Minister's, 
Sir Claude Mac Donald, reputation for mildness 
and uprightness, and I am sure that his views will 
coincide with mine, so I hope that you will kindly 
communicate my views to him. 

" I have," etc. 

(Seal of Viceroy.) 

[Copy.] 
From Consul to Viceroy. 

" H.B.M, Consulate, 
" Canton, December 29, 1898. 

" Your Excellency, — I have the honor to ac- 
knowledge your Excellency's despatch of the 23d 
instant, with regard to the question of the establish- 
ment of foreign places of business within the city. 

" I have the honor to observe that from the mo- 
ment that it was decided between our respective 
Governments that Clauses i and 2 of Section III. 

of the Chefoo Agreement required further consid- 

246 



CANTON 

eration, the question treated by these clauses had 
to remain as it was before the Chefoo Agreement 
was drawn up^that is, on the lines of the Nan- 
king and Tientsin Treaties. 

" As I have already observed to your Excellen- 
cy, I applied to her Majesty's Minister for instruc- 
tions before taking any action in Banker & Co.'s 
case. His instructions to me, which I have had 
the honor to quote, are explicit, and your Excel- 
lency knows that it is the duty of a subordinate 
to carry out the instructions of his superior. 

" I trust that your Excellency will not therefore 
deem it an unfriendly act on my part if I say that 
I am unable to comply with your request, and that 
I have instructed Banker to open his shop, and act 
in accordance with the provisions of the former 
treaties. I would, on my side, ask your Excellency 
to give instructions that his business be not inter- 
fered with. If, when our respective Governments 
have further considered the question, it is agreed 
that the terms of Clauses i and 2 of Section III. 
of the Chefoo Convention should come into force, 
it will then be for me to inform Banker & Co. 
that their goods, while outside the British conces- 
sion but within the port of Canton, are liable to 
payment of likin. 

" I have the honor to be, 
" Your Excellency's most obedient humble servant, 
(Signed) " R. W. Mansfield, Consul. 

" His Excellency Tan, 

" Viceroy of the Two Kwang Provinces." 

247 



-^ I 



THE BREAK-UP OF CHINA 

The British Minister declares in clear and em- 
phatic language that under Treaty there is a right 
to establish a shop in the city of Canton. 

The Viceroy declares that under Treaty this 
. right does not exist. 

At Wuchow,some lOO miles up the West River, 
there are foreign shops in the town and suburbs 
because the whole place is considered an open 
port, there being no settlement or concession; 
whereas at Canton, where there are foreign con- 
cessions, only the area of such concessions counts 
as the open port, and immediately outside their 
limits likin is levied. 

The merchants here were much exercised in 
their minds at the frequent piracies which had oc- 
curred lately on and about the West River. 

I obtained from the British Consul and other 
sources full accounts of the piracies which actu- 
ally occurred at and about the time I was in Can- 
ton. The accounts speak for themselves as to 
the audacity of these pests to trade and com- 
merce. The merchants told me that at the pres- 
ent time piracy is worse than it has ever been 
known before in this locality, and is enormously 
on the increase in the district round Canton. 
Forty-one instances became public last year, but 
many more cases occur which never become 
known, owing to the terror native boatmen have 
of the pirate's revenge. It is causing immense 
delay in the delivery of goods, as Chinese in 

charge of cargo-boats will not travel at night. 

248 



CANTON 

[Copy] 

" Piracy on the * Tung Kong ' Launch, Flying 
THE British Flag at Kong Mun on the 
West River — Consul's Letter to his 
Excellency the Viceroy. 

"Your Excellency, — I have received the iol- 
lowing petition from the Kwong-wan Steamboat 
Company of Hong Kong: 

"On the 31st October, at about 7.10 p.m., the 
steam-launch Tung Kongy flying the British flag, 
and the property of the Kwong-wan Steamboat 
Co., Limited, was at Kong Mun in the San Ui 
district on the point of returning to Hong Kong. 
As the anchor was being weighed a number of 
Chinese, who had boarded the launch at Kong 
Mun ostensibly as passengers, terrified the master 
and crew by pointing fire-arms at them, and com- 
pelled them to take the launch to a place near the 
Ma On Shan, which is situate near a stream called 
Ma Kau, which is the boundary dividing Kao 
Tsun and Hai Chou, and also the district of Hsin 
Hui, from the district of Shun Te. 

" When the Tung Kong had arrived inside the 
Ma Kau, three snake - boats came alongside, and 
from these about fifteen more pirates boarded the 
launch, making in all about thirty pirates on board 
at that time. The pirates then robbed the pas- 
sengers of baggage, goods, and effects to the value 
of about $3000, and these things they transferred 

to a large cargo -boat of a kind similar to those 

249 



THE BREAK-UP OF CHINA 

seen at Kong-moon, and which was estimated to 
be between two and three hundred piculs in carry- 
ing capacity. On board this cargo-boat there ap- 
peared some fifteen more pirates, who assisted 
those on board the launch in transferring their 
booty ; and, after the stolen goods had been put 
on board, the pirates compelled those in charge of 
the launch to tow the cargo-boat until about 1 1 p.m., 
at which time the launch was allowed to return. 
In addition to stealing the articles above men- 
tioned, the pirates also took two revolvers, four 
rifles, and about four hundred cartridges, the prop- 
erty of the Kwong-wan Steamboat Co., and about 
$200 from the compradore's room. The Com- 
pany also fears that the pirates intend to attempt 
to extort money from the owners of the launch, 
for at the time of the piracy one of them said: 
* We know that the owners of this launch are mak- 
ing money, and when we send them a letter they 
had better obey it.' 

" It is believed that Ko Chun and Hoi Chou are 
the resort of a large and desperate band of robbers, 
and I have to request that your Excellency will 
take vigorous steps to root them out. I have 
the honor to observe that during the past few 
years piracy and robbery by violence have in- 
creased to a very great extent in the Kwangtung 
waterways. Scarcely a day passes but some 
flagrant case of the kind occurs, and trade is 
thereby most seriously affected. It is difficult to 

avoid the conclusion that the local authorities are 

250 



CANTON 

negligent of their duties. In the present instance 
a vessel bearing the British flag has been taken 
possession of, its captain and crew threatened with 
fire-arms, and some thousands of dollars' worth of 
property robbed Cases of this kind in the terri- 
tory of a friendly Power cannot but be detrimental 
to cordial relations, and I feel it my duty to report 
the present state of things to my Minister. 

" If the magistrates of districts allow robbers to 
collect in bands of many tens and commit depreda- 
tions with impunity, they are unfit for their position 
and should be removed. 

" I feel sure that your Excellency, who cannot be 
ignorant of what is going on, will agree with me in 
this, and that you will lose no time in instituting a 
vigorous campaign against the organized piracy 
and robbery which are now constantly occurring. 
" I have, etc., 

(Sd.) " R. W. Mansfield, Consul. 

" To H.E. Tan, 

" Viceroy of the Two Kwang Provinces." 



[Copy.] 
Piracy on the Kwangtung Waterways. 

Report to Minister. 

" H.M. Consulate, 

"Canton, November 7, 1898. 

" Sir, — Consul Brenan, in his Trade Report for 

1897 O^st paragraph), says: * Probably never since 

Canton was open to foreign trade has piracy been 

251 



THE BREAK-UP OF CHINA- 

so rife as in the year under review. The boldness 
of the pirates is, however, surpassed by the apathy 
of the provincial Government' Since Mr. Brenan 
wrote this, matters have been going from bad to 
worse. From December last to date no less than 
^^jr cases of piracy have been brought to the notice 
of this office by the Hong Kong Government, and 
another case has also come up where an English- 
woman, married to a Chinese, was one of the suf- 
ferers. These cases, however, form but a very small 
proportion of the cases that have actually occurred. 
I have found no less than forty-one cases, accounts 
of which have been given by the local press. In 
only one case of those brought to my notice, in spite 
of continual pressure, has any arrest been made; 
and matters have now reached such a pass that 
trade on the inland waters of the province is being 
very seriously interfered with. 

" I have the honor to enclose copy and trans- 
lation of my despatch to the Viceroy on the sub- 
ject of the first case, where a launch plying between 
Hong Kong and Samshui under the British flag 
was taken possession of and looted by a gang of 
some forty-five persons. 

"Finding that my representations on the sub- 
ject generally, both verbal and in writing, are of 
no avail, I find myself obliged to bring the matter 
to your notice. The persons engaged in piracy 
and robbery by violence (for the offences are by no 
means confined to the waterways) must be very 

numerous, and these being emboldened by impu- 

252 



CANTON 

nity, the evil cannot but increase unless some 
means can be found for dealing effectually with it. 
In my opinion, the best plan would be the special 
appointment of a military officer, with an adequate 
force, who could, in each case reported, be de- 
spatched at once to the scene of the piracy and 
devote all his energies to the discovery and punish- 
ment of the offenders. At the same time, to se- 
cure for him the energetic support of the District 
Magistrates, these officers, who are the responsible 
persons, should be held pecuniarily liable for the 
property robbed in their districts. In the present 
state of things, no less radical measures would be 
effective to put a stop to these outrages, which are 
having a most serious effect upon trade in Kwang- 
tung. 

" The case reported is a typical one, and repre- 
sents the mode of procedure in almost every case. 
Actual bloodshed is rare, and it is believed that 
the crews of the pirated vessels are frequently in 
collusion with the pirates. 

" I have, etc., 

(Sd.) " R. W. Mansfield, 

" H.B.M. Consul. 

" Her Majestv's Minister, Peking." 



THE BREAK-UP OF CHINA 

Piracy at Pinghai, N.E. of Hong Kong. Hong 
Kong Licensed Junk No. 5669. 

Copy of Statement made by Lo Tak-fat, relative 
to a Piracy committed on the Hong Kong Li- 
censed Junk No. 5669. 

Lo Tak-fat states : 

" I am master and one-third owner of the li- 
censed fishing-junk No. 5669; my two partners 
are also on board. On December 9, 1898, we sailed 
from Hunghom, bound to Kit Shek Chun ; on De- 
cember loth, while sailing near Ping Hoi, Kwai 
Sin district, about fifty miles from Hong Kong, 
we were attacked by two unlicensed fishing-boats, 
one about eighty piculs capacity, with a crew of 
ten to twelve men, and the other of about sixty 
piculs capacity, with a crew of about eight men. 
They started firing with muskets at us from a dis- 
tance of about eighty yards off, on our starboard 
side, four or five men in each boat firing, and the 
others rowing. As they neared us we got a quan- 
tity of ballast-stones up from the hold to repel 
them with, having no arms or ammunition of any 
kind on the junk ; when close alongside they 
threw a number of powder-bags, that exploded on 
board, then came on board themselves, shooting 
and cutting with choppers and spears all who op- 
posed them. Two of my folks were killed by 
' musket-balls, three were cut down with choppers 

and tumbled overboard, and four were wounded, 

254 



CANTON 

one by a musket-ball in his arm, and the other 
three with cuts and stabs with choppers and spears. 
The rest of us hid under the hatches, where we 
were not further molested. The pirates ransacked 
the junk, broke open all the clothes -boxes, and 
took away all clothing of value, one small clock, 
some jewelry, two clothes - boxes, and over icx) 
dollars in money that was in the several boxes; 
clothing, money, and everything will amount to 
over 2CX) dollars. I had a good sight of their faces 
as they came up, and would be able to identify 
many of them; two or three are men of about 
fifty years of age, the other men from twenty to 
forty years old ; one man has a very thin yellow 
face, and no teeth in front ; he is about twenty- 
seven years of age. Most of them are opium- 
smokers. I saw no fishing-gear in their boats; 
the boats are fishing-boats. I think by their build 
they are craft from the village of Ngau Tau, near 
Ping Hoi. After they left I turned my junk, and 
looked for my folks who were thrown into the 
water. I saw no trace of them, and I think that, 
if not killed outright before being knocked over- 
board, they sank and were drowned. 

" I then sailed back to Hong Kong, arriving at 
Hunghom about 8 p.m. on that date, where I made 
this report to the police, December lo, 1898." 

255 



THE BREAK-UP OF CHINA 

[Copy.] 

" HuNGHOM Police Station, 

^^ December 12, 1898. 

"Sir, — I have the honor to report for your in- 
formation, with reference to the attached report of 
piracy : 

" That on the loth inst., at 9.20 p.m., Lo Tak-fat, 
master of fishing -junk No. 5669 H, reported to 
me, at this station, that his junk had been pirated 
in Chinese waters, and several of his crew killed 
and wounded. I at once telegraphed to Tsim Sha 
Tsiii Police Station for a launch to remove the 
wounded to hospital. I then went on board the 
junk, where I found things generally as he had 
reported. 

" No 3 Police Launch (with Inspector Kemp and 
Sergeant Gourlay on board) arrived soon after, and 
removed the dead bodies to the public mortuary and 
the wounded men to the Government Civil Hospital. 

" I inspected the junk on the morning of the 
I ith inst. I found eight bullet-holes in the wood- 
work. These bullets had all been fired in from 
the starboard and stern. I also saw four or five 
blackened spots on the deck where powder had 
been exploded, and marks of scorching round the 
rudder-post, where some matting had caught fire. 
On the stern and stern-rails I found spots of blood, 
as if some one had been cut down and fallen over 
the rail. Other blood-stains that I saw on the deck 

on the loth inst had been then washed ofiF. ' 

256 



CANTON 

" On the deck and in the stem cabins I found 
five empty clothes -boxes, all of which had been 
forced open. When I boarded the junk on the 
loth inst I found two loaded rifles lying on the 
deck. These, I was informed, were left by the 
pirates. They are old muzzle-loaders, almost un- 
serviceable, but appear to have been fired, probably 
by applying a lighted joss-stick to the powder in 
the nipples. I saw no other arms or any ammuni- 
tion on board the junk, and there is none entered 
on the license. I think there is little doubt but 
that this is a genuine case of piracy. 

" I will furnish a list of all the articles stolen, 
that can be described, as soon as possible. 

" I have, etc., 

(Sd.) " J. Gauld, P.S. 59. 

" The Honorable E. H. May, C.M.G., 
" Capt Supt. of Police." 



Piracy on West River between Canton and 

WUCHOW. 

^^ December 28, 1898. 

" The Chung On is a small Chinese steamer of 
about seventy tons burden, running between Can- 
ton and Wuchow. On the 28th December, 1898, 
she left Wuchow for Canton with passengei^ for 
various ports between there and Canton. It ap- 
pears that ten pirates boarded her at Wuchow, as 
passengers, and at Do Sing several more came on 

R 257 



THE BREAK-UP OF CHINA 

board with some large earthen - ware jars, which 
they said contained food. All went well until 
after the pirates commenced business at Chat 
Par-lin. They broke the jars, and in one there 
were revolvers and in the other ammunition. 

" The Chinese captain got hold of a pistol, and 
was holding it out of one of the wheel-house win- 
dows ready to shoot any one who came along, but 
one of the pirates crept softly round the house and 
grabbed the pistol before the captain was able to 
make use of it. The pirates then shot and mor- 
tally wounded him, and while he was lying help- 
less on the deck they opened his jacket and 
emptied all the chambers of a revolver into his 
stomach. After he was dead they cut ofiF two 
fingers and two toes. One sailor was wounded in 
the shoulder by a bullet, and another man in the 
thigh. The pirates then took all the valuables, 
money, and clothes from the passengers, and left 
the vessel at Do Kee, a place about a mile below 
Yuet Sing. The passengers refused to go on to 
Canton, and the steamer was headed for Tak-hing. 
As the officials there seemed to be unable to do 
anything, the vessel was steered to Wuchow, where 
the affair was reported to the officials. That was 
about eleven o'clock on the night of the 29th 
December." 

The above instances illustrate very clearly the 
want of security for commercial enterprises and 
development. There is no real security for com- 
merce throughout the whole of China. Attention 

258 



CANTON 

is called to this fact in chapter on "Chinese 
Armies and Navies." 

The merchants were unanimous anVl emphatic 
in their protests against any such line of policy 
being pursued as is embodied in the expression, 
"Sphere of Influence." They brought to my 
notice the great predominance of British goods, 
which form the Export Trade from the provinces 
of Kwangsi and Kwangtung. 

These tables convey much interesting instruc- 
tion on this point. 

RAW SILK 

Season ending May 31, 1898. — 1897 to 1898. 

The Total Export, value Mexican Dollars, 19,417,450. 
Ficuls 29,873 at $650 per picul was bales 37,341. 



Exported 




Value 




Per 




Piculs 


Dollars 


Bales 


Cent. 


English firms 


18,056 


11,736,400 


22,570 


60.45 


German firms . 


6,182 


4,018,300 


7,727 


20.69 


French firms . 


S»635 


3,662,750 


7,044 


18.86 



29,873 

English Firms does not include 1674 Piculs shipped by 
Farsees. 

WASTE SILK 

Erported English firms . . . Ficuls 20,627* 77*23 

" German firms ... " 6,084 22.77 

" French firms ..." nil — 

TEA. — Entirely in British hands. 

* Not including 6775 Piculs shipped by Parsees. 

259 



THE BREAK-UP OF CHINA 



Exports from Canton for 1897, to Europe and America, 
BUT NOT Including Shipments by Parsees, which 
Shipments are very large. 



Approximate Value 
Dollars 

500,000 Pigs' Bristles 
400,000 Preserves . 
250,000 Canes , . 
650,000 Cassia . . 
50,000 Cassia Buds 
2,500,000 Matting 
900,000 Ess. Oil 



Engush and 
German 

5,654 piculs 
3S»ooo " 
30,000 bales 
34,000 piculs 

87s " 

452,000 rolls 
2,775 piculs 



400,000 Duck Feathers . 26,000 
1,000,000 Fire Crackers . 190,000 






French 

nil 

nil 
a few hundreds 

nil 

nil 

nil 
unknown 
(from Tonquin) 

nil 

nil 



6,650,000 



SILK PIECE-GOODS 

British 480 cases 

German 950 " 

French nil 

The British merchants pointed out how detri- 
mental a French " Sphere of Influence " over these 
two provinces would be to a trade which is almost 
entirely in their hands. They called my attention 
to the result of a French sphere of influence on 
British trade in Madagascar and Tonquin, and 
conjectured that a similar result would surely fol- 
low the admission of a French " Sphere of Influ- 
ence " over Kwangsi and Kwangtung. 

The merchants begged me to assure the Asso- 
ciated Chambers of Commerce that the policy of 

the " Open Door " and equal opportunity for the 

260 



CANTON 

trade of all nations was absolutely essential for the 
continuance of British trade in the South of China, 
The merchants asked my opinion as to the native 
authorities according preferential rights to native 
bottoms as against British -owned steamers. I 
informed them that I would represent the case to 
the Associated Chambers. 

While I was at Canton his Excellency the 
Viceroy Tan Chung Lin was seriously ill. His 
Excellency is of a great age, being over eighty-two. 
He paid me the honor of sending his deputy, his 
Excellency Kwei Yun, to call upon me and to ex- 
plain how sorry he was not to be able to receive 
me, owing to his ill-health. The Viceroy also sent 
me a message by his deputy, hoping that I would 
let him know if there was anything that he could 
do to oblige me, as he knew I had come to 
China in the interest of Anglo-Saxon trade and 
commerce. 

I asked the Deputy if I could see the forts, the 
arsenal, and the powder factory. I received in 
reply a message from his Excellency to say that 
he would be delighted, and a request that I should 
write him a letter, giving him my opinions con- 
cerning them. He also said he would place a man- 
of-war at my disposal in order that I might visit 
the fort in comfort and conveniently. 

I had a long interview with his Excellency 

Kwei Yun and some other high officials as to the 

question of the future security and development 

of Anglo-Saxon trade and commerce. His Ex- 

261 



THE BREAK-UP OF CHINA 

cellency Kwei Yun told me that he was not afraid 
of disturbances. 

When I pointed out to him the extent of the 
damage caused to trade by the continual piracies, 
he said that the Viceroy intended that they should 
be stopped, but that it was very difficult to get 
hold of the real offenders, owing to the innumer- 
able canals and waterways where they were able 
to conceal themselves. 

I remarked that we had an adage in England, 
" Where there is a will there is a way." I informed 
his Excellency that, as these piracies were disturb- 
ing British trading interests, I should have to refer 
to them in my Report to the Associated Cham- 
bers of Commerce. He said he would be careful 
to inform the Viceroy that British traders were 
much concerned in the matter. 

I asked his Excellency about the mineral re- 
sources of the province. His Excellency said that 
the province was very rich in minerals, and that 
the Chinese themselves were just about to open 
up a coal-mine near Pakhoi. On my asking him 
if the finances of the province were in a sounder 
and more satisfactory condition than other prov- 
inces which I had visited, he answered that they 
were sufficiently well off to meet ordinary circum- 
stances. 

In my second interview with his Excellency 
Kwei Yun I called attention to the continual dis- 
turbances throughout China, so fatal to the well- 
being of trade, and pointed out that these disturb- 

262 



CANTON 

ances were common in the province of Kwangtung. 
I also pointed out the necessity for reorganizing 
the Chinese Army under foreign officers, in order 
to give that police security which countries trad- 
ing with China have a right to expect 

I also said, if disturbances continued, and the 
Chinese Government were unequal to quelling 
them, China was certain to be broken up, as for- 
eign Governments, in defence of their trading in- 
terests, would be compelled to take over Spheres 
of Influence. 

His Excellency saw the point, and said he would 
convey my remarks to the Viceroy. I could get 
no opinion from his Excellency as to the neces- 
sity of reorganizing the Chinese Army. To any 
pointed question I asked him he invariably re- 
plied that he would speak to the Viceroy on the 
matter. For this reason the meeting was unsatis- 
factory, as his Excellency naturally could not ex- 
press his opinions, the constituted authority being 
the Viceroy. 

He declared that there were 20,ocx) soldiers in 
the province, armed with Mauser rifles, but ad- 
mitted that they had never been drilled or dis- 
ciplined. 



XX 

WUCHOW 

The estimated population is 50,000 

TRADE STATISTICS 

The total value of trade in 1897 was Hk. Taels 1,912,711 
(over ;£'2 70,000). 

The total tonnage of shipping entered and cleared in 1897 
was 52,188, of which 41,402 was British. 

WucHow was first opened to foreign trade by a 
special article of the Burmese Frontier Convention, 
1897. 

I had not time to visit Wuchow, but Mr. Hosie, 
the British Consul, kindly came down to Canton 
to meet me, and gave me much valuable informa- 
tion. 

Mr. Hosie informed me that the populace are 
rapidly arming all round Wuchow, and that a ris- 
ing might break out at any moment. He thought 
that if it did break out it would be a purely local 
rising against the Chinese authorities themselves. 
I asked him if such a rising would not aflFect trade 
adversely, and also if he could give me some de- 
tailed fact to report to the Associated Chambers 

in order to substantiate his statement. He re- 

264 



WUCHOW 

plied that a rising at Wuchow broke out in 1898. 
There was great loss of property, and trade was 
stopped for two months. The southeastern part 
of Kwangsi, the richest part of the province, was 
most seriously affected, and to a great extent de- 
populated. This part of the province is a great 
rice country, and it also grows tea and cassia. 
There are large paper industries here. Silk and 
sugar are also exported. The Wuchow trade 
shows great promise, although the port was 
opened so recently as 1897, and if it were not for 
the constant disturbances in the neighborhood 
trade would be considerably developed. Since 
the new navigation laws came into force, in June, 
1898, only one steamer of very small tonnage has 
started. She is used for towing; under the re- 
strictions she is only allowed to tow between Wu- 
chow and a spot within a few hundred yards of 
Samshui, which is the limit of the area of the port 
where she is registered — Wuchow. She is under 
the British flag. 

Wuchow is an open port, but there is no Anglo- 
Saxon settlement or concession. The area exempt 
from likin is far larger than at Canton, where there 
are foreign concessions. 

Mr. Hosie suggested that if a railway was con- 
structed between Wuchow and Chungking by 
way of Kweiking and Kweiyang, the capitals of 
Kwangsi and Kweichow, respectively, goods which 
now take three months or more getting to Hong 

Kong could be delivered in four days. It would 

265 



THE BREAK-UP OF CHINA 

certainly avoid the gorges between Chungking and 
Ichang. The route proposed has not been sur- 
veyed, but I am told it presents no very great 
difficulties. At a time when so many concessions 
are being given for railways in China in order to 
develop trade, I think it right to bring this sug- 
gestion to the notice of the Associated Chambers 
of Commerce. 

Mr. Hosie gave me an instance to prove that 
security was wanting in this part of China. He 
told me that on June 30, 1898, at the commence- 
ment of the trouble near Wuchow, the Chinese 
authorities had sent four guards for his protection 
at the Consulate against the rebels. On the after- 
noon of that date these guards ran to Mr. Hosie 
and said: "The rebels are coming; will you lend 
us your rifle?" On making inquiries, he dis- 
covered that the four guards had only one rifle 
between them. Mr. Hosie did not lend them his 
rifle. 



XXI 



CHINESE ARMIES AND NAVIES 

In the reference I received from the President 
of the Associated Chambers of Commerce I was 
particularly asked to report " whether the organ- 
ization of the Chinese civil and military adminis- 
tration is sufficiently complete to insure adequate 
protection to commercial ventures," I therefore 
lost no opportunity of ascertaining for the infor- 
mation of the Chambers of Commerce the strength, 
efficiency, and organization of the different forces, 
both naval and military. I also went to all the 
forts which form the coast and river defences of 
the Chinese Empire, and in order to find out how 
the forces were equipped and maintained I visited 
all the arsenals. 

The various Viceroys gave me every facility to 
see all that was possible. They asked me if I 
would send them memoranda giving my frank 
opinion as to the efficiency of all I saw. As the 
Viceroys allowed me to see everything with a view 
to eliciting my opinion, it would not be proper for 
me to make public all that I became acquainted 
with, but enough will be found in the following 

Reports to show that no security whatever exists 

267 



THE BREAK-UP OF CHINA 

for development of British trade and commerce 
within the Chinese Empire ; and, further, that no 
security exists now for British trade outside the 
Treaty ports. I refer to that security which only 
can be given by effective military and police or- 
ganization. It may have been observed in pre- 
vious parts of this Report that the Viceroys them- 
selves clearly gave me to understand that in the 
event of serious disturbances occurring they had 
not the means to cope with them. 

No one knows the real strength of the Chinese 
armies, not even the Chinese Government itself. 

The military forces are divided ; some are Man- 
chu, and some are Chinese. The Manchu forces 
are quite exclusive, no Chinese serving in their 
ranks ; but the Chinese forces have some Manchus 
among them. 

The armies in the North and about Peking are 
nearly all commanded by Manchu princes. The 
Manchu armies are supposed to be 170,000 strong; 
but there is no Manchu army efficient either in 
drill, discipline, or organization throughout the 
Empire. The Manchu force is divided and quar- 
tered in most of the big towns throughout China 
— ^such as Nanking, Hangchow, Foochow, Can- 
ton, and other places. All the Manchu armies 
are under the command of Manchu or Tartar 
generals. They have considerable privileges over 
and above those allowed to the Chinese. Every 
Manchu, whether in the army or not, is supposed 

to be given his rice and 3 taels a month by the 

268 



s 



CHINESE ARMIES AND NAVIES 

Government. If not belonging to the army, he is 
liable to be enrolled if required. Nobody knows 
the amount of Imperial taxation that is devoted 
to pay the Manchus. It is variously computed as 
from one to three millions sterling. Like other 
sums in the hands of the Government, most of the 
money finds its way into the pockets of officials 
and is not expended as intended. The Viceroys 
of the provinces have no command or authority 
over Manchu armies commanded by Manchu gen- 
erals. The Manchu generals have considerable 
rights in the provinces where they are quartered 
over the Manchu subjects. 

All the armies in the provinces are maintained 
at the expense of the Viceroys, with the exception 
of the Manchu garrisons. In the province of 
Chihli, General Yuan Shi Kai's army and the Im- 
perial armies at and around Peking are maintained 
by the Board of Revenue out of Imperial taxes. 
These State-paid Imperial armies are not supposed 
to be sent away from the vicinity of Peking. Every 
soldier throughout the Empire is supposed to re- 
ceive 3 taels (gs.) a month. There are different 
systems in every province and in every army as to 
pay, food, and clothing. In some armies the men 
are paid to feed and clothe themselves. In other 
armies they are fed and clothed. This matter is 
left entirely in the hands of the general command- 
ing. As the generals, like all authorities in China, 
only have a nominal salary, they make large profits 

or squeezes during their command. In order to 

269 



THE BREAK-UP OF CHINA 

report an instance, I questioned one of those in 
command when in Peking. He informed me that 
he commanded 10,000 men. I ascertained that 
all he actually commanded was 800. His method 
is common to China. He receives the money to 
pay and feed and clothe 10,000 men. If his army 
was to be inspected, he hires coolies at 200 cash 
(Sidf.) a day to appear on parade. This is well 
known to the inspecting officer, but he receives a 
douceur to report that he has inspected the army 
and has found it in perfect order. 

The army is entirely a voluntary service, but 
when once a man has joined it, it is difficult, if not 
impossible, to leave it. 

VISIT TO THE ARMY UNDER THE COMMAND OF 

GENERAL YUAN SHI KAI 

On October 27, 1898, I went to Hsiao Chan to 
visit General Yuan Shi Kai, and to attend a re- 
view of his troops. I stayed two days and one 
night with the General, and during that time I 
not only saw all his troops paraded and ma- 
noeuvred, but had ample opportunity to examine 
the equipment of all their arms. I also visited the 
stores, clothing, and provisions, made myself ac- 
quainted with the complement of each regiment, 
and went carefully through the monthly pay- 
sheets of the whole army. I have every detail 
connected with the establishment and mainten- 
ance of this force. 

270 



CHINESE ARMIES AND NAVIES 

The strength of the army was 7400 men — most- 
ly Shantung men. These and the Hunanese are 
reported to make the best soldiers in China. Gen- 
eral Yuan Shi Kai is a Chinaman, and his army 
is composed of Chinese. The infantry were armed 
with Mauser rifles — German made. He had ten 
6 -gun batteries of artillery of different calibers, 
throwing from i-lb. to 6-lb. projectiles. The cav- 
alry were armed with lances and a Mauser infan- 
try rifle. On parade the whole force appeared an 
exceptionally smart body of men of extremely fine 
physique. They were evidently well fed, and their 
uniforms were very serviceable and well kept. 
Most other armies are clothed in an ordinary 
Chinese dress, with a large badge sewn on in front 
and rear. At my request the General put them 
through various parade movements, and then car- 
ried out manoeuvres in the surrounding country 
which proved to me that both officers and men 
were thoroughly conversant with their duties. 
Their discipline was excellent. With the excep- 
tion of the artillery and the Maxims, all equipment 
was serviceable and efficient. I suggested to the 
General to practically test the equipment of the 
artiller}' and Maxims by galloping them over some 
rough ground. The result was to prove conclu- 
sively that the equipment was useless. 

I found the General most energetic and intelli- 
gent, and a well-informed and well-educated man. 
He is also a thoroughly patriotic Chinaman, and 

most loyal to the dynasty. He expressed genuine 

271 



THE BREAK-UP OF CHINA 

anxiety as to the future of his country, and was 
quite of opinion that unless she undertook some 
measures for her own preservation nothing could 
save her falling to pieces. He said, now that China 
was weak, all Europe, while professing the most 
sincere good-will towards her, was seizing portions 
of the Empire under cover of naval and military 
demonstrations. I asked the General if he could 
make any suggestion that would be for the benefit 
of China, and at the same time one which Eura 
pean countries would assent to. The General an- 
swered that no proposal that the Chinese could 
make would receive the consent of the European 
Powers ; that a Chinese would naturally make a 
proposition for the maintenance of the Empire, 
while European countries showed by their actions 
that they wished to split up the Empire and divide 
it among themselves. 

The General was very sympathetic with regard 
to the question of reorganizing the Chinese Army 
as one Imperial Army, but thought that the com- 
mand and the finance should be entirely in the 
hands of the Chinese, even if foreign officers were 
employed. 

If all the Chinese generals were like General 
Yuan Shi Kai the armies and their financial ar- 
rangements would not be in the condition they are 
now. General Yuan Shi Kai spends the money 
he receives for his army as intended. He person- 
ally superintends the payment of his men's wages 

and the distribution of rations and clothing. 

272 



CHINESE ARMIES AND NAVIES 

This army is the only army complete in all de- 
tail, according to European ideas, that I found in 
China; and for this reason I have entered thor- 
oughly into its equipment and efficiency. 

When I was at Peking there were the following 
armies in the neighborhood: 

GENERAL SUNG'S ARMY 

General Sung, who is reputed to be a very able 
man, but is now eighty years old, has an army sup- 
posed to be 20,000 strong scattered all along the 
coast about Kinchow. As a matter of fact, I could 
not make out that there were more than 10,000 
men — 5000 at Kinchow, 3000 at Chung-ho-so, and 
2000 at Shanhaikwan. 

They are well armed with Mauser rifles and 
have Krupp artillery and Maxims. Some of these 
men have been well drilled by German officers. 

GENERAL SOON CHING'S ARMY 

At Lutai there were thirty camps under General 
Soon Ching. A camp is a square fort supposed 
to accommodate 500 men. They, however, rarely 
contain more than 250 men, owing to the system 
that I have described. Of the 1 5,000 men said to 
be there, there are only between 7000 and 8000. 
Colonel Warranoflf, belonging to the Hussars of 
the Russian Guard, and some Russian officers 
were there. They had superseded five German 

8 273 



THE BREAK-UP OF CHINA 

officers in March, 1898, who had been instructing 
the men. There is no drill and very little disci- 
pline among these men. 

I met one of these German officers, whose name 
was Schaller. I also met Colonel Warranoflf. 



GENERAL TUNG FU CHAN'S ARMY 

There were about 10,000 Kansuh troops under 
General Tung Fu Chan — mostly Mohammedans 
—encamped a short distance from Peking. They 
were a most disorderly and undisciplined rabble, 
badly armed and undrilled, but good fighters. They 
had been ordered from the West, where they had 
been subduing a rebellion, to Peking. While I 
was there they assaulted and nearly killed two 
British engineers who were working on the line at 
Fungtai. They also broke the windows of the 
railway station and damaged some boilers and 
stores. Their presence was deemed so dangerous 
to the foreigners that the foreign Ministers demand- 
ed their withdrawal. 



GENERAL NIEH'S ARMY 

Between Hsiao Chan and Tientsin General Nieh 
had some thirty camps, containing about 13,000 
men. Some of these men had been well drilled 
by German officers. They are well armed with 
Mauser rifles, artillery of mixed caliber, and Max- 
ims, but their discipline is very lax. There were 

274 



CHINESE ARMIES AND NAVIES 

five Russian instructors there. I asked for per- 
mission to visit these camps, but the Chinese offi- 
cials threw every obstacle in my way. 

THE PEKING FIELD FORCE 

There is also a Peking field force, commanded 
from the Palace, of especially picked men — 10,000 
strong. They are quartered in the Hunting Park 
in Peking. They are well armed but indifferently 
drilled. 

CAVALRY CAMP AT KAIPING 

There was a cavalry camp at Kaiping, the sup- 
posed strength of which was 1500 men. Three 
Russian officers have superseded the German offi- 
cer who was drilling these men. They are ex- 
tremely short of horses. 

GENERAL YI-KE-TONG'S ARMY 

It is reported that there is a large army scattered 
about in Manchuria. Though fairly armed, they 
are undrilled and undisciplined. The number of 
this army is variously estimated at between 8000 
and 15,000 men. The name of the general com- 
manding is Yi-Ke-Tong. 

MONGOLIAN CAVALRY 

Besides the armies that I have enumerated, there 
are in Mongolia about 100,000 Mongolian cavalry. 

275 



THE BREAK-UP OF CHINA 

They are excellent men, and ruled by their own 
princes under a system of feudal tenure. They 
are not paid. I was informed that they are de- 
voted to the present dynasty. 

With the exception of Yuan Shi Kai's army, all 
the armies above referred to have little or no firing 
practice, and none of them have any organization 
whatever for transport* It seems incredible, but 
some of the soldiers are still practised in shooting 
with bows and arrows at a target. When at Peking, 
I saw them practising in an open space near the 
Observatory. Hitting the target is a detail of 
minor importance ; the real merit consists in the 
position or attitude of the bowman when discharg- 
ing his shaft. 

HIS EXCELLENCY THE VICEROY CHUNG 

CHI TUNG'S ARMY 

I witnessed a review of the garrison of Wuchang. 

There were about 450 men and a battery of six 

guns. About 200 of these men were very well 

drilled, smart, and well dressed. They were well 

armed with the newest German pattern Mauser 

rifle. The others had not been drilled, and I was 

told had only lately been enlisted. The guns were 

drawn by men and not horses. These were 5.3 

centimetre Krupp guns. The ammunition was 

carried by the gun's crew. The cavalry are quite 

inefficient in their present condition. The Vice- 

276 



CHINESE ARMIES AND NAVIES 

roy has about 6000 troops scattered over his prov- 
inces, but these are the same character as the 
ordinary Chinese soldier — undisciplined, but fairly 
armed. Besides this, there are supposed to be 
10,000 Manchu troops about 300 miles away, be- 
tween the Tung Ting Lake and Ichang. They 
are under the command of a general named Ching 
Heng. They are undisciplined and very badly 
armed. 



HIS EXCELLENCY THE VICEROY LIU KWEN 

YrS ARMY 

His Excellency the Viceroy Liu Kwen Yi is 
supposed to have 20,000 troops under his com- 
mand. I saw about 8000 of them. They were 
a fine body of men ; many of them of splendid 
physique. The majority of them were Hunan 
men. The infantry were armed with three diflfer- 
ent kinds of rifles, this being observable even in 
companies. Of the 20,000 men 10,000 would be 
required to garrison the forts on the river. The 
men were well clothed and apparently well fed, but 
not well drilled or disciplined. 

At Kiangzin there is a garrison of 3000 men 
under General Li, which comprises two six-gun 
batteries of artillery and two squadrons of cavalry. 
I saw these men on parade as well as manoeuvring 
over a country. They were a very fine lot of men, 
well turned out and well drilled. They had been 
drilled by German officers, who had left. 

277 



THE BREAK-UP OF CHINA 

HIS EXCELLENCY THE VICEROY HSU YING 

KWEFS ARMY 

His Excellency the Viceroy Hsu Ying Kwei is 
supposed to have an army of some 8000 men ; but 
these men cannot be called soldiers at all. They 
are mostly coolies wearing the military badge be- 
fore and behind. His Excellency is commencing, 
however, to drill some troops, and has enlisted 
some fine men. I saw some 250 of them. They 
were in the early stages of learning their drill. 

There is a small Manchu garrison at Hang- 
chow. 

HIS EXCELLENCY THE VICEROY TAU CHUNG 

LIN'S ARMY 

His Excellency the Viceroy of Canton is sup- 
posed to have 20,ocx> men under his command. 

Most of these are undrilled and undisciplined, 
and many of them unarmed. Those that I saw 
were the ordinary Chinese coolies. 

There are some men in the forts very well 
turned out, disciplined, and drilled. 

There is also a Manchu garrison at Canton 
of about 5000 men. They live in their private 
houses, and are entirely undrilled and undisci- 
plined. All these troops were very badly armed, 
and had, apparently, no system of organization 
whatever. As an instance, I observed that the 
guard at the arsenal were armed with the old 

muzzle-loading Tower muskets. 

278 



CHINESE ARMIES AND NAVIES 

The town of Wuchow, in this province, is garri- 
soned by a force of 300, totally unarmed. 

HIS EXCELLENCY THE VICEROY KWEPS ARMY 

In Hunan and Szechuan the Viceroy Kwei is 
said to have an army of 20,000 men. They are 
totally undisciplined, and worthless as police, as 
has been evinced by their inability to put down 
Yu Man Tsu's rebellion, which has lasted ten years. 

At Cheng-tu there is a garrison of 5000 Man- 
chu troops, but they are like the others — undis- 
ciplined, undrilled, badly armed, and totally ineffec- 
tive. 

During my visit to the different armies I counted 
in the ranks fourteen different descriptions of 

rifles. 

Different patterns of Mauser rifles. 

Martini-Henry. 

5. Winchester Repeating. 

6. Mannlicker. 

7. Remington. 

8. Peabody-Henry. 

9. Sneider. 
ID. Enfield. 

11. Tower Muskets (smooth-bore). 

1 2. Berdan. 

13. Muzzle-loading Gingal. 

14. Breech-loading Gingal. 

279 




THE BREAK-UP OF CHINA , 

A gingal is a weapon between 9 ft. and 10 ft. 
long. They are dififerent lengths in dififerent 
armies ; some of them are breech-loading, others 
muzzle-loading. Their weights vary from 40 lbs. I 

to 60 lbs. Three men are required to handle 
them. When in action, the gingal is laid along the 
shoulders of two men, while the third man fires it. 

I also saw bows and arrows. 

As proof of the inefficiency of these armies to 
protect life and property, and to give security to 
trade and commerce, the following list of disturb- 
ances is appended, showing what has occurred 
since the beginning of 1 898 : 

AT SHASHI 

Spring, 1898. — A serious riot in which the Cus- 
toms House and the houses of Messrs. Jardine & 
Matheson were burned to the ground, and all the 
buildings and boats of foreigners set on fire. A 
British man-of-war had to be sent there. 

AT WAICHOW 

Spring, 1898. — A general disturbance, which 
the Imperial troops were in no way capable of 
quelling. A British man-of-war had to be sent to 
Kiungchow. 

AT CANTON 

Spring, 1898. — Disturbances occurred in the 
city; incendiarism and looting. Also great in- 

23o 



CHINESE ARMIES AND NAVIES 

crease of piracy on the West River, and its in- 
numerable tributaries. 

NEAR WUCHOW, IN KWANGSI 

Summer, 1898. — Serious rebellion, in which 
many Chinese authorities lost their lives. Two 
cities were sacked, and 5000 troops were unable 
to quell it. 

AT YANGCHOW 

Summer, 1898. — A serious riot, in which launches 
were attacked and looted. A British man-of-war 
had to be sent to Chinkiang. 

IN SZECHUAN 

Since 1888. — Rebellion of Yu Man Tsu, in 
which many lives have been lost and property to 
the value of 6,000,000 taels (nearly ;^ 1,000,000 
sterling) destroyed. {See chapter on *' Hankow.") 

AT HANKOW 

Autumn, 1898. — Serious incendiary fires, in one 
alone of which 1000 lives were lost and ;^ 1,300,- 
000 worth of property destroyed. 

AT PEKING 

Autumn, 1898. — A disturbance in which for- 
eigners and members of the British and American 

Legations were assaulted. 

281 



THE BREAK-UP OF CHINA 
AT LUKOUCHIAO (12 miles from Peking) 

Autumn, 1898. — A serious attack was made on 
a party of four Englishmen by soldiers of the Kan- 
suh Army. 

NEAR TUYAN, IN KWEI-CHOW 

End of 1898. — The murder of a British mis- 
sionary, Mr. Fleming. This murder was undoubt- 
edly committed with the connivance of the au- 
thorities. 

Besides these there is an open rebellion in 
Anhui, and disturbances reported from Shantung 
and Kansuh. 

China, throughout her history, has been one 
long scene of rebellion and stern repression, but 
never before has authority been in so weak or so 
helpless a condition, the financial position of the 
Empire hindering the Government from maintain- 
ing a force adequate, in either numbers or effi- 
ciency, to prevent disturbances and rebellions. 

I have already mentioned that some of the troops 
at Peking still practise shooting with bows and 
arrows. Many other points were brought to my 
notice which would be ludicrous if they were not 
so pitiful. The Consul at Wuchow told me that 
during the late riots soldiers were armed with every 
sort of weapon — guns, rifles, and blunderbusses. 
They also carried long brass horns and gongs and 

other instruments to make discordant noises. They 

282 



CHINESE ARMIES AND NAVIES 

patrolled the streets and the outside of the town. 
Many were totally unarmed, and carried only a bird- 
cage and a fan, being known as soldiers by their 
military badge. 

It must not be imagined from the foregoing re- 
marks that the Chinese would make bad soldiers. 
From all that I have heard and seen I believe they 
would make splendid soldiers if properly trained, 
and if fed, paid, and clothed according to their 
contract with the authorities. They have all the 
characteristics necessary to make a good soldier. 
They are sober, obedient, easily managed, and very 
quick at learning. There were many instances of 
heroic bravery during the Chino-Japanese War. 
General Ysu was found, after the battle of Yalu, 
surrounded with the bodies of hundreds of his own 
soldiers, who had died around him. 

General Tso was so beloved and respected by 

his men that, before the battle near Newchwang, 

the wounded refused to remain in the hospital, and 

some were actually carried by their comrades to the 

scene of action to fight for their general. The 

courage and bravery of the coolies from Hong 

Kong who worked the scaling-ladders at the forts 

of Taku in i860 will never be forgotten by the 

British engaged in that campaign. No just opinion 

of the fighting capabilities of the Chinese can be 

founded upon their late war with Japan. When 

their troops were fairly armed they had grossly 

incompetent leaders. When they had gallant 

leaders the soldiers were either badly armed or 

283 



THE BREAK-UP OF CHINA 

had no ammunition. Almost every known rifle 
was to be found in their ranks, and before an action 
ammunition was served out in handfuls, with no 
regard to the weapon the soldier carried. These 
handfuls included all classes of rifle and pistol am- 
munition. The men are good enough, but they 
need capable leaders and honest administration. 

THE NAVY 

The Chinese Navy is divided into two squad- 
rons — the Peyang Squadron in the North, and the 
Nanyang Squadron in the South. 

The Peyang Squadron consists of three cruisers 
of 3400 tons, German built; 

One torpedo cruiser, German built ; 

One torpedo gun-boat. 

I visited these vessels. 

Two armored cruisers of 48CX) tons have been 
built and paid for. 

They are still lying at Armstrong's, owing to 
the Chinese Government being short of money 
and men, and all their dockyards, except one — 
Foochow, which is useless — being taken by foreign 
Powers. 

There are also four torpedo destroyers lying at 
Stettin under similar conditions. 

The Nanyang Squadron is composed of: 

Six cruisers of '3500 tons, German built; 

One cruiser of 1800 tons, built in England; 

284 



CHINESE ARMIES AND NAVIES 

Four old-fashioned gun-boats of 400 tons, built 
in England ; 

Four torpedo-boats, 1 30 feet, built in Germany — 
modern, and in excellent order. 

I visited these vessels, and spent a week on 
board one of the cruisers, which was placed at my 
disposal by the kindness of the Viceroy of the 
Kiang Liang provinces, in order that I might visit 
the forts on the Yangtse. 

The Chinese Fleet as a whole is undermanned, 
but there are on board many men well trained by 
English instructors. 

Many Chinese authorities asked my advice as 
to the fleet. I recommended them to put what 
ships they had left in order for police purposes, 
pointing out that such vessels should be able to 
stop the piracies at and about Canton. I strong- 
ly recommended them not to expend any more 
money for naval armaments, since the work of 
protection which devolved upon them demand- 
ed rather a military than a naval development 
In my opinion, the first thing they ought to 
do is to provide that security for trade and 
commerce which only militar}^ and police can 
give. 

I called their attention to many cases of wasteful 
expenditure, and, in particular, to the fact that 
they had about the coast and in the river hundreds 
of men-of-war junks, entailing an absolutely useless 

outlay of money. 

285 



THE BREAK-UP OF CHINA 

The Chinese have only one dock-yard left, which 
is at Foochow. 

I ascertained the budget and visited the yard. 
The waste of money is appalling. There is one 
dry -dock capable of docking a cruiser of about 
3000 tons. The wings of the dock are cracked, 
and I was told that the dock-yard authorities were 
anxious about the foundations. 

Some torpedo-boats are at and about Hong 
Kong and Canton, but are employed under the 
Imperial Maritime Customs. 

I recommended the Chinese to sell the cruisers 
at Armstrong's and the torpedo destroyers at 
Stettin. 



REPORTED POSITION OF RUSSIAN TROOPS IN 
EASTERN SIBERIA AND MANCHURIA 

While at Newchwang I endeavored to obtain 
the numbers of Russian troops in Eastern Siberia 

and Manchuria, as well as the localities in which 
they were quartered. The authorities I consulted 
were reliable, and had been both in Eastern Si- 
beria and Manchuria. The appended list is a 
copy of the information given to me: 

RUSSIAN FORCES IN EASTERN SIBERIA 

Habarovak. 

Staff I St Brigade Eastern Siberian Infantry of the Line; 
2 Batteries (III. and X.) Eastern Siberian Infantry of 
the Line ; 

286 



CHINESE ARMIES AND NAVIES 

2 Batteries (III. and IV.) 2d Eastern Siberian Regi- 
ment Artillery ; 

Staff Eastern Siberian Engineer Battalion ; 

2 Companies of Engineers ; 

2 " I St Battalion Ussuri Railway Corps. 

Iman. 

I Company ist Battalion Ussuri Railway Corps. 

Grap Kaya. 

1 Battalion (VIII.) ist Brigade Eastern Siberian In- 
fantry of the line. 

Kamsa Ruiboloff. 

2 Squadrons (one only in time of peace) of Cavalry ; 
Battalion of Ussuri Cossacks. 

Atamanovskaya. 

I Squadron ist Battalion Prunivosk Cavalry. 

AVATINO. 

I Battalion (II.) Infantry ist Brigade Eastern Siberian 
Rifles ; 

I Squadron (V.) ist Regiment Cavalry Trans-Baikal 
Cossacks. 

NiKOLSKI. 

Staff of the Commander-in-Chief of the troops of 
Southern Ussuri ; 

Staff ist Brigade Eastern Siberian Rifles; 

3d Battalion (III.» IV., and V.) Eastern Siberian 
Rifles ; 

Staff Ussuri Cavalry Brigade ; 

Staff ist Regiment Cavalry Trans-Baikal Cossacks ; 

3 Squadrons (I., II., and III.) ist Regiment Cavalry 
Trans-Baikal Cossacks ; 

Staff ist Regiment Eastern Siberian Artillery; 

4 Batteries (I., II., V., and ist Mortar Battery); 
I Company ist Battalion Ussuri Railway Corps. 

287 



Garrison 



THE BREAK-UP OF CHINA 

POLLAFKA. 

I Squadron (VI.) ist Regiment Cavalry Trans-Baikal 
Cossacks. 

Rastrinin. 

1 Battalion (ist) Infantry Brigade Eastern Siberian 
Fusiliers ; 

Staff Prunivosk Cavalry Battalion. 

Vladivostock. 

2 Battalions (I. and VII.) ist Brigade Eastern Siberian 
Infantry of the Line ; 

Staff ist Battalion Ussuri Railway Corps ; 
' Staff Vladivostock Fortress ; 

5 Battalions (20 companies) Fortress In- 
fantry ; 

6 Companies of Garrison Artillery ; 
I Company of Garrison Engineers ; 
I Torpedo Corps. 

Barabiske. 

I Battalion (VIII.) 2d Brigade Eastern Siberian Rifles; 
I Squadron (IV.) ist Regiment Cavalry Trans-Baikal 
Cossacks. 

Stavanskaya. 

1 Battalion (V.) ist Brigade Eastern Siberian Infantry 
of the Line. 

POSSIET. 

Staff 2d Brigade Eastern Siberian Infantry of the 
Line; 

2 Battalions (IX. and XI.) Eastern Siberian Infantry of 
the Line. 

NOVOKIROSIK. 

Staff 2d Brigade Eastern Siberian Rifles ; 
4 Battalions (VI., VII., IX., and X.) Eastern Siberian 
Rifles; 

288 



CHINESE ARMIES AND NAVIES 

4 Batteries (III., IV., VI., and 2d Mortar Battery) ist 
Regiment Eastern Siberian Artillery. 

FUNTIN. 

I Squadron 2d Prunivosk Cavalry Battalion. 

The ten battalions of Rifles are being reorganized. 
In April, 1896, their efifective strength was increased 
by one-third, and this was again done in 1897. 

I was told that a reorganization of the Cavalry 
has lately been effected, having for its object an 
increase in the number of squadrons forming each 
regiment. Thus to the above list five squadrons 
of 1st Regiment of Ussuri Cossacks have been 
added. They are stationed at Novokirosik. 

Briefly there are some 

28,000 men at Vladivostock. 

20,000 *' Nikolski, where there are 6 Generals. 
8,000 " filagovensk. 

40,000 " Haborosk and neighborhood, with Com- 
mander-in-Chief and Headquarters and 
12 Generals. 
7,000 or 8,000 men at Kirin. 

About 1 20,000 men in Eastern Siberia and Man- 
churia altogether. At Newchwang there were 200 
men when I was there, and I was informed that 
there were 40 men at a place called Liao Yang, 
where there is a coal-mine. 

The Russians are now building three docks at 
Vladivostock, each big enough to take the Rossza, 
and each at a cost of nineteen to twenty millions 
of roubles. Also a wharf 2^ miles long, and bar- 
racks to hold 8000 to 10,000 men. 
T 289 



XXII 

FORTS AND ARSENALS 

FORTS 

By permission of the Viceroys I visited over 
forty of the forts and batteries which form the coast 
and river defence of the Chinese Empire. At all 
these forts I asked that the guns' crews might man 
the guns in order that their state of efficiency should 
be tested. The guns were laid and trained, and 
some of them were fired. Some of the forts are 
immensely powerful, and a few guns' crews knew 
how to handle the guns. Physically, the garrison 
artillery throughout the Empire are a splendid 
body of men. 

The forts are armed with every conceivable sort 
of gun ; most of the batteries with muzzle-loading 
guns ; the modern forts with heavy modern breech- 
loading artillery of the best description. Many of 
these guns are made in the Chinese arsenals from 
British and German patterns. 

The Viceroys asked me to write and say what I 
thought of their forts. This I did. 

In one of these forts there was a heavy battery 

of 6o-ton muzzle-loading guns, which were loaded 

by depressing the muzzle into the magazine. I 

290 



FORTS AND ARSENALS 

ventured to point out to the General the danger of 
this proceeding, and the likelihood, through care- 
less sponging, of the magazine being blown up. 

The General congratulated me on my acumen, 
and immediately showed me where a magazine had 
exploded the year before from the same cause, and 
had been rebuilt for a probable repetition of this 
accident, which cost no less than forty-two lives. 

At another fort I asked to see the powder used 
in the heavy guns, and was shown some powder 
of Chinese manufacture. I suggested that such 
powder was not suitable, and might burst the gun. 
The General in command replied, " Yes, it does; we 
have lately blown tfie breech off two 12-inch 50-ton 
Krupp guns, and killed and wounded thirty men." 
Before this conversation I had observed in a fort, 
some distance off, two 12-inch Krupp guns fitted 
with Armstrong breech mechanism, and on in- 
quiring the reason had been informed that the 
breech had been blown off, owing to the use of 
Chinese powder at exercise. These guns had 
been beautifully converted at the Shanghai Arsenal. 

I spent much time in viewing these forts in 
difiFerent parts of the Empire, and obtaining all 
details concerning them. I have not entered into 
minute particulars, as I have in regard to the ar- 
mies, since the forts can have very little to do 
with the security of British trade and commerce 
in the interior of the Empire. Nor would it be 
courteous to those who asked me to give an opin- 
ion upon them. 

291 



THE BREAK-UP OF CHINA 

ARSENALS 

There are seven arsenals in the Empire of China. 
They are at Tientsin, Shanghai, Nanking, Han- 
yang (Hankow), Foochow, Canton, and Ching-tu. 

I visited all these arsenals except the one at 
Ching-tu in Szechuan. 

I made myself thoroughly acquainted with the 
budget allowed for each arsenal, what they were 
manufacturing, the number of men employed, the 
European countries from which they had procured 
their machinery and tools— in fact everything which 
concerned the management, equipment, and work 
done in these arsenals. The Viceroys, when giv- 
ing me permission to visit them, asked me to write 
to them and say what I thought as to their man- 
agement and efficiency. I did this and received 
very courteous letters in reply. 

TIENTSIN 

This arsenal is under the provincial Govern- 
ment of the Viceroy of Chihli. Considerable ex- 
pense must have been incurred in fitting it up. 
The shops and sheds are excellent. There is an 
hydraulic press of 1200 tons, 4 cupolas which 
could cast up to 20 tons, and a good supply of 
furnaces, Siemens' process. There is also a 12- 
ton traveller, and a driving engine of 40-horse 
power, which were built at the arsenal. While I 

was there another driving engine of 130 -horse 

292 



FORTS AND ARSENALS 

power was in course of construction. The tools 
are very good, modern, and of British or German 
manufacture, and include everything necessary 
for the repair and maintenance of a squadron and 
also for the construction of small guns. I saw 
them making four i6olb. pressure circular boil- 
ers. There is enough spare room in this arsenal 
to put up plant to supply the whole Chinese 
Army. There is deep water right up to the 
arsenal. 

Mr. Stewart, a Scotsman, is in charge of this 
arsenal. It is wonderful what he has achieved 
under the difficulties of Chinese management. 
The arsenal is under the administration of a 
Chinese official, who receives 150 taels (about 
;^2i) a month. A man at home in a similar po- 
sition would receive between £2000 and ;^3000 a 
year. 

I have already referred to the results attending 
the under -payment of officials in the Chinese 
Empire. 

With proper European management this arsenal 
could turn out three times the amount of work 
they do now for the same budget. 

In this arsenal there is a mint, with two modem 
machines. They can, if necessary, turn out 30,000 
dollars a day ; when I was there they were making 
1 5,000 dollars a day. 

Close to the arsenal is a Government powder 
factory. It has good machinery, and is well and 
carefully organized by a German. 

293 



THE BREAK-UP OF CHINA 

I visited the Naval School which is located here. 
It is in excellent order, and apparently very well 
managed. There were sixty students, the sons of 
gentlemen, between the ages of sixteen and twenty. 
They remain at the school for five years, and then 
proceed to a training-ship. As the Chinese Navy 
is reduced to such very small dimensions, it is dif- 
ficult to say what will become of them when they 
have served their time in the training-ship. All 
these students are taught English. The Peking 
Government finds the budget (which is a very 
liberal one) for this college. The school is under 
Chinese management. 

Next door to the Naval College there is a school 
for thirty Chinese students under Russian super- 
vision. They are learning to become Russian in- 
terpreters. The Peking Government finds the 
money to maintain this school. 

SHANGHAI - 

This arsenal is under the provincial Govern- 
ment of the Viceroy of Nanking. It is full of 
modern tools and machinery, stores and material 
of every description. Everything is extremely 
well found, and the arsenal is in perfect order. If 
properly organized under entirely European con- 
trol, and with some extra expenditure, it alone 
could supply war material for the whole of the 
Naval and Military forces of the Chinese Empire. 

There are two Englishmen at this arsenal who act 

294 



FORTS AND ARSENALS 

as advisers to the Chinese Authorities, under 
whose administration the arsenal is placed. Mr. 
Bunt is in charge of the whole of the engineering 
works, and Mr. Cornish is in charge of the gun- 
making and gun-mounting. If these gentlemen's 
advice was always followed, a great economy would 
result, and the output would be enormously in- 
creased. The Chinese Authorities informed me 
that they quite appreciated the invaluable services 
these two Englishmen have rendered to them. 
There is water transport to the arsenal, a small 
dock, and a steam purchase 6oton shears. The 
whole arsenal is tram-lined. The tools and ma- 
chinery are of British manufacture, supplied by a 
German firm. I found that this practice was com- 
mon in China, and have seen the names of foreign 
agents stamped on British machinery. As the 
agent would probably make from lo per cent, up- 
ward, I asked several of the Chinese authorities 
why they did not buy direct from the British firms. 
They explained that if anything proved unsatisfac- 
tory with the machinery they could easily obtain 
compensation from the agent who was in China, 
whereas if machinery were purchased direct from 
England, if anything went wrong, compensation 
could only be obtained after great trouble and ex- 
pensive lawsuits. 

There are facilities for casting up to thirty tons. 
To show the Associated Chambers of Commerce 
what this arsenal is capable of, I append the work 
going on when I happened to be there. 

295 



THE BREAK-UP OF CHINA 

There were in hand : 

Two 9.2 guns to be mounted on hydro- 
pneumatic disappearing carriages. 
Two 9.2 guns for garrison batteries. 
Eight 6" guns, q.f. 
Twelve 4.7 guns, q.f. 
Twenty 1 2-pounders, q.f. 
Twenty 6-pounders, q.f. 
Fifty 3-pounders, Q.F. 

These guns were of the latest Armstrong pat- 
tern. 

All the steel for these guns is made in the arse- 
nal, chiefly from native ore. The gun factory does 
not accept this steel until it has passed through 
the same tests as the British Government use, and 
each gun is proved by the tests the British use be- 
fore it leaves the arsenal. 

I saw machinery for making guns of every cal- 
ibre up to the 1 2" 50-ton gun. 

Several of these last-named guns have been 
manufactured in the arsenal, and I saw some of 
them mounted in the forts I visited. 

The rifle factory of this arsenal is turning out a 
large number of first-rate magazine rifles, latest 
Mauser pattern. 

The cartridge factory could turn out millions of 

cartridges a year, and there is excellent machinery 

for making all the cylinders for cartridges for the 

heavy guns. There is also plant for casting and 

turning projectiles of all calibres. Many hundreds 

296 



FORTS AND ARSENALS 

of thousands could be made in the course of the 
year. 

The powder factory is making three kinds of 
powder — smokeless, black, and brown. 

All the coal used comes from Tongshan, near 
Tientsin. 

There is a machine designed and made here by 
Mr. Bunt, of a most serviceable and economic 
character. By means of a system of clutches the 
same engine can drive an hydraulic press 2000 
tons pressure, or a rolling - mill which can roll a 
ten-inch plate. 

The arsenal can manufacture steel guns of all 
calibres both for naval and military purposes, 
rifles, powder, and all classes of ammunition. 
Amid all this splendid work I saw the steel bar- 
rels for the useless gingals being made, incredible 
though it seems. Great economy could be effected 
in the administration. All leather equipment for 
the armies of the Chinese Empire is bought in 
Europe. If machinery were put up in the Shang- 
hai arsenal, leather equipment could be made there 
easily. 

In a conversation with the director of the arsenal 
(a Chinese mandarin), he expressed much anxiety 
as to what was going to become of China in the 
near future. He said that he hoped Great Britain 
would assist China to keep her integrity. I in- 
formed him that I did not think the British people 
would feel inclined to assist China unless China 

showed some signs of assisting herself. 

297 



THE BREAK-UP OF CHINA 

I also pointed out to him the large and useless 
expenditure of money incurred by the manufacture 
of heavy artillery, which could have nothing to do 
with the maintenance of the integrity of China 
under present conditions; whereas if the same 
money was devoted to equipping a serviceable 
army, it would provide that security for trade and 
commerce which foreign nations perceived did not 
at present exist. 

He seemed to think there was some force in 
these remarks. 

NANKING 

This arsenal is under the provincial government 
of the Viceroy of the Liang-kiang provinces. It 
is well found in machinery and tools, principally 
of British manufacture, but some German and some 
Swiss. There is no European adviser or foreman. 
The Chinese manager and officials did not appear 
to know what they were making, or why they were 
making it. The machinery, which is modern, and 
of first-class make, is entirely devoted to making 
obsolete and useless war material. A large num- 
ber of small guns are being made throwing about 
a I -lb. shell. There are, too, some 5 pr. guns be- 
ing made on the Krupp pattern, but without lim- 
bers, the guns' crews being supposed to carry the 
ammunition. I asked the official in charge to 
show me how. He attempted to do this with the 
aid of some coolies, but soon saw its impractica- 
bility. He had never tried it before. Some of 

298 



FORTS AND ARSENALS 

the machinery here was making one-inch four-bar- 
rel Nordenfeldts — an obsolete arm. The greater 
portion of the machinery was directed to making 
gingals. The Chinese authorities showed me with 
great delight that they have fitted a Mauser breech- 
loading action to some of these weapons. One of 
these mandarins informed me that the bullet would 
go through four inches of wood, and observed with 
some pride and satisfaction that no nation had a 
similar weapon. It was heart-breaking to see both 
officials and workmen taking pleasure and using 
diligence in the manufacture of costly but abso- 
lutely useless war material. They bought all their 
steel from Shanghai arsenal. 

HANYANG (Hankow) 

This arsenal is under the provincial government 
of the Viceroy of Hupeh and Hunan. It has a 
first-rate modern plant, all by German makers. I 
noticed a large number of modern milling ma- 
chines. There is a very good rifle factory, which 
turned out about 8000 rifles a year, modern 
Mauser pattern. There is also a large gun fac- 
tory which at present turns out about 200 of the 
small I pr. shell guns I have referred to on pre- 
vious occasions. The work turned out in this 
arsenal was another instance of the terrible waste 
of money in manufacturing war material of no pos- 
sible value. I saw heavy and expensive machinery 

lying about all over the yard, intended for the 

299 



THE BREAK-UP OF CHINA 

manufacture of 12" 5oton guns of Krupp pattern. 
None of this machinery had been set up. I also 
saw a large quantity of machinery for a powder- 
mill, but this had not been set up either, and the 
powder required for making cartridges at this 
arsenal came either from Germany or the Shanghai 
arsenal. There was a modern rifle cartridge fac- 
tory, with an excellent machine, which could turn 
out 10,000 cartridges a day. There was a large 
plant for making coke, but all the coke required 
for the arsenal was brought from the Tongshan 
colliery in the north. Besides the machinery ly- 
ing about on the ground, not set up, there were 
plenty of machines idle. 

There seemed to be no organization, and no re- 
sponsible foreman. There were some Germans 
employed in this arsenal, and the condition of the 
machines and work turned out showed foreign 
assistance. As at other arsenals, if these for- 
eigners were allowed control and management, the 
waste of money would be stopped, and the ma- 
chines would be turning out war material of some 
utility. 

FOOCHOW 

This arsenal and dockyard are under the sole 

responsibility of the Manchu General, Tseng Chee. 

They have some small cupolas of about two tons, 

three tons, and five tons capability. There is a 

fair lot of machinery in this arsenal for making 

engines ; some of it is British, but most of it is 

300 



FORTS AND ARSENALS 

French. There is a good boiler-shop with modern 
fittings, but all the boilers required were bought 
in France. The casting- shop was employed in 
casting projectiles for heavy Armstrong guns, 
M.L.R. From the budget allowed for this arsenal 
the waste appeared even greater than that in other 
arsenals which I visited. 



CANTON 

This arsenal is under the provincial Govern- 
ment of the Viceroy of Kwangtung and Kwangsi. 
An enormous mass of obsolete war material and 
old tools was lying about in this yard, and thou- 
sands of cast-iron spherical shot of all sizes. There 
were some very good modern tools of British 
and German make, but they were, as in other 
yards, employed in making i-pr. guns and gin- 
gals. 

While at this arsenal I was shown an old pow- 
der-factory, and observed it had open grating win- 
dows. On remarking to the mandarin that such 
want of precaution was dangerous, and it was liable 
to cause an explosion, he replied : "Yes, that is true; 
it blew up two years ago, and killed and wounded 
twenty men. We have rebuilt it, but do not in- 
tend to use it again." 

There was a rifle-factory here turning out good 

rifles, Mauser pattern, but the arsenal was turning 

out two gingals for every rifle made. The gingals 

manufactured here were the longest I have seen, 

301 



THE BREAK-UP OF CHINA 

being 9 feet 8 inches in length. They made their 
own tool steel at this arsenal. 

There are two small cupolas for casting. 
Though the machinery in this arsenal is old. it 
is in very good order. In the moulding shop 
they were making moulds for ornamental railings. 

On the opposite side of the river there is a 
powder-factory, which had commenced work three 
days before I arrived. The factory is complete, 
and built under the most modern conditions. The 
boilers, engines, and shafting were made in the 
arsenal, and looked first rate. The factory was 
employed in making German smokeless powder. 
They hoped to turn out 90,000 lbs. in the year. 

There is a cartridge factory about four miles 
from this powder-factory. The machinery is very 
good and all German. It was employed in making 
cartridges, Mauser rifles, and gingals. 

CHING-TU 

I was unable to visit the only other arsenal, that 
of Ching-tu, as it is far away to the west, in the 
province of Szechuan; but I was informed that 
this arsenal is under the administration of the 
Manchu General, and that the machinery is of 
German and British make, and is employed turn- 
ing out rifles and cartridges, Mauser pattern. 

I found in those arsenals, under entirely Chi- 
nese management, that in many cases neither the 

302 



FORTS AND ARSENALS 

foremen nor the workmen understood the feed 
and speed gearing of their tools, and often the tool 
itself was not set to take full advantage of its cut- 
ting edge. They appeared much interested when 
shown how to set and gear their tools correctly. 

My visits to the arsenals showed me that enor- 
mous sums of money are being expended on war 
material that in most cases is absolutely useless. 
Even the Shanghai arsenal, which turns out work 
second to none in Europe, is making heavy guns 
for men-of-war, or forts, which can be of no possi- 
ble utility to the Chinese Empire under present 
conditions. I ventured to point this out to the 
Viceroys with whom I communicated. 

If all the arsenals but Shanghai were closed as 
manufactories, and only used as depots, a very 
large sum of money, which is now wasted, would 
be saved. This sum of money would be more 
than ample to make Shanghai a manufacturing 
arsenal capable of equipping an army of 200,000 
men in an efficient manner. 



XXIII 

RAILWAYS 

The railways of China should be divided under 
three heads : 

I. Built 
II. Building. 
III. Projected. 

There is a very wide difference between railways 
built and building, and those which are only pro- 
jected, as in the latter case some of the ground 
over which the railways are supposed to pass has 
not even been surveyed. 

Those British lines not surveyed can scarcely 
be counted as commercial assets in favor of Anglo- 
Saxon trade, against foreign lines already in course 
of construction. 

RAILWAYS BUILT 

The only railways actually built at present are 
Imperial Chinese railways. 

I. Peking to Tientsin, and from Tientsin 
to Shanhaikwan — 300 miles — under the con- 
trol of his Excellency Hu at the time of my 
visit. 

304 



RAILWAYS 

II. The other from Shanghai to Woosung 
— ^about 17 miles — under control of his Ex- 
cellency Sheng. 

The Peking-Shanhaikwan line is a double-track 
line, well built and maintained, and all details con- 
nected with it are to be found in the chapter under 
Tongshan, as all materials, with the exception of 
wheels and axles, are manufactured in that place. 

The Shanghai - Woosung Railway is a double 
track, but is not well built or maintained, although 
there is a daily service of trains. I have travelled 
by, and examined, both these lines. 

The summary of the railways in the Chinese 

Empire is as follows: 

Built : All Chinese 317 miles. 

Building: Chinese 170 miles. 

Belgian 700 " 

Russian 1,400 '' 

Total 2,270 " 

Projected (Surveyed, or being surveyed) : 

Chinese 97 " 

German 430 *' 

British 730 ** 

Anglo-American .... 700 " 

Russo-Chinese 130 '* 

French 420 " 

Total 2,507 ** 

Projected (Unsurveyed) : 

Anglo-German .... 600 '' 

British 470 '* 

Total 1,070 " 

Total projected . 3,577 " 
u 305 



THE BREAK-UP OF CHINA 
RAILWAYS BUILDING 

The only railways building are: 

I. The Lu-Han or Peking-Hankow Rail- 
way, a trunk line of about 700 miles. 

II. The Shanhaikwan-Newchwang Rail- 
way — 170 miles. 

III. The Stretensk-Vladivostock line, of 
which icx>D miles is in Chinese territory. 

IV. The Russian - Manchurian line, a 
branch from the Stretensk-Vladivostock line, 
to Talienwan and Port Arthur — about 400 
miles. 

The Lu'Han Railway is to run from Peking to 
Hankow, passing north and south through the 
provinces of Chihli, Honan, and Hupeh. A syn- 
dicate, capitalized by Belgian and French finan- 
ciers — of whom the French subscribed ;^3,ooo,ooo 
and the Belgian ;^2,cxdo,ooo — have secured the 
concession. This railway is supposed to have 
great prospects, but it is a matter of opinion as 
to whether those of the rival (projected) Tientsin- 
Chinkiang line may not be better. 

I visited the Lu-Han line, both in the North, 
where it is to join the Imperial Chinese Railway, 
and in the South, where it had been commenced 
at Hankow. 

In the North there was fair activity ; but in the 
South work had been suspended altogether, al- 
though there were about twelve miles of embank- 
ment ready for the metals. 

306 



RAILWAYS 

As the Yangtse River is continually encroach- 
ing on the north bank, it appeared to me that the 
railway embankment was far too close to the river, 
and probably a large extra expense for bunding 
will have to be undertaken by-and-by. 

This line is under the control of his Excellency 
Sheng, and quite distinct from the Imperial rail- 
ways of North China. 

The Government engineers of the Imperial rail- 
ways were borrowed by his Excellency Sheng to 
prevent starting his line with raw hands, as he did 
at the southern end — f>., from Hankow. 

The section under the Imperial Railway Au- 
thority is from the big bridge over the Hun Ho at 
Lu Kao Chiao to the city of Pao Ting Fu — eighty 
miles in length. 

The line is being constructed for double track, 
but only one will be laid until another is required. 

Works have been carried on very slowly, due to 
his Excellency Sheng using rails, etc., made at his 
works at Hanyang, causing great expense and 
delay. 

At date of my visit forty-five miles of track had 
been laid on main line, and the ten - mile branch 
to the collieries and quarries west of Liu Li Ho ; 
the remainder awaits arrival of 4000 tons of rails 
from England, which eventually had to be ordered 
to complete track to Pao Ting Fu. 

I was told that traffic on the line will be in- 
considerable until it extends much farther south. 
There has been great delay in making surveys, 

307 



THE BREAK-UP OF CHINA 

and the Belgian engineers for this purpose had 
only just arrived when I was there. 

Delay was said to be due to hitch in Belgian 
Loan. The Americans had the reversion of this 
concession in the event of the Belgian Syndicate 
not being able to raise the money. 

Traffic to Pao Ting Fu will probably be open in 
May, 1899, ^ut ^^^ o^ two large bridges will not 
be completed, as girders for them may not arrive 
before that date 

The Shanhaikwan-Newchwang Railway is an 
extension of the present Imperial Chinese Rail- 
way, and is to run from Shanhaikwan to Yingkau 
(the port of Newchwang), via Kinchow and a 
junction with the projected line to Sin Min 
Thun. 

The line is in course of active construction as 
far as Kinchow, and will probably be open to this 
point in May, 1899. A British corporation financed 
this railway. There was some misunderstanding 
between the British and Russian Governments as 
to the security for the loan. This is fully referred 
to in the chapter on Newchwang. 

This railway is a very valuable one, owing to it 
passing the new Treaty port of Ching Wang Too, 
which, with some expenditure of money, can be 
made into a mercantile port. 

Further, this railway passes the extensive coal- 
fields of Nan-Paian, and when it is extended to Sin 
Min Thun it will pass close to the Kwang Ning 

coal and iron field. 

308 



RAILWAYS 

This railway is also valuable for the fact that it 
will, when the junction is made with Yingkau (or 
Newchwang), be able to carry the trade from Man- 
churia in the winter, which is now stopped for four 
or five months in the year, owing to the port of 
Newchwang being blocked with ice. It is generally 
supposed that this is a British railway, and a coun- 
terpoise to the Russian railway to the North. As a 
matter of fact, it is a Chinese railway, under Chi- 
nese control, protection, and administration, but a 
British corporation advanced the money to build 
it, being secured by a lien on the existing railway 
as far as Shanhaikwan and a guarantee from the 
Chinese Government 

The Stretensk' Vladivostock Railway is a con- 
tinuation of the Russian Trans-Siberian line, 
and is a concession to the Russian Govern- 
ment by the Chinese, and built with Russian 
money. 

This is an admittedly strategic line. I was told 
there was great activity being displayed in the com- 
pletion of it. It is expected to be finished in from 
three to four years. Some considerable difficulties 
are being encountered with regard to the tunnels 
and bridges, but the line is to be in working order 
before these are finished. I was informed that it 
was to be a single-track line. 

The Russian- Manchurian Railway is a branch 
of the Stretensk- Vladivostock line, coming south 
to Talienwan and Port Arthur. 

This is a concession to the Russian Govern- 

309 



THE BREAK-UP OF CHINA 

ment, and is also of Russian gauge, finance, ad- 
ministration, construction, and protection. 

It is admittedly a strategic railway, but will also 
be a valuable commercial line, and if the " equal- 
opportunity-for-all-nations " policy remains in force 
in the North, it will be a valuable line for the de- 
velopment of British trade and commerce, as it 
will open up a very rich country where the line of 
communication is bad. 

. When I was at Newchwang, the Russians had 
about 1 50 miles of the main line from Talienwan 
to the North ready for the metals, etc. The branch 
line to Newchwang to the main line was nearly 
finished. I rode along it for some considerable 
distance. The whole of this railway is patrolled 
by Cossacks. I was informed that this was to pre- 
vent the Chinese stealing the rails. 

RAILWAYS PROJECTED 

The railways projected are thirteen in number, 
and are as follows : 

I. The Taiyuan Fu-Chengting Railway — 
130 miles. 

II. The Kiao-chow-Yichow-Tsinan Rail- 
way, a triangular line joining these three places 
— about 430 miles. 

III. The Tientsin - Chinkiang Railway — 
about 600 miles. 

IV. The Hankow-Canton- Kowloon Rail- 
way — about 700 miles. 

310 



RAILWAYS 

V. The Pekin Syndicate Railway — 250 
miles (not including branch lines). 

VI. The Tonquin-Nanning Fu — 200 miles 
in Chinese territory. 

VII. The Langson-Nanning — 100 miles. 

VIII. The Pakhoi-Nanning line — 120 
miles. 

IX. The Shanghai-Nanking Railway — 
180 miles. 

X. The Pu-kon-Hsin-Yang Railway — 270 

miles. 

XL The Soochow - Hangchow - Ningpo 
Railway — 200 miles. 

XII. The Burmah Extension to Yunnan 
— about 300 miles. 

XIII. The extension of the Shanhaikwan 
Railway from Kinchow to Sin Min Thun — 
97 miles. 

Tke TaiyTian-Fu'Chengting Railway is a branch 
line from Chengting, on the Lu-Han trunk, to 
Taiyuan-Fu, and this concession has been granted 
to the Russo- Chinese bank, who have signed a 
contract for its construction. I was informed that 
there was some difficulty as to finding the money, 
but I should think this unlikely, as the Vicomte 
Breteuil, with some engineers, was surveying the 
proposed route while I was in China, and I believe 
he represents the Credit Lyonnais in France. 
There should be no difficulty about the money if 
the survey is satisfactory, as this railway, when 

3" 



THE BREAK-UP OF CHINA 

completed, will be one of the finest properties in 
China. 

The KiaO'Chow^Yichow-Tsinan Railway is a 
triangular railway in the province of Shantung, 
and is a concession to the Germans. This rail- 
way is being surveyed now. A noteworthy point 
about it is that the Germans have determined that 
they shall have preferential rights, as far as railway 
enterprise goes, in the province of Shantung, and 
that both Great Britain and China have agreed to 
this demand. 

The Tientsin Chinkiang Railway runs north to 
south to the east of the Lu-Han, and commer- 
cially is expected to pay better, as it runs nearer 
the coast. It is an Anglo-German line, and the 
contract has been signed, but no survey has yet 
been made. 

The Hankow • Canton Railway runs from the 
Yangtse to Canton, where it is to join the Kow- 
loon- Canton railway. It is an Anglo-American 
concession, and an extremely valuable one, as it 
passes through some very rich provinces, particu- 
larly the province of Hunan, which as yet is en- 
tirely closed to the foreigner. 

This is supposed to be the second richest prov- 
ince in the whole of China. The signing of this 
contract was eminently satisfactory, as it brought 
an American and British syndicate together. The 
whole line is 700 miles in length, but of this 600 
miles originally belonged to the American syndi- 
cate. 

312 



RAILWAYS 

The Pekin Syndicate Railway is a railway to 
give an outlet for the enormous deposits of coal, 
iron, and petroleum which this British syndicate 
has the right of working. From all I could gather 
in China, the coal and iron field, if not the largest, 
is one of the largest mineral fields in the world. 
It is in the province of Shansi. This syndicate 
has a most valuable concession, as it also has the 
right to construct branch railways to connect with 
main lines, or with water navigation, to facilitate 
the transport of the Shansi coal. The nearest 
head of navigation giving access to the Yangtse 
is Siangyang, on the Han river, about 250 miles 
from the coal-field. The railway route is unsur- 
veyed at present, but quite lately a large number 
of the best engineers procurable have gone out 
to report fully, not only on the railway route, but 
upon the coal area also. 

The Tonquifi'Nanning'Fu, the Langson-Nan- 
ningy and Pakhoi-Nanning railways are all in- 
timately connected. The French contracts for 
these railways have been signed, and some of the 
routes surveyed. I heard that the French en- 
gineers had made themselves and their Annamite 
escort most unpopular by their rigorous treatment 
of the natives. 

Among the mercantile communities in the south, 
the idea was freely expressed that none of these 
lines would be built, anyhow with French capital, 
as the French commercial communities have de- 
clared that such lines would not divert trade for 

3'3 



THE BREAK-UP OF CHINA 

French benefit, but if built would develop British 
trade immensely. 

The Shanghai' Nanking Railway is a British 
railway projected to connect Nanking with the 
coast. If this railway is constructed it will be a 
most valuable property. The contract has been 
signed, and part of the route has been surveyed. 

The Pu'kon-Hsin-Yang Railway is a projected 
branch from the Shanghai-Nanking Railway from 
Pukon to Hsin-Yang in Honan, a distance of 270 
miles. The right has merely been conceded to a 
British firm, but the contract has not been signed, 
nor has there been any survey. , 

The SoochoW'Hanchow-Ningpo Railway. — The 
same British firm have the right to construct this 
railway. It should be a very paying line, if con- 
structed, as it passes through very populous dis- 
tricts. The contract has not been signed, nor has 
any part of it been surveyed. 

The Burmah Extension Railway is a projected 
British line to connect the Burmese Railway, when 
it reaches the frontier of China, with the capital of 
Yunnan. The route is supposed to be quite im- 
practicable, but this theory is unreliable till it has 
been practically tested by those sent to survey the 
country through which the line is to pass. From 
what I could gather, I believe that this line will be 
found practicable. 

The Shanhaikwan Extension is a project on the 
part of the Imperial Chinese Railway authorities 
to extend the line at present being built in two 

3H 



RAILWAYS 

directions, one from the proposed junction, lo 
miles south of Kwangning, to Sin Min Thun, 67 
miles, and from the main line to the Nan Paian 
collieries, 30 miles. This is a Chinese railway 
under Chinese control and administration. It is 
managed by Mr. Kinder, a British subject, and is 
to be financed by a British Corporation. 

The line is a particularly valuable one, as it 
passes near the rich coal area of Kwan Ning, and 
has the undoubted advantage of being near the 
sea. It also, under present conditions, will be able 
to tap the great trade of Manchuria. 

It was brought to my notice while in China that 
if railways were built connecting the following 
places a great development of trade might be ex- 
pected. 

It would appear that these routes should be 
surveved. 

1. A railway between Wuchow and Chung- 
king, via Kweiking and Kweiyang, the capi- 
tals of Kwangsi and Kweichow respectively. 
If this railway could be built, goods which 
now take three months or more getting to 
Hong Kong could be delivered in four 
days. 

2. A railway between Nanning-Fu and 
Chang- Sha. It would open up a very rich 
country if on survey this line was found to be 
practicable. 

3. A railway between Chungking and 
Ching-tu in Szechuan. I was informed that 

315 



THE BREAK-UP OF CHINA 

this railway would be certain to pay if found 
to be practicable. 

In addition to these a railway has been 
suggested through the Chekiang and Fukien 
provinces, along the coast, from Hangchow to 
Canton. This railway has been applied for 
by a British syndicate. 

The gauge for all railways built in China is to 
be 4 feet 8^ inches, with the exception of the Rus- 
sian-Manchurian Railway, which is 5 feet. 

It is important that railways built in China 
should be built to suit the people, the climate, and 
the country. 

The costly methods in use in Europe and the 
rough light structures on pioneer lines in the 
United States are both equally inapplicable. 
The construction needed is somewhere between 
these two extremes, and more dependence must 
be placed on the talents and experience of those 
on the spot than in any account of high -class 
opinion or data obtainable from elsewhere. 

Tariffs must be kept low, or advantage will not 
be taken of the railways for goods traffic, and if the 
fares are not low the Chinese will prefer to walk. 

From inquiries I made I should think that, un- 
less killed by initial extravagance, most lines in 
China can be made to pay well. The whole de- 
tails connected with the expenses of running a rail- 
way in China are to be found in the chapter head- 
ed " Tongshan." 

316 



RAILWAYS 

If the "Open Door" policy is maintained 
throughout China, the more countries who em- 
ploy their capital and energy in making railways, 
the better it will be for British trade; but in or- 
der to secure the " Open Door " policy, it may be 
that we shall have to concede to other countries 
preferential rights, or spheres of interest, as far as 
railway enterprise is concerned. This we have al- 
ready done with regard to Germany in Shantung 
and Russia in Manchuria, and the question arises, 
What is our position in the Yangtse Valley, where 
other Powers possess railway concessions ? In my 
humble opinion, it would be better for Anglo-Saxon 
trade and commerce if we keep clear of " Spheres 
of Influence " in every shape and form, and adhere 
firmly to the " Open Door and Equal Opportu- 
nity " policy. 



XXIV 



WATERWAYS 



The Waterways of China are the natural lines 
of communication throughout this great Empire. 
There are few places of importance which could 
not be reached by water transport. The country 
is irrigated by some of the most splendid rivers in 
the world, and intersected by a system of canals 
which is six hundred years old. Like everything 
else in China, however, the wonderfully complete 
system of water communication is falling into de- 
cay. The Grand Canal, one of the finest pieces 
of engineering in the world, and which connects 
North China with the Yangtse Valley, is abso- 
lutely dry in some places; but while I was at 
Hankow one of the Pekin Syndicate engineers 
arrived from the North, having travelled nearly 
the whole distance by the Grand Canal, and he 
reported that it is still navigable for many hun- 
dreds of miles. 

Large sums of money are set apart for the 
maintenance and repair of the waterways, but 
very little of it is applied for its legitimate pur- 
pose. The banks are falling in through want of 

318 



WATERWAYS 

bunding and proper care. The general silting up 
of so many of the important waterways of China 
causes both delay and inconvenience to trade. 

Whatever improvements are made in the direc- 
tion of increasing the facilities of transport by 
railways, the waterways should not be neglected. 
They are not only the principal and natural line 
of communication, but the cheapest mode of trans- 
port, and would materially assist the extension of 
foreign trade if kept in efficient order. 

The principal river in China is the Yangtse 
River. This magnificent river is second only to 
one river in the world — the mighty Amazon. Its 
broad stream, yx>o to 3500 miles in length, taps 
the heart of the Chinese Empire and passes 
through its richest provinces, its basin extending 
over an area of 700,000 to 750,000 square miles. 
It is navigable in the flood season (the summer) 
for ocean-going steamers for a distance of 680 
miles from the sea — viz., to Hankow, where the 
Han River flows into it. Beyond Hankow navi- 
gation becomes difficult, but not dangerous, and 
ordinary steamboats can go up to Ichang, in the 
province of Hupeh, a distance of 370 miles far- 
ther. It will thus be seen that this mighty artery 
is navigable for steamers for 1050 miles from the 
sea, and for another 440 miles— viz., to Chung- 
king — it is at present navigated by large junks; 
the rapids above Ichang being impossible for any 
but shallow-draught steamers to pass. A steam- 
launch has, however, succeeded in getting up there; 

319 



THE BREAK-UP OF CHINA 

Mr. Archibald Little, a British resident in China, 
being the pioneer of steam and civilization in 
the Yangtse gorges. Small junks go as far as 
Pingshan, 1 750 miles from the mouth, and small 
native boats, I was told, go 200 miles higher still, 
so that for nearly 2000 miles this magnificent 
river is a highway of trade. 

I ascended the Yangtse from Shanghai as far 
as Hankow, touching at the various Treaty ports 
on the way. The shortness of the time at my dis- 
posal rendered it impossible for me to proceed 
beyond Hankow, but I made full inquiries on the 
subject of navigation and trade above this point* 
One of the British pilots navigating the river be- 
tween Hankow and Ichang gave me the following 
particulars of this part, with the names of all inter- 
mediate stations and their distances : 



THE YANGTSE RIVER BETWEEN HANKOW 

AND ICHANG 

Distance from Hankow 
Hankow. 

■r 

Keun Kan 7 miles. 

Kwa-ma-Cbiu 19 " 

Mei-tan-cbu 26 " 

Paechu 44 " 

Han-chu-kwang 57 " 

Lung-kau 75 ** 

Singti 93 " 

Moopachin Rocks . . . . no " 

Kinhokow 115 

I, 320 



« 



r 



WATERWAYS 

Just below here Yobchau is situated. Practically 
it is at the mouth of the Tung Ting Lake. Yobchau 
has recently been opened. 

Pagoda Village 128 miles. 

Sze-pa-kan 136 " 

A bad place, with shifting sands. Plenty of water 
in summer — up to 16 feet; in winter lowest water 
7 feet to 8 feet. 

Fanchi 146 miles. 

Low Point ....... 157 " 

A bad place, with shifting sands. The channel is 
always changing. In winter there is 6 feet to 7 feet 
of water. 

Shan-chi-wan 167 miles. 

Just below here is Hia-chi-wan, where there is a 
good anchorage. It would be a good place for a 
coaling-station. 

Sin-ho-kan 184 miles. 

Liu-ki'kan 193 '' 

Tian-hien-kan 205 " 

Here is the " Salimis " bar, 6 feet to 7 feet of 
water ; but the channels change sometimes daily. 

Sunday Island 248 miles. 

A very bad place indeed. Sand always shifting ; 
never the same channel. 

Ho-hia 261 miles. 

Tuh-kechow 274 " 

Shasze 303 " 

A bad place ; ever shifting channel ; 6 feet to 8 
feet of water. 

Broad Point 313 miles. 

Tung-Tsze 332 ** 

Sometimes bad ; shifting sand ; 6 feet to 8 feet of 
water. 

Grand Point 333 miles. 

Chikiang 338 " 

E"too 350 " 

X 321 



THE BREAK-UP OF CHINA 

Rocks and shingle bottom ; buoyed in winter. 
Tiger Teeth ....... 360 miles. 

Ichang 370 " 

There are no channel lights at night. The 
three steamship companies — Messrs. Jardine & 
Matheson, Messrs. Butterfield & Swire, and the 
China Merchant Company — keep permanent 
buoys at E-too; but otherwise each company 
sound every time their steamers go up or down, 
and then place buoys. The sand is always shift- 
ing, and in many places the bars change daily. 
Going up the river there may be seven or eight 
feet of water, coming down there may not be four 
feet in the same place. In summer any steamer 
drawing sixteen or even eighteen feet could get 
to Ichang, but in winter no steamer can pass up 
drawing more than six feet. There is plenty of 
water at Ichang for a big ship to lie, if once she 
gets there. 

The famous gorges or rapids of the Yangtse lie 
between Ichang and Kweichow, a distance of 
about 146 miles. Although I had no time to visit 
them personally, I obtained all the information 
possible about them, not only from foreigners who 
have constantly passed through them, but also 
from the Chinese pilots and captains who are al- 
ways traversing them in junks. 

From what I could learn, they are in no way so 

difficult or so dangerous for steamer traffic as those 

on the Nile, and before many years are over the 

322 



WATERWAYS 

energy and enterprise of British merchants should 
have cargo -steamers proceeding through these 
rapids. At any rate it ought to be tried, 

I could not find that any British company in- 
tended to start steamers to run through the gorges, 
but I was informed that a German company was 
getting capital together and making preparations 
for this object Although the question is one of 
open competition, both for the sake of Anglo-Saxon 
trade and prestige it is to be hoped that the first 
cargo-steamer to navigate these rapids will fly the 
British flag. 

I went on board several of the junks used for 
the traffic through the gorges ; they are beautifully 
built, of very superior workmanship, and totally 
unlike any other junks in China. Near the water- 
line they are cigar-shaped, with very high coam- 
ings on the upper deck, and every arrangement 
made for battening them down securely. These 
junks carry between fifty and sixty tons of cargo. 
They are very suitable for the export trade of Sze- 
chuan, as they can get down the rapids without 
much difficulty or danger. But steamers are ur- 
gently needed for the import trade, owing to the 
risk and delay incurred in getting these junks up 
the stream against the rapids. 

The chief difficulties to be contended with are 
the extraordinary bends that the river takes, the 
speed of the stream, which, as far as I could make 
out, was from eight to nine knots, and the slope 
of the water in some of the reaches sometimes 

323 



THE BREAK-UP OF CHINA 

amounting to a fall of from 5 to 6 feet in 800 
feet. 

I have the daily rise and fall of the river at 
Ichang for 1897. The greatest rise in twenty- 
four hours was 132 inches; the greatest fall in 
twenty-four hours was 59 inches. These were on 
May 6th and 8th respectively. 

I could not discover that these rapids are re- 
garded as dangerous by those who are accustomed 
to them, provided proper care is taken. Junks are 
occasionally stove in, but as they are built with 
water-tight compartments they are seldom lost. 
The crews occasionally have to swim, but the 
loss of life is very small, as sanpans are used 
as life-boats in all the dangerous places. Dam- 
age to cargo is the most frequent cause of com- 
plaint. 

I firmly believe that H.M.S. Woodcock could 
proceed up and down the rapids with perfect safety 
if carefully handled. 

It might be possible to use these gorges for ob- 
taining water power, as at Niagara. Electric plant 
might be established here, and manufactories for 
the treatment of tobacco and other products of this 
district could be started. The water power could 
also be used for hauling up boats on a system 
similar to that which I have described as being in 
use at Lake Biwa in Japan. 

In my opinion, with a certain expenditure of 

money and the assistance of the brain and energy 

of the civil engineer, these rapids could easily be 

324 



WATERWAYS 

rendered safe for cargo-steamers with a speed of 
not less than twelve knots. 

So far as I could gather from expert opinion, at 
no place throughout the whole of the gorges do 
any great engineering difficulties exist which could 
not be overcome. A British engineer who quite 
recently passed through this district informed me 
that he estimated that the New Rapid could be 
permanently improved at a cost of ;^ 12,000. He 
also estimated that an expenditure of ;^50,ooo 
would be more than enough to clear the rapids 
suffiiciently to enable steamers to pass through the 
gorges at any time of the year. The sum seems 
ridiculous when compared with the advantages to 
be obtained by opening up steamer traffic with the 
rich provinces of the country beyond. 

The Chinese authorities are reported to have 
allocated 150,000 taels (about ;^2 1,000) in trying 
to render the New Rapid safe for navigation. 

Up till now they have not succeeded in doing 
much good, and the general belief is that most of 
the funds remained in the pockets of one of the 
local officials. 

It was brought to my knowledge that just about 
the same time as I arrived in Hankow (November, 
1898) the French were very active surveying for a 
railway in Szechuan, and their surveyors have 
openly declared that if the " Spheres of Influence " 
policy is adopted they would certainly consider 
Szechuan (one of the Yangtse provinces) as with- 
in their Sphere of Influence. If this claim w£re 

325 



THE BREAK-UP OF CHINA 

admitted, the British " Sphere of Influence " might 
end at the Tung Ting Lake, but certainly would 
do so at Ichang. 

The French base their claim on the fact that 
the Chinese themselves declare that the Yangtse 
River proper flows out of the Tung Ting Lake, 
and that the Upper Yangtse is only a tributary. 
As a matter of fact, the Chinese hardly ever call 
the Yangtse by the name by which the foreigner 
knows it Up to the Tung Ting Lake they gen- 
erally call it the Taking, or Great River ; from the 
Tung Ting Lake to the westward, generally called 
by the foreigner the Upper Yangtse, is to the 
Chinese known by the name of the Chingchow 
River. 

This is a very important point: it adds one more 
to the international complications likely to lead to 
war if the " Sphere of Influence " policy is ever 
adopted in China. Accounts of the progress of 
the French survey party on the Uppej Yangtse 
which reached me were not satisfactory. They 
appeared to have failed to propitiate the Chinese, 
and to have caused a good deal of ill-feeling against 
foreigners by their procedure. I submit to the 
Associated Chambers that British interests would 
be well served by keeping this part of China under 
British observation. 

The British Government had just completed put- 
ting together a shallow-draught gunboat — H.M.S. 
Woodcock — and it was placed on the Yangtse 

River while I was in China. This boat was sent 

326 



WATERWAYS 

out in pieces from England, and is built on the 
model of the shallow-draught gun-boats used lately 
with such great success on the Nile, and which 
draw less than two feet of water. 

As will be seen by the account of my interviews 
with the Viceroys of Nanking and Wuchang, the 
Chinese authorities would warmly welcome British 
gun-boats on the waterways in order to assist the 
provincial Governments in securing respect and 
security for the foreigner. 

The establishment of landing-places and coal- 
hulks (particularly the former) on the Yangtse and 
other rivers is very desirable. Hulks for bonding 
goods at the Treaty Ports on the rivers might assist 
the trader. 

There is a good deal of passenger traffic on the 
Yangtse as well as cargo. Accommodation is pro- 
vided for European passengers, but the majority of 
the passengers are Chinese. Fares are very low, 
and great numbers of the latter are carried. I 
inspected the Chinese accommodation on the river 
steamers on my passage up to Hankow. The 
steamers carry a large Chinese crew, and, in ad- 
dition, a number of men under the supercargo. 
The commander and officers are all Europeans; 
both a Chinese and European pilot are carried. 
The pay of the European officers is good, and the 
life and work not unpleasant in a healthy climate, 
although malaria is rife on shore during some parts 
of the year. 

It is perfectly possible to get from Shanghai 

327 



^ I 



THE BREAK-UP OF CHINA 

(which is situated on the Wangpoo, a tributary 
which enters the Yangtse River near its mouth) to 
Chinkiang through a creek to Soochow, and from 
Soochow, via the Grand Canal, without touching 
the Yangtse except for a distance of 5 miles. This 
was done by a British gentleman in June, 1898, 
in a steam-launch drawing 3 feet of water, I 
mention it to show how the whole country is 
traversed by waterways which only require proper 
attention to make them valuable and cheap channels 
for trade into the interior. I had ocular proof of 
the advisability of placing small tug-boats on the 
river in this locality in order to hasten the de- 
parture of junks with cargo for the canal. They 
usually have to wait for a fair wind. Sometimes 
they wait for days. 

THE GRAND CANAL 

The Grand Canal, the longest artificial water- 
way in the world, starts from Tientsin and runs 
south from there to Hangchow, a distance of 
about 600 miles. It crosses numerous rivers in its 
course, including the Yellow River and the Yangtse. 

While at Chinkiang my attention was drawn to 

the Grand Canal on the south side of the Yangtse, 

and I saw that there was no water in it; pigs 

were disporting themselves in the bed, which was 

actually dry. It was silted up where it should 

join the Yangtse, simply from want of care. The 

canal is in this deplorable state for some eight or 

328 



WATERWAYS 

nine miles south of the Yangtse for about four 
months out of the year, during which time it has 
to be entered some miles southward by means of 
other branches. 

This illustrates one of the many thousand cases 
where the civil engineer is wanted in China. 

If this waterway was dredged and made effi- 
cient, it would add largely to the commerce of 
Chinkiang and improve the lines of communica- 
tion with the interior of the Empire. This ques- 
tion is referred to in the memorandum of the 
Chinkiang Chamber of Commerce. Most of the 
large sums of money given for the preservation of 
this canal are regularly peculated by the officials. 
The mandarin who is paid a large sum of money 
annually to keep the canal clear has never been 
south of the Yangtse River. 

In the north I was informed that the Grand 
Canal was blocked for miles owing to the periodi- 
cal floods of the Yellow River. 

It would be impossible to over-estimate the im- 
portance of this canal to trade and commerce if 
opened up and rendered navigable. 

WEST RIVER 

The next most important river to trade in China 
is the West River, which enters the sea near Can- 
ton, and which flows through the fertile provinces 
of Southern China, where almost every inch of 

soil is cultivated. 

329 



THE BREAK-UP OF CHINA 

There is a large and growing British trade be- 
tween these provinces and Hong Kong, and sta- 
tistical Tables showing the details of this trade 
are enclosed under " Hong Kong." 

To merely take the figures given without any 
explanation would be to convey to those unac- 
quainted with the conditions of the carrying trade 
of the West River an erroneous idea of the pro- 
portion which the British possess. As a matter 
of fact, with the exception of one small steamer of 
about ICO tons, flying the American flag, the whole 
of the carrying trade is either British or Chinese. 
With the inland waters open and equality of treat- 
ment accorded to all, a vast increase can be looked 
for, carrying with it an increase of the proportion of 
British vessels which will find employment ; none 
of which would be allowed to compete if the 
French, under a " Spheres of Influence " policy, 
were allowed to claim the Two Kwang Provinces 
as within their sphere. The trade itself can be 
divided into foreign imports; exports to Hong 
Kong destined to foreign countries; domestic 
trade — ue., carriage of Chinese goods from one port 
in China to another ; and exports of Chinese goods 
to Hong Kong, whence they come back into China, 
the object of this being to qualify such goods to 
go inland under transit pass. 

A representative of Messrs. Jardine & Matheson 
had occasion last year to visit Fatsban, and on 
discussing various questions with the merchants 
at that place discovered that large quantities of 

330 



WATERWAYS 

goods manufactured there and destined for Nan- 
ning-Fu still followed the old route z//^ Pakhoi, into 
which they had been forced, as it was the line of 
least resistance as far as likin was concerned. 
Cargo via Pakhoi route costs $347 per picul to 
land at Nanning-Fu — likin, freight, coolie hire over- 
land, etc., all included. To send it to Hong Kong, 
bring it back into China, and ^end it up to Nan- 
ning-Fu under transit pass, entails the payment to 
the I.M. Customs of two full duties and a half 
(that is, one duty on export, one on its return for 
imports, and half for transit dues), in all $2.44, 
which leaves a balance quite ample to cover 
freight, etc., by the West River route. On being 
asked why, if they were determined to dodge pro- 
vincial taxation, they did not choose this way of 
doing it, which would be quicker, more direct, and 
presenting the additional advantage of gaining the 
cover of a transit pass to their goods, they quickly 
grasped the idea ; the result has been that increas- 
ing quantities of cargo now go via Hong Kong. In 
fact, nearly the whole of the exports, and a cor- 
responding proportion of the imports which ap- 
pear in the Customs Returns for the Port of 
Samshui, are due to this cause. The carriers are : 
First, those engaged in the direct trade to Hong 
Kong, picking up such domestic trade as they can 
en route; second, those engaged in the domestic 
trade purely, such as from Canton to Wuchow. 
The first consist of British steamers, British sail- 
ing lorchas,or junks, one small American steamer, 

33' 



THE BREAK-UP OF CHINA 

and a number of junks flying no flag at all ; the 
latter towed by Chinese steam-launches. The 
second consist of British steamers, one or two 
Chinese launches, and a large number of specially 
constructed Chinese junks, towed by Chinese 
launches; these latter are run by semi-official 
Chinese companies, in which likin officials are in- 
terested. 

The junks referred to above as flying no flag at 
all require some explanation. At the opening of 
the West River the Customs, foreseeing the ne- 
cessity of providing for craft of this nature, made 
the following rule : 

Section II. — Clause i. 

"Foreign-owned steam-vessels and foreign- 
owned vessels not being steamers, if not hold- 
ing national or colonial registers, are permit- 
ted to trade on the West River under the 
West River certificate. 

This regulation was promptly taken advantage 
of by the Hong Kong Chinese, who saw in it a 
means to avoid both the likin officials under which 
their craft would properly come under the Chi- 
nese flag, and the responsibility and expense 
which attach to the flying of a foreign flag. The 
West River certificate costs $ioo per annum, paid 
to I.M. Customs. The system they adopt is as 
follows : 

Chinese capitalists engage some foreigner, hith- 

332 



WATERWAYS 

erto generally a British subject, to assume nominal 
ownership of certain junks which they intend to 
run, and usually of the bulk of the cargo carried 
by such junks. This foreigner communicates to 
the Consul and Customs at the port or ports the 
fact that he is the owner of these vessels ; that so- 
and-so — naming one of the Chinese capitalists — 
will act as his agent ; and he also, as a rule, allows 
his name to be placed on a sign-board outside the 
Chinese Hong, where his pretended agent resides. 
This foreign name is then used by the Chinese to 
transact all Customs business, take out transit 
passes, etc., and by assuming nominal ownership 
of the goods to their destination secures Consular 
intervention in case of likin interference en route. 
Thus it is that various foreign names figure at 
Wuchow and appear in the Customs books as 
the importers of considerable quantities of goods, 
whereas, in reality, they are Chinese engaged as 
Customs brokers under a foreign name. One dif- 
ficulty of the assumed ownership system is that it 
enables Chinese to practise evasions of likin, ne- 
cessitating the closest scrutiny on the part of the 
Consul of any case brought before him. At the 
best, it is a state of things which does not com- 
mend itself to those interested in the legitimate 
expansion of trade; but it has been brought into 
existence by the corrupt fiscal administration of 
Chinese officials, which drives their own nationals 
to seek protection under cover of a foreign name 
to secure equality of treatment. No doubt it will 

333 



THE BREAK-UP OF CHINA 

disappear with the introduction of reform, the first 
step towards which will be the publication of the 
likin tariff on inland waters. I have referred to 
this in the chapter on " Trade." 

The reason the British flag is not better repre- 
sented on the West River, and that the junks fly- 
ing no flag at all have been permitted to gain the 
ground they have in the carrying trade, is as fol- 
lows: 

Previous to the opening of the river, the likin 
exactions were so heavy and vexatious as to cause 
nearly all trade to be diverted to such routes as 
the Pakhoi overland to Nanning, Hanoi-Lung- 
chow to Nanning, etc., all of which routes are in- 
ferior to the direct route by the West Riven The 
difficulty of estimating the volume of such trade, 
and how much of it could be relied upon to return 
to its natural channel under the regime oi the I.M. 
Customs, caused the large shipping companies of 
China to pause before investing capital in a class 
of boats adapted to river work, and for that work 
only, nor were they unsupported in their exercise 
of caution when such an authority as Sir Robert 
Hart did not anticipate that the staff of the Wu- 
chow Customs would need to be more than a 
nominal one. The delay has, however, been util- 
ized to gain experience of the needs of the trade 
and of the class of craft best adapted for carrying 
it. These are now under construction, and should 
be included in any estimate of the British capital 
employed on the West River. With regard to the 

334 



WATERWAYS 

trade between Treaty ports, etc., at the opening of 
the river two British steamers were placed on the 
Canton-Wuchow line, but the differential treat- 
ment which is accorded to Chinese goods if car- 
ried in foreign steamers from port to port on the 
river has restricted the earnings of the British 
steamers above-mentioned, and also those on the 
direct line to Hong Kong, although in a less de- 
gree, to practically passenger traffic only. 

Under such restrictions it is not to be wondered 
at that the shipping companies interested were 
slow to invest capital in the building of steamers 
for a trade so little likely to prove remunerative. 

The practice at present prevailing at the Treaty 
ports with regard to the junks towed by steam- 
launches, is for the junk towed and her cargo to 
come under the likin authorities, and the launch 
which tows it, but carries no cargo, comes under 
the I.M. Customs ; a dual system of control, pro- 
ductive of much smuggling and evading of rev- 
enue. 

The merchants complain very much on the 
West River of the preferential rights accorded by 
likin officials to native craft, in which officials are 
interested, and also to similar rights being extend- 
ed to native - owned cargo. This practice is op- 
posed to Treaty rights. 

I will summarize the points of interest about 
the West River trade as brought to my notice by 
the merchants: 

I. British merchants do not possess a direct 

335 



THE BREAK-UP OF CHINA 

pecuniary interest in goods to the point of desti- 
nation in China. 

2. That the British ship-owner does possess a 
direct interest, and can be relied upon, if allowed, 
to push his vessels to all and any parts of China 
where navigable waters exist. 

3. That with the advent of the British ship 
comes establishment of genuine British firms in 
the interior. The reform of taxation will follow, 
and with it a greater sale of British goods. 

4. That the ship-owner at pfesent is under a 
grave and serious disadvantage, owing to the dif- 
ferential treatment which is accorded to Chinese 
cargo carried in junks. That it is not a matter 
which concerns the ship-owner only, nor is it a 
matter solely between the Chinese Government 
and its subjects; but that it is a direct tax on all 
steamer-borne British goods. 

5. That according to the interpretation put 
upon the Inland Water Regulations by the I.M. 
Customs this state of things will not be remedied. 

If the foregoing contentions be correct, it is a 
matter for the earnest consideration of the Asso- 
ciated Chambers. It appears to me that it is neces- 
sary to secure an equality of treatment for all 
goods, no matter how carried, as, in pushing the 
interests of ship-owners, merchants, and manu- 
facturers who supply China with foreign goods 
will also benefit. The first step to be taken in 
this direction is to make the Inland Water Regu- 
lations apply to all inland waters without distinc- 

336 



WATERWAYS 

tion, and to all craft and their cargoes, whether 
steamers or junks. 

Piracy on the West River is another serious 
hinde ranee to trade. Under the chapter on Canton 
I give some instances of the proportions to which 
it has grown, and the inability of the local officials 
to cope with it. 

The West River, like all the waterways in China, 
should be surveyed by foreign civil engineers, in 
order that some economic and effectual proposal 
should be made to secure the conserving of this 
cheap and valuable method of transport 

THE YELLOW RIVER 

The Ho Han Ho, or Yellow River, is so called 
from the yellow deposit of mud which it brings 
down, and which makes even the sea of a yellow 
tinge for many miles from its mouth. Although 
less important to trade than either the West 
River or the Pei Ho, in length and volume it is 
equalled among the rivers of China only by the 
Yangtse. 

It rises in the plains of Odontala, not far from 
the source of the Yangtse, and is about 3000 
miles in length. After a long course among the 
mountains, it reaches the great plain of China, 
which, as a matter of fact, consists of the alluvial 
deposit brought down by it and other rivers in 
former ages. It may be said to leave the hills 
at a place called Kung (hsien), some 80 miles 

Y 337 



THE BREAK-UP OF CHINA 

west of Tai Fong Fu, and from this point it has 
from time to time wandered sometimes to the 
northwest of Shantung, discharging into the Gulf 
of Pechili, and sometimes to the south of Shan- 
tung, where it was flowing at the time the first 
authentic map of China (1853) was made. In 
1853 another of those changes took place in the 
course of the Yellow River which have earned for 
it its terrible reputation, and it then cut out for 
itself the present channel. The Yellow River has 
often been called " China's Lament," as, from the 
earliest history of the Empire, it has periodically 
broken its banks and flooded the country, causing 
dreadful devastation and loss of life. In our own 
times the floods of 1887, when the river broke its 
banks and caused wide-spread misery, are especially 
to be remembered, and from the accounts which I 
received while in China it would appear that the 
disaster of 1898 was equally terrible in its effect 
Large parts of the Province of Shantung and over 
one-half of the Province of Honan were inundated. 
Millions of lives were lost and whole towns and 
villages were swept away. These periodical inun- 
dations, which are the scourge of the population of 
the basin of the Yellow River, are due to a curious 
fact. The river brings down many millions of tons 
of yellow mud yearly, and this causes the bed 
to rise till in some parts it is 60 feet above the 
level of the surrounding country. The Chinese 
keep building up the banks, but sooner or later 

the river bursts its bounds, and, after flooding the 

338 



WATERWAYS 

country all around, cuts out a fresh channel for 
itself, which is sometimes hundreds of miles from 
its old bed. Then in a few years the same process 
is repeated. Soon after I reached Peking his Ex- 
cellency Li Hung Chang was sent to investigate 
the causes of the late floods, and to report how 
they could be prevented in future. Germany has 
also sent engineers for the same purpose, and the 
Pekin Syndicate, a British corporation, has sent 
engineers to survey this river. I have the honor 
to submit to the Associated Chambers the im- 
portance of this question, as, although some of 
the accounts point to the impossibility of its navi- 
gation, it has yet to be proved that this is so. 

From inquiries I made of engineers and others 
who have navigated part of this river I believe 
that it offers few facilities for navigation. Above 
Tsinan, for a distance of 250 miles, there are im- 
mense numbers of boats and a large traffic, but 
boats drawing only 18 inches are often ashore for 
hours. With care, however, boats drawing 3 feet 
can navigate the river from the crossing of the 
Grand Canal up beyond Kung at low water, while 
below the Grand Canal as far as Lokow, the port 
of Chinan, large boats can be used. Soundings at 
low water here vary, I am told, from 7 feet to 14 
feet. Below Lokow to the bar, vessels drawing 8 
feet can pass, and the bar is passable for vessels of 
this draught at high water. The irregular freshets, 
the constantly changing channel, and the swiftness 
of the current (the river has a fall of 13^ inches in 

339 



THE BREAK-UP OF CHINA 

a mile), combined with the low depth of water 
on the bar, render it improbable that European 
steamers will ever be able to develop the trade of 
the surrounding country under present conditions. 
The alluvial plain through which it passes is the 
finest crop-growing country in China. It is pos- 
sible that something might be done to improve 
this river. The cost of such improvements will 
be enormous ; but when the benefit derived from 
the time and money spent on the Danube, the 
Mississippi, and the Irrawaddy are remembered, 
it would appear that the Yellow River ought not 
to be abandoned, especially as it is necessary to 
prevent the inundations which recur so frequently 
with such terrible effects. 



THE WANGPOO 

The Wangpoo River is a tributary of the 
Yangtse, and is chiefly important owing to the 
fact that the chief Treaty port of China, Shang- 
hai, stands upon it. The great difficulty of this 
river is the Woosung bar. 

As nearly 8,000,000 tons of shipping entered 
and cleared at Shanghai in 1897, the urgency of 
something being done to improve this bar is ap- 
parent. Passengers and cargo often have to travel 
some fifty miles up the river to Shanghai in steam- 
launches and barges. It has been suggested that 
the nature of the silt would render it possible for 
a channel to be cut, which the current would 

340 



WATERWAYS 

probably keep open, although the bar would pos- 
sibly extend farther than it does now, owing to 
the silt carried through the channel depositing 
itself on either side. 

The Chamber of Commerce at Shanghai, com- 
posed of all nationals, were extremely urgent in their 
representations that something should be done. 
As they very justly pointed out, if the large fees 
collected from foreign shipping were used proper- 
ly they would allow of conservancy charges being 
met. The remedy asked for by the merchants is 
the establishment of a proper Conservancy Board, 
with European representation upon it. 

THE PEI HO RIVER 

The Pei Ho River is the most northern river in 
China proper. On its banks stands the important 
Treaty port of Tientsin, with a total tonnage of 
over 1,300,000. Here, again, there is a trouble- 
some bar. Large sums of money have been spent 
upon its improvement by the Chinese authorities, 
but without success. 

The difficulties are twofold. The river over- 
flows its bank, and also makes a bar by depositing 
mud. Some years ago a French engineer under- 
took to remedy the inundations, and constructed 
canals to take off the surplus water. An unfort- 
unate error was made. The level of the locks 
was placed below the level of the water at flood. 
The result was that all the clear water flows away 

341 



THE BREAK-UP OF CHINA 

over the top of the locks and only the sediment 
goes down to the sea to be deposited on the bar. 
In flood the freshet is of no use for the purpose of 
cleaning the river. 

The Anglo-Saxon and other foreign merchants 
here took the matter into their own hands and be- 
stirred themselves so well that the Viceroy of 
Chihli offered 100,000 taels towards the 250,000 
which an English engineer estimated would be 
the cost of deepening the river. This offer was 
made on condition that the foreign community 
should contribute the 150,000 taels remaining. 

The Municipal Council at Tientsin Foreign 
Settlement raised a loan for this amount at six 
percent, issuing bonds for the money to the Hong 
Kong and Shanghai Bank who negotiated them. 
In order to provide the interest on this loan and 
repay the capital in twelve years, the Municipal 
Council, with the consent of the Chinese author- 
ities, will levy wharfage on all goods landed at the 
settlement. It is hoped that the expenditure of 
this 250,000 taels will permanently improve the 
river ; but if not, there is a proposal to ask the 
authorities that Tongku, at the mouth of the river, 
be made a Treaty port. 

THE LIAO RIVER 

The Liao River flows through Northern Man- 
churia. Some distance up the river stands the im- 
portant port of Newchwang, which is generally 

342 



WATERWAYS 

called Yingkau by the Chinese. At the time of 
my visit there was probably an increase of shipping, 
owing to the winter being so close at hand. The 
change in temperature is very sudden, and the port 
often closes in twenty-four hours, owing to ice. I 
counted twenty steamers and 2000 junks while 
coming down the river. The E. Sang, the vessel 
I was travelling by, touched the bar going out, 
but did not stick. A vessel coming in was less 
fortunate, and we left her on the bar waiting for 
the next tide. 

The river has a curious bend above the port, 
and while it has gradually washed away all but a 
few hundred yards of the British concessions on 
the right bank, it deposits mud in the bend on 
the left bank. The new British and Japanese 
concessions are on this new land in the bend of 
the river. The Russian concession is higher up 
the river, and is situated on the extreme apex of 
the bend. 

THE HAN RIVER 

The Han River is a tributary of the Yangtse, 
which it enters at Hankow. It is navigable for 
the largest Chinese junks for about ten months 
in the year as far as Laohoken. There is no 
steamer traffic on it whatever, owing to the fact 
that there is no open port upon it. In January 
and February the water is very low, less than 5 
feet. The two most important towns situated on 
it are Laohoken and Siangyang. The former is a 

343 



THE BREAK-UP OF CHINA 

very big place. Siangyang is connected by tele- 
graph to Hankow. Between Hankow and Siang- 
yang there is a big " bore " which runs from 4 feet 
to 1 2 feet in height. It formerly caused enormous 
loss of life and property. This " bore " is active 
between the middle of March and the middle of 
June. A 1 2-feet " bore " takes eight hours between 
Hankow and Siangyang — a distance of about 160 
miles. A 4-feet " bore " takes much longer. Now 
telegraphic communication is sent to Siangyang, 
and the junks get due warning of the approach of 
the " bore." 

I was only able to go a short distance up the 
Han River in a steam-launch, as my time was 
short. 

Many of the smaller rivers in China are silting 
up; and several cities, at one time of great impor- 
tance, have lost their water communication and 
are now places of little note. For instance, at 
Haikwan there was formerly a great cotton trade, 
but now the growers have had to reduce their crop. 
Hwangpi is another town that has suffered from a 
similar reason. The silt in nearly all the rivers is 
very light, and could be easily dredged with 
dredges similar to those used on the Mersey. I 
believe there is also a special dredger used for 
work where the silt is always in motion. There 
used to be one of this character used on the 
Thames. Similar dredges would be very useful 
on Chinese rivers. Many of the rivers pass 

344 



WATERWAYS 

through gold districts. I heard that gold was 
found both up the Yangtse and the Liao rivers. 
Gold dust is also brought down the Yuen River 
(which runs into the Tung Ting Lake) in fairly 
large quantities. Prospectors might direct their 
attention to these rivers. 



TUNG TING LAKE AND SIANG RIVER 

In dealing with the waterways of China it is 
impossible to overlook the Tung Ting Lake and 
Siang River. Although I was unable to visit 
either of these, from what I could learn the lake 
is gradually getting shallower. The position of 
this lake, and its connection with the Great Yang- 
tse, which flows through it, and with the Siang 
River, which runs into it from the south, ren- 
ders it an important inland water. At the open- 
ing of the lake is the port of Yohchau, which has 
lately been open to foreign trade. 

The Siang River comes from the south of 
Changsha, which is an important city in Hunan. 
It seems very desirable that this town should be 
opened up to foreign trade. 

Between Changsha and Siangtang the Siang 
River is half a mile wide. Hunan, the province 
through which it flows, is the most anti-foreign in 
China, and probably the least known to the for- 
eigner. Its capabilities are said to be enormous. 
The universal opinion is that it is very rich in 
minerals. The new inland navigation rules, by 

345 



THE BREAK-UP OF CHINA 

opening up the Siang River and the Tung Ting 
Lake, should add to foreign trade very consider- 
ably. 

THE POYANG LAKE 

The Foyang Lake is of some considerable im- 
portance to Chinkiang and other ports on the 
Yangtse River, with which there is direct com- 
munication. Since the new navigation rules, six 
British-owned steam-launches have been sent from 
Chinkiang, and there is every likelihood that this 
venture will be a very successful one. 

ROADS 

There are said to be 20,000 miles of roads in 
China, nearly all of which were made in the reign 
of a former emperor. I visited Peking about 
thirty years ago. On my return visit last year I 
found it unchanged, except that it was thirty times 
dirtier, the smells thirty times more insufferable, 
and the roads thirty years the worse for wear. A 
mule was drowned in a hole in the middle of the 
roadway opposite one of the Foreign Legations a 
few weeks before my arrival. China has a very 
good system of roads in spite of their bad condi- 
tion. All that is required is to make the so-called 
roads available for locomotion and transport. The 
caravan and trade routes all require good roads to 
be made upon them, and among the reforms I 

have suggested in my concluding observations, a 

346 



WATERWAYS 

Department for Roads and Waterways will be 
found included. The roads might be placed under 
the proposed Conservancy Board of the Water- 
ways. In Egypt the making and maintenance of 
the roads have been undertaken by the irrigation 
officers with the greatest success. 

Large sums of money are put apart for repair 
and maintenance of the roads in Peking, but it is 
only the officials who know where the money goes 
to. A Mandarin gets a high salary, and a large 
budget is allowed him for lighting the Peking 
roads. I was informed there are only six oil-lamps 
that represent this outlay, but I could not ascer- 
tain their locality. 



XXV 



THE BRITISH CONSUL IN CHINA 

The British Consul in China is, as a rule, hard- 
working, painstaking, and devoted to the interests 
of his nationals; but throughout China I was 
struck by the strong sentiments expressed by the 
British commercial community on the subject of 
the Consular Body. In my humble opinion, the 
British merchant is too harsh in his judgment on 
this question ; but it is only fair to add that nearly 
all the merchants and Chambers of Commerce 
with whom I conferred on this subject readily ad- 
mitted that the faults which existed were due more 
to the system than to the Consuls themselves. 
However, the Consular Body, like any other public 
officials, are accustomed to receive all the blame 
when things go badly, while their Government 
appropriates all the credit if affairs go well. They 
will readily understand that in drawing attention 
to the facts which were brought to my notice it is 
not my intention to blame individuals, but to show 
where improvements in the present system are 
possible. 

The complaints made by the mercantile com- 
munity may be tabulated as follows : 

348 



THE BRITISH CONSUL IN CHINA 

1. That the Consuls are diplomatic agents 
more than representatives of trade and com- 
merce. 

2. That under the present system they are 
not, except in a few cases, good business men. 

3. That the Consuls of other nations do 
more for their nationals, particularly in the 
matter of promoting trade, by introducing 
commercial men to Chinese officials. 

4. That in the matter of transit passes 
and other facilities for trade, the British nar 
tional receives less privileges from his Con- 
sular officer than any other foreigner in 
China, and that all fees charged by the 
British Government are higher than by other 
countries. 

Although the Consuls deserve every support 
and consideration in their difficult duties, it is well 
to remember how very important it is, in the inter- 
ests of trade and commerce, that everything should 
be done to secure to the British merchant in China 
that assistance and support to which he is justly 
entitled. I talked over these complaints both with 
the Consuls themselves and with the Imperial Chi- 
nese Customs authorities, who naturally have a 
good deal to do with the Consular Body, and I am 
bound to state that the Consuls admitted there 
were defects in the present system, and that the 
Customs authorities appeared to support the views 
of the British merchants. 

349 



THE BREAK-UP OF CHINA 

The first complaint, that the duties of the Con- 
suls are more diplomatic than commercial, is quite 
true; but is easily explained. In countries like 
China extra-territorial rights are conceded by the 
native Government to all foreigners. In other 
words, no foreign subject can be tried and punished 
by the native tribunals, but is subject to the law 
as administered by his own authorities. The re- 
sult is that the British Consul in China is not only 
a representative of the British Government, to pro- 
tect British trade, but he is also a member of the 
Diplomatic Corps, and is the representative of his 
Government (acting through the British Minister) 
in all political questions in his district. The ordi- 
nary Consul in an European port is merely a Brit- 
ish trade agent; but in China he is something 
more than this. He may be the representative 
of the British Government in an area as large as 
France or Germany, and the native population in 
his district may be as widely separated in language 
from the rest of China as the inhabitants of one 
European country are from the inhabitants of 
another country. 

The duties of the British Consul in China do 
not end here. He exercises all the authority of 
a judge in both civil and criminal cases, and is 
expected to have some knowledge of English and 
Chinese law, although he is never given any facili- 
ties for acquiring such knowledge. He also exer- 
cises a general supervision over the British com- 
munity and possesses considerable power over 

3SO 



THE BRITISH CONSUL IN CHINA 

them. He is bound to register every British sub- 
ject in his area of jurisdiction once a year. He 
registers all sales and purchases of land by his 
nationals, and no marriage is legal without his aid. 
It is quite impossible under the present system 
to avoid making the work of the Consular Body 
diplomatic as well as commercial, and the conse- 
quence is that the commercial duties are bound to 
suffer. The merchants have, therefore, a legitimate 
ground of complaint on this head. 

A COMMERCIAL ATTACHE WANTED 

The remedy which I would suggest to the As- 
sociated Chambers of Commerce is that a com- 
mercial attache, with a proper Intelligence Depart- 
ment, should be appointed for China, and that 
assistant judges, police magistrates, etc., should be 
appointed, so as to relieve the Consular Body of 
part of their work. These latter should have a 
legal training. Very few Consuls possess a legal 
training, and when they do it is only because they 
are energetic, brilliant men, who have studied law 
at their own expense while on leave at home. 

With regard to the commercial attache, this is 
a point which has long been pressed by the China 
Association and British merchants in China. It 
is more needed, perhaps, than in any other coun- 
try. It may be said that a commercial attache has 
been appointed, but the so<:alled appointment has 
been only a farce. 

351 



THE BREAK-UP OF CHINA 

What the merchants asked for was the crea- 
tion of a distinct office ; to be filled by a qualified 
man, with a sound business training and of suf- 
ficient position and ability to make the Chinese 
authorities treat him with respect, and his repre- 
sentations with prompt attention and considera- 
tion. 

In order to meet their wishes, the appointment 
was offered to one of our best Consuls in China, 
but at a lower salary and allowances than he is al- 
ready receiving. Very naturally he declined this 
generous offer; and to make matters more ludi- 
crous, the title of "commercial attache" was added 
to the office of Consul-General at Shanghai, with 
a salary of one hundred pounds a year. This was 
merely adding an impossible task to the already 
over - burdened work of the Consul - General, and 
making him a present of a hundred pounds a year 
for work which he could not perform. The mer- 
chants generally made one special point as to the 
appointment, and that was that they would prefer 
not to have a Consul appointed unless a man of 
high standing, whom they could have confidence 
in, of which there are several in China. They 
were of opinion that he should have a special 
business training. 

The second complaint, that the Consuls — with 

few exceptions — are not good business men, is 

perfectly true. This again, however, is the fault 

of the system rather than of the men themselves. 

There are some notable exceptions. - The Consu- 

352 



THE BRITISH CONSUL IN CHINA 

lar Body is selected by open competitive examina- 
tions among mere lads. The examinations are 
usually held twice a year. The young gentlemen 
who succeed are sent straight out to China and 
go up to Peking, where they are shut up for two 
years grinding at the official Chinese dialect. 
They are then sent direct to one of the smaller 
ports of China as assistants in the Consul's office 
for another three years, doing despatch work, etc., 
and very often are Vice-Consuls before they have 
any knowledge or experience of the world, or have 
moved about among English commercial men. 
The consequence is that the system makes men 
narrow and pro-Chinese in their sympathies, and 
when this is not the case it is only due to su- 
perior ability and energy on the part of the men 
themselves. 

The remedy suggested is that after the two 
years in Peking, and a year in a port, the young 
Consuls should be sent home for a couple of years 
to study law and gain a wider experience of men 
and matters than a small Chinese port can teach 
them. 

The third complaint — viz., that other foreign 
nations in China give better Consular assistance 
to their commercial men than Great Britain — 
seems to have some foundation. The Consuls, 
on the other hand, present a very good case in 
reply. They say: "We have 64 per cent, of the 
whole foreign trade of China, and that trade has 
been built up under the British system of allow- 

2 353 



THE BREAK-UP OF CHINA 

ing the merchant to know his own business better 
than any Government can know it for him. The 
system also works well with the Chinese, as they 
appreciate the fact that we are not always bullying 
them on behalf of our nationals as the Consuls of 
other Powers often do." 

There is a good deal to be said on both sides ; 
but there seems to be no doubt that we have ar- 
rived at a time when the British Government will 
seriously have to consider whether the system of 
non-intervention hitherto pursued should not be 
modified. Up till now private enterprise has 
brought Great Britain to her present superior 
commercial position, and, therefore, the existing 
system has been a success. Conditions change, 
however, and policies should change with them. 
The British merchant does not ask for grand- 
motherly interference with his business. He is 
quite capable of attending to it himself, but in 
these days of fierce competition what he does 
want is an equal opportunity with the merchants 
of other nations in dealing with the Chinese 
officials. 

In matters such as obtaining concessions, min- 
ing rights, etc., tenders for Government work, or 
the introduction of goods specially adapted to the 
requirements of the provincial officials' needs, or 
the needs of their departments, the merchant — no 
matter how enterprising — has no status which 
will enable him to obtain a hearing. British mer- 
chants complain that their Consuls have been 

354 



THE BRITISH CONSUL IN CHINA 

known to refuse to afford them the introductions 
and facilities which other Consuls give to their 
nationals. 

In every case where this complaint was made I 
asked for evidence, and here are a few examples 
which were quoted to me. All the cases occurred 
in 1898: 

A British mining engineer wanted an introduc- 
tion to a Viceroy with the idea of applying for the 
post of surveyor under the Chinese Government 
to prospect for minerals in Western China. Apart 
from the personal advantage to be gained, he 
claimed that it was to the advantage of any country 
that its nationals should make such surveys, as 
they would become acquainted with the mineral 
wealth of the country, and have a voice in the em- 
ployment and nationality of the engineers who 
come out, and would advise where the necessary 
machinery should be bought. The Consul to 
whom he applied flatly refused to give him such 
an introduction, giving as a reason that if he gave 
him an official letter and he was refused an in- 
terview, it would be an insult to Great Britain, 
and the Consul would be put to a great deal of 
trouble. 

In another case application was made for a let- 
ter of introduction to a Mandarin in high author- 
ity. A very curt letter was given. As the British 
subject in question was specially recommended to 
the American Consul, he went to him and asked 
for a letter of introduction to his Excellency, re- 

355 



THE BREAK-UP OF CHINA 

ceiving at once a very warm letter, which procured 
him an interview. At this interview his Excellen- 
cy inquired, " How is it that you, a British subject, 
have a better recommendation from the American 
than from your own Consul?" His Excellency 
also stated that on the English letter he should 
not have taken him, but as it was he gave him 
employment. 

At another place the British Consul refused to 
give a letter of introduction to the Arsenal, and 
said that privately he would do all he could, but 
that officially he could not do anything. 

Without pronouncing any opinion on these 
cases, I think they are matters for the considera- 
tion of the Associated Chambers of Commerce. 
Reference to the complaints of the British com- 
munities will be found in other chapters, notably 
under Chinkiang, where there had been twelve 
changes of Consuls in three years. 

The last grievance, with regard to fees, was this. 
That the fees charged all round were much too 
high; but the fee for transit passes, even when 
only two and a half dollars a pass, was exception- 
ally obnoxious, because American transit passes 
were issued free of charge by many American 
Consuls. One large firm calculated that they 
used I GOO to 1500 passes in the year, and their 
American rivals the same number. This meant 
that the British firm had to pay between 3000 and 
4000 dollars a year more for the privilege of be- 
ing British traders. 

356 



.THE BRITISH CONSUL IN CHINA 

The scale in force appears to be as follows : 

Japan 2 dollars 

France 240 " 

Russia 1.50 " 

U.S.A., nil 
Germany, often nil 

The British charge has lately been reduced to 
2.50— it used to be 4.50. It certainly seems de- 
sirable that the Associated Chambers of Com- 
merce should take up this point in order to secure 
equal opportunity for all merchants. It would ap- 
pear that endeavors should be made to arrive at 
an understanding with other Powers for a uni- 
form scale of fees to be charged. The difference 
seems a trifle, but in the aggregate it amounts to 
a sum equal to the rent of many firms. 

A most serious complaint against the Consular 
system appears to be that contained in a letter 
from the Chinese subjects of Great Britain in 
Hong Kong. This I have already referred to at 
length under the chapter on " Hong Kong." 

The consensus of opinion in China is that there 
is great room for improvement in the Consular 
Body. The men do not obtain the experience or 
training so necessary to fit them for their respon- 
sible work. They get worn out under the present 
retirement system ; the service has been starved, 
overworked, and underpaid. The men must dete- 
riorate mentally and physically during the last few 
years of their service. 

357 



THE BREAK-UP OF CHINA 

The remedies suggested are more men, better 
pay, and earlier retirement There should be a 
few very well-paid men, and the others should 
get better paid than at present. The pension 
should be ;^500 a year after twenty-five years' ser- 
vice. To reduce the cost of these improvements, 
there should be more Vice -Consuls instead of 
Consuls at the smaller ports. 

The merchants are very anxious that additional 
Consuls should be appointed at one or two places 
where there is no British Consul now; one of 
these places is Changsha, in the province of Hu- 
nan, and another is Kirin, in Manchuria. 



XXVI 

FINANCE AND CURRENCY 

I AM fully aware how incompetent I am to deal 
with such an intricate subject as the Finance and 
Currency of China, and for the opinions and facts 
in the following chapter I am indebted to the va- 
rious authorities whom I consulted during my 
Mission, and to recognized experts on Chinese 
finance, including various bank managers at the 
ports throughout China and in London, and es- 
pecially to Mr. T. Jackson, chief manager of the 
Hong Kong and Shanghai Bank, Hong Kong, 
and to Mr. C. S. Addis, of the same bank's Shang- 
hai branch, from whose letter to the London 
Chamber of Commerce I quote fully. 

Recognizing the difficulties of this subject, not 
only to myself, but to the ordinary public, I made 
a very complete collection of the coinage in use in 
China in the various provinces, for the benefit of 
the Associated Chambers, and I hope to place this 
on view in some public place where it will be ac- 
cessible to all who are interested in the matter. 
It illustrates effectively the diversity of the coin- 
age, and the consequent difficulties of the trader, 

359 



THE BREAK-UP OF CHINA 

owing to the variations as well as the fluctuations 
in the rate of exchange. 

The collection consists of the following: 









SYCEE 








£ 


s. 


d. 


Province Hunan 


Town Changsha 


Tls. 


5" 


Value 


IS 


10 


it 


Shansi 




Taiyuanfu 


« 


s" 






14 


6 


it 


Hupeh 




Hankow 


<i 


4" 






13 


S 


u 


Chihli 




Tientsin 


(( 


lo" 




I 


9 


S 


it 


Yunnan 




Talifu 


i( 


i" 






4 


loi 


it 


Szechuan 




Chingtu 


(i 


lo" 




I 


8 


I 


(i 


Chekiang 




Hangchow 


(( 


S" 






14 


6 


l( 


Shantung 




Chefoo 


it 


lo" 




I 


9 


8 


u 


Fengtien 


(Manchuria) 


















Town 


1 Newchwang 


it 


56" 




7 


13 


2 


« 


Kiangsi 


(( 


Kiukiang 


it 


7" 




I 


I 


6 


(( 


Kiangsu 


(( 


Soochow 


it 


SS" 




7 


9 


6 


(t 


Shanghai 


Sycee . 


a 


S3" 




7 


5 


5 



« 



Central Szechuan 1150 cash per tael. 

Chungking 1080 " " 

Wuhu 1320 " " 

Shantung 12 10 " 

Shanghai 1170 " 

Peking 550 large cash per Kung Fa tael. 

Subsidiary Coin 

Ten-cent and twenty-cent pieces : 

Minted at Kiangnan, approximate value 2)//. and 5^. 
" in Kwangtung Province " " " 

" " Fookien " " 

« "Hupeh " " " " 

« "Anhui " " " " 

360 



FINANCE AND CURRENCY 

Chinese Dollars 

Minted at Tientsin Arsenal, approximate value 2S. 8|//. 
" " Kiangnan " 

" " Kwangtung Province " ** " 

" " Anhui « " " " 

« " Hupeh " " " « 

Also current in China : 

Mexican Republic scale dollar. 

Spanish Carolus dollar. 

Japanese yen. 

Indo-China dollar (French Republic). 

British dollar. 

The want of military organization in China has 
much to do with the financial weakness of that 
country. Bad security means a high rate of in- 
terest, or curtailment of borrowing powers. The 
credit of this great Empire is now far from good. 
Her only honest available asset — the I.M. Cus- 
toms — is pledged to the hilt, and under present 
conditions she has neither good security to offer 
for future loans, nor revenue to meet her growing 
obligations. 

As is shown by the remarks of several of the 

Viceroys (quoted in other chapters), even the funds 

allocated to the provincial Governments are being 

encroached upon to provide security for present 

indebtedness, and there is a growing anxiety 

among the people as to whether the authorities 

will find it necessary to impose increased taxation 

to make up for the loss of provincial revenue. 

361 



THE BREAK-UP OF CHINA 

It needs no expert knowledge of finance to see 
that the whole system of Chinese financial admin- 
istration is utterly rotten. China is in a state of 
great financial embarrassment, not because her as- 
sets are small, but because her revenue is wasted 
and badly administered, and her capital resources 
undeveloped or squandered, China is not so 
much overtaxed as badly taxed, and all that she 
requires is advice and assistance in reorganizing 
her finances, which, provided her military and po- 
lice administration were perfected, would place 
her in the forefront of national credit on the 
Western money markets. 

The present revenue of China is estimated to 
amount to 85,000,000 taels, but this only repre- 
sents about one-fifth of what is actually collected. 
In other words, the machinery of collection is so 
bad that it absorbs 80 per cent, of the amount 
collected. Under proper supervision and admin- 
istration the revenue of China would go up by 
leaps and bounds, and taxation could actually be 
reduced. 

The case of Egypt is a splendid example of what 
sound and honest financial administration can 
efiFect If China were assisted by the European 
Powers to e£Fect the reforms necessary, her posi- 
tion would be infinitely superior to that of Egypt. 
Her resources are unbounded, and if the present 
system of peculation and waste were stopped, she 
would soon be in a sound financial position. 

The Chinese Empire at present owes between 

362 



FINANCE AND CURRENCY 

;^50,ooo,cxx5 and ;^6o,ooo,ooo, for which the reve- 
nue of the Imperial Maritime Customs is pledged. 

The loans are as follows : 

1. The 7% silver loan of 1894 (English) 
for Tls. 10,000,000, to be paid ofif in 20 years. 

2. The 6% gold loan of 1895 (English) for 
;^3,ooo,ooo, to be paid ofiF in 20 years. 

3. The 4.% gold loan of 1895 (Russo-French) 
for ;^ 1 6,000,000, to be paid ofif in 36 years. 

4. The 5^ gold loan of 1896 (Anglo-Ger- 
man) for ;^ 1 6,000,000, to be paid off in 36 
years. 

5. The 4i^ gold loan of 1898 (Anglo-Ger- 
man) for ;^ 1 6,000,000, to be paid off in 45 
years. 

In addition to these there are two loans of 
;^ I, 000,000 each, raised on other revenue, but 
with a provision that if other revenue fails the 
Customs shall pay them. There are also one or 
two old silver loans for small amounts still run- 
ning, but as far as ability to meet responsibility is 
concerned, the five loans above enumerated are 
the only ones worth taking into consideration in 
connection with the duties collected by the Impe- 
rial Maritime Customs and the seven likin collec- 
torates pledged as collateral security for the last 
loan. That it was necessary to supplement the 
Customs guarantee by seven of the likin collec- 
torates for the last 4^% Anglo-German loan, points 

363 



THE BREAK-UP OF CHINA 

to the fact that no part of the Customs revenue 
can be available for additional loans. 

In addition to this, China has in the last year 
guaranteed the interest on foreign loans negoti- 
ated for railway purposes to the amount of ;^4,ooo,- 
ooo for the Lu-Han Railway, and ;^2,300,ooo 
for the Newchwang Railway. Under the most- 
favored -nation clause this will have to be con- 
tinued for all railways employing foreign capital, 
and in the present financial position of the coun- 
try these Government guarantees are certain to 
hamper China very materially. 

The immense natural resources of China render 
reform very easy. At present the system is fatal to 
honest finance. The provincial officers of all grades 
receive bare pittances for salary. They often have 
to pay very large sums before they take office, 
borrowing the amount of the "squeeze" from 
Chinese banks, or among their own friends. The 
consequence is that the officials make as much as 
they can during their term of employment, in order 
to repay themselves for the amount it cost them 
to obtain ofiice. In addition to this, they expect to 
pay for the expenses of keeping up the necessary 
state of their position, and to make a good sum 
over as a sort of retiring allowance when their 
period of office is completed. As a matter of fact, 
unless they get into disgrace, they usually succeed 
in doing all this, and it is therefore perfectly easy 
to understand the enormous leakage in the revenue 
collected before it is remitted to Peking. One of 

364 



FINANCE AND CURRENCY 

the first necessities of financial reform in China is 
a system of public accounts and proper salaries to 
all officials. China has ample funds for all purposes, 
including the provision of an efficient military and 
police, but she must be assisted from without if the 
present corruption is to be replaced by honest and 
capable financial administration. In her mineral 
rights she has a source of revenue scarcely touched. 
The whole of the mineral rights are the property 
of the Government, which exacts a rent for work- 
ing them. 

The day for loans guaranteed by revenue is past 
and gone, to pledge more revenue can only result 
in serious embarrassment ; no more money ought 
to be lent except for productive enterprise, and then 
only on proper conditions — that is, such conditions 
as shall give lenders security on the one hand, and, 
on the other, enable China to see her way not only 
to meet her obligations, but also to derive sure and 
certain additional benefit from the enterprise the 
borrowed money is wanted for and expended upon. 
With the question of loans is mixed up the matter 
of railway and mining concessions. Do people 
really understand what these amount to? Are 
they merely to put some money into the pockets 
of promoters, or are they to do good work for both 
China and bondholders ? Concessions may look 
most enticing on paper; can they really be given 
effect to? and, if so, will they at once, or ever, 
show the profits that the people say they promise ? 
The public cannot act too warily in these matters, 

365 



THE BREAK-UP OF CHINA 

and if they wish to avoid loss they would do well 
to consult firms of good repute in China all about 
any concession ; where is the region, what are its 
contents, how are the inhabitants inclined, how 
were the officials induced to support the scheme, 
what local difficulties are there to be encountered, 
what kind of carriage is provided for, and what 
demand is the new supply to find, meet, or make. 
All these are points deserving of attention. 

The appointment of a foreign financial adviser to 
direct the administration and collection of internal 
revenue, the reform of currency, the establishment 
and centralization of mints, the establishment of a 
Government Bank, and the remittance of provincial 
revenues and tribute-rice by open public tender in- 
stead of the present extravagant close system, 
might, under proper administration, quadruple the 
present revenue of China without increasing taxa- 
tion by a single cash. 

Great Britain's enormously preponderating trade 

and her financial stability, coupled with the success 

of her reforms elsewhere, would entitle her to offer 

China assistance in reforms of this character. A 

proper department of finance would have to be 

inaugurated, and while the head of it might be an 

Anglo-Saxon, its foreign employes should be of a 

cosmopolitan character, similar to the personnel of 

the Customs Department The policy of the Open 

Door should be maintained in this as in other 

matters. 

Nothing would be more materially affected by 

366 



FINANCE AND CURRENCY 

a Spheres of Influence policy than this question 
of the finances of China. Splitting up the Chi- 
nese Empire means loss to bondholders and the 
disappearance of the security mortgaged to them. 
As an instance of this, the first Anglo -German 
loan was partly secured on Formosa, Formosa is 
no longer part of the Chinese Empire. 

If Spheres of Influence are marked out in China, 
and the resultant downfall of the Chinese Govern- 
ment is brought about, who will pay the bond- 
holders, and what security have they for their 
loans? What becomes of China's guarantees in 
the matter of the railway loans? And even if 
these matters were amicably settled between the 
Powers grabbing at Chinese territory, how can 
there be any security for interest being paid on 
loans by a country plunged into anarchy and re- 
bellion, which must seriously disturb trade and 
diminish the Customs receipts? 

The question of China providing adequate se- 
curity against disorder and trouble, which may 
lead to the intervention of Foreign Powers and the 
partition of the Empire, is, as I have endeavored 
to show throughout this Report, entirely a question 
of the reorganization of her army. Without this 
there can be no security and no public confidence, 
and therefore she is bound to provide such ade- 
quate military and police protection. The pres- 
ent position of China disturbs confidence and 
causes loss to foreign bondholders. A drop of 
even i per cent, in the price of Chinese loans 

367 



THE BREAK-UP OF CHINA 

means a loss of half a million sterling to foreign 
investors. 

The last Anglo-German loan, floated in March, 
1898, at 90, fell to 85} in October, 1898, at the 
time I reached China, and is now standing at 85 
in April, 1899. 

The 5 per cent, loan of 1896 dropped from 98f 
to 97i, the price at the time of my visit It now 
stands at 99 — April, 1899. The prices of other 
loans I have mentioned are as follows : 

7th April, 1899. 

1894. Tls. 10,000,000 7 ^ Silver, issued in London 

@ 98 ^, quoted ,- - - £105 

1^95* ;C3)Ooo>ooo 6 ^ Gold, issued in London @ 96^ ^, 

quoted <;^io6 

1895. ;f 1,000,000 6 ^ Gold (Cassel), issued in Lon- 

don @ 106 ^, quoted £^og 

1S95. ;^i,ooo,ooo 6 ^ Gold, issued in Berlin @ 104!^^, 

quoted £106 

1^95' ;^i 5,820,000 4 ^ Gold, issued in Paris @ 99 ^ 

(guaranteed by Russia), quoted £^o$h 

The currency of China is as confusing and as 
hopelessly involved as her finances. The general 
standard of value throughout the Empire is the 
tael, which is not a coin but a weight of silver, 
averaging about ij ounce. This, again, varies in 
the different provinces. The commercial standard 
of tael is the Haikwan (or Customs) tael, which in 
1897 averaged in value: 

2S, iif^., English; 
$0.72 gold, American ; 
3.73 francs, France; 
368 



FINANCE AND CURRENCY 

3.03 marks, Geman ; 
2.34 rupees, Indian ; 
1.50 dollars, Mexican; 

at the sight exchange on London, New York, 
Paris, Berlin, Calcutta, and Hong Kong respec- 
tively. There are various other taels in use, the 
most notable being Kuping (or Treasury tael), 
the Kuaiping (or Shanghai) tael, and the Hankow 
tael. The latter may be said to be exactly 3 per 
cent, in value above the Shanghai tael. There 
is 10 per cent, difference between the highest 
and lowest of the other three taels. Not only is 
the tael not a coin, but I believe no weight of 
silver exactly corresponding to a tael is ever used. 
The smallest piece of silver in my collection, un- 
minted, is 1.80 taels in value. The silver coin 
used all over China is the dollar, and there are no 
less than nine different sorts of dollars current in 
China, five of which are minted in the country. 
The dollar which is most commonly used, and 
which has the highest value, is the Republican 
scale dollar minted in Mexico. The other foreign 
dollars in use are : 

1. The Japanese yen ; 

2. The Spanish Carolus dollar; 

3. The French Republic dollar (Indo-Chinese piastra). 

But none of these are so extensively used as the 
Mexican dollar. The Chinese dollars are those 
minted at 

2 A 369 



THE BREAK-UP OF CHINA 

1. Tientsin Arsenal; 

2. Kwangtung Province ; 

3. Kiangnan; 

4. Hupeh Province ; 

5. Anhui Province. 

The subsidiary coins are five cents, ten cents, 
twenty cents, and fifty cents, which are minted in 

1. Kwangtung Province ; 

2. Kiangnan; 

3. Fookien Province ; 

4. Hupeh Province ; 

5. Anhui Province. 

The coins most commonly used by the Chinese 
themselves, however, are copper cash, the nominal 
value of which is, on an average, \qoo to the dol- 
lar. The relation between the copper cash and 
silver is so important that I can best explain the 
question by quoting the following three questions 
from the London Chamber of Commerce to the 
Hong Kong and Shanghai Bank, and the replies 
of Mr. C. S. Addis, of the branch at Shanghai, to 
these questions : 

" Question i. — Whether copper cash is issued 
from the Mints in China at higher rates since the 
closing of the Indian Mints, or if the increase in 
value (alleged to have taken place) occurs after 
issue } 

" It is difficult to answer this question in the 
terms in which it is put. Mints in China are not 
* open ' in our sense of the word. They are Gov- 
ernment institutions which purchase copper, cast 

370 



FINANCE AND CURRENCY 

it in coins of a fixed weight and composition, and 
finally place them in circulation through the pay 
of soldiers and Government officials. They can- 
not be said, therefore, to issue cash at either high- 
er or lower rates, because, while the standard of 
weight and fineness of the coins is fixed, there is 
no fixed ratio between copper cash and silver. 

"The exchange between the two — x>., copper 
cash and silver — is determined by the quantity of 
copper cash in circulation. 

" The question may be asked, however, if any 
reduction has been made since the closing of the 
Indian Mints in the weight and fineness of the 
coins issued by the Mints in China? The answer 
is that no such change appears to have taken 
place. How well the standard has been main- 
tained will be seen from the accompanying memo- 
randum by Dr. Stuhlmann, Professor of Chemis- 
try at the Peking College, containing a tabulated 
analysis of coins issued by the Pao Ch'uan and 
Pao Yuan Mints during the present reign, 

"A tael (Kung Fa weight) of silver at present 
prices would purchase sufficient copper to produce 
388 Peking large cash, or say yi tiao (i tiao=5o 
large or 1000 nominal cash). At the capital, 
where soldiers and Government officials receive 
their pay at an old commuted rate of 14 tiao to 
the Government tael, copper cash may still be 
minted to a small extent, the loss being borne 
by the Imperial Treasury. Some recent memori- 
als to the Throne, advocating a reduction in the 

371 



THE BREAK-UP OF CHINA 

weight of the coins, met with an unfavorable re- 
ception from the Empress-Dowager, who feared to 
excite discontent among her soldiery, 

" As regards the provinces, there is reason to 
believe that the production of copper cash during 
the past five years has been almost entirely super- 
seded by the minting of a subsidiary silver coin- 
age. In 1897 the number of these subsidiary 
coins issued by the mints at Tientsin, Wuchang, 
Foochow, and Canton was as follows : 

50 cent pieces 214,796 

20 " 31,852,571 

10 " i7>S92,93i 

S " 66,921 

"On the basis of, say, 920 cash to the dollar, 
those subsidiary coins represent a substitute for 

7,608,907,242 copper cash of the aggregate value 

of over $8,000,000. 

" Question 2. — What the exact increase in value 
amounts to, and the extent of any fluctuations that 
may have taken place ? 

" The increase in the value of copper cash as 
compared with silver since the closing of the Ind- 
ian Mints varies in different parts of China. 
Speaking broadly, it may be said to amount to 
about 25 per cent, as the following Tables will show: 

" The number of cash which a dollar would pur- 
chase has fallen since 1892. 

Wenchow from 1,140 to 950 
Shanghai " 1,050 ** 920 

Tungchow " i»o75 " 925 
372 



FINANCE AND CURRENCY 

" The number of cash which a tael would pur- 
chase has fallen since 1892. 

Central Szechuan from 1,600 to 1,150 
Chungking " 1,700 " 1,080 

Wuhu " 1,600 " 1,320 

Shantung " i»45o " 1,210 

" The variations observed in the above figures 
may be ascribed partly to the percentage of spuri- 
ous cash in circulation and partly to the variety 
of the taels in use at the different centres. 

"The following Table shows the fluctuations 
from year to year in the value of the Peking 
large cash (i tiao=50 large cash). 

"Number of Peking large cash (i large = 20 

small cash) obtainable for one Kung Fa tael during 

1892 Tiao 14.200 = 710 large cash 



1893 




14 = 700 


1894 




13.500 = 675 


1895 




13.600 = 680 


1896 




12.800 = 640 


1897 




12 = 600 


1898 




11.500= 550 



i( 
«( 
cc 
a 

it 



" Number of cash obtainable in Shanghai dui> 

ing 

1892 Tls. I = 1,400 cash = $1,050 cash 



1893 


Ci 


= 1,370 " 


= 


1,030 


1894 


« 


= 1,300 " 


= 


970 


189s 


C( 


= 1,270 " 


^ 


950 


1896 


« 


= 1,210 " 


^ 


880 


1897 


i( 


= 1,170 " 


— 


910 


1898 


a 


= 1,170 ** 

373 


= 


920 



(C 
(C 

li 
it 
it 
a 



THE BREAKUP OF CHINA 

" It will be observed from the above Table that 
copper cash, probably on account of the large 
. number of spurious coins in circulation, command 
a market price considerably below their intrinsic 
value in silver. A tael of silver, as has already 
been stated, would purchase sufficient copper at 
present prices to produce, if minted, 388 Peking 
large cash, while 550 of these cash would be re- 
quired in exchange for a tael in the open market. 
There is still, however, a substantial rise in value 
of about 25 per cent, to be accounted for. 

" The cause may be sought : first, in the scarcity 
of cash due to the cessation of coinage during the 
past five or six years ; second, in the large quanti- 
ties believed to have been illicitly melted down for 
the purpose of making domestic utensils instead 
of using copper ; and third, to the growing de- 
mands made upon an already restricted currency 
by the steady increase of population. 

" Question 3. — Whether any fall in the value of 
(a) food grains, or (6) wages, has followed the rise 
in the value of copper cash. 

"Copper cash having appreciated in terms of 
silver might naturally be expected to show a simi- 
lar increase as regards food and wages. In other 
words, we should have expected to find a corre- 
sponding fall in the price of commodities. As a 
fact, the exact reverse of this has taken place. 
While cash will purchase more silver than former- 
ly, they will purchase less of other articles. The 
purchasing power of cash has risen in terms of 

374 



FINANCE AND CURRENCY 

silver and fallen in terms of commodities. The 
following Tables show the fluctuations year by 
year of the two staple articles of diet in China : 

Average Price of Flour (native production) in Peking 
1892 per 133^ lbs. Tls. 2.40 or, large cash 1,704 



1893 




cc 


ii 


2.60 


it 


(( 


a 


1,820 


1894 




it 


u 


2.70 


ti 


iC 


a 


1,822 


189s 




ti 


(4 


3 


a 


C( 


a 


2,040 


1896 




a 


(C 


3 


i( 


u 




1,920 


1897 




u 


<( 


3.40 


(( 


it 


(C 


2,040 


1898 




(i 


c( 


4.20 


<i 


it 


ti 


2,310 



Average Price of Rice in Shanghai 
1892 per 2i3i lbs. $3.37 or cash, 3,538 



1893 


(( 


it 


341 


" " 3,5" 


1894 


(( 


a 


352 


" " 3,414 


"895 


a 


it 


365 


" " 3.467 


1896 


ti 


a 


4.76 


" " 4.189 


1897 


it 


it 


5.18 


" " 4.714 


1898 


a 


a 


6.33 


" " S.823 



" The foregoing figures, though drawn from two 
cities only, may be taken as typical of a widely 
spread movement. There is no reason to doubt 
the correctness of the statement made by Mr. 
Grosvenor in his Report on the trade of China in 
1896, that the general increase in prices is univer- 
sally applicable throughout the whole Empire. 

" The question remains. How are we to recon- 
cile this upward movement of prices with the ad- 
mitted appreciation of copper cash — why do cash 
cost more and buy less ? 

375 



THE BREAK-UP OF CHINA 

" This question, or something like it, was ad- 
dressed last year by the Royal Asiatic Society to 
members residing in different parts of China, 
Some thirteen replies were received, covering a 
great extent of the Empire from north to south, 
and from east to west. In a Report on these pa- 
pers, prepared by Mr. F. E. Taylor, Statistical 
Secretary to the Imperial Chinese Maritime Cus- 
toms, a variety of explanations have been adduced, 
of which the following is a brief summary: 

" Increased population is reported everywhere, 
making a greater demand upon products of all 
kinds, while the fall in the gold value of silver has 
stimulated exports and thereby reduced the sup- 
ply circulable for the natives. The enormous 
quantities of debased cash in circulation have also 
contributed to send up prices. In some districts 
short crops, and in some the extended cultivation 
of the poppy, are held to be largely responsible 
for the dearness of food. In Shangtung it is said 
that the cost of agricultural labor has been in- 
creased by the immigration of laborers to West- 
ern Siberia; Szechuan complains of short crops, 
poppy cultivation, and export of foodstuffs. From 
Foochow we learn that the province is poorer, 
owing to the falling off in the tea trade, while 
taxation is heavier. These attempts to explain 
obscure and complicated phenomena are interest- 
ing as far as they go, but can scarcely be consid- 
ered conclusive. Perhaps the only really logical 

hypothesis of the appreciation of cash in terms of 

376 



FINANCE AND CURRENCY 

silver and the depreciation of cash in terms of 
commodities is that suggested by Mr. Taylor, 
viz: 

" * That silver has fallen in value as a com- 
modity still deeper than debasement of the 
coinage has forced down the purchasing pow- 
er of cash.' 

" This still leaves open the question of which 
much might be written as to what has lowered the 
value of silver in China. 

" In conclusion, apology must be made for the 
generally tentative character of the information 
presented in the foregoing pages. The statistics 
cited have no pretension to more than approxi- 
mate accuracy. In a country like China, where 
there is nothing approaching a Bureau of Statis- 
tics, such scraps of information as are available 
must be taken for what they are worth. It is 
hoped that they may be found not without value 
as a means of comparison." 

The memorandum on Chinese copper cash, by 
Dr. Stuhlmann, of the " Tuan Wan Kwan," Pe- 
king, to which Mr. Addis refers, is as follows : 

" Not only has the price of silver in comparison 
with gold constantly fallen of late years, but at 
the same time, and to a certain extent in connec- 
tion with this, a depreciation of the former metal 
as compared to Chinese copper coin has taken 
place. In other words, one receives to-day con- 
siderably fewer cash for the tael than a few years 

377 



THE BREAK-UP OF CHINA 

ago. Thus, for instance, the rate of exchange for 
the Peking tael, which in 1893 was still 13^ to 14 
tiao,has gradually fallen to 10 tiao. In spite of this, 
the value of copper coin has otherwise remained 
the same, so that the quantity of foodstuff, etc., 
procurable for a tiao is not greater than formerly. 
To what extent, then, a further fall in the tael ex- 
change is to be expected, should no new factor 
come in, may possibly be arrived at with the help 
of the analysis of locally current cash comprised 
in the following Table. I premise that the first 
and the second columns of the Table refer to the 
so-called large Peking cash, and moreover to such 
as have been cast during the reign of Kuang Hsu. 
These are marked in Manchu characters with the 
words " Pao Ch'uan " or " Pao Yuan," according 
to whichever of the two mints established here 
they come from, and they form the greater portion 
of the copper coin at present circulating in Peking. 
The third and fourth columns of the Table show 
the composition of the so-called small cash which 
have been struck here during the same period, and 
which, almost without exception, are only current 
in the province. In the latter class of coin there 
appears to be a much greater proportion of old- 
time coins than is the case here in Peking. 

" Nevertheless, the weight and composition of 
all these coins are, generally speaking, pretty much 
the same. Finally, the fifth column refers to the 
analysis of a cash coined during the reign of 

Chien Lung, and this analysis was made in con- 

378 



FINANCE AND CURRENCY 

sequence of the view widely held by the Chinese 
that coins of that period contain a considerable 
quantity of gold. It will be seen from the Table 
how far this has been confirmed ; at any rate, in 
so far as concerns the pieces analyzed by me. I 
have added these figures in order to show to what 
extent coins of that period differ from those of 
the present day. 

"Naturally a great number of cash were em- 
ployed for each analysis, and the figures quoted 
are the average results of several tests : 



Kuang Hsu 


Large Peking 
Cash 


Small Peking _, . _ 
' Cash ChienLung 




Pao 


Pao 


Pao 


Pao 




Weight per 


Ch'uan 


Yuan 


Ch'uan 


Yuan 


Small Cash 


Cash . . 


8,961 


8,242 


3.726 


3»S" 


4,021 




Gramm. 


Gramm. 


Gramm. 


Gramm. 


Gramm. 


Tin . . . 


1.20^ 


0.635^ 


1.09?^ 


0.52?^ 


3-"^ 


Gold* . . 


Strong 
Trace 


A trace 


Slight 
Trace 


— 


— 


Silver . . 


0.02^ 


0.02^ 


0.045^ 


o.o35< 


o.o4jf 


Lead . . 


2,S2^ 


4.17}^ 


4-435^ 


2.385^ 


SM^ 


Copper . . 


53-25^ 


SI -935^ 


$6.1 1 fl 


56.865^ 


So.io^ 


Zinc . . . 


3^19* 


38.91^^ 


36'So^ 


39-405< 


39.885^ 


Iron . . . 


4.705^ 


4.14?^ 


i.6ij^ 


0.66^ 


0.98^ 


Sand, etc. . 


0.125^ 


0.20^ 


0.22$|( 


o.iS5< 


0.2Sfi 



Total . 100.00^ 100.00^ 100.00^ loo.ooj^ loo.ooj^ 



"As may be seen from this Table, the cash 
from the two mints show small differences in both 

* In no case did the gold contained amount to as much as i oz, 
to the English ton. 

379 



THE BREAK-UP OF CHINA 

weight and composition. If we take the mean of 
the two, then we get for 50 large cash = i tiao, a 
weight of 430.08 gramme = 11.526' Kuping Liang 
(i Kuping Liang, or tael = 37.31256 gramme = 
575.82 grains), containing 52.59 per cent, or 6.062 
Kuping Liang of copper, and 38.55 per cent, or 
4.443 Kuping Liang of zinc. If we then calculate 
the value of the copper at 28 taels per picul (= 
1600 Liang), and that of the zinc at 8 J taels per 
picul (the prices lately ruling here in Peking) we 
have, omitting the other component parts, the 
value of the metals contained in 50 cash as equal 
to 0.1289 taels. A tael is, therefore, only sufficient 
to provide the necessary copper and zinc for 388 
large cash, or yi tiao. Actually, however, as al- 
ready mentioned, the present rate of the tael is 
loj tiao, and consequently, in spite of the fall in 
the past few years, still considerably higher than 
one could expect, for the copper money purchas- 
able for a tael costs the Government, as shown 
above, in copper and zinc, not less than 1.354 taels, 
exclusive of the cost of minting. One obtains 
similar, though not quite such startling, results 
from a calculation on the above lines of the value 
of the small cash, which amounts to 0.115 taels 
per 100 pieces. Consequently, a tael is only suffi- 
cient to provide the material for 870 small cash, 
and at the present rate of 1000 cash to the tael the 
purchaser receives an amount of copper and zinc 
which actually represent a metal value of 11 50 

taels. The interesting fact may be submitted that 

380 



FINANCE AND CURRENCY 

at present in Peking — and as far as I know, else- 
where in China — the tael, as compared to the cop- 
per coinage, still possesses a more or less imagi- 
nary value. This shows itself on the one side by 
the rapid depreciation of silver in relation to gold 
that has lately taken place, and on the other side 
by the steady rise in copper prices, which two 
movements of the foreign metal markets the value 
of the cash has not to the full extent followed. 
Nevertheless, during the last few years the raw 
material, so far as the local coins are concerned, 
has been principally drawn from Europe and Japan. 

" It is therefore to be expected that a further 
fluctuation in exchange in favor of cash will take 
place, and, indeed, the limit of that fluctuation, 
other considerations excluded, may be determined 
by the cost of production of the coins. A fall of 
the tael to 350-4CX5 large (7-8 tiao) and 850-900 
small cash is, therefore, within the bounds of pos- 
sibility. That in such a complicated question many 
other factors are involved is evident from the al- 
ready alluded to relatively high rates of exchange 
of the small cash as compared to the large ones, 
and this is explained by the increased demand cre- 
ated by the Tientsin Peking Railway." 

Upon the general question of currency and ex- 
change I asked two questions, and obtained the 
following expert opinion. The whole question is 
so difficult that I will offer no opinion upon the 
replies, interesting as they are. The questions I 
asked were : 

381 



THE BREAK-UP OF CHINA 

1 . Is a gold standard possible ? 

2. How has the varying rate of exchange 
aflFected the price of commodities ? 

The answers I received may be shortly sum- 
marized thus : 

1. No; because the balance of trade being 
against China, it is improbable that gold would 
remain in the country. 

2. The answer is, out of six of the princi- 
pal commodities imported, prices have gone 
up from 30 per cent, to 40 per cent, in five 
instances, and declined 42 per cent, in one 
instance, between January, 1890, and October, 
1898 (the date at which I arrived in China). 
The exchange in 1890 was 4^. 6flt, and in 
1898 2s. Sd. It has also tended to make the 
Chinese merchant more of a commission 
agent than a bonafde trader. 

To those who are interested in the questions, 
the detailed replies I received are more fully given 
below : 

I. "The currency of China is based on silver 
and copper cash ; the former at its intrinsic value, 
the latter approximately so. As silver has during 
recent years declined relatively to copper, ex- 
change between silver taels and copper cash has 
more or less adjusted itself to their relative values. 
This has been probably brought about by two 

causes : 

382 



FINANCE AND CURRENCY 

" (a) The curtailment of coinage of copper 
cash, as the operation could only be carried 
on at a loss. 

" (6) The melting of cash, as the metal they 
contained was worth more than their nominal 
value as money. 

"The Chinese having been accustomed to a 
standard of value based upon silver at its intrinsic 
value, they would probably look with distrust upon 
any coinage which had a fictitious value ; as gold 
and silver are constantly fluctuating in value in 
relation to each other, it is impossible to have a 
gold currency with subsidiary silver coinage which 
is not a fictitious value ; it is probable that such 
subsidiary coinage would depreciate or appreciate 
in accordance with its intrinsic value, unless it 
were exchangeable for gold in all important centres. 

The balance of trade, as far as the foreign Cus- 
toms statistics show, is against China ; there is no 
data to show how far the balance may be redress- 
ed by the trade in native vessels from Chinese 
ports to foreign countries — such as Corea, Japan, 
Siam, and the Straits, and by native overland 
trade to Thibet, Central Asia, and Siberia; the 
loans recently floated by China will virtually aug- 
ment the balance of trade against her, and there- 
fore it is improbable that gold would remain in 
the country, even if it could be introduced with 
the object of starting a gold currency, at any rate 
until Chinese exports increased to such an extent 

383 



THE BREAK-UP OF CHINA 

that the balance of trade were turned in her 
favor. 

" The question as to the prices of commodities 
in relation to exchange naturally divides itself into 
two headings — namely: 

" (a) Commodities imported from gold coun- 
tries, and 

" (6) Commodities produced in the country 
itself. 

" As regards imported commodities, prices here 
must naturally conform to the varying gold ex- 
change, and in the process of adjustment much risk 
attaches to those engaged in the trade; the reason 
is plain, because, seeing that goods have to be 
bought at home for arrival here months ahead, 
there is the terribly uncertain factor of the fluctua- 
tions in exchange during the interval. The fol- 
lowing few figures will show how the declining gold 
exchange has affected the prices of imported com- 
modities: 

Jan., 1890. Oct., 1898. Per cent 
Ex. 4s. 6d, Ex. 2S, Sd. Fall 42 





Tls. 


Tls. 




Gray shirtings . . , 


173 


2.24 


Rise 30 


White shirtings . 


2 


2.65 


" 32 


Woollen camlets . , 


10.20 * 


14.20 


" 40 


Nail-rod iron . . , 


2.80 


3-6o 


" 30 


Lead 


4.80 


7.10 


'' 48 



" Of course^, exchange is not the only factor in- 
fluencing prices; a very important factor is the 

price at which goods can be purchased at home, 

384 



FINANCE AND CURRENCY 

which, in turn, is dependent upon the price of raw 
material. For instance, first-cost prices at home of 
cotton and woollen goods, in 1890, were some 20 
per cent, higher than they are to-day. 

" In connection with the general question of the 
efiFect of a varying exchange upon trade as a whole, 
there can be no doubt that it has largely influenced 
foreign traders towards endeavors to eliminate 
from their business, as far as may be, the specula- 
tive exchange factor. Much has been written about 
the disappearance of the bona fide British merchant 
in China — that is, a trader who buys and sells on 
his own account — it being alleged that the trader in 
China has degenerated into a mere commission 
agent. The answer is that the bona fide merchant's 
business has, in consequence of varying exchange, 
become so largely speculative that the careful 
trader naturally endeavors to minimize his risk by 
getting a fAtrdpzity to assume the risk of exchange; 
consequently his object is to sell his goods before 
he buys them, whether in imports or exports. 
Commission business is naturally the result. As, 
however, the volume of business constantly con- 
tinues to increase, it may be taken for granted 
that, so far as imports are concerned, our manu- 
facturers at home care little whether we con- 
duct our business on * merchant' or * commission' 
lines, and it is difficult to see where the cry of 
the degeneracy of the British merchant in China 
comes in. 

"Another point is that, business being now 

2B 385 



THE BREAK-UP OF CHINA 

largely conducted on commission or ' indent' lines, 
we are at least certain of supplying Chinese with 
what they actually want, and not with what we may 
think they want; our manufacturers consequently 
are obliged, if they accept our indents, to arrange 
their machinery according to the wants of the 
market they are supplying ; this consideration has 
an important bearing on the oft-repeated cry of the 
want of adaptability of the British manufacturer, 
our method of business at least compels him to 
subordinate his conservative ideas to our actual 
wants. 

" As to the second point — viz., Commodities pro- 
duced in the Country^ there is no doubt that, con- 
currently with the fall in silver, there has been a 
general rise in China's home products; the fall in 
silver has something to do with this, at any rate, so 
far as the prices of exported produce is concerned, 
the Chinaman being smart enough to take advan- 
tage of the fact that the depreciated silver enables 
the foreigner to pay more silver than formerly for 
his produce, but undoubtedly the main reason for 
the rise in Chinese commodities, including necessa- 
ries of life, and hence wages and general cost of liv- 
ing, is the appreciation of copper cash in terms of 
silver. The actual worker in China, whether in 
field or factory, looks for his wages in cash, and 
whereas in 1890 a tael (i^ oz. of silver) purchased 
1400 cash, it now purchases less than 1 200. Wages 
and prices have therefore, as expressed in silver, 

advanced accordingly." 

386 



FINANCE AND CURRENCY 

With regard to the statement, in the opinion I 
^ have quoted above, that the Customs returns show 

a balance of trade against China, this is perfectly 
true; but other expert opinion I have obtained 
states that if the overland trade is taken into con- 
sideration, and the movements of bullion are in- 
cluded with trade returns, it will be found that in 
1898 there was a balance of six millions in favor 
of China. Experts have been known to differ on 
other occasions. * 

It is beyond my power to do more than lay 
these statements before the Associated Chambers 
of Commerce, and to leave them to draw their own 
deductions from them. I trust, however, that this 
chapter will be found useful to all interested in 
the subject, and that the object-lesson of the col- 
lection I have brought to England may be equally 
instructive to the ordinary business man. 

There is room for very great improvement in 
Chinese finance and currency. This is beyond 
doubt. The currency hinders trade, and is trouble- 
some to every one. As an instance of this, there 
are no less than five different currencies between 
Tientsin and Peking, a distance of 80 miles. As 
an example, the railway fare between Peking and 
Tientsin was i dollar 40 cents, but from Tientsin 
to Peking it was i dollar 30 cents. The remedies 
which I would suggest for this state of affairs, for 
the consideration of the Associated Chambers of 
Commerce, are these : 

I. A Bureau of Finance to be established 

387 



THE BREAK-UP OF CHINA 

with a foreigner at the head of it, as financial 
adviser to the Chinese Government. 

2. The establishment of a system of pub- 
lic accounts and audits, and reform in the col- 
lection of internal taxation of all kinds. 

3. The establishment of a Government 
bank (or official status to be given to one of 
the existing banking corporations in China). 

4. The establishment of a national mint, 
and a uniformity in the coinage minted and 
allowed as legal tender throughout the Chi- 
nese Empire. 

5. The establishment of a commission of 
experts by China to investigate these questions, 
and to report how reforms should be initiated. 

I feel confident that if the Associated Cham- 
bers of Commerce can do anything to secure these 
points being attended to, that trade and commerce 
will be beneficially affected thereby. 

The Banks of China at the date of my visit were 
the following : 

Hong Kong and Shanghai Banking Corpo^ 

ration English. 

Chartered Bank of India, China, etc. . . " 

Mercantile Bank of India " 

Bank of China and Japan '^ 

National Bank of China Chinese. 

Imperial Bank of China ^' 

Yokohama Specie Bank Japanese. 

Deutsch Asiatische Bank German. 

Russo-Chinese Bank Russian. 

Banque de Tlndo Chine French. 

388 



XXVII 

TRADE, TREATIES, AND TARIFFS 

Up till now foreign trade in China has been 
checked and hindered less by political changes 
than by the failure of the foreign merchant to se- 
cure all he expected or was entitled to under his 
Treaty rights, and by the tariffs illegally imposed 
on goods which have already paid customs and 
other duties at the port of entry. 

British commercial interests in China have been 
fostered by the treaties and tariffs she dictated, by 
the energy of her merchants, and by the possession 
of the lead among native competitors as well as 
foreign rivals. But competition is telling adverse- 
ly, the energy of the British merchant is being 
equalled by other nationals, the failure of China to 
keep strictly to the letter of her treaties, and the 
fact that the dictated treaties have not sufficiently 
considered both sides of the case, are all beginning 
to have an effect. The competition of the Chinese 
and the introduction of steam into the country are 
also combining to produce changed conditions in 
China, bearing in an important degree on British 
commerce. The diligence, frugality, and skill of 
the Chinese make them formidable trade rivals, 

389 



THE BREAK-UP OF CHINA 

and in order to keep the preponderance of trade 
in British hands it will be necessary for both our 
merchants and the authorities at home to recog- 
nize these changes. 

New markets must also be sought. If the mer- 
chant finds that the native workman is seriously 
cutting into one branch of his business, it is ad- 
visable that he should try and turn the activity of 
his opponent into a profitable channel for himself 
and Anglo-Saxon trade generally. New industries 
must be opened up, and I would especially direct 
the attention of the Chambers of Commerce to 
the openings for glass factories, among others, of 
which there at present seems only one in China, 
and to the fact that the more the native competes 
with the British manufacturer in certain classes of 
trade the more machinery he will require, and 
the orders for such machinery will come to this 
country if our machinery manufacturers are enter- 
prising enough. Special attention should also be 
directed to the variations in the buying and sell- 
ing of goods, as there is a great difference be- 
tween certain classes of goods in which the trade 
is ephemeral instead of permanent. For instance, 
dealings in cotton goods and teas will probably 
go on as long as China lasts, but purchases of arms 
and railway material are only to supply temporary 
wants, and may cease altogether when once China 
is in a position to produce her own plant. At the 
present moment, however, there is a great open- 
ing for railway material. Some of the orders have 

390 



TRADE, TREATIES, AND TARIFFS 

come. to this country, but at this moment the 
greater proportion are going to America. It ap- 
pears to me that the first necessity of the British 
manufacturer is to study the special requirements 
of the China market, and of these I have given 
some indication in the chapter on " Tongshan." 

Political occurrences, due to the action of For- 
eign Powers, have affected trade much less than 
has been supposed. The steady growth in the for- 
eign trade of China has, on the whole, been main- 
tained. The Customs Returns for 1898 are not 
yet public, but from good authority I learn that 
the figures will be as follows : 

Imports in Hk. taels 209,000,000 

Exports " " 153,000,000 

Total 362,000,000 

This shows an increase of 7,000,000 taels in im- 
ports, and a decrease in exports of about 10,000,- 
000 on 1897. This bears out what I have con- 
tinually drawn attention to in the course of my 
Report — viz., that trade has suffered by the want 
of security and the lack of confidence. The action 
of Russia in the North, Germany at Kiao-chow, 
or France along the Tongking frontier has had 
no effect, because no markets have yet been closed 
to trade which were open before. 

On the contrary, trade with all these districts 
has never been really open, and has only reached 
them through the hands of the Chinese. The ac- 
tion of these Powers has, therefore, had no effect 

39' 



THE BREAK-UP OF CHINA 

on the import trade unless to increase it, by im- 
proving the line of communication, and the facili- 
ties for transport. The danger in this direction 
is a prospective one, and lies in the fact that paper 
guarantees are not sufficient to assure the Brit- 
ish merchant against regulations and preferential 
tariffs, which will hinder the present steady de- 
velopment of his trade in the near future. The 
case with regard to exports is far different. The 
foreign export trade is almost entirely in the 
hands of British merchants, and the feeling of un- 
rest throughout China, the disturbances and riots, 
and the anxiety of the people, have arrested the 
natural growth of the export trade. Goods have 
been unable to come down from the interior, and 
instead of the increase we might reasonably have 
expected to find, there is a decrease of io,cxxd,ooo 
taels on the returns of 1897, although still an in- 
crease on previous years. The wealth of China, 
and the proof that I am not wrong in dwelling so 
much in this Report on the prospective trade pos- 
sible, is very clearly demonstrated by the fact that 
the total foreign trade has actually doubled itself 
since 1888. In my opinion, it will more than 
double even the present figures in the next decade 
if China is loyally assisted by Foreign Powers from 
without, and if she is also prepared to undertake 
reforms within. 

It is not always wise to confound political with 
commercial questions, but in China the two can- 
not be separated. Strong political influence at 

392 



TRADE, TREATIES, AND TARIFFS 

Peking must have a beneficial effect on commer- 
cial relations, and a strong and friendly China is 
the best guarantee for whatever extension and 
development are necessary for trade. 

We cannot, however, afford to overlook two 
positive and important facts if the " Open Door " 
policy is maintained. The most -favored -nation 
clause of all the treaties makes it impossible for 
any country to obtain anything by negotiation for 
her own exclusive benefit, which will not either be 
shared by all other Powers, or enable them to 
force a quid pro quo from China. Secret under- 
standings with China are impossible, and any at- 
tempt to monopolize control in any direction will 
be opposed and neutralized, if not completely 
foiled, by the threats which others will hold out 
over China's head. 

Thus, if Manchuria remains Chinese, preferen- 
tial railway rates cannot be introduced, the Russian 
railway will ofiFer increased trading facilities to all 
nations, and profit to Russia herself. This is ex- 
actly a case in point where the political question 
is inseparable from the commercial. All that we 
know at present is that Russia has been in nego- 
tiation with the Imperial Chinese Customs for the 
establishment of Chinese Customs Houses all 
along the line of her railway. Germany, also, at 
Kiao-chow, has consented to allow a Chinese 
Customs House to be established at that place. 

The object of all treaties made between Great 
Britain and China has been to promote trade ; but 

393 



THE BREAK-UP OF CHINA 

the Chinese provincial authorities, owing to their 
more or less independent position, have, in many 
cases, succeeded in nullifying the efifect of these 
treaties, and by illegal and vexatious tarifiFs on 
goods en route to the interior have caused both 
delay and loss to British trade. 

The Imperial Chinese Maritime Customs, under 
the able control of Sir Robert Hart, levies an ad 
valorem duty on all foreign goods landed in China. 
This duty amounts to only 5 per cent, and as 
China's Treaty with Great Britain regarding the 
Customs Tariff is about to expire, China has an- 
nounced her intention of asking for an increase of 
duty. 

The British merchants in China do not object 
to an increase in the ad valorem duty, because it 
gives them an opportunity of raising the whole 
question of taxation on foreign trade, and an op- 
portunity of getting the present abuses remedied. 
As they justly observe, a slight increase in taxation, 
levied at the port of entry, will be less injurious to 
trade than the uncertainty of the taxation levied 
on goods and the delay caused in transit by pro- 
vincial authorities. 

The principal treaties under which British trade 
with China is conducted are as follows : 

I. Treaty of Nanking .... 1842 

II. Tientsin Treaty 1858 

III. Chefoo Convention . . . 1876 

In addition to this there is the Customs Tariflf 

394 



TRADE, TREATIES, AND TARIFFS 

itself, to which China and Great Britain are con- 
tracting parties. The rights and privileges theo- 
retically conceded under these treaties have, in 
many instances, been withheld for thirty years. 
These privileges are as follows : 

NANKING TREATY OF 1842 

The Nanking Treaty of 1842 provided that 
" When British merchandise shall have once paid 
at any of the said ports (Treaty Ports) the regu- 
lated customs and dues, agreeable of the tariflf to 
be hereafter fixed, such merchandise may be con- 
veyed by Chinese merchants to any province or 
city in the interior of the Empire of China on 
paying a further amount as transit duties, which 

shall not exceed per cent, on the tariff value 

of such goods." Article X. — Treaty of Nan- 
king. 

This Treaty is perfectly clear. It provides that 
British merchandise may be admitted to Treaty 
Ports on payment of the tariff, and to the interior, 
in the hands of Chinese merchants, by an addi- 
tional tax as transit duty, the percentage for 
transit duty being apparently left open for several 
years. 

The original intention of the framers of this 
Treaty was to secure free entry of British goods 
to the ports opened to trade under Article II. of 
the same Treaty, and to allow them to be im- 
ported into the country not open to foreign trade 

395 



THE BREAK-UP OF CHINA 

by a further payment. In course of time, how- 
ever, the Chinese began to take advantage of the 
fact that duties other than these two were not ex- 
pressly forbidden, and in 1858 the whole question 
was thoroughly gone into and a new Treaty was 
signed, which may be said to be the Magna 
Charta of the British merchant in China. This 
was the 

TIENTSIN TREATY OF 1858 

This Treaty covers a very wide field connected 
with the rights and privileges of foreign trade, but 
the clause with which we are most concerned is 
that known as Article XXVIII. 

This commences that " Whereas it was agreed 
under Article X. of the Treaty of Nanking that 
British imports having paid the tariff duties should 
be conveyed into the interior free of all further 
charges^ except a transit duty." And then goes on 
to describe how British merchants had complained 
that the duty not having been stated, charges were 
suddenly and arbitrarily imposed by local officials, 
and therefore — 

" It shall be at the option of a British subject 
desiring to convey produce purchased inland to a 
port^ or to convey imports from a port to an inland 
market, to clear his goods of all transit duties by 
payment of a single charged 

The Article goes on to state that this charge 
is to be levied at the first barrier passed by ex- 
ports proceeding to the sea, or on imports going 

396 



TRADE, TREATIES, AND TARIFFS 

inland at the port where they are landed. It also 
provides that this duty or " single payment " shall 
not exceed 2j per cent, on the value of the goods, 
and provides that: 

" On payment thereof a certificate shall be is- 
sued which shall exempt the goods from all further 
inland charges whatsoever^ 

There could be no possible misunderstanding 
in this plain language. It was clear that two 
duties only need be legally incurred by foreign 
traders. 

1. The ordinary Customs duty. 

2. The transit-pass fee, which was to cover 
all goods whether going to or from a port. 

To set the point beyond cavil, however, the fol- 
lowing extract from a despatch of Lord Elgin (the 
framer of this Treaty) to the Foreign Office in 
November, 1858, may be quoted: 

" Henceforth, on payment of a sum in name 
of transit duty, goods, whether of export or 
import, will be free to pass between the 
port of shipment or entry to or from any 
part of China without further charge of toll, 
octroi, or tax of any description whatsoever. 
I confess that I consider this a most impor- 
tant point gained in the future interest of for- 
eign trade with China. I have always thought 
that the remedy (against the grievance pressed 
upon mc by mercantile bodies or individuals 

397 



THE BREAK-UP OF CHINA 

since I came to China) was to be sought in 
the substitution of one fixed payment for 
the present irregular and multiplied levies, 
.... although it was obviously difficult to 
devise a scheme for the commutation of tran- 
sit {i.e.y inland) duties which, without creating 
great financial disturbance, should prove an 
efifectual protection to the importing and ex- 
porting merchants." 

In spite of this, as years went on, the Chinese 
officials, with undiminished perseverance, con- 
tinued to try and impose various additional taxes 
under specious pretexts and different names, the 
principal of these being a tax known as likin, and 
which was not only illegal but was a great source 
of hindrance to trade, as the merchant never knew 
what the amount of the likin might be. The great 
difficulty also was that, as goods were entirely in 
the hands of Chinese compradors in transit, the 
Chinese were naturally less able to resist the 
squeeze, than if the goods had been under the 
control of a foreigner when the tax was charged. 

In 1868 Sir Rutherford Alcock, the British 
Minister at Peking, took the matter in hand, and 
in a despatch which he wrote to the Foreign Office 
he said : 

** China has, by her treaties, foregone all 
further right of taxation on whatever can be 
shown to constitute the foreign trade, import 
or export. The likin continues a violation of 

398 



TRADE, TREATIES, AND TARIFFS 

treaty rights. . . . This question of the as- 
sumed right of the Chinese Government to 
tax foreign trade ad libitum is one of principle, 
and of such vital moment to the interests of 
commerce that a British Minister can have 
no discretionary power in protesting against 
it as a violation of treaty." 

Sir Rutherford also drew up a Convention, in 
1868, which was intended to clear up the whole 
question ; for while the Tientsin Treaty, as quoted 
above, very clearly stated that it was ^' ai tke option'^ 
of a British merchant to clear his goods by one 
payment of transit duty, the weak point in the 
clause was that which ordered that, upon the ap- 
plication of the Consul, the duty between the port 
and any place in the interior should be published 
in Chinese and English for the benefit of the mer- 
chants at large. In other words, it permitted the 
provincial authorities to still levy duties on goods 
en route as long as the duties were notified to the 
British Consul, and it only gave the merchant," an 
option " to clear his goods from such duties by 
paying for a transit pass or certificate. 

Sir Rutherford Alcock's Convention was in- 
tended to clear up this point, and to make it im-. 
perative that there should be a simultaneous pay- 
ment of duty and all dues on imports at the time 
of landing, and their subsequent exemption from 
all further taxation, in the Treaty Port provinces. 
Unfortunately, this Convention was never ratified, 

399 



THE BREAK-UP OF CHINA 

but it undoubtedly was the solution of the diffi- 
culty, as while provincial officials are allowed to 
levy likin at all, they will do so as they do now, 
whether the goods have paid transit-pass dues or 
not. If those in charge of the goods covered by 
a transit pass refuse to pay this illegal exaction, 
they have to submit to detention and delay, which 
is, in the long run, as costly to the merchant as if 
he paid the illegal squeeze imposed by the officials. 
The present Inspector-General, Sir Robert Hart, 
talked the matter over with me, and he was of 
opinion that the provision I have quoted in the 
unratified Alcock Convention was a good one, and 
"that it will only be by an understanding of a 
similar nature that any transit system will ever be 
made to work well." 

The efforts of Sir Rutherford Alcock having 
proved abortive, the abuses continued to flourish 
and increase. Trade was hampered, and the mer- 
chants continually complained. The most com- 
mon complaint was that, ignoring the terms of 
Treaties, the provincial officials steadfastly re- 
fused to recognize the rights of Chinese merchants 
to carry goods under the transit-pass system. The 
result of this was to restrict the expansion of trade 
with all parts other than Treaty Ports. Another 
Convention was drawn up to settle this point, and 
by 



TRADE, TREATIES, AND TARIFFS 
THE CHEFOO CONVENTION OF 1876 

Section 3 of Article IV. enacted that: 

"The Chinese Government agree that 
Transit Duty Certificates shall be framed un- 
der one rule at all ports, no difiference being 
made in the conditions set forth therein ; and 
that, so far as imports are concerned, the na- 
tionality of the person possessing and carrying 
these is immaterial. Native produce carried 
from an inland centre to a port of shipment, 
if bona fide intended for shipment to a foreign 
port, may be, by treaty, certified by the Brit- 
ish subject interested, and exempted by pay- 
ment of the half duty from all charges demand- 
ed upon it en route. If produce be not the 
property of a British subject, or is being car- 
ried to a port not for exportation, it is not en- 
titled to the exemption that would be secured 
it by the exhibition of a transit duty certifi- 
cate. The British Minister is prepared to 
agree with the Tsung-li Yamen upon rules 
that will secure the Chinese Government 
against abuse of privilege as affecting pro- 
duce. The words nei-ti (inland) in the clause 
of Article VII. of the Rules appended to the 
tariff, regarding carriage of imports inland 
and of native produce purchased inland, ap- 
ply as much to places on the sea coasts and 
river shores as to places in the interior not 
open to foreign trade; the Chinese Govern- 

2C 401 



THE BREAKUP OF CHINA 

ment having the right to make arrangements 
for the prevention of abuses thereat." 

Article VIL, appended to the Customs Tariff, 
is equally plain. As to imports it says, on the 
transit certificate being issued "no further duty 
will be leviable upon imports so certificated, no 
matter how distant their place of destination." 
The regulations of this Article as to exports, how- 
ever, are a direct contravention of the Treaty of 
Tientsin, for, instead of providing for the payment 
of transit dues at the first barrier which the goods 
pass, it provides that they shall only be examined 
there, and the transit duty be paid at the last bar- 
rier before arrival at the port of destination. This 
rather left the door open to the provincial authori- 
ties to " squeeze " the goods en route, as they could 
say that no duty had been paid. Another harass- 
ing condition in this same rule is that "unauthor- 
ized sale in transitu of goods that have been en- 
tered as abovci or a part, will render them liable 
to confiscation." 

The effect of this regulation was to prevent the 
merchant taking advantage of any opportunity of 
selling his goods en route, and any accident or loss 
of part of the cargo in transitu gave the local offi- 
cials an unequalled opportunity of inflicting heavy 
penalties on the merchant. For instance, about 
a year ago an American merchant at Wuchow 
shipped 2000 cases of kerosene oil to Kweilin un- 
der transit pass, but on arrival at a barrier near 

402 



TRADE, TREATIES, AND TARIFFS 

Kweilin it was discovered that the cargo was short 
of twenty cases mentioned on the pass. It is more 
than probable that the local likin officials, who 
are up to all sorts of tricks, had arranged to have 
these twenty casks stolen, for on arrival at the bar- 
rier near Kweilin they seized the cargo and impris- 
oned the Chinese supercargo, on the ground that, 
these twenty casks being missing, the whole cargo 
would be confiscated for violation of Rule 7. 
Months passed before a settlement was arrived at, 
the merchant losing a contract for 120,000 cases 
of oil owing to the delay, besides having to pay a 
heavy sum as demurrage to the owners of the 
native junks he had employed. 

The consequence of this and similar cases was 
that in 1898, not long before my visit, a new set 
of Transit Pass Rules had been promulgated by 
arrangement between the Tsung-li Yamen, the 
Inspector- General of Customs, and the foreign 
Ministers. I append a copy of these Rules for 
the information of the Associated Chambers, and 
for the benefit of merchants who are contemplat- 
ing catering for the China market : 

RULES 

I. Certificated imported goods going from 
a Treaty port to any inland place duly speci- 
fied shall be free, after payment of a half duty 
for transit pass, from further taxation of any 
kind. * • 

403 



THE BREAK-UP OF CHINA 

2. On arrival of the goods at the place 
of destination the certificate shall be can- 
celled. 

3. If the entire quantity of goods duly cer- 
tificated are sold while en route to a stated 
destination, then the certificate must be can- 
celled at the barrier where the goods are sold. 

4. Should the entire quantity of certifi- 
cated goods not be sold, but only a portion 
be sold, on the remainder reaching the next 
barrier the quantity and description of the 
goods sold and the place where the sale 
took place must be reported by the merchant 
to the Likin Office, whereupon the official 
in charge of the Likin Office will make 
an endorsement on the certificate under his 
seal of office, and the balance of the goods 
will be allowed to pass without delay. 

5. Clear and strict instructions must be 
issued to the officials in charge of the barriers 
nearest the port whence goods are despatched 
inland that they must not allow certificates 
duly stamped by them to pass goods a second 
time. 

6. If on examination it be found that certi- 
ficates are being used a second time, the goods 
specified by them will be confiscated. 

I am well aware that none of this information 

is new to the Associated Chambers nor to the 

China Merchants, but, in view of the forthcoming 

404 



r 



TRADE, TREATIES, AND TARIFFS 

revision of the TariflF, I have thought it wise 
to shortly summarize the whole question of our 
Treaty rights from 1842 down to the present day, 
and so to place the exact position of afifairs before 
business men who have not time to turn up trea- 
ties and regulations to verify important points. 

With regard to the new rules, excellent as they 
are, I agree with the Inspector-General that no 
satisfactory settlement of this much -vexed ques- 
tion will ever be arrived at till it is made a neces- 
sary condition of foreign trade with China that all 
taxes on goods imported or exported on behalf of 
foreigners shall be levied at one place, the port of 
arrival in the case of imports, and the port of de- 
parture in the case of exports, and to secure this 
China must make it illegal for any duties to be 
collected en route under any pretext whatever. 

ILLEGAL TAXES 

The principal illegal taxes at present collected 
on goods in transitu are Likin (a sdrt of provincial 
Customs due levied in every province, and some- 
times in nearly every district of a province), Ching- 
fui (or Defence tax), the Haikow, and the Loti- 
Shui (or Destination tax). 

The likin tax is said to have originated owing 

to the necessity to raise money after the Taiping 

rebellion. The whole object of it appears to be to 

squeeze the poor, the weak, and the enterprising. 

It is an effectual bar to the extension of trade. 

405 



THE BREAK-UP OF CHINA 

No sooner is a new trade route opened than likin 
exactions are imposed, and in every province it is 
merely an excuse for tyranny and extortion. Ille- 
gal as it is, when levied on foreign goods under 
transit pass, it is curious to find both the British 
and German Governments giving the tax a legal 
status by accepting seven Likin Collectorates as 
collateral security for the last Anglo-German loan. 
The seven collectorates are as follows : 

Salt Collectorates. 

^^^^^S I Province of Hupeh. 

Hankow ) 

Tatung (Wuhu) .... " " Anhui. 

General Cargo. 

Kiukiang " " Kiangsi. 

Suchow 

Sung-Hu (Shanghai) . . " " " 
Eastern part of province, Chihkiang. 

Collection is estimated at five million taels per 
annum. 

The likin is not only a hinderance to trade, but 
also causes most wasteful expenditure of men and 
money. Only about one-fifth of the amount col- 
lected ever reaches the authorities, and to avoid 
the tax coolies are employed to carry goods miles 
round a likin barrier, which delays traffic. 

The Native Customs House working alongside 
the Imperial Maritime Customs is a great anom- 
aly. It hinders trade by enabling heavy charges 

to be levied on Chinese merchants who have 

406 



TRADE, TREATIES, AND TARIFFS 

bought goods from the foreigner which have al- 
ready paid all legitimate dues. It is from begin- 
ning to end a bad system, and foreign trade suffers 
less by the amount levied upon it in going up or 
coming down country than it does by the intol- 
erable delays and difficulties which this system 
entails. 

The British merchants drew my attention to the 
fact that these duties, illegally levied, checked the 
import trade, and often caused serious loss in the 
export trade. A merchant in China undertakes 
to deliver in London a certain quantity of goods 
by a certain date. The merchant is compelled to 
deliver or to pay. The fact of the rate of ex- 
change being against him, when the time comes 
for him to deliver, is one unavoidable cause of loss, 
but when there is added to this the heavy sums 
he has to pay to the Likin Collectorates to get his 
goods in time to deliver, it will be seen how serious 
a matter it is. 

At several places the merchants pointed out to 
me that the officials know very well that the mer- 
chant must have his goods delivered by a certain 
time, and so they ignore the transit pass, and the 
supercargo has either to pay the squeeze demanded 
or suffer months of delay. News is a long time 
reaching the coast. The Consul protests, and 
orders are sent to release cargoes. Total deten- 
tion runs into months. Next time the Chinese in 
charge of goods pay, to avoid delay. British mer- 
chants pay it either in increased freight, if price 

407 



THE BREAK-UP OF CHINA 

of goods IS already settled, or, if not, in increased 
price. If contract has been made for forward de- 
livery at a fixed price, this seriously affects the 
margin of profit The merchants intend to press 
for indemnity if the present system continues. 
They claim that the present way of getting an 
apology from the Taotai is of no use. The only 
way to deal with the Chinese authorities in such 
cases is to attack their pockets. It is of no use 
for the merchant to take the case before his Con- 
sul, because there is great difficulty in getting the 
Chinese compradors and supercargoes to give evi- 
dence before the Taotai. If they give such evi- 
dence, the Likin Offices pass the word along the 
line, and the Chinese comprador finds himself boy- 
cotted when he next goes up country for goods. 
The remedy the British merchants suggest is that 
when a cargo has been delayed for weeks at likin 
barriers, despite the transit pass which covers it, 
the Consul should be authorized to fine the local 
official, and remit the fine to the Imperial Mari- 
time Customs. The merchants claim that if this 
system was inaugurated the present squeezes 
would soon be stopped, as the Peking authori- 
ties would take care the local mandarin paid the 
fine, which would go to swell the receipts of the 
Imperial Chinese Customs; on the other hand, 
the local Taotai would be less supine, having an 
interest in finding and punishing the ofifenders, in 
order to recover the sum by which he was out of 

pocket. 

408 



TRADE, TREATIES, AND TARIFFS 

Sometimes the officials refuse to issue transit 
passes for frivolous reasons. A Mr. Morrison 
applied to Mr. Brenan, Consul-General at Shang- 
hai, some six weeks before I left China, for a transit 
pass for sheepskins. The Taotai refused to grant 
this, giving no better reason than that such busi- 
ness was a novelty. Mr. Brenan sent in a bill to 
the Taotai for actual damages for delay and loss 
of time. To give the Taotai a lesson, Mr. Morri- 
son should be allowed to claim moral and indirect 
damages as well, which should amount to looo 
taels rather than icxd taels. This sort of thing 
puts enterprising merchants ofif, whereas if Mr. 
Morrison received encouragement and succeeded, 
it would benefit and stimulate trade and commerce. 

The transit-pass system cannot be said to be an 

" utter failure," as the facts reported in the chapter 

on " Chinkiang " will show. The new rules have, 

no doubt, done a good deal towards stimulating 

this system, but much still remains to be done. 

We have only ourselves to blame for the troubles 

which have arisen. The text of the treaties was 

clear, but the British Board of Trade gave away 

our case by admitting the destination tax to be 

legal 30 years ago; while Sir Thomas Wade, 

when Minister at Peking, actually laid down the 

extraordinary dictum as to likin that '* it was not 

legal within foreign settlements," implying that 

it was legal outside. The whole wording of the 

treaties as to transit -pass dues contravenes this, 

giving an exactly opposite decision. 

409 



THE BREAK-UP OF CHINA 

The French have made a much better stand, 
and their action has benefited British trade in the 
South. Of late years, however, the British Lega- 
tion at Peking have directed their efiforts to pro- 
tecting British interests on this question, and the 
good effect of their action is now being felt. 

Of the other taxes, the " Loti Shui " is probably 
the most obnoxious. It is generally farmed out 
to some official whose interest it is, therefore, to 
get as much as he can. Although described as a 
destination tax, it is also very often imposed as a 
growers' tax. 

The taxes levied on exports are the greatest 
possible evils to Chinese products. The tea trade 
has been nearly crushed out, and taxation, com- 
bined with the deterioration which necessarily 
follows in cultivation, is destroying it. If foreign 
capital came to its assistance and better methods 
of cultivation were introduced, it might still stand 
a chance. Russia is now attempting to cultivate 
Chinese tea in the southern parts of her Empire, 
and some thousands of coolies have been deport- 
ed to Russia to assist in starting the cultivation. 
Most of them, I was told, went from the district 
around Hankow, which is the great tea centre. 
Silk has also suffered from taxation, and Japan 
is now actively competing with China in this 
branch ; while the taxation placed upon the cotton 
grower is slowly but surely killing that industry 
also. 

Although these taxes are paid by the Chinese, 

410 



TRADE, TREATIES, AND TARIFFS 

they are all subjects for the Associated Chambers' 
attention, as taxation which injures and reduces 
the productive capabilities of a country affects not 
only the natives of that country, but all foreign 
merchants trading with it 

One of the harassing taxes in China which pre- 
vents and retards the expansion of trade is the 
tax imposed on their own domestic trade — viz., a 
duty of 2^% ad valorem on all goods passing from 
one port in China to another port. 

The salt monopoly is another of the taxes 
which requires to be reformed if China is to pros- 
per. At present it presses very hardly on the poor- 
er classes, and is a drag on the natural resources 
of the country. In other parts of the Report I 
have given instances where the inhabitants of 
fishing towns actually imported salted fish as an 
article of diet, as it was cheaper than salting the 
fish they caught themselves. Salt is a necessity 
of life, particularly in Eastern countries, and while 
it may legitimately be made a source of revenue if 
so desired, no one can doubt that its taxation, if 
in^properly administered, is a great hardship to 
the people. The reform in Eg)rpt in this depart- 
ment might be well imitated in China. 

The land tax is constantly complained of by 
both foreigners and Chinese. In any revision of 
the tariff the reform of this tax will be asked for 
by the foreign communities. 

There are two sides to every question, and be- 
fore entering into the question of tariff revision I 

411 



THE BREAK-UP OF CHINA 

should like to say a few words upon the Chinese 
side of this question. 

The difficulties in the way of reform lie chiefly 
in the fact that the provincial Governments must 
have revenue from some source or other, and you 
cannot hope to suddenly suspend indirect taxa- 
tion which the people are accustomed to, and re- 
place it by direct taxation, as would appear to be 
necessary if likin and other octroi are abandoned. 
The provincial Governments rely chiefly upon 
likin for their revenue, and although the Chefoo 
Convention authorizes Chinese purchasers to take 
out transit passes to cover goods, the authorities, 
who see their revenue disappearing, look upon the 
Chinese, not as making use of a treaty right, but 
as abusing it to evade the payment of Chinese 
taxes. This is one of the matters in which a 
proper appreciation of Chinese official needs must 
be shown before the arrangements can be expected 
to work smoothly and without friction. 

Another point is that, at present. Canton sugar 
goes to Hong Kong in native junks, and is thence 
sent in foreign bottoms to treaty ports, claiming 
transit privileges as having acquired a foreign 
character. This is regarded as an abuse of tran- 
sit rights, and native officials proceed to make 
difficulties for the whole transit system. Revision 
and fuller definitions, coupled with consideration 
for China's financial necessities, may put the transit 

pass system on a proper and workable basis. 

412 



TRADE, TREATIES, AND TARIFFS 

REVISION OF TARIFFS 

The request of China for a revision of the tariff 
is complicated by the fact that all the treaties do 
not expire together. To protect the British mer- 
chant, it may be necessary for the Associated 
Chambers to see that whatever is done in this di- 
rection is done by all the Powers together. 

Neither the Anglo-Saxon nor other foreign mer- 
chants appear to object to any increase in the tar- 
iffs, provided greater facilities for trade are granted, 
and necessary reforms in the fiscal system are given 
as a quid pro quo. The merchants and Chamber 
of Commerce with whom I discussed this question 
expressed themselves in different ports in China 
to be willing to consent to an increase of the pres- 
ent duty from 5 per cent, to 10 per cent, 12 per 
cent, or even 15 per cent all round, but if in- 
creased to this extent they hold that the transit- 
pass dues should be done away with, and that all 
merchandise, having paid duty on entering the 
country, should be free of all further taxation 
whatsoever. 

The Associated Chambers of Commerce will 
notice that the present duties amount to 7^ per 
cent (5 per cent customs and 2J per cent tran- 
sit), but that even after this 7i per cent the mer- 
chandise is liable to be illegally taxed. It would 
appear, therefore, that even an increase of the 
present duties to 15 per cent, would in the long 
run pay the foreign trader, provided that this 15 

413 



THE BREAK-UP OF CHINA 

per cent, was a full, final, and inclusive charge, 
and no other taxation of any kind was im- 
posed. It would also pay the Chinese Govern- 
ment, as even if they returned a percentage of 
this increase to the Provincial authorities, in 
order to reimburse them for their loss of likin, 
etc., they would still have a considerable surplus 
over the present receipts. More than this, both 
the Imperial and Provincial revenue would soon 
feel the effect of increased trade which greater 
privileges and a certain fixed duty would un- 
doubtedly produce. 

The foreign merchants without exception agree 
that tarifif revision which grants China any in- 
crease of revenue must include the following as a 
quid pro quo : 

1. Extended rights of residence and trade 
to foreigners. 

2. Removal of all restrictions on navigation 
on inland waters, and opening up of internal 
communication by railways. 

3. Guarantees for the immunity of foreign 
merchandise from further taxation, after it has 
paid the duties fixed by treaty. 

They also considered that other necessary re- 
forms, not directly connected with the question of 
tariffs, should be undertaken. These reforms I 
have fully mentioned in my " Observations " at 
the end of this Report, and I would submit to 

the Associated Chambers of Commerce that, if 

414 



TRADE, TREATIES, AND TARIFFS 

treaty revision is undertaken, it would be an ex- 
cellent opportunity to bring that moral pressure 
on the Chinese Government which would ensure 
all of these reforms being carried out. The Chi- 
nese authorities must have money to carry on 
administration, and the commercial classes must 
have some return for the concessions they will 
be asked to make. 

One important point in tariff revision should 
not be overlooked by the commercial classes of 
this country. Ad valorem duty is based upon a 
fixed scale of values in certain commodities. The 
fall in prices in some of these has made the 5 per 
cent, ad valorem really much more than 5 per 
cent. In some cases the increase has been so 
great as to wipe out almost any margin of profit. 

On the Chinese side one important matter 
should be considered when treaty revision takes 
place. The Chinese authorities complain that 
some merchants have been known to declare the 
value of their goods at much below the real sum. 
This dishonesty not only affects customs receipts, 
but also injuriously affects their more honest trade 
rivals. Some method should be devised of giving 
the customs authorities a check upon the value of 
the cargoes. 

The next question is, How is treaty revision to 
be carried out in fairness to both sides, and to se- 
cure that all these just demands of the merchants 
receive proper attention? The difficulty about 
some of the treaties having several years yet to 

415 



THE BREAKUP OF CHINA 

run before they expire will not be dealt with easily. 
The French treaty and our own are contermin- 
ous, but the Japanese has eight years and the 
German four years to run. I submit that the 
proper thing for China to do would be to try and 
induce these countries to allow their treaties to 
lapse, and join Great Britain and France in a new 
general commercial treaty. Failing this, the only 
way will be for China to give a continuation of the 
British and French treaties till the date the oth- 
ers fall in. Unless this is done, Great Britain and 
France will be binding themselves to pay specially 
high rates of duty, while the most-favored-nation 
clause would allow other Powers to share in the 
privileges and concessions which they obtained 
from China in return for such duties. 

The Marquis I to, in one of the interviews I had 
with him, suggested that the only way to settle 
treaty revision in a satisfactory and speedy manner 
was to have a conference of Ministers in China. 
He pointed out that to refer the questions involved 
to the various home Governments would involve 
needless delay and confusion. Those on the spot, 
who knew the subject thoroughly, should be in- 
trusted by the Governments with the work of dis- 
cussing and agreeing upon the points to be deter- 
mined, and the result of their deliberations could 
then be forwarded in the form of a draft treaty to 
their respective Governments. It appears to me 
that this suggestion of the Marquis Ito is one 

worthy of consideration. 

416 



TRADE, TREATIES, AND TARIFFS 

The merchants suggested that, in order to arrive 
at a proper understanding and to assist the Minis- 
ters, there should first of all be a committee of 
consuls sent round to the various ports to obtain 
the views of the mercantile communities upon cer- 
tain definite c|uestions, and to formulate their de- 
mands. Such a commission should consist, they 
thought, of Chinese officials, British consuls, Euro- 
pean (not British) consuls, and a British merchant. 
Due care should be taken that the interests of all 
nations were fairly represented, but that it was in 
proportion to their trade. 

What the future of foreign trade in China might 
be is well illustrated by a comparison between the 
foreign trade of that country and Japan at the 
present moment. Japan is a country without a 
tittle of the natural resources of China. Japan has 
only a population of 42,000,000 ; China has a popu- 
lation of over 400,000,000. Japan's foreign trade 
last year was $444,000,000 ; China's foreign trade 
last year was $495,000,000. 

In conclusion, I cannot avoid noticing here the 
very hearty, sound, business ideas of British mer- 
chants in China as expressed to me in the interviews 
I had with them. I found no petty feeling of com- 
mercial rivalry animating them. On the contrary, 
they were most anxious to impress upon me how 
successful their methods were, and how little they 
feared the competition of other nationals, if a fair 
field was assured them. There is more danger of 
their undervaluing the effect of commercial rivalry 
2D 417 



THE BREAK-UP OF CHINA 

than of complaints or ill-feeling because of such 
rivalry. 

To summarize this weighty subject, the points 
are as follows: 

1. There are many fresh openings for trade, 
to which the attention of British manufactur- 
ers should be directed. The commodities 
I would specially note are — glass, tool-steel, 
steel wire rope, electric plant, railway material, 
mining machinery, high explosives for mining 
purposes, and machinery of all kinds. 

2. Treaty rights must be enforced, and 
illegal impositions on trade be prevented. 

3. In return for tariff revision the whole 
question of fiscal and other reforms ought to 
be raised as a quid pro quo. 

4. This quid pro quo must include all and 
every facility for trade and commerce to pene- 
trate into the interior. 

5. Help the Chinese to reorganize their 
forces, to police the country, or trade cannot 
be secure. 

The situation in China to-day bristles with in- 
ternational, commercial, and financial difficulties. 
British commerce, once the only occupant of the 
field, has now to face competition and adverse 
political influences, and if the 64 per cent, of Brit- 
ish trade is to be maintained and increased, our 
commercial classes will have to use all their ener- 
gies and abilities to keep the flag of Great Britain 

in the front of commercial enterprise in China. 

418 



XXVIII 

JAPAN 

As I received several invitations from Chambers 
of Commerce and prominent personages interested 
in Chinese trade to visit both Japan and America, 
I came home through those two countries, hoping 
that I might be able to gather some useful in- 
formation for the Associated Chambers of Com- 
merce. 

On arriving at Nagasaki, January ii, 1899, I 
visited the large mercantile docks and works of 
the Mitsu Bishi Company. 

Perhaps the following facts may be interesting 
to the ship-building community of this country: 

There are two yards, a short distance apart, 
both under the direction of the same company. 
They employ 4000 men. I found on the stocks a 
steamer building for the Japanese mercantile fleet 
—^000 tons, 430 feet long, and 45 feet beam. She 
had a double bottom right fore and aft, 1 1 water- 
tight bulkheads, without doors, twin^crews to run 
1 2 knots with 7200 tons dead-weight. I was much 
struck by the safety and capabilities of this vessel. 

She had a sister ship already launched and cany- 

419 



THE BREAK-UP OF CHINA 

ing freight. I was told that both of these ships 
will be built at a loss, owing to the steel they use, 
which comes from Scotland, costing ;^io a ton on 
delivery. This loss is borne by Baron Yonoski 
Iwasaki and Baron Hisaya,two rich Japanese gen- 
tlemen, in support of the patriotic idea of starting 
shipbuilding in Japan. With the exception of the 
loss on these two ships, the yards are doing a thriv- 
ing business. I saw two good docks, one 520 feet 
long, and the other 360 feet long. I also found an 
excellent example of the art of competition. The 
Americans are trying to introduce both tool steel 
and pig-iron at such a low price as must entail a 
loss. All the tool steel and pig-iron at present 
comes from Great Britain, as does all the coke that 
is used, and the boiler tubes and ingot steel — the 
latter from Glasgow. All the boilers and engines 
and ordinary shafting are made at the works, but 
very heavy shafting comes from abroad. 

The shops were in first-rate order, well found, 
well built and cared for. 

The Japanese are making strenuous efiForts to 
convey all their water-borne commerce in Japan- 
ese vessels. From what I saw in Japan I should 
be inclined to think that the trade most likely to 
be developed with Great Britain is machinery. A 
large amount of machinery in Japan is of British 
manufacture, and it will be satisfactory to the 
Associated Chambers to know that the last order 
for twenty engines for the Government railway 

has been given to Great Britain. 

420 



JAPAN 

In the near future Nagasaki is certain to be a 
point of departure, being such a good harbor, and 
right in the route between America and China. 
The energy and enterprise of the Mitsu Bishi 
Dock Company is sure to find its reward. 

I arrived at Kobe on the 13th of January. I 
found the minds of the British merchants here 
much occupied over the new jurisdiction which is 
to come into force in Japan ist of July, 1899. 
After receiving several addresses I was asked to 
give an opinion on this matter. In answer, I re- 
marked that it would be well to see how this new 
treaty acted before criticising it adversely, and that 
it would further the interests of British trade if the 
British merchants allowed it to be understood that 
as far as they were concerned they would do their 
best to help the Japanese Government to carry 
out the tenor of the treaty, and so endeavor to 
make it a success. 

At Osaka I visited the Military Arsenal. It was 
principally employed making a new quick-firing 
gun — i2-pounder — ^for horse and field artillery, 
Japanese patent. The principle was certainly sec- 
ond to none. They were also making a magazine 
rifle, Japanese patent, and quite perfect in design 
and construction. Most of the machinery in this 
arsenal is British. 

I visited one of the factories of the Japan Sugar 

Refining Company. This enterprise pays well. 

The sugar comes from Java and is refined for 

421 



THE BREAK-UP OF CHINA 

use in Japan. The machinery here was made in 
Great Britain. 

I also visited the largest of the 17 cotton mills 
at Osaka. All the machinery I saw was British, 
and I was told this was the case throughout all 
the mills. This mill employed 5000 men, wom- 
en, and children. I saw some weaving milk also. 
There were some 54,000 spindles and 600 looms 
at work. In Japan there are 70 cotton mills 
altogether. 

There are 30 match factories at Osaka, but 
most of them are on a very small scale. I visited 
one, the Osaka Sei Sui Company. A great part 
of the work is done by hand, but what machinery 
they have is German. They employ 1500 men, 
women, and children. I made particular inquiries 
as to whether any of the diseases generated by 
match-making were common in these factories. I 
was informed they had no experience of such dis- 
eases whatever. 

I went over some very busy iron and steel 
works, which belonged to an Englishman but were 
registered as a Japanese Company. The works 
are extensive and show great enterprising energy. 
Twelve hundred men are employed. I saw a very 
good small dry-dock and three steamers on the 
slips, the biggest of which was 600 tons. Several 
steam-pinnaces were building. 

I have called attention to these facts in the Re- 
port, for although they are not connected with 

Anglo-Saxon trade proper, they are industries de- 

422 



JAPAN 

veloping in Japan, and increasing the volume of 
Japanese trade. This increase in volume must 
create a demand for goods of Anglo-Saxon manu- 
facture. 

I was invited to attend a meeting at which the 
Mayor, the General Commanding, the Members 
of the Chambers of Commerce, and all representa- 
tive citizens were present. The Mayor spoke of 
the importance of the Mission sent by the Asso- 
ciated Chambers to China, and declared that it 
was imperative for the future of Japanese trade 
that the "Open Door" policy be adhered to. 

On the 15th of January, at Kioto, I went over 
the'"great electric plant worked by water-power, 
produced with a fall of 1 20 feet. This power sup- 
plies Kioto with two-thirds of the electric light, 
works the electric trams, the pumping for the wa- 
ter-works, and no less than sixty different indus- 
tries in or near the town. All the machinery, 
which is excellent, is American. The entire plant 
cost ;^50,ooo. This sum was found by the mu- 
nicipal council, who are solely responsible for the 
scheme and its successful carrying out This 
system of electric batteries is, I think, one of the 
most remarkable examples of municipal progress, 
energy, and enterprise to be seen in Japan, or per- 
haps in any country. 

Another further interesting example of munic- 
ipal enterprise is illustrated by the following : 

There is a great trade and passenger traffic from 
Kioto to Lake Biwa, and through the lake to the 

423 



THE BREAK-UP OF CHINA 

surrounding country. Boats used to come up the 
river from the sea to Kioto and there discharge 
their passengers or cargo. A mile had then to be 
traversed to reach the lake, where passengers and 
cargo again embarked for distribution. This in- 
terruption has been done away with by the follow- 
ing ingenious device. On arrival at Kioto the 
boats are now floated into a cradle and hauled 
up the mile, the incline of which is 120 feet, by 
a steel wire hawser worked by an electric motor. 
By this means the same boats perform the whole 
distance of sixty miles from the sea to the farther 
end of the lake. This electric tramway for boats 
is most extensively used, there being always boats 
waiting to take their turn. The municipality only 
charge a small carriage of thirty cents on each 
boat hauled up the incline. The invention and 
the whole plant is American. 

There is no country which I have visited where 
electricity as a motive power has been taken ad- 
vantage of to the same extent as in Japan, for the 
furtherance and development of trade and com- 
merce. Telephones and telegraphs abound in 
every street in nearly every town throughout the 
empire, and a very large and increasing number of 
manufactures are worked by electric power. I 
made many inquiries as to the original outlay and 
working expenses, comparing electricity with steam- 
power, and, taking all circumstances into consider- 
ation, the former is unquestionably the cheaper. 

Before leaving Kioto I was invited to a meeting 

424 



JAPAN 

at the Mayoralty, which was attended by all the 
leading Japanese officials and merchants. His Ex- 
cellency the Governor, Wutsumi Tadakatsu, for- 
mally welcomed me, as representing British trade 
and commerce, to Kioto. He spoke of the future 
of China, and maintained that it was necessary for 
Japan to keep the Open Door for her trade in that 
country. I met J. Naiki, the Mayor of Kioto, K. 
Hamaoka, President of the Chamber of Commerce, 
K. Amenomori, Chairman of the City Assembly, 
and many others. All these gentlemen were very 
earnest in their hopes that the "Open Door" 
policy would be strongly supported and guaran- 
teed by those countries who have trade in China. 
They made frequent allusions to the friendly feel- 
ing existing between Japan and Great Britain. 

I arrived at Tokio on the morning of January 
17th. That evening I had the honor of meeting 
the following Japanese gentlemen : Marshal Yama- 
gata, the Minister-President; Viscount Aoki, Min- 
ister for Foreign Affairs ; Marquis Saigo, Minister 
for the Interior; General Viscount Katsura, Min- 
ister for War; Admiral Yamamoto, Minister for 
Marine; Viscount Tanaka, Minister of the Im- 
perial Household; Baron Sannomiya, Grand Mas- 
ter of the Ceremonies ; Baron Kawaguchi, Vice- 
Minister of the Household ; and Count Hirosawa, 
Private Secretary to the Minister-President. All 
these ^gentlemen were intensely interested in the 
trading and commercial future of China. They 
were quite open in their opinion as to the neces- 

42s 



THE BREAK-UP OF CHINA 

* * 

sity for the great trading nations to combine to- 
gether with the object of keeping the door open in 
China. Their expressions were most friendly to 
Great Britain, and the remark was frequently made: 
" England and Japan must work together in the 
East in order to secure the future development of 
their trade and commerce." 

I elicited the opinion that the " Sphere of In- 
fluence" policy in China would be considered fatal 
to the trading interest of Japan. On asking why, 
it was pointed out to me that Japan had a large 
and increasing trade with Corea and Newchwang, 
and hoped shortly to develop a large trade at F'oo- 
chow and Hankow; that if the Open Door prin- 
ciple prevailed Japan intended to push her mercan- 
tile enterprises in other parts of China. Opinions 
were often given that the integrity of China must 
be preserved if the principle of the " Open Door " 
was to obtain. I was further informed that the 
question of the reorganization of the Chinese 
Army was occupying the attention of those in 
authority in Japan, and with the object of help- 
ing China forward in this direction the Japanese 
Government had consented to receive thirty Chi- 
nese students into the military college at Tokio. 
Besides these students, while I was at Tokio, fifty- 
seven Chinese recruits arrived from China to be 
trained as non-commissioned officers. I asked the 
opinions of those officers who had been in com- 
mand in China during the late Chino-Japanese 

War as to the soldier-like qualities of the Chinese. 

426 



JAPAN 

Opinion was unanimous that they would make 
splendid soldiers if properly trained, properly 
treated, and properly led. Throughout my journey 
in Japan I heard the most friendly expressions 
towards the Chinese, 

I was given to understand that the Mission sent 
to China by the Associated Chambers of Com- 
merce was regarded with the keenest interest in 
Japan. The Japanese hoped that it would result 
in a closer relationship between the two nations, 
as the interests of each were identical. 

On several other occasions I had opportunities 
of meeting high authorities, and the leading mer- 
chants of Japan. The expressions of opinion were 
always similar to those above narrated. 

I again had the pleasure of paying several visits 
to the late Prime-Minister, Marquis Ito. 

During my stay at Tokio the authorities took 
me over the various schools for military training — 
the District School, the Central School, and the 
Military School, where I saw all the classes at 
work, both in the lecture-hall and in the gymna- 
sium and riding-school. Nothing could be more 
perfect than the system of teaching and training. 

I also went over the arsenal and made myself 
acquainted with the pay, hours, and system of the 
establishment. There are 6000 men employed. 
No country turns out better work. The greater 
part of the machinery and tools are British, the 
remainder being German and American. 

While at Tokio the Minister for War, General 

427 



THE BREAK-UP OF CHINA 

Viscount Katsura, kindly ordered a parade of 
troops. Artillery, cavalry, and infantry were each 
quite excellent in organization, appearance, and 
discipline. The cavalry and artillery are mounted 
on a very good class of horse, bred in the country 
from Arab and American stallions. I also saw 
recruits in every stage of learning their drill. 

The remarkable increase of the physical de- 
velopment of the men who serve in the army is 
well worthy of notice. It was so apparent that I 
questioned the officers as to the reason. They 
said that the fact was perceived with the greatest 
satisfaction throughout the whole Empire, and 
that it was accounted for by the physical exer- 
cises the men had to perform in their training, 
as well as the change of diet which had been inau- 
gurated. Part of the men*s rations now is bread 
(made with American flour) and meat, the same 
as that supplied to the troops of European coun- 
tries. I tasted a ration and found it excellent. 

The barracks which I saw are as smart and 
clean as is possible. I visited the stores of cloth- 
ing, etc., for the reserve ; each regiment is respon- 
sible for its own reserve clothing necessary for 
mobilization. The esprit de corps of the Japanese 
Army is very apparent. The Government allows 
a certain sum to each regiment for the clothing 
for the reserves. The colonels and officers by 
economies and even subscriptions increase the 
amount of clothing until the stores are really in 

excess of that laid down, which adds considerably 

428 



JAPAN 

to the comfort of the men if suddenly called 
out. 

The Chamber of Commerce at Tokio invited me 
to address a public meeting on the future develop- 
ment of trade with China. I did not think it 
would be courteous to refuse. The meeting was 
attended by Ministers, military and naval officers 
of distinction, the President and many members of 
both Houses, and all the leading gentlemen of the 
mercantile community. My remarks were trans- 
lated for the benefit of those who did not under- 
stand English. I was informed that the views I 
expressed were in hearty sympathy with the audi- 
ence, who thought they tended towards the devel- 
opment of trade with China, and also provided a 
peaceful solution of the problem in the Far East. 
It was conveyed to me that if Great Britain would 
only lead with a definite policy in China, Japan 
would most certainly follow. 

Several Japanese merchants came to see me, 
and asked me to convey to the Associated Cham- 
bers of Commerce a matter which they declare 
hinders Japanese trade with Great Britain. They 
said that the merchants of Tokio had always to 
pay in advance for goods forwarded direct to 
Tokio, which was not the case with goods ordered 
for Yokohama. 

I visited the new prison of Tokio, with the ob- 
ject of ascertaining whether any industrial works 
were carried on in the establishment. I found all 

prisoners were employed in working for private 

429 



THE BREAK-UP OF CHINA 

firms, who employed them by contract; nearly 
every industry was represented. 

Before leaving Tokio I had an opportunity of 
paying my respects to his Majesty the Emperor. 
His Majesty was much interested in the objects of 
the Commercial Mission to China. His Majesty 
said : " I am very pleased you have visited my 
country. The development of trade with China 
must promote a stronger feeling of friendship be- 
tween the peoples of Great Britain and Japan, the 
interests of both countries being the same. I am 
in hopes that the Mission you have undertaken 
may be the commencement of great trading enter- 
prise in the East, in whjch my country must take 
a prominent part. Such enterprise will not only 
affect the East, but Europe as well, though Japan 
and Great Britain will be the countries that will 
principally benefit." 

I arrived at Yokohama on the 24th of January, 
and was invited by the Minister for Marine, Ad- 
miral Yamamoto, to visit the dockyard and fleet 
at Yokoska. The Admiral placed H.I.M. cruiser 
TakasagOy built at Elswick, at my disposal to take 
me from Yokokama to Yokoska. I went all over 
the ship, engine-rooms, boiler-rooms, etc. She 
was in as good condition as a man-of-war could be, 
and her ship's company were smart, well dressed, 
and well disciplined. There is a large torpedo 
depot at this place, where everything connected 
with torpedo warfare is kept under its own admin- 
istration for care and maintenance— boats, mines, 

430 



JAPAN 

cables, batteries, torpedoes of all sorts, and all 
stores connected with torpedo warfare belong to 
this depot. This is an infinitely preferable plan 
to the British, where everything connected with 
torpedo warfare is only an auxiliary of the great 
dockyards. I saw here three of the Chinese 
ships captured by the Japanese in the late war, 
among them being the Chen Yuen. They were 
all being refitted for service in the fleet. I went 
all over the naval barracks, which were in the 
same complete state of efficiency that I found all 
naval and military establishments in Japan. I 
observed the same system carried out with the 
seamen's rations as is carried out with the mili- 
tary rations. The officers in command informed 
me that before the rations were altered to those in 
vogue in Europe — ue.y meat and bread substituted 
for or added to native diet — the terrible dis- 
ease of beri-beri was not at all uncommon in the 
Japanese Navy. Since the alteration of this ration 
the disease has entirely disappeared. 

My visit to Japan impressed me that the politi- 
cal as well as the commercial classes are deter- 
mined to maintain an " Open Door " in China, in 
those places where they have at present large 
commercial interests. . The nation is arming slow- 
ly, but most effectively. There is a patriotism 
among all classes that is most discernible. The 
future well-being of Japan depends much more 
largely on the maintenance of the "Open Door" 
in China than is generally known in this country. 

431 



THE BREAK-UP OF CHINA 

The population of Japan is increasing rapidly. 
Only one-twelfth of the whole Empire can be 
cultivated. Food will have to be imported. In a 
bad rice year now, food is imported in enormous 
quantities. In order to pay for this import Japan 
must have an export. China is the nearest market, 
and Japan requires that her export shall not be 
hampered by adverse tarififs on arrival in China. 
I have entered rather fully in this Report into the 
question of the organization and efficiency of the 
naval and military forces of Japan ; because these 
forces will have to be reckoned with when solving 
the problems connected with the future develop- 
ment of trade and commerce in the Far East, and 
their efficiency must be almost as great a point of 
interest to Great Britain as it is to Japan. 



XXIX 

THE UNITED STATES 

I ARRIVED at San Francisco on February loth. 
I visited the great ship-building yard of the Union 
Steel and Iron Works. This yard turned out the 
famous battle-ship Oregon and the cruiser Column 
bia. The battle-ship Wisconsin had been recently 
launched here, and was being completed. This 
yard has the reputation of continually turning out 
men-of-war vessels at from one to two knots over 
the contract speed. While I was there the Jap- 
anese cruiser Chilose^ built at the Union Works, 
undertook her contract steam-trial, the result being 
nearly two knots over her contract speed. I visit- 
ed this vessel, and found her excellent in all de- 
tails. Her armament was to be supplied by Els- 
wick. This yard has patented a pair of electric 
engines for revolving the turrets of the heavy guns 
mounted on the Wisconsin. It is a cheap, light, 
and most efficient method. By invitation of the 
Commodore, I visited the Naval Yard at Mare 
Island, and saw some of the auxiliary ships sent 
out with the Iowa and Oregon. These consisted 
of five colliers, properly fitted for coaling, a dis- 

2E 433 



THE BREAK-UP OF CHINA 

tiUing-ship, and a refrigerating-ship for fresh pro- 
visions. The provision - ship, the Celtic^ bought 
from an English firm, can carry in her refrigerators 
fresh meat and vegetable rations for io,o<x> men 
for four months. I visited her and saw all her 
fittings. The two battle-ships were entirely self- 
supporting during their long cruise from the At- 
lantic to the Pacific, owing to sailing in company 
with these auxiliaries. I mention this in the 
Report, as it is the first practical illustration of 
what can be done to enable a fleet to keep at sea, 
ready for action, and supplied with all necessaries 
— a matter very important for the protection of 
trade and commerce to a country with such vast 
maritime interests as Great Britain. 

The San Francisco Chamber of Commerce 
asked me to address them on matters connected 
with the future development of trade in China. 
I accepted their invitation. Afterwards, many 
members of the Chamber informed me that they 
entirely concurred with the view that the " Open 
Door " was the only satisfactory solution of the 
problem of how to develop trade in China. They 
also said that they hoped the present friendly feel- 
ing between the United States and Great Britain 
would always continue, maintaining that if the 
two countries worked together it would not only 
benefit the trade and commerce of the world but 
also make for peace. All the mercantile com- 
munity were intensely interested in the Eastern 
Question, pointing out that San Francisco would 

434 



THE UNITED STATES 

naturally be the port for the great output of 
American trade when China was opened up. 

I arrived at Chicago on February 1 7th, where, 
as the representative of the British Associated 
Chambers, I enjoyed the hospitality of Mr. McCor- 
mick, the President, and the Committee of the 
Commercial Club. These gentlemen invited me 
to visit the Board of Trade (the Produce and 
Stock Exchange of Chicago). On being intro- 
duced as the representative of the British Associ- 
ated Chambers, the whole business of the great 
market ceased for the moment, an event, I was 
informed, absolutely without precedent, which 
showed the keen interest taken in the Commercial 
Mission of Inquiry which had been sent to China. 

Every possible kindness was shown me, and I 
was enabled to visit the Great Bank (Illinois 
Trust), the operating room of the Postal Tele- 
graph and Cable Company — one of the largest 
in the world — the printing works of one of the 
great newspapers, and other establishments of 
great interest. 

I was entertained (February i8th) by the Com- 
mercial Club, where I met the President of the 
Club and also the representative merchants of this 
great city. The regular date of this entertain- 
ment was altered to suit my convenience, an un- 
usual compliment only once before paid to an in- 
dividual — viz., General Grant — a further proof of 
the interest taken in the Mission to China. 

The speeches delivered, after the remarks I 

435 



THE BREAK-UP OF CHINA 

ventured to make, seemed to indicate that the 
mercantile community of Chicago were intensely 
interested in the Chinese problem, and that they 
regarded the question of equal opportunity for the 
trade of all nations in China as being quite as 
necessary for the development of the American 
trade as it was for British trade. 

I arrived at Buffalo on February 20th. I was 
invited by the Merchants' Exchange and the In- 
dependent Club to address a meeting on the com- 
mercial future of China, The sentiments generally 
expressed after my remarks were to the effect that 
the " Open Door " was essential for the further 
development of American trade with China. Some 
gentlemen interested in the great electric plant 
at Niagara kindly took me all over the colossal 
works. There is no reason why Buffalo and its 
vicinity should not become the greatest manufact- 
uring city in the world. I observed that already 
the ground between Buffalo and Niagara was well 
occupied with manufactories built and building. 
I was informed that motive power — electricity — 
is supplied from Niagara to those who rent it 
3-^ $5 {£^) per horse-power per month. Every 
one connected with this electric plant feels as- 
sured that a splendid future awaits their enter- 
prise. 

I visited Washington and paid my respects to 
the President of the United States, and was most 
hospitably entertained by Mr. Hay, the Secretary 
of State and late American Ambassador to Great 

436 



THE UNITED STATES 

Britain, where I met many distinguished Amer- 
icans, senators and others. 

The British Commercial Mission to China was 
regarded with considerable interest by all whom I 
met. 

I arrived at New York on February 23d. That 
night I was entertained by the American Asiatic 
Association, and I was asked to deliver an address. 
The American Asiatic Association was formed on 
the same lines, and with the same objects, as the 
British China Association, and, like the China 
Association, its objects are political. It watches 
over the American commercial interests in the 
Far East, and brings political pressure to bear in 
furtherance of those interests. A notable feature 
of this entertainment was an eloquent speech de- 
livered by Mr. Whitelaw Reid, the great apostle 
of Protection in the United States, declaring that 
the " Open Door " policy was the best for Amer- 
ican trade in the Philippine Islands and in China 
and, more, that the American Government intend- 
ed to commit itself to this policy in the Philippine 
Islands. 

The following day I was asked to address the 
Chamber of Commerce of New York. This meet- 
ing was quite as crowded and enthusiastic as the 
other meetings which I had been requested to ad- 
dress in the United States. At all these meetings 
I spoke on matters solely connected with trade as 
it at present exists in China, and on questions con- 
nected with its future development and security. 

437 



THE BREAK-UP OF CHINA 

There can be no doubt that the subject excited 
a considerable amount of interest throughout the 
United States. This was shown not only by the 
manner in which the Press of the country dis- 
cussed the matter, but also by the numerous let- 
ters I received from trading and commercial com- 
munities from all parts of the United States, and 
by the many telegrams inviting me to address 
public meetings throughout the country. Among 
these latter were several from the largest and most 
important cities of the United States, such as Phil- 
adelphia, Boston, Milwaukee, Louisville, Kansas 
City, Cincinnati, Baltimore, and many more, be- 
sides those I had the pleasure of visiting. 

I visited the Naval Yard, where I was received 
with the greatest kindness and cordiality by the 
authorities. I went on board the Massachusetts^ a 
most serviceable and heavily armed battle-ship. 

I visited also the great steel cable factory, and 
observed the most interesting method of effectu- 
ally lubricating the shaft ; the shaft, with the six 
reels containing steel -wire strands, weighs 250 
tons. It revolves at the rate of 106 revolutions 
a minute, on a bearing 9 inches in diameter. It 
is kept lubricated by means of an automatic hy- 
draulic pump, of great power, charged with oil. 
I was informed that a hot bearing is unknown, 
although the shaft, with all its weight, rests verti- 
cally on so small a surface. 

I travelled home through the United States, 
hoping to be able to obtain from the Chambers 

438 



THE UNITED STATES 

of Commerce some definite opinions for the As- 
sociated Chambers of Great Britain. The interest 
in the Mission was intense, and I personally was 
received with the most unbounded hospitality, 
kindness, and cordiality. I was asked to give my 
views on China, and what opportunities existed 
for the development of trade (particularly Amer- 
ican trade) in the East. 

Since my return home I have continued to 
receive many letters of a similar tenor, three of 
which I here append to show the interest taken by 
the commercial communities in the United States 
in the Mission in which I was engaged. 

" Massachusetts State Board of Trade, 
" Lowell, Mass., March 21, 1899. 

" Rear-Admiral Lord Charles Beresford, R. N., 

" representing the 
" Association of Chambers of Commerce 
" of the United Kingdom, 

** London, England. 
" Dear Sir, — The Members of the Massachusetts 
State Board of Trade, composed of forty-two mer- 
cantile organizations representing the commercial 
and industrial interests of the State, beg to ac- 
knowledge receipt of your favor of the 21st ultimo, 
and also express their regrets that your limited 
time in this country would not permit an accept- 
ance of the invitation to visit our Commonwealth. 
" The Mission in which you have been recently 
engaged, under the auspices of the Associated 

439 



THE BREAK-UP OF CHINA 

Chambers of Commerce, to ascertain the best 
methods for promoting trade and commerce in 
China, is one of more thdh ordinary importance to 
the American people, and the results of your inves- 
tigation, as embodied in a report, will be read with 
great interest throughout the commercial and in- 
dustrial world. 

" The Massachusetts State Board of Trade is in 
hearty sympathy with any plan that will provide 
equitable national competition for the import and 
export trade of the great Chinese Empire, and 
believes that the earnest support and forceful in- 
fluence of commercial bodies among the nations 
interested should be freely given in promoting and 
advancing national legislation in this direction. 

" Please convey to the Members of the Asso- 
ciated Chambers of Commerce of the United King- 
dom the most cordial greetings of the Massachu- 
setts State Board of Trade, who deeply appreciate 
their earnest efforts to develop trade and commerce 
and advance the standard of civilization in the Far 
East 

" With the hope that a practical and beneficial 
commercial alliance may be the ultimate result of 
your endeavors, 

" We have the honor to remain, 
" Very truly yours, 

" Charles E. Adams, 

" Presidents 



THE UNITED STATES 

"The Philadelphia Commercial Museum, 
" 233 South Fourth Street, 

" Philadelphia, March 21, 1899. 

" Lord Charles Beresford, 
" The Admiralty, 

" London England. 

" My dear Lord Charles, — I have your very 
kind favor of March 3d, written on board the SL 
Louis^ and appreciate very much your thought- 
fulness. 

" It was a great disappointment to me, and to 
Philadelphians generally, that you were not able to 
visit our city. I was especially sorry not to have 
had the opportunity of showing you in detail the 
workings of the Philadelphia Commercial Museum, 
especially in view of the efiforts we are at present 
making to acquaint our people with the opportuni- 
ties existing in the Far East — opportunities which 
you have so eloquently set forth as presenting 
themselves. 

" I trust when the result of your observations in 
the Orient is laid before the Associated Chambers 
of Commerce in England, this Institution may be 
favored with a copy. 

" Hoping that some time in the future you may 

find it possible to visit Philadelphia, and that I 

may then be fortunate enough to explain to you 

the efforts being made by our Institution to foster 

export trade, and trusting that our two countries 

441 



THE BREAK-UP OF CHINA 

may always co-operate in the industrial and com- 
mercial development of the Far East, believe me, 

" Most sincerely yours, 

" W. P. Wilson, 

" Director:' 



^"^ February 24, 1899. 
" Right Hon. Lord Charles Beresford, M,P., 
" London, England : 

"Sir, — I am directed by the President to ac- 
knowledge receipt of your valued favor 15th inst 
It is a matter of great regret to us that your time 
was so limited in this country that you could not 
give us the pleasure of entertaining you. 

" Your Mission is one of very great importance 
to this country, as well as the country you so ably 
represent. We take this occasion to express the 
thankfulness (which we believe is the feeling of 
every true American) for the very cordial relations 
existing between Great Britain and the United 
States. So long as cordial relations and active 
co-operation for the good of humanity exist, un- 
told benefits must come to the world. 

" It will give us very great pleasure to receive a 
copy of your Report. 

" Yours faithfully, 

' "E. D. BiGELOW, 

" Secretary^ 

The principle of the "Open Door" is unani- 
mously held to be the policy necessary for the in- 

442 



THE UNITED STATES 

crease of the United States trade with China ; but 
there the matter rests. I heard no sentiments ex- 
pressed which conveyed to me any opinion on the 
part of any of the American Chambers of Com- 
merce as to how the " Open Door " principle was 
to be insured, although I did hear many opinions 
expressed that the time could not be far distant 
when the Chinese Empire would be added to the 
list of those countries which had fallen to pieces 
from internal decay. Though the great trading 
classes of the United States, as far as I could 
gather, are keenly alive to the necessity of safe- 
guarding the future of the United States' commer- 
cial interests, it was quite apparent to me that 
those in authority, and indeed the people as a 
whole, are, for the present, at any rate, going to 
allow Chinese affairs to take care of themselves. 
It was very satisfactory to me to be frequently told 
that the fact of the British Associated Chambers 
having sent a Mission of Inquiry to China would 
provoke an interest among the commercial classes 
of the United States with regard to the future of 
China. The attitude taken up by the commercial 
classes in Japan was totally different from that 
which I found in the United States. Both saw 
the necessity of keeping the Door open in China 
if full advantage was to be taken of the possible 
development of American or Japanese trade ; but 
while on the Japanese side there was every indi- 
cation of a desire to act in some practical manner 
in order to secure the Open Door, I could discover 

443 



THE BREAK-UP OF CHINA 

no desire on the part of the commercial communi- ^ 
ties in the United States to engage in any practical 
efifort for preserving what to them might become 
in the future a trade, the extent of which no mortal 
can conjecture. On many occasions I suggested 
that some sort of understanding should exist be- 
tween Great Britain and the United States for the 
mutual benefit of the two countries with regard 
to the future development of trade in China; but 
while receiving the most cordial support to this 
proposal, nothing of a definite character was sug- 
gested to me that I could present to the Associ- 
ated Chambers. 

Looking at the matter fairly, the public mind 
in the United States is occupied with an entirely 
novel policy, which, being an actual fact, must be 
more engrossing to the American public than 
matters which up to now even have not advanced 
into the region of discussion. I refer to the policy 
of expansion, as illustrated by the difficult problem 
which has to be solved in the Philippine Islands. 
Added to this, the actual trade between the United 
States and China at the present moment is a very 
small proportion of the whole foreign trade of that 
country, only 8 per cent. The American trade 
with China is, however, very much larger than 
appears in the import list contained in the returns 
of the Imperial Maritime Customs of the Chinese 
Empire. Taking the question of the import of 
plain cotton goods alone for the years 1887-1897 
inclusive, referred to in this Report in the chapter 

444 



THE UNITED STATES 

on " Shanghai," it will be seen that American goods 
during those ten years have increased in quantity 
1 2 I.I I per cent, and 5945 per cent in value, 
while the British import of the same class of 
goods has decreased 13.77 P^*" cent, in quantity, 
and 7.9 per cent in value. In examining these 
trade returns the question of ownership and manu- 
facture is an all-important one. At the time of 
import this cotton is owned by the British mer- 
chant and shipped in British bottoms, but the 
competition of the United States is directly with 
the Lancashire cotton manufacturer. I was much 
impressed by the good feeling and friendship tow- 
ards Great Britain expressed by all with whom 1 
came in contact in the United States. These 
kindly sentiments were particularly marked on all 
occasions when the health of her Majesty the 
Queen was proposed. I believe that a great deal 
of the enthusiasm with which I was received dur- 
ing my journey throughout the United States was 
actuated by the sentiments of kindly feeling tow- 
ards the British. 

There is a very large and increasing export trade 
of flour from America to China. The Chinese 
are appreciating this class of food more every 
year. There is also a great export of American 
machinery of all sorts to China. The whole of 
the Russian railway plant in Manchuria — viz., 
rolling-stock, rails, and sleepers — comes from the 
United States. There is also a large import of 
American machinery into Japan. 

445 



THE BREAK-UP OF CHINA 

Although the American percentage of trade 
with China is only 8 per cent, of the whole, it is 
important to remember in what a comparatively 
short time this has been built up, and if to this 
percentage was added the proportion of British- 
owned trade in commodities of American origin, 
I am of opinion that it would be found that 
the actual American manufactured goods repre- 
sent a very much larger percentage than is gen- 
erally known. As it is, American trade repre- 
sents 8 per cent, as against 28 per cent, of all 
other nations (excluding Great Britain) combined. 

The only direction in which I found a falling 
off in American trade was in kerosene - oil, in 
which industry Russia and Sumatra are becoming 
America's chief competitors. A noteworthy fact 
that was brought to my notice by the Commis- 
sioner of Customs at Newchwang was, that Ameri- 
can manufactured goods at that port now repre- 
sent about 50 per cent, of the whole foreign im- 
port, showing that, at any rate in North China, 
American trade is increasing in volume and im- 
portance. 

The problems connected with the future de- 
velopment of trade in China will be solved more 
easily if the powerful Anglo-Saxon races can come 
to some mutual understanding regarding them. 
As the interests of the United States and Great 
Britain are absolutely identical in China, an un- 
derstanding must conduce to the benefit of both 

great nations, and certainly make for the peaceful 

446 



THE UNITED STATES 

solution of the difficulties. Both nations are es- 
sentially trading nations, neither want territory, 
they both wish to increase their trade. With an 
equal opportunity throughout China, they would 
not only increase their trade but do much towards 
increasing the prosperity of the whole world. 



XXX 

OBSERVATIONS 

In reviewing this Report, several points become 
apparent: 

1. The anxiety of British merchants in China 
as to the security of capital already invested. 

2. The immediate necessity for some assurance 
to be given to those who are willing to invest 
further capital. 

3. That this existing sense of insecurity is due 
to the effete condition of the Chinese Government, 
its corruption and poverty; and to the continual 
riots, disturbances, and rebellions throughout the 
country, 

4. That the rapidly advancing disintegration of 
the Chinese Empire is also due to the pressure of 
foreign claims, which she has no power either to 
resist or refuse — all this leading to the total inter- 
nal collapse of authority. 

5. The terrible prospect of a civil revolution, 
extending over an area as large as Europe, among 
400 millions of people, upon which catastrophe the 
thin line of European civilization on the coast, and 

a few ships of war, would have little or no eflfect 

448 



OBSERVATIONS 

6. The uncertainty as to what Government 
would follow, should the present dynasty fall, and 
our ignorance as to what policy any future admin- 
istration would adopt respecting the contracts and 
concessions made by the existing Tsung-li-Yamen. 

7. The fear of the traders of all nations in 
China that the home Governments of Europe, 
in their desire to conciliate the interests of those 
who seek trade with those who want territory, 
should drift into the Sphere of Influence policy, 
thereby endangering the expansion of trade, incur- 
ring the risk of war, and hastening the partition 
and downfall of the Chinese Empire. 

8. The apprehension existing in all capable 
minds in China lest the Governments of Europe, 
after beginning with the bullying expedient of 
claims and counter-claims, and then drifting into 
the policy of Spheres of Influence, should end by 
hopelessly blocking the Open Door. 

9. The undoubted loss of British prestige 
throughout the whole Chinese Empire owing to 
recent political events in the North. 

From my own observation, I consider these fears 
and anxieties, put before me by the traders of all 
nations, and the Chinese, well worthy of the imme- 
diate attention of the Associated Chambers of 
Commerce. Upon the foregoing Points I beg 
to offer the following Observations : 

Upon Point 2, I would observe that the more 
capital is invested in China, the greater the claims 

2F 449 



THE BREAK-UP OF CHINA 

of the foreign traders upon the protection of their 
home Governments. 

As to Point 3, 1 assert that the great bulk of 
the Chinese people are honest, acute men of busi- 
ness ; that only the traditional method of govern- 
ment is corrupt; the honest mandarin has no 
chance under the system. Disturbances are due 
to the want of proper military and police. 

With respect to Point 4, I feel most strongly 
that the pride and profession of Great Britain, to 
be the champion and chivalrous protector of weak 
nations, have been humbled and exposed by her 
acquiescing and taking part in the disintegrating 
policy of claims and counter-claims with which 
the Chinese Empire is being bullied while she is 
down. I hold that to break up a dismasted craft, 
the timbers of which are stout and strong, is the 
policy of the wrecker for his own gain. The real 
seaman tows her into dock and refits her for an- 
other cruise. 

With regard to Point 5, in my opinion there 
is only one remedy, which is to maintain the in- 
tegrity of the Chinese Empire, and give security 
to the trade of all nations, by a thorough reorgan- 
ization of the army and police of the entire coun- 
try. As this can only be done by outside help, 
and as those who are able to render the service 
are apparently afraid to step in, either from want 
of confidence in China's recuperative power, or 
from fear of their neighbor's opinion, I would, 

with all deference, offer the following sugges- 

450 



OBSERVATIONS 

tion: Why should not Great Britain, which has the 
largest vested interest in the country, lead the way, 
and invite the co-operation of all interested par- 
ties, in the organization of China's military and 
police, in the same spirit as Sir Robert Hart has 
organized her Customs? If it is objected that 
some one nation might thereby seek or gain pre- 
dominance in the country, and thus provoke jeal- 
ousy among the rest, why should not this objec- 
tion be anticipated by a clear understanding that 
those who co-operate from various nations to do 
this work shall be strictly the servants of the Chi- 
nese Empire, like General Gordon or Sir Robert 
Hart; and that the one and only end in view is 
to strengthen, support, and maintain the Govern- 
ment of China, and the lives and properties of the 
European traders ? 

If it be objected that some nations might refuse 
to co-operate, may it not be said in reply that 
Great Britain has met a similar objection before 
in Egypt; and that no number of such refusals 
can absolve the four great trading nations from 
coming to the rescue of the Chinese Government 
and their own traders in a moment of imminent 
peril ? 

If it be objected that China itself is effete and 
rotten, I reply that this is false. The traditional 
official system is corrupt, but the Chinese people 
are honest. The integrity of their merchants is 
known to every banker and trader in the East, 
and their word is as good as their bond They 

451 



THE BREAK-UP OF CHINA 

have, too, a traditional and idolatrous respect for 
authority, and all they need is an honest and good j 

authority. 

If it be objected that this reform of the Chinese 
forces would be costly, I answer that the neces- 
sary reorganization could be effected by an honest 
expenditure of the moneys now allowed for de- 
fence, and need not cost a shilling of European 
money. I have proved to my own satisfaction 
that effective military and police forces could be 
organized on the funds now available for these 
purposes. The country is not over-taxed, it is 
badly taxed, and the Revenue is peculated whole- 
sale. What the Sphere of Influence policy would 
cost, in loss through hostile tariffs and in expen- 
diture of blood and money for defence, it is not 
possible to say. For who can estimate the diffi- 
culty and cost to European Powers of defending 
and administering huge sections of a country with 
bad roads, teeming with a population absolutely 
hostile to foreigners and foreign domination? 
The Chinese are conservative. They have behind 
them the traditions of 4000 years, and within 
them the prejudices natural to isolation. 

The Spheres of Influence policy would certainly 
weaken all central authority in the Chinese Em- 
pire, and would transfer the responsibility for law 
and order to a disconnected and often antagonistic 
group of foreign settlers, who would find the work 
of peaceful administration wellnigh impossible. 

Nominal Spheres of Influence, such as those of 

452 



OBSERVATIONS 

Germany in Shantung and Russia in Manchuria, 
may exist as long as a semblance of Chinese author- 
ity remains, but once the people realize authority 
is powerless, anarchy, rebellion, and bloodshed must 
ensue. The breaking-up of the Chinese Empire 
into Spheres of Influence would also be certain to 
lead to war between the European nations. It is 
surprising that people can be found to talk calmly 
of the break-up of an empire of 400 millions of 
people, as if such a gigantic revolution could be 
accomplished by a stroke of a pen. 

I may be told that we've got a policy made out 
of old treaties and agreements which we must con- 
tinue. If that be so, I reply that the time has come 
when these treaties and agreements should receive 
a thorough revision, because arrangements made 
with safety when China was strong may turn into 
grave perils now China is weak. The effete con- 
dition of the Chinese Government entirely alters 
the mutual relations of her foreign neighbors. It 
has been said that the danger connected with weak 
nations comes from the jealousies of the neighbors 
who are waiting to divide the property among them. 
These jealousies may for a moment be smoothed 
over by small mutual concessions paid on account ; 
but such temporary expedients can have no finality, 
and will only serve to bring about the fatal policy 
of Spheres of Influence, creating gigantically ex- 
pensive European military frontiers in the Far East, 
with no strong Chinese buffer between them. 

With respect to Point 8, I cannot repeat too 

453 



THE BREAK-UP OF CHINA 

often the profound conviction held by every trader 
in China that the policy of the Open Door, or 
equal opportunity for the trade of all nations, is 
the one and only policy possible for the develop- 
ment of trade and commerce. It is, however, no 
use theorizing over so vital a question. We must 
declare in some practical manner how the policy 
is to be carried out. Neither is it any use keeping 
the door open without insuring that the room on 
the other side of the door is in order. To keep 
the door open the integrity of the Chinese Empire 
must be maintained. To preserve that integrity, 
the organization of her military forces for police 
purposes is necessary. Whatever fiscal policies 
may be projected by the stay-at-home diplomatists 
of European States, let this be clearly understood, 
that the traders of all countries in Chinese territory 
are absolutely unanimous in their belief in the 
policy of the Open Door. The Chambers of Com- 
merce in China are composed of all nationalities, 
and it will be seen that the resolutions of these 
Chambers cordially support the views of the China 
Association, which is purely British. Politicians 
and traders have not always the same ends in view, 
nor the same plans for getting what they want 
The politician may wish only for an apparent ad- 
vantage, and get it by bluff, but in doing so he may 
seriously endanger the peace and progress nec- 
essary for the development of commerce. Nations 
weak in trade but enterprising in diplomacy may 
seek territorial aggrandizement, and by their action 

454 



OBSERVATIONS 

ruin the commerce of countries strong in trade 
but feeble in policy. 

Another point of importance is the probable de- 
mand of China to increase, under a new Treaty, 
the tarifif levied on foreign goods. If this be ac- 
ceded to some quid pro quo must be given to the 
European Powers. Again, if the European Powers, 
by joint action, agree to maintain the integrity of 
the Chinese Empire on the lines I have indicated, 
some quid pro quo must be given by China in re- 
turn. 

The European nations should insist on a series 
of reforms in Chinese administration and finance, 
which are as necessary to China herself as to her 
foreign traders. These reforms may be epito- 
mized thus : 

1. An Imperial coinage. 

2. Reform in the method of collecting the land 
tax. 

3. Removal of restrictions on the export of grain. 

4. Modification of the laws governing the salt 
monopoly. 

5. The right of foreigners to reside in the in- 
terior for purposes of trade. 

6. The registration and protection of trade- 
marks and copyright. 

7. The removal of the remaining restrictions on 
inland water navigation. 

8. The abolition of the likin, or reforms which 
would insure that likin should be collected once 
only. 

4$$ 



THE BREAK-UP OF CHINA 

9. Greater facilities to be given to bona fide for- 
eign syndicates to work minerals. 

10. The establishment of bureaus for the regula- 
tion of finance, railways, waterways, roads, posts, 
and telegraphs, and a bureau to deal with all 
questions connected with trade. All of these are 
urgently needed, particularly for the postal and 
telegraph services, which are at present managed 
under a legalized system of squeeze. The foreign 
merchants constantly complain that the existing 
service is so untrustworthy that no letters between 
the ports are safe unless registered. The present 
telegraph service is so bad that a letter from Tien- 
tsin to Shanghai has been known to arrive before a 
telegram sent at the same time. The Times Cor- 
respondent at Peking told me that his telegrams 
very often cost as much to send from Peking to 
Shanghai as from Shanghai to London. 

11. One other bureau is urgently needed, and 
that is a Trade Intelligence Department, to deal 
with scientific and practical questions relating to 
the natural products available in China for com- 
mercial purposes. What is an insignificant export 
to-day may become a valuable article of commerce 
to-morrow. There should be a scientific classifi- 
cation of the products of China on the same lines 
as the classification of products in India. 

I would also like to point out to the Associated 

Chambers the desirability of impressing upon the 

British centres of commercial education the neces- 

456 



OBSERVATIONS 

sity for teaching the Chinese language to British 
youths who are to seek employment in that coun- 
try. This has been undertaken already by Ger- 
man and American traders. 

The question for the future, to my mind, is this : 
Are the great trading nations of the world going 
to allow the Powers that seek only territorial ag- 
grandizement to blockade the wealth of China, 
and shut the Open Door in their faces ? 

With regard to British Commerce in China, it 
is true that we have lost no ground so far as exist- 
ing trade is concerned, but our commercial su- 
premacy is seriously threatened by competition. 
We could not expect to enjoy always the advan- 
tageous position we have held in the past. We 
cannot hope to have everything, but with equal 
opportunity to all we shall do well. 

If it be said that my policy for the reorganiza- 
tion of the Chinese army and police is a warlike 
policy, I reply that it is the only plan yet suggest- 
ed which gives any guarantee of peace. Great 
Britain's strongest guarantee of peace has been 
the reorganization of her fleet. Without peace 
commerce must perish. To keep the peace, au- 
thority must be properly equipped. Our choice 
with regard to the Chinese Empire is simple — we 
may choose to wreck or we may choose to restore. 



\ 



\ 



f*^ 

^-^ 



, \ 







\ 




i 



k 




APPENDIX 



REFERENCE EMBODIED IN A LETTER 

FROM THE 

Hon. Sir STAFFORD NORTHCOTE, Bart., M.P., 

President of the Associated Chambers of Commerce of 

Great Britain, 

''August I, 1898. 

''Dear Beresford, — You know the deep interest which 
the Associated Chambers of Commerce take in the develop- 
ment of British trade with China. 

''As President of the Association, I feel bound to do all in 
my power to promote our commercial interests in that Empire. 

" It appears to me that one most important question for the 
Associated Chambers is to obtain accurate information as to 
how security is to be insured to commercial men who may be 
disposed to embark their capital in trade enterprise in China. 

" It is generally admitted that there is a great possible field 
for business undertakings ; but I, personally, feel some doubt 
as to whether the organization of the Chinese civil and military 
administration is sufficiently complete to insure adequate pro- 
tection to commercial ventures. 

" I believe it would be of immense advantage to the com- 
mercial classes of other countries if they could obtain a 
comprehensive Report on this question from a competent 
authority. 

" I want to get, for the benefit of the Associated Chambers, 
a report from a non-official source. 

459 



APPENDIX 

** At the same time, it is necessary that our Commissioner 
should possess certain qualifications. 

'' He must be of sufficient position to warrant the expectation 
that he will be able to secure ready access to all sources of 
information. 

'' And I should like to have the services of an officer of naval 
or military experience, since, as I have said, I believe much 
turns on the question of British merchants being able to rely 
on adequate protection for their enterprises from the Chinese 
Government ; and I should wish to know how far such pro- 
tection can be regarded as effective. 

*' I have, therefore, to ask whether your engagements would 
permit of your visiting China at as early a date as may be 
convenient to yourself ; and if you would kindly furnish me 
with a Report on these matters, and upon any other subjects 
you may think would be of interest and advantage to the 
Associated Chambers of Commerce. 

" Believe me, 
" Yours very truly, 
"H. Stafford Northcote, 
'* President of the Associated 
" Chambers of Commerce. 
" To Rear- Admiral 

" The Lord Charles Beresford, M.P." 



CHINA ASSOCIATION, SHANGHAI 

Meeting of October 6, 1898 

" My Lord, — On behalf of the Committee of this branch 
of the Association, I have much pleasure in welcoming your 
Lordship on your arrival in China, not only in view of the 
object of your visit, which we understand is directed towards 
the general advancement of British interests in this country, 
but also on the score of your Lordship's personality, which 
will give weight to the opinions which you may form, and to 

4^ 



n 



APPENDIX 

the representations which you may make on your return 
home. 

" We believe that prior to your Lordship's departure from 
England you were in communication with the London Com- 
mittee of this Association, and you are no doubt acquainted 
with the objects to which our work is directed — namely, to 
represent, express, and give effect to our views and opinions 
on matters affecting British interests in China, whether political 
or commercial ; and you are no doubt also acquainted with 
the more important questions which are at present occupying 
our attention. In asking for this interview, we have thought 
that you might not be unwilling, prior to your visit to Peking, 
to receive some expression of this Committee's views regard- 
ing current matters of interest 

" It is unnecessary to say that at the present moment the 
further development of recent events in Peking is being looked 
for with the keenest interest. We are still without infor- 
mation sufficient to enable us to judge of what is likely to 
result from the change which has taken place in the Peking 
Government, but on the face of it it would appear that the 
results can hardly be favorable to British aims and interests 
in China. The facts before us appear to be that the new 
party in China, a party which had for its object progress and 
reform, and with which party the interests of Great Britain 
surely lay, has, for the time being at any rate, been crushed, 
and that the old ri^nu which we connect with stagnation and 
corruption has been re-established. In such case it is difficult 
to say what may not be the effect upon the Empire generally, 
for undoubtedly the doctrines of the ' new movement ' are now 
widely spread over the country, and are not only favorably 
received by a very large section of the people, but have also 
been embraced by very many intelligent officials in high places; 
that the spirit of rebellion may be stirred seems to us only too 
likely— indeed, there is already rebellion on an alarming scale 
in the Southern provinces, and, seeing that it is the Cantonese 
element in the Peking Government that is suffering chiefly 
from this Manchu reaction, it seems fully probable that the 

461 



APPENDIX 

rebellious movement in the South will be largely strengthened. 
It is unnecessary to dwell upon the disastrous effects which 
internal troubles must have upon commerce, in which Great 
Britain is so vitally interested. 

** A question of great commercial interest at the present 
time is the pending revision of the Tientsin Treaty of 1858, 
more particularly as it will be China's object in the revision 
to obtain a substantial increase in the present Customs tariff. 
The principle of a revision of the tariff in favor of China has 
long been admitted by foreign merchants in the country; but 
at the same time it has been, and is, consistently held that if 
increased duties at the ports are granted to China, ample safe- 
guards must be taken that merchandise, having once paid 
these duties, shall receive in the interior the protection from 
irregular and illegal taxation which it nominally enjoys under 
the Treaties, but which it has never received. It is impossible 
at this interview to enter into detail as to this vexed question. 
Volumes have been written on the subject, and it is one which 
has no doubt been studied by your Lordship. It has been, 
and is still, urged that, internal fiscal reform is the first step 
necessary towards remedying the evils complained of, but how 
this reform was to be brought about has been the question 
which has for years bafHed those who have made a study of the 
matter. There is not only the difficulty caused by the whole- 
sale corruption of the provincial Governments, which the re- 
stricted nature of foreign intercourse with China has made it 
impossible to check, but there is the further difficulty arising 
out of the practically autonomous nature of the Governments 
of the provincial units ; interference with the existing irregular 
taxation in the provinces means a loss of provincial revenue, 
and in the event of an increase in the Imperial duties, which 
we contend must be dependent upon the abolition of internal 
'squeezes,' means must be devised for satisfying legitimate 
provincial needs out of the Imperial collection. This con- 
sideration has not been lost sight of in suggestions which have 
been put forward by the Association. The question of dealing 
with the difficulties upon which we have touched has, however, 

462 



APPENDIX 

assumed a new complexion in view of the changes which have 
taken place in China during the past few years. Now that the 
Chinese bubble has burst, and China is forced to pledge her 
resources to meet her financial needs, there seems to be better 
opportunity for insistence upon foreign interference in her 
internal affairs. It has been urged by this Association that 
the reforms required before an increased tariff be conceded 
should include : 

'* (i.) Extended rights of residence and trade. 

"(2.) The opening up of internal communication by 
means of railways, and by the opening of all inland 
waters to free navigation. 

"(3.) Guarantees to be taken for the immunity of mer- 
chandise from further taxation after it has paid the duties 
fixed by Treaty. 

"With regard to these, some measure of progress has al« 
ready been made towards opening up internal communication, 
and the success of her Majesty's Minister in securing the 
freedom of inland navigation is heartily acknowledged. It is, 
however, still contended that this freedom of navigation must^ 
to be effective, carry with it the right of inland residence ; 
there must be freedom to establish stations under foreign con- 
trol for the effective handling, and for the protection of the 
merchandise which is carried in foreign vessels ; without this 
right the freedom of inland navigation will be limited to a 
mere extension of the facilities for passenger traffic. The case 
of railways is somewhat similar. At the present time finan- 
ciers from Europe and America seem to be jostling for so- 
called * concessions,' but concessions without control and man- 
agement are likely to prove disappointing! Chinese man- 
agement of railways is scarcely likely to be less corrupt in this 
respect than in others, and foreign control, either sole or in 
conjunction with a minority of natives, should be insisted on, 
in addition to the Imperial guarantee for ultimate redemption 
of loans and payment of interest thereon. In this connection 

463 



APPENDIX 

there again arises the necessity of the right to reside inland, 
and such right is also essential for the protection of goods 
which the railways carry. Would-be concessionaires who visit 
this country, hoping to obtain something that they can float at 
home with immediate benefit to themselves, may rest assured 
that those who have long local experience are alive both to 
opportunities for gain or loss in this as in any other pursuits. 
In connection with the third condition which the Associa- 
tion puts forward for an increased tariff — ^namely, guarantees 
against any taxation of goods beyond that fixed by Treaty — it 
has been urged that such guarantee can best be found by ex- 
tending the sphere of the operations of the Imperial Maritime 
Customs — the only honest source of revenue that China pos- 
sesses. In this direction an important beginning is being 
made in the Yangtse Valley provinces, where the collection 
of likin is being undertaken by the foreign Customs; it is 
earnestly to be hoped that the area of operations will be 
extended, and particularly that it may be found possible 
to supervise likin collection in the provinces of Kwangtung 
and Kwang-si, where the Treaty rights of goods have been 
so notoriously ignored. To sum up this part of the ques- 
tion, we are convinced that until extended rights of internal 
residence and trade are conceded ; until guarantees are given 
for the management of the vast sums of money that are be- 
ing invited for investment in China, and until reforms can 
be effected in the provinces which will secure merchandise 
from irregular taxation, the claim of the Chinese Govern- 
ment to an increase in the Customs tariff should not be ac- 
ceded to. 

*' For the furtherance and protection of British commercial 
interests, it has again and again been urged by this Associa- 
tion that the appointment of a commercial attach^, or of at- 
taches, is essential. It is felt that the multifarious duties of 
the Consular body, and the fact that these are only exercis- 
able at fixed stations, render it impossible for the members of 
that body to give the care to commercial matters which the 
magnitude of British interest requires; and, moreover, incon- 

464 



APPENDIX 

sideriDg this question the exceptional difficulties which sur- 
round all matters in China are specially to be remembered 
Our representations on this subject have been apparently ad- 
mitted to be sound in that a commercial attach^ has been 
appointed, but, seeing that the office is merged in that of Con- 
sul -General at Shanghai, the appointment is useless. Our 
conception of the position and duties of a commercial attach^ 
has been several times expressed; he should be of definite 
rank sufficient to enable him to command the respect and at- 
tention of the high provincial officials ; he should be free to 
move about the country at will, unhampered by other work, 
and he should be in continual touch both with the Chinese 
officials and with his own nationals. In a communication 
from this branch of the Association, dated two years ago, we 
stated that our object in pressing for the appointment of a 
commercial attach^ was ' not limited to the petty details of 
official obstruction, but comprehended a system of reform 
calculated to raise and strengthen the Chinese Empire and 
simultaneously promote the welfare of British commerce and 
British interests.' These views we repeat to-day, but, seeing 
the enormous difficulties which attend the procuring of reli- 
able information in China (difficulties which seem to have be- 
come very plainly apparent during the changing events of last 
year), we would now go further and urge the establishment of 
a complete service which would continue the duties of the 
special case of commercial matters with those of obtaining in- 
telligence. So far as we are aware, the British Government, 
despite its vast interests in this Empire, is without anything 
approaching an Intelligence Department, and we believe that 
the establishment of such a department would immensely 
strengthen the hands of her Majesty's Minister in Peking. 

" In an interview such as this it is impossible to do more 
than touch on the veriest fringe of the many reforms which have 
constantly been urged as essential for the benefit both of China 
herself and of foreign interests in the Empire ; the corruption 
which saturates every department of government throughout 
the length and breadth of the country makes fiscal reform a 
3G 465 



APPENDIX 

first necessity. The Reports published recently by Mr. Jamie- 
son and Mr. Brenan contain official record of the vastness of 
this corruption, and though had China been able to maintain 
her exclusive position, she might have continued for decades 
longer unchanged, yet her altered circumstances cannot fail to 
bring disaster, unless she sets her house in order on lines con- 
sonant with the ideas and wishes of the Western nations from 
whom she cannot now detach herself. Among the reforms 
which have been advocated may be mentioned : The necessity 
for a national coinage ; reform in the method of the collection 
of the land-tax ; the removal of the restrictions on the export 
of grain ; modification of the laws governing the salt monopoly ; 
registration and protection of trade-marks, and the establish- 
ment of a law of copyright ; also the establishment of railway 
and mining bureaus, placing these enterprises on a uniform 
and organized basis. 

" We do not propose on this occasion to occupy your Lord- 
ship with any expression of our views on the broad question of 
the political situation which has arisen in China, nor to criti- 
cise the action of our Government in connection with it. This 
much, however, we may say — namely, that there seems to us 
to have been a regrettable want of stability in the policy which 
has been pursued. We seem to have left the policy of the 

* Integrity of China,' and, walking through the * Open Door,' to 
have arrived at the policy of the * Sphere of Influence.' We 
think that the long neglect of Chinese affairs by our Govern- 
ment, a neglect probably due to a mistaken feeling that British 
influence in the Far East reigned supreme, coupled with a fal- 
lacious belief in the power of China herself, has been the cause 
of an indecisive policy which has apparently allowed us to fall 
between two stools. Great Britain's 'Sphere of Influence' 
should be wherever British trade preponderates, and with the 

* Open Door ' for other nations all peoples would have equal 
opportunity ; but this ideal can never be attained without res- 
olute determination on the part of the British Government to 
lead and not to follow in the councils at Peking. On these 
matters, however, your Lordship will, no doubt, form your own 

466 



APPENDIX 

conclusions during your visit, which we trust will be enjoyable 
to yourself, and will achieve its object of benefit to British in- 
terests in the Far East. 

"L. J. Dudgeon, Chairman. 
"To the Right Honorable 
"Admiral Lord Charles Beresford, C.B., M.P. 
" Shanghai, October 4, 1898.'' 



CHAMBER OF COMMERCE, SHANGHAI 

Address of October 7, 1898 

" My Lord, — On behalf of the Shanghai General Chamber 
of Commerce the Committee have the honor of welcoming you. 

" As a General Chamber of Commerce representing all for- 
eign nationalities, we greet you as representing the Chambers 
of Commerce of Great Britain, and we can all do so without 
hesitation, for under the Favored-nation Clause no one nation 
benefits more than another in their commercial treaties with 
the country in which we now are. 

" On this principle the Shanghai Chamber of Commerce is 
established, and has for many years been a factor. 

"We will not weary your Lordship with retrospect more 
than to remark that, had Treaties been observed in the past, 
we should have heard less of likin and loti shui, and that no 
revision of Treaty, be it based on the many reports this Cham- 
ber has already fathered, or on any inquiries yet to come, can 
be permanently of advantage unless it combines conditions, 
and indeed exactions, that its terms shall be adhered to, not 
only technically, but in a common-sense interpretation. 

"Our views on existing Tariffs are recorded in Reports of 
Sectional Committees drawn up in 1896, which our Secretary, 
Mr. Drummond Hay, will hand you ; but though then com- 
plete as far as we could see, they may now need revision, and 
in view of the probability that the Minister for Great Britain 

4^7 



APPENDIX 

will be the first Minister seriously engaged in such work, we 
have mentioned to his Excellency that, until this Chamber has 
some knowledge of the views held by the Consular and Cus- 
toms officials on the Reports we took such labor to compile, 
we can say no more than to suggest that a round-table con- 
versation of a few Consular, Customs, and mercantile rep- 
resentatives might pave the way and clear the atmosphere of 
many cloudy bedarkenings. 

" That all nationalities will agree to a more productive scale 
of Import Duties, provided there are proper and really binding 
guarantees of an end to inland 'squeezes* and irregular im- 
positions, is, I think, certain, but that is a condition, and it is 
well we should all understand this. 

" On the other hand, if China's true interests are to be con- 
sidered, considerable amelioration of Inland and Export taxa- 
tion on Exports is a sine qu& nan, 

'* Taking the political aspect, which we, as an International 
Chamber, do not attempt to define, we may, in the interests of 
all nationalities, contend that in a commercial sense we know 
no geographical * Spheres of Influence,' but advocate equal 
rights and equal opportunities for all who have integrity and per- 
severance necessary to carry their initiative to successful ends. 

'' We have little time to discuss political matters with your 
Lordship, but while alive to the fact that political issues may 
outweigh the commercial, and necessitate here and there de- 
pots of nourishment for those forces on which we, as foreigners, 
are compelled to rely in countries which we sincerely regret 
are now retarded in adopting Western civilization and usages, 
we see no reason for commercial jealousies ; and when you 
consider that for several decades of years this International 
or General Chamber of Commerce has on these lines done 
service, all will admit that proportional tradal influence de- 
mands consideration. 

" Dealing thus generally with the points we have alluded to, 
your Lordship will bear with us while we mention one or two 
more local. 

"You will have heard, my Lord, of the Woosung Bar. 

468 



APPENDIX 

Though the number of our ships has greatly increased of late 
years, many millions have been exacted from foreign ship- 
owners in the shape .of tonnage dues ! This Chamber has 
raised and spent money in formulating proposals by which it 
is hoped that this important Treaty port may maintain its 
waterways, the Yangtse and Whangpoo Rivers ; but the im- 
provements, remedial and novel, cost money, and we see no 
reason why those who pay the piper should not name the tune. 
We therefore demand a Conservancy Board here, on which 
mercantile and shipping representatives should adjudicate and 
direct, along with Consular and Customs officials, the expen- 
diture of money which is solely derived from the foreign mer- 
chant and ship-owner. In short, in this, as in the question 
of tariffs on goods, we maintain that politics, whether Tory or '"^n^. - ^'^ 
Liberal, and whether British, German, American, Russian, Jap- 
anese, or any other country, have no part, for the fact remains 
in our minds that Taxation and Representation are inseparable. 

''My Lord, we may say another word to strengthen our 
position in regard to expenditure of tonnage dues derived 
from foreign ships, when we tell you that for years three- 
tenths of these receipts have been diverted to purposes other 
than those we believe were obviously intended by Treaty. We 
admit that departmental expenses of harbor administra- 
tion, etc., and funds for light -house purposes, are proper 
charges, but, apart from these, moneys received from ship- 
ping should be used^r shipping, and conservancy expenses 
might easily be met were this principle admitted and adopted. 

"In a somewhat similar light we, as representing all foreign 
nations, have taken up, at the request of our Municipality, 
the overshadowing, important subject of the extension of our 
settlement A settlement defined fifty years ago as, perhaps, 
one and a half miles wide and a mile and a quarter deep, is 
no use for us. We — that is, foreigners — have extended four or 
five miles each way, and yet in the area in which we live and 
move and have our being there are drains and stinks innumer- 
able, though we spend money in making roads* 

''The Chinese reply (' that if we had kept for foreigners 

469 



APPENDIX 

alone the area assigned to us ') is all nonsense. If we bad 
done so, we should hav6 had no country roads, no country 
houses, no nothing! — merely a place like Shameen,at Canton, 
z, prison for foreigners, surrounded by masses of natives 
living on foreigners, but in slums worse even, far more 
numerous and larger, than those we now assert are a danger 
both to health and order. Not only out in the Bubbling Well 
and Yangtzepoo districts do we want the extension, but also 
over at Pootung, where from Tungkadoo to down below the 
harbor limits foreigners have built wharves and docks and 
factories, which, it is almost inconceivable, are not within our 
municipal jurisdiction ! We held a public meeting on this 
' extension ' subject in June last, and the printed Report, with 
the sanitary medical news it contains, will, we hope, not be 
too long for your Lordship to study. 

" Charles Alford, Chairman." 



CHAMBER OF COMMERCE, TIENTSIN 

Resolution of October 24, 1898 

"That this meeting of the Tientsin Chamber of Commerce 
welcomes the mission of Rear- Admiral Lord Charles Beres- 
ford, from the Associated Chambers of Commerce of Great 
Britain, and unanimously desires to record its conviction that 
the policy of preserving the integrity of China, with a guar- 
antee of an ' Open Door,* a fair field, and increased trading 
facilities for all countries, is the best and most sound for all 
foreign trading communities in China, and hereby desires Lord 
Charles Beresford to convey the resolution of this Chamber. 

(Signed) "W. W. Dickinson (Chairman). 
" John H. Osborns (Hon. Sec). 
"M. March. 
"E. Hegh. 
"J. N. Dickinson. 
"Charles H. Ross. 
" D. H. Mackintosh. 
"R. Lurry." 
470 



APPENDIX 

NEWCHWANG MEETING 

Address of Niruember 7, 1898 

• 

" My Lord, — I have great pleasure in handing you herewith 

two copies of a series of resolutions passed unanimously, after 

full and free discussion, at a meeting of British residents this 

morning. 

" Further, I am instructed by the meeting to request you to 

be good enough to communicate one copy of these resolutions 

to Lord Salisbury, with such comments as you may consider 

advisable. 

"I am, Sir, 

"Your obedient servant, 

" J. J. Fredk. Bandinel, 

" Chairman of the Meeting. 
" To Rear- Admiral 

" Right Hon. Lord Charles Beresford, C.B., at New- 

chwang. 

•* Copy of Resolutions 

" Unanimously adopted at a meeting of British Residents at 
the Port of Newchwang, North China, on the 7th Novem- 
ber, 1898. 

" We advocate : 

" I. Obtaining a British concession on the north bank of 
the river — that is to say, on the side opposite to the present 
town. 

" 2. Forming the East end of the town within the walls into 
a foreign (not necessarily British) settlement. 

"3. The right of owning land in the interior, and establish- 
ing there filatures and other similar enterprises worked by for- 
eign machinery. 

" 4. The right of working mines in any part of the three 
provinces where Chinese or other foreigners may or do work 
them, and on equally favorable terms. 

" 5. The maintenance of our right to inland navigation, with 

471 



APPENDIX 

power to stop at any town or village on the banks, equally with 
those enjoyed on any river iii China. 

''6. That the rights and property of the Protestant mission- 
aries and their converts should be maintained intact as here- 
tofore according to the rights existing by the Treaty of Tient- 
sin and the Edict of 1891. 

" 7. That a British Consular Agent be permanently stationed 
in Kirin, as formerly in Chungking. 

" 8. We deprecate most strongly the annexation of this port, 
and of any of the three provinces, by any foreign Power, and 
we rely on the British Government to maintain the * Open 
Door.' 

'^9. We object to the right claimed and exercised by the 
Russians of landing railway material without examination or 
payment of duty, especially as this diminishes the security on 
which money has been loaned by British subjects to the Chi- 
nese Government. 

" 10. We view with apprehension the establishment of Rus- 
sian military posts throughout the provinces as at Kirin. 

"11. That the Russian Government should be requested 
to appoint a Consul at this port, in view of the large and in- 
creasing Russian interests, and the possibility of complications 
arising which would demand immediate conference between 
Consular officials on the spot. 

" 12. That a copy of these resolutions be sent by the Chair- 
man to Lord Charles Beresford, also another copy with the 
request that he will communicate the same to Lord Salisbury, 
and that another copy be sent to her Majesty's Minister at 
Peking. J. J. Frederick Bandinel, 

" Chairman of the Meeting." 



SHANGHAI GENERAL CHAMBER OF COMMERCE 

Address of November 16, 1898 

" My Lord, — I have the honor to inform you that the Com- 
mittee of this Chamber have passed the following resolution, 

472 



APPENDIX 

which is in general confirmation of the views verbally ex- 
pressed at their recent interview with your Lordship : 

*' ' That in the opinion of this Committee the interests of 
both China and of the Foreign Powers having commer- 
cial relations with her require that the equality of rights 
as secured by existing Treaties be strictly safeguarded 
against any changes of an exclusive or preferential nature 
in favor of different nations in any part of the Empire ; 
and, further, that it is desirable that, in order to effect 
this end, a general agreement be entered into between the 
Powers interested, guaranteeing the equality of commer- 
cial rights and privileges to all nations alike.' 

''I have the honor to be, 

" Your Lordship's obedient Servant, 

"Drummond Hay, Secretary. 
" Rear-Admiral Lord Charles Beresford, 
" R.N., C.B., M.P., etc" 



HONG KONG GENERAL CHAMBER OF 

COMMERCE 

Meeting of November 19, 1898 

" My Lord, — I have the honor to transmit to your Lord- 
ship copy of a series of resolutions unanimously adopted by 
the General Committee of this Chamber at a special meeting 
held OD the 19th inst. 

" The resolutions embody the views and recommendations 

of the Chamber in connection with the present situation, vis-d^ 

vis China and the new policy latterly developed by the Treaty 

Powers. 

'' I have the honor to be, my Lord, 

*' Your most obedient Servant, 

" R. M. Gray, Chairman. 

'* To Admiral Lord Charles Beresford, 

" M.P., etc., etc." 

473 



APPENDIX 

^'With reference to the Mission of Lord Charles Beresford 
to China, this Chamber, having considered the situation, po- 
litical and commercial, wish to record the following opinions 
and recommendations: 

" I. In the interests of commerce it is vitally necessary that 
the position of the Colony of Hong Kong, as the natural out- 
let and focus for the trade of the Two Kwang Provinces, 
should never be lost sight of in considering any claims to 
' Spheres of Influence ' that may be put forward either now or 
in the future. 

*' 2. Hong Kong, through a line of railway, connecting first 
with Canton, and eventually with Hankow and her sister cities 
Wuchang and Hanyung, is in a position to directly tap the 
very heart of commercial China. 

*' 3. The trade of Hong Kong, now roughly estimated at 
some fifty millions sterling per annum, may, when the river- 
ways of South China are opened and the railway to the Yangtse 
Valley becomes an accomplbhed fact, reasonably be expected 
to expand immensely. 

" 4. The geographical situation of Hong Kong, lying, as it 
does, half-way between India and Japan, on the very borders 
of one of the most populous provinces of China, and at the 
mouth of one of the greatest systems of inland navigation in 
Asia, is of supreme importance to British trade, and any scheme 
or policy that loses even partial sight of its unique advantages 
ought not to commend itself to the attention of the British 
Government. 

" 5. That, however important the trade of the United King- 
dom with Central China, it must not be forgotten that the key 
to British influence and prestige in the Far East reposes in 
the Colony of Hong Kong. 

" The Chamber, therefore, respectfully urge that while 
it is of the utmost importance to secure an * Open Door ' 
for British and foreign trade in the Yangtse Valley and in 
the North of China, it is imperative that — 

"(tf) Trade throughout China should be freed from all 

474 



APPENDIX 

inland imposts, one tax payable at the port of entry sufficing 
to frank goods to their destination. 

'* {d) That the dual system of Customs should be abolished, 
and a contribution to the Provincial treasury be made out of 
the revenues of the Imperial Maritime Customs. 

" (c) In view of the lawless condition of the Two Kwang, 
it should be strongly impressed on the Chinese Government 
that vigorous measures be promptly taken to put down brig- 
andage and restore order throughout the provinces. 

**(d) That, as part of the grand scheme for throwing open 
to foreign trade the entire waterways of China, means be at 
once taken to secure the opening of the West River above 
Wuchow-fu and also the North and East Rivers along their 
entire navigable courses/' 



CHINKIANG CHAMBER OF COMMERCE 
Jiesolutioni of November 22, 1898 

The following are the recommendations of this Chamber: 

" I. Strict and immediate enforcement of the inland 
navigation rules. 

'' 2. Right of foreigners to reside in the interior, un- 
fettered as regards trade, and to buy land in the vicinity 
of Treaty ports. 

"3. Amelioration of condition of certain barriers in 
Riangsu, notably that at Huai-kuan on the Grand Canal. 

'' 4. Revision of the Yangtse Regulations. 

''5. A more hearty and willing co-operation on the part 
of H.M.'s Consuls for the furtherance of trade and pro- 
tection of British interests." 



KIUKIANG MEETING 

Address of November 25, 1898 

" My Lord,— As Chairman of the deputation and other Brit- 
bh reudents appointed to wait upon you, I beg to present to 

475 



APPENDIX 

your Lordship this expression of the pleasure your visit to this 
port afiFords us, and to invoke your powerful influence at home, 
both in Parliament and with the Government, with a view to 
the extension of the privileges of British residents in Central 
China. 

*' British subjects desire : 

'' (i.) Full liberty to establish in the interior manufact- 
uring and other industrial concerns, particularly in tea- 
growing districts. 

" (2.) To open and work mines on equally favorable 
terms with the natives. 

"(3.) That the rights of Christian missionaries and 
their converts in the interior and elsewhere be fully rec- 
ognized. 

''(4.) That ample protection be accorded British sub- 
jects in all legitimate enterprises in China. 

*' (5.) That special attention be given to the French and 
Russian activity in Central and Western China, especially 
in view of the fact that an armed French force is at pres- 
ent in the West, and that a railway is now being construct- 
ed opening up direct communication between Central 
China and the Russian sphere in the North. 

'' (6.) That a British naval force be stationed perma- 
nently in the Yangtse as a demonstration of the intention 
to protect her interests. 

"(7.) That Hunan be opened to trade and missionary 
work, which shall have the fullest protection throughout 
the province, and that a British Consul be appointed to 
reside at Changsha, the capital. 

"(8.) That an understanding be arrived at with the 
United States of America by which both nations may 
take concerted action against the closing of any doors to 
missionary work and trade now open in the Empire, and 
that the two nations reopen any doors that may have 
been closed. 

''The British community resident in this part of the Yang- 

476 



APPENDIX 

tse Valley, in the centre of the section of the Empire specially 

guaranteed by China to Great Britain, urge a close attention 

on the part of the British Government to the development of 

this important ' sphere of British influence/ for its possibilities 

and resources are almost unlimited. 

*' The deputation confidently anticipate that the result of 

your Mission to the Far East will promote a still more rapid 

opening up of this part of the Empire of China to Christianity, 

and all forms of Western civilization. 

'' I am, my Lord, 

'' For and on behalf of the Community, 

"Your obedient Servant, 

" Edward S. Little, 

" Chairman of the Deputation. 
" To Rear- Admiral 

" Right Hon. Lord Charles Beresford, C.R" 



HANKOW MEETING 

Resolutions of December 5, 1898 

"My Lord, — I beg to hand you herewith a copy of res- 
olutions passed unanimously at a meeting of the British 
Mercantile Community of this concession, and to request that 
you will call the attention of her Majesty's Government to 
the subjects mentioned therein, which are of the greatest im- 
portance to all residents and traders here. 

" I am, my Lord, 
" Your obedient Servant, 

" C. £. Geddes, 
" Chairman of above Meeting. 
" To the Right Honorable 

" Admiral Lord Charles Beresford, 
" R.N., C.B., M.P." 

" Resolutions passed at a meeting of the British Mercantile 
Community, held at Hankow on the 3d December, 189S : 

" I. We believe that it is largely in consequence of the lack 

477 



APPENDIX 

of firmness on the part of her Majesty's Government that 
this country is now plunged into such a state of political tur- 
moil that the Chinese merchants have practically ceased to 
do business. The Local Governments in this part of the 
Empire, impoverished by the loss of revenue derived from 
likin, are no longer able to control the people, and the general 
feeling is that it is only the want of a leader that prevents an 
uprising of a dangerous character. And inasmuch as the na- 
tive authorities are not in a position to afford us security and 
protection to carry on our trade in the future, as we have done 
heretofore, we call upon her Majesty's Government to extend 
to us the protection to which we are entitled as British subjects. 

'^ 2. We consider it of the utmost importance that the further 
opening up to trade of the waterways of the Yangtse and its 
great tributaries, the Tung Ting Lake, etc., on the principle of 
the 'Open Door,' free to all, should be carried out with as little 
delay as possible, and permission obtained for foreigners to 
trade direct with and reside in the large cities within this dis- 
trict on similar terms as with the existing Treaty ports. We 
would suggest that the establishment of a Consulate at Chang- 
sha, and the opening of that city as a Treaty port, would be a 
measure of great importance towards securing a standing in 
the province of Hunan. 

"3. Since the establishment of the Treaty port of Hankow, 
in 186 1, British subjects have, from time to time, bought land 
outside the limits of the British concession under Chinese title- 
deeds. These deeds have been duly registered, and bear the 
Consular stamp of her Majesty's Government. Since the war 
with Japan proved the weakness of the Chinese, advantage 
has been taken by the French and Russian Governments to 
seize upon such property as above mentioned, to the loss and 
detriment of British subjects, claims to the ownership of land 
lodged with the French and Russian Consuls having been re- 
jected and declared invalid without explanation or the possi- 
bility of appeal. The result of this has been to lessen in Chi- 
nese opinion the value of the British Consular stamp on a 
deed, a fact which will have a most serious effect on British 

478 



APPENDIX 

interests here ; and the native officials now refuse to register 
deeds sent in by her Majesty's Consul, to which they offer no 
objection if the application is made through the French or 
Russian Consul. 

*' C. E. Geddes, Chairman." 



FOOCHOW CHAMBER OF COMMERCE 
Resolution of December 22, 1898 

'' That the General Chamber of Commerce of Foochow de- 
sires to avail itself of the opportunity of your Lordship's visit 
to place before you its endorsement of the views already ex- 
pressed by the other Chambers of Commerce in China, viz. : 

" I. That the ' Sphere of Influence' policy, so called, would 
be fatal to the interests of British Trade and Commerce in 
China. 

''2. That we earnestly hope that the declaration of her 
Majesty's Government with regard to the maintenance of the 
'Open Door' will be strictly adhered to. 

" 3. That in order to keep the * Open Door' for the trade of 
all nations, it is necessary that the integrity of China should 
be preserved." 



AMOY GENERAL CHAMBER OF COMMERCE 

Address of December 23, 1898 

'' My Lord, — I have the honor to transmit to your Lordship 
the following resolutions, unanimously carried at the meeting 
of the British Members of this Chamber, held this morning, 
at which your Lordship was present : 

*' ' I. That this Chamber is of opinion that British trade 
at Amoy would be considerably enhanced were the right 
of residence in the interior allowed, and likin either 
abolished or compounded in one payment. 

479 



APPENDIX 

***2. That the best thanks of this meeting are offered 
to the Associated Chambers of Commerce for having sent 
out a Mission to inquire into British Trade and Com- 
merce, and that it is hoped that the Mission to China will 
result in considerable benefit to British merchants.' 

** I have the honor to be, 

" My Lord, 

" Your most obedient Servant, 

"J. J. Dunne, 
" Secretary. 
"To Rear- Admiral 
" Right Hon. Lord Charles Beresford, 
" C.B., M.P., etc., etc." 



SWATOW MEETING 

Resolution of December 24, 1898 

" That this meeting trusts that her Majesty's Government 
will see the necessity for taking more vigorous measures to 
maintain and promote British influence in China." 



CHINA ASSOCIATION, HONG KONG 

Meeting 0/ December 28, 1898 

At a meeting of the Committee of the Hong Kong Branch 
of the Association, held at the City Hall, on the 28th Decem- 
ber, 1898 — present, J. J, Francis, Q.C., in the chair, the Hon- 
orable C. P. Chater, C.M.G., Thomas Jackson, C. S. Sharp, 
E. W. Mitchell, and F. Henderson (Hon. Sec.) — the following 
resolutions were unanimously passed : 

" Resolved — 

" I. That unless some definite policy is adopted by the 
British Government in connection with affairs in China, and 

480 



APPENDIX 

unless prompt action is taken to give effect to that policy, 
British trade and British influence in China are in serious 
danger of diminution. 

'' 2. That the policy embodied in the term * Spheres of In- 
fluence ' tends to the eventual dismemberment of the Chinese 
Empire, can only lead to war, and ought to be set aside. 

''3. That the policy embodied in the phrase the 'Open 
Door ' ought to be clearly defined and strictly enforced, even 
at the risk of war. 

" 4. That the policy of the * Open Door,' in our opinion, 
means that all rights and privileges obtained by any one 
Power, under treaty or convention with China, should be 
common to all Powers and their subjects throughout the Em- 
pire of China ; that the action of any nation in endeavoring 
to obtain from the Chinese Government any exclusive rights 
or privileges should be deemed an unfriendly act, and that 
Great Britain should call upon the Chinese Government to re- 
fuse to grant any exclusive rights to any Power, and should 
support China, by force if necessary, in her refusal. 

"5. That if any nation has any reasonable claim to exclu- 
sive influence in the Southern provinces of China — Kwang- 
tung, Kwangsi, and Yunnan — that Power is Great Britain ; 
but that Great Britain claims no such exclusive privilege, 
and will permit no other Power to exercise any exclusive 
right. 

"6. That the Revenue system of China is the greatest of 
all obstacles to the improvement of trade, to the increase of 
manufactures, to the opening of mines, and the construction 
of railways in China, and that the British Government should 
bring all its power and influence to bear on the Imperial 
Government to compel the unification of the finances of the 
Government, Imperial and Provincial, in the hands of a Special 
Service, entirely manned by Europeans and worked on the 
plan of the Imperial Maritime Customs. 

'* 7. That with the unification of the collection of revenues 
in the hands of a special department, as above, there will 
necessarily be conjoined an immense improvement in the 
3H 481 



APPENDIX 

policing of trade routes both by land and water ; and greater 
additional security for investments in China. 

"That these resolutions be transmitted to Lord Charles 
Beresford, and that copies thereof be sent to H.M.*s Minister 
in Peking, the Shanghai branch of the Association, and the 
Committee of the Association in London. 

"F. Henderson, 

" Hon. Secretary. 

"Jno. J. Francis, 

"Chairman." 



CHINESE MEETING, HONG KONG 
Resolutions of January 22, 1S99. 

Resolutions passed at the meeting of Chinese merchants 
and traders, and other Chinese gentlemen resident in Hong 
Kong, interested in trade, held at the Chinese Chamber of 
Commerce Rooms on Sunday, the 2 2d January, 1899, at 
noon. 

On the motion of Mr. Ho T^ung, seconded by Mr. Leung 
Shiu-Kwong, it was resolved : 

" I. Having closely followed with great and attentive 
interest, and carefully considered what Lord Charles 
Beresford has said and done in China in connection with 
his recent Mission on behalf of the Associated Chambers 
of Commerce, we, the Chinese community of Hong Kong 
here assembled, are in accord with and heartily support 
the policy the noble Lord proposes in regard to the *Open 
Door' as regards commerce, and also with regard to the 
reorganization of the Chinese Army under the British. 

"2. That we recognize the combined proposals, if car- 
ried out, will benefit China quite as much, if not more, than 
England, and other nations, in her trading interest, and 
we therefore hope that Lord Charles will be intrusted by 
the British Government with the carrying out of the views 

482 



APPENDIX 

he has so closely enunciated, as we, the Chinese people of 
Hong Kong, observe that his efforts are directed to the 
benefit of both his country and our country, and to the 
benefit of the trade of China and the trade of England. 

** 3. That we recognize and make our cordial acknowl- 
edgments for the sympathetic manner with which he has 
approached our country ; and 

" 4. That we desire to emphatically express our full 
confidence in Lord Charles Beresford, whose ability, in- 
tegrity, and zeal we are sure peculiarly fit him to success- 
fully carry out the proposals he has made for the further- 
ance of trade and the preservation of the Chinese Empire. 
(Signed) "Lo Chi Tiu, Chairman. 

" H. O. FooK, Secretary." 



GENERAL FOREIGN COMMERCIAL COMMUNITY, 

SHANGHAI 

Eesoiutian 0/ January 8, 1899 

''That our cordial thanks be tendered to Lord Charles 
Beresford for the service he has rendered to the foreign com- 
munities in China by personal investigation into the conditions 
of the various interests we represent.'' 

Memoranda showing views of British merchants are also to 
be found under "Canton," " Wuhu," and "Chefoo." 



SUMMARY OF TRADE STATISTICS 

The following is a summary of the trade statistics given 
under the headings of the different places mentioned in this 
Report. I was unable to get reliable figures for 1898, as I left 
China in the early part of January, 1899. ^ ^^ ^^^o unable to 
obtain trustworthy figures at each place of the proportionate 
value of British trade, so I have preferred to omit it alto- 

483 



APPENDIX 



gether, as the tonnage of shipping gives a fairly approximate 
idea of the British preponderance of trade in China, which 
amounts to 64^ of the whole foreign trade. The American 
percentage is 8^ of the whole, and the remaining 28^ is divided 
among the other foreign nations, Japan Laving the larger share, 
and Germany coming next 







Total 
net value of 
Trade, 1S97 


Total tonnage 


Total British 


Towns 


EsUmated 
Population 


of Shipping 
entered and 


tonnage 
entered and 






cleared, 1897 


cleared. 1897 






Haikwan taels 






Tientsin . . 


l»ooo,ooo 


55.059.017 


1,326,663 


574.177 


Newchwang 


60,000 


26,358,671 


730,964 


363.922 


Chefoo . . 


32.876 


22.051.976 


2,385.301 


1.327,559 


Hankow . . 


800.370 


49.720,630 


1.783.042 


1,109.853 


Kiukiang . 


53.101 


14,865.563 


2.656.552 


2,004.298 


Wuhu . . 


79.275 


8.888.361 


2,867,485 


2,159.307 


Chinkiang . 


135.220 


24.145.341 


3.535.739 


2.353.702 


Shanghai . 


405.000 


101.832.962 


7,969.674 


4,591.851 


Foochow . 


636,351 


13.556,494 


641.795 


470,239 


Amoy . . 


96,370 


12.973.616 


1,727,251 


I.417.135 


Swatow . . 


40.216 


28.398.001 


1,917.027 


1.655.864 


Canton . . 


1.600.424 


49.934.391 


3,718.064 


3.000,571 


Wuchow 


50,000 


1,912,711 


52,188 


41.402 


Hong Kong 


246.880 


;£5o.ooo,ooo 


15.565.843 


8,268.770 


Nanking 


150.000 








Peking . . 


1,300,000 








Wei-hai-Wei 


4.000 









Definitions of Chinese Weights, Etc. 

16 taels = I catty. 
I catty = i^ lb. avoirdupois. 
100 catties = i picul. 

I picul = 133^ lbs. avoirdupois. 
75 catties =100 lbs. avoirdupois. 

Six mou = I acre. 
3.3 li = I mile. 

In 1897, I Hk. (Haikwan or Customs) 

tael = 2X. 11}//. English. 
" = $0.72 American. 
484 



it 



INDEX 



Addis, C. S.. Report on relation be- 
tween copper and silver cash, 370- 

377. 

Albumen, 167. 

Alcock, Sir Rutherford, Convention 
of, 399. 

Allen, Mr., British Consul at New- 
chwang, 51. 

American Asiatic Association, 437. 

American interests in China: Car 
couplings, 29; Firms in Shanghai, 
93 ; Flour trade, 95 ; Kerosene, 95 ; 
Locomotives, 26 ; Lumber, 95 ; 
Machinery, 445 ; Piece goods trade, 
92 ; Railway material, 49. 

Americans, Opinions of, on Lord Ber- 
esford's Mission, 439 ; Opinions of, 
on Open Door policy, 430-437. 443- 

Amoy, Report ot Chamber of Com- 
merce, 479 ; Visit to, 182. 

Antimony, 165. 

Annies (see chapter on ''Chinese 
Armies and Navies," 267). 

Army, Chinese, Inefficiency of, 280; 
Reorganization of, essential to fut- 
ure prosperity, 7, 11, 96, 107, no, 

139. 143. I57» 174. 231. 450; Jap- 
anese, 427; Russian, in Manchuria, 
286. 

Arsenal, at Osaka, 421 ; Shanghai, 
294; Tokio,427. 

Arsenals, 290-302. 

Baldwin engines, 28, 45. 

Bank, China and Japan, 89 ; Tientsin, 

16. 
Banker & Co., Case of, 238-247. 
Banks, List of China, 388. 
Bean mill, 63. 
Bean oil, 57. 
Beancake, 34, 57. 
Beans, 34. 40. 57. 
Belgium, Railway interests of, 305. 



Beri-beri, Disease of, 431. 
Bradley & Co., i8a 
Buffalo, Visit to. 436. 
Butterfield & Swire, 33. 

Canal, the Grand, 318, 328. 

Canes, Canton trade in, 235, 260. 

Canton, Arsenal of, 301 ; Exports of, 
259; Piracy of, 248-258; Trade 
statistics of, 198-202 ; Visit to, 232- 
263. 

Capital, Anglo-Saxon, Opportunity for, 
170 ; Demoralization of, 17 ; Need 
of, 38 ; Tientsin Bank, 16. 

Cassia, Canton trade in, 260; Wnchow, 
265. 

Catholics, and Vu Man Tsu, 141. 

Cavalry, Chinese, 275 ; Japanese, 428. 

Cereals of Manchuria, 35. 

Chamber of Commerce, Amoy tea. 
Report on, 183-184 ;Chinkiang, Re- 
port no, 121, 131 ; Shanghai, Ad- 
dress to author, 88 ; Tientsin, 14. 

Chambers of Commerce, Reports of 
(see Appendix). 

Chao-Chao Fu, 178. 

Chefoo, Convention of, 240, 244, 247, 
401 ; Development of, 66 ; Gold- 
mines of, 68 ; Trade, 65 ; Visit to, 

65. 
Chicago, Visit to, 435. 

Cbihli, Viceroy of, 292. 

China, Administration of, 211 ; Aliena- 
tion of, 20 ; American interest in, 
433* 447 ; British trade with, 198, 
203 ; '* Break-up '* of, effect of, 20 ; 
Policy should be changed, 84; 
Population of, 194; Revenue sys- 
tem of, 225 ; Trade compared with 
J[apanese, 417. 

Cmna Association, Report of, 480, 

Ching, Prince, Interview with, 2. 

Chingfui tax, 405. 



485 



INDEX 



Chinkiang, British merchants' report 
on, 133 ; Chamber of Commerce, 
121-475 ; Trade statistics of, 120- 
135 ; Visit to, 120. 

Chine- tu, Arsenal of, 302. 

Chu-kiang River, 232. 

Chung Chi Tung, Interview with, 156; 
Army of, 276. 

Chungking trade with Newchwang, 

33. 
Coal, Chefoo, 66 ; Hunan, 164 ; 

Kwangnin, 25 ; Kwangtun^, 188, 

262; Nan-Paian, 24; Mimng of, 

61 ; Newchwang, 40 ; Shuisi, 313 ; 

Statistics of, 30; Wuhu, 116. 

Coinage, Report on relation of silver 
and copper, 371. 

Coins, 368 ; Analysis of, 371-379. 

Coke, not manufactured, 31. 

College, Visit to Imperial Naval, no ; 
Visit to Military, 112. 

Commerce, British, Protection of , 211- 
230; Chambers of {see Appendix); 
Piracy, No security because of, 
248-258 ; Protection lacking, 280. 

Commercial attache, 351. 

Company, Japan Sugar Refining, 421; 
Mitsu Bishi, 419 : Taku Tug and 
Lighter, 18; Union Steel andiron, 

433. 
Consul, the British, in China, 348 ; 

Complaints against, 349-358 ; Rus- 
sian needed at Newchwang, 37. 

Consular representation, 128. 

Consular system. Defects of British, 

349-357. 
Convention of Chefoo, 240, 244, 247, 

401. 

Copper, Used in coinage, 370. 

Corea, Japan trade with, 426; at Rus- 
sians mercy, 55. 

Com, waste of, 188. 

Cotton, American export of, 445 ; 
Newchwang trade in, 58; Quality 
of Chinese, 91; Taxation of, 410; 
Shanghai trade in, 90, 93, 294. 

Cruisers, English and German built, 
284. 

Currency, {ste chapter on), 359 ; De- 
fects of, 387 ; Gold, 383 ; Opinions 
on, 382-386. 

Customs, Opium, Report on Hong 
Kong, 200 {see Tariffs, 389). 

Customs House, Regulations of Shang- 
hai, 77 ; at Kowloon, 204. 



Debt, of China, 363. 



Deer-horns, 60. 

Dickinson, W. W., 14. 

Dockyards, of Mitsu Bishi Co., 419. 

Duck feathers, 260. 

Duties (see chapter on ** Tariffs,*' 389), 
Ad valorem, 415 ; Opium, on Hong 
Kong, 204-210 ; Preferential, 236 ; 
Railway materials exempted from, 
45 ; Shanghai Customs House col- 
lection of, 80; Tientsin, 15; Tran- 
sit, agreement of Chinese Govern- 
ment concerning, 401. 

Electric Plant of Kioto, 423, 424. 

Emperor, Interview with the Japanese, 
430. 

Evans & Pugh, 147. 

Exchange, Declining gold, 384. 

Exports (see tables, 198, 203, 391), 
American, to China, 445 ; Canton, 
235, 259, 260; Chinkiang, 136; 
Newchwang, 33, 57, 60 ; Value of 
Newchwang gold, 62 ; Taxes on, 
410 ; Tea, 184 ; Tientsin, 15 ; Wu- 
chow, 265. 

Feathers, 167. 

Felt, 60. 

Fergusson, Mr., property case of, 69. 

Finance (see chapter on, 359), Spheres 
of Influence and, 367. 

Fire-crackers, Canton export of, 260. 

Fleming, murder of, 140. 

Flour, American export of, 445 ; Fluct- 
uation in price of, 375. 

Foochow, Arsenal of, 300 ; Report of 
Chamber of Commerce, 479 ; Trade 
statistics of, 169 ; Visit to, 169. 

Forests of Manchuria, 35. 

Forts (see chapter on * * Forts and Arse- 
nals," 290). 

France, Chinese interests of, 99 ; Han- 
chow interests of, 144 ; SiUc trade 
of, 259 ; Sphere of influence of, in 
Kwaugsi and Kwangtung, 235, 260 ; 
in Yangtse Valley, 325; Treaty 
rights of, 82. 

Furs, Tientsin trade in, 18. 

Germany, Canton silk trade of, 259; 

Chefoo controlled by, 65 ; England's 

relations to, 21 ; Kiao-chow occupied 

by, 67, 74. 
Gingal, 280. 
Ginseng, 60. 
Glass, Opening for manufacture of, 

40, 390, 418. 



486 



r 



INDEX 



Gold, at Chefoo, 66 ; Currency, 383 ; 
at Hunan, 166 ; at Newchwang, 62 ; 
in Yangtse Valley, 345. 

Gordon, Chinese, 6. 

Grand Canal, Condition of, 131 ; Pec- 
ulation of officials of, 326. 

Great Britain, China trade, extent of, 
6 ; Canton silk, trade of, 259 ; China 
trade with, 192 {see tables, 198- 
203) ; Confidence of China in, 231 ; 
Fergusson case, action in, 69 ; Man- 
churian trade, 47 ; Right of, to estab- 
lish shops in Canton, case of Banker 
& Co., 238-247 ; Russia, fear of, 
f 58 ; Spheres of Influence, policy in 
regard to, 3, 4 ; Subjects, inadequate 
protection of, 212-214. 

Greaves and Giddes & Co, case with 
French Consul, 145. 

Grieg, Dr., 52. 

Haihow, Value of trade of, 198-202. 

Halliday, Mr., ill. 

Hankow, Arsenal of, 299 ; Geograph- 
ical importance of, 168 ; Report of 
Chamber of Commerce of, 477 ; 
Visit to, 139. 

Hanyang, 150. 

Harbor of Wai-hai-Wei, best in North- 
ern China, 72. 

Hart, Sir Robert, 6, 12 ; Administra- 
tion of, 175. 

Hemp, 40. 

Hides, Tientsin trade in, 18. 

Hisaya, Baron, 420. 

Ho Kai, Address to Lord Beresford, 
211-231. 

Hoi Chou, Pirates of, 250. 

Hong Kong, Report of Chamber of 
Commerce, 473 ; Visit to, 191-23 X. 

Hosie, Mr., British Consul at Wn- 
chow, 264. 

HsO Jung Kwei, Viceroy of Foocfaow, 
Interview with, 173. 

Hsu Ving Kwei, Army of, 278. 

Hu Yen Mei, Interview with, 11. 

Huang Chin, Interview with, 98. 

Hunan, Manufactures of. Mineral 
wealth of, 164 ; Soldiers of, 271. 

IcHANG, Trade with Newchwang, 

33. 
Imports (x^^ tables, 92, 198-203, 391), 

Cotton, Comparison of, for 1887 and 

1897 : Newchwang, 33, 57 ; Oil, 

American, 59 ; Tientsin. 15. 

Iron, in Hankow, 153; Kwangnin, 



25 ; Kwangtung, 188 ; Manchuria, 

39. 61. 
Ito, Marquis, Interview witlt, 95, 416. 

{ACKSON, Mr. P., 359. 
apan. Electricity as a motive power 
in, 424 ; Exports of, compared with 
Chinese, 60; Open Door in China 
desired by, 431 ; Trade of, com- 
pared with Chinese, 417 ; Visit to, 
419. 

Jardine and Matheson Steamship 
Company, 33, 149. 

Junks, Description of river, 323. 

Kaiping, Cavalry camp at, 275. 
Kang Yu Wei, Interview with, 191- 

195. 
Khanpingkhan pass, 18. 

Kiangzin, Army at, 277; Visit to, 138. 

Kiaochow, Visit to, 73; German oc- 
cupation of, 73. 

Kioto, Electric plant of, 423. 

Kirin, Hospital at, 52 ; British Con- 
sul needed at, 36, 44. 

Kiukiang, Report of Chamber of Com- 
merce, 475 ; Population and trade 
statistics of, 117. 

Ko Chun, Pirates of, 250. 

Kob^, Visit to, 421. 

Kowloon, 204. 

Krupp guns, 290. 

Kwangnin coal and iron, 25. 

Kwangsi, British trade with, 108-202 ; 
French Sphere of Influence in, 235 ; 
Silk exports of, 259. 

Kwangtung, British trade with, 198- 
202; French Sphere of Influence in, 
235 ; Mineral wealth of, 188 ; Piracy 
on waterways of, 248-258 ; Silk ex- 
ports of, 259. 

Kwei Chun, Interview with, 97. 

Kwei Yun, Interview with, 261-263. 

Labor, Cost of native, 27 ; need of 

skilled, 38. 
Lake Poyang, 346 ; Tung Ting, 345. 
Land, Russian policy in purchase of, 

57. 

Lang, Captain, 7. 

Lead, 39, 165. 

Li Hung Chang, 12 ; Proposition of, 
84. 

Likin, Evils of, 170, 178, 184, 189, 
234, 238, 241. 333. 406. 

Lin Kwen Yi, Army of, 277 ; Inter- 
view with, 106. 



487 



INDEX 



Lo Tak Fat, Statement on piraqr by, 

254. 
Loans, 363 ; Present prices of, 368. 

Locomotives, American, 26, 29 ; Dabs*5, 

26 ; Baldwin's, 28, 45. 

•• Loto Shui," 410. 

Lumber, 95. 

M AcDoN ALD, Sir Claude, 8, 68 ; Letter 
in Banker & Co. case, 238. 

Machinery, American, 26, 49, 445 ; 
German, 70. 

Maize, 40. 

Manchu, Armies of, 268. 

Manchuria: Annexation, Eifect of Rus- 
sian, 55 ; Army of, 275; Forests of, 
35 ; Foreign trade of, 57 ; Impor- 
tance of, 42 ; Missions in, 52 ; Port 
of, 34; Resources of, 35, 61 ; Rus- 
sian army in, 32, 34, 36, 47, 287 ; 
Russian and British trade with, 
48. 

Mandarins, Illegitimate gains of, 219- 
225. 

Mansfield, R. W., Consul at Canton, 
Letters in Banker & Co. case, 238- 
244 ; Reports on piracy at Canton, 
249-253. 

Manufactures: Bricks, 185; British, 
openings for, 418 ; Cannon, 294 ; 
Cotton goods, 422 ; Matches, 422 ; 
Munitions of war, 294; Powder, 
293; Rifles, 294; Salt, 179; Steel 
and iron, 154 ; at Tongshan, 25. 

Matches, Newchwang trade in, 57. 

Matting, Export trade of Canton in, 
235. 260. 

Mauser rifles, in use in Chinese Army, 
271, 276, 112. 

Maxim guns, Chinese Army equipped 
with, 271. 

Millet, 40. 

Min River, Navigation of, 170-171. 

Minerals : Wealth of Hunan in, 165 ; 
of Hupeh, 154; of Kwangtung, 
179, 188, 262 ; of Manchuria, 61- 
62 ; of Newchwang, 39. 

Mining Rights desired, 38. 

Mint, at Tientsin, 293. 

Missions : Catholic, at Hankow, 142 ; 
at Hunan, 165 ; Jesuit, at Shanghai, 
104 ; Protestant, in Manchuria, 

52. 
Mitsu Bishi Co., Visit to docks of, 

419. 

Mongolia, Absorbed by Russia, 55 ; 

Army in, 275. 



Nankhow Pass, 18. 

Nanking, Arsenal of, 298 ; Treaty of, 
237» 238, 395 ; Visit to. io6. 

Nan^ang, Squadron of, 284. 

Navigation Laws, Anglo-Saxon trade 
affected by, 77 ; Inland, 122. 

Navy, Report on Chinese, 284 ; on 
Japanese, 419, 430. 

Needles, 40. 

New York, Visit to, 437. 

Newchwang, Port of, 33-40 ; Visit to, 
32; Report of Chamber of Com- 
merce, 471. 

Nieh, Army of Genera], 274. 

Ningpo, Riots at Joss-house of, 100. 

Northcote, Sir Stafford, i, 459. 

Officials, Corruption of Chinese, 
216-^25. 

Oil, 40; Canton export of, 235, 260; 
American export of, 446. 

Open Door, American trade, essential 
for future of, 437, 443 ; Benefits of, 
to all nations, 96, 103, 115 ; Canton 
merchants on, 261 ; Desire of Chi- 
nese for, 19 ; at Foochow, 172 ; at 
Hong Kong, 196, 211 ; Report of 
Hong Kong merchants on, 211— 
231 ; Japanese trade, imperative 
for future of, 423, 426, 431 ; at 
Kiao-chow, 67, 74; Necessity of, 41 ; 
Only rational policy, 454 ; Tientsin 
Chamber of Commerce on, 470 ; In 
Yangtse Valley, 317, 393. 

Opium, Hong Kong duties on, 204- 
210. 

Osaka, Visit to, 421. 

Pakhui. {See table, 198-202.) 

Paotung, French claim to, 102. 

Paper, Wuchow trade in, 265. 

Pavloff, M., Russian Chaig^ d* Af- 
faires, I. 

Pease, Trade in, 34. 

Peking, Field force of, 275 ; Gov- 
ernment of, 83-86; Visit to, I. 

Petroleum, Newchwang trade in, 59. 

Peyang, Squadron of, 284. 

Pigs' Bristles, Canton trade in, 260 ; 
Newchwang trade in, 62. 

Piracy, at Canton, 234 ; Accounts of, 
at Canton, 248-258. 

Police, Inefficiency of Chinese, 4; 
Necessity for reorganization of, 

450. 
Population. {See Statistics.) 
Port Arthur, i. 



488 



INDEX 



Ports, of Manchuria, 34 ; Wei-hai- 
Wei, 71. 

Powder (sfe Arsenals) Manufacture 
of German smokeless, 302 ; Qual- 
ity of Chinese, 290; Tientsin fac- 
tory, 293. 

Preserves, Kwangsi and Kwangtung 
exports of, 257. 

Prison, Visit to Tokio, 429. 

Railways {see chapter on, 304) : Bur- 
mah Extension Railway, 314 ; Che- 
foo, 66-69 ; Hankow-Canton Rail- 
way, 312, 167; Kiao-Chow-Yichow- 
Tsman Railway, 73, 312; Lu-Han 
Railway, 306; Pekin Syndicate 
Railway, 29. 313 ; Russian Man- 
churian Railway, 309 ; Shanghai- 
Nanking Railway, 314; Shanhaik- 
wan Extension Railway, 23, 314 ; 
Shanhaikwan-Newchwang Railway, 
308 ; Soochow - Hanchow - Ningjxj 
Railway, 314; Stretensk-VIadivos- 
tock Railway, 309 ; Swatow and 
Chao-Chao Fu, 180; Taiyuan-Fu- 
Chengting Railway, 311; Tientsin- 
Chinkiang Railway, 312 ; Tonquin- 
Nanning-Fu Railway, 313; Trans- 
Manchurian, 44, 48 ; Wuchow and 
Chungking, 265. 

Railways, Essential for development, 
II ; British interests in, 305 ; Ger- 
man interests in, 303; Gauge of, 
316 ; In course of construction, 306 ; 
In operation, 304; Projected, 310; 
Russian interests in, 305. 

Reform, of Chinese Government, 211- 
230. 

Reforms, su^ested by author, 455. 

Reports of Chambers of Commerce. 
(S!ee Appendix.) 

Residence, No liberty to foreigners 
for purposes of trade, 83 ; In inte- 
rior, 126. 

Revenues, Corruption of Chinese, 220- 
225 ; Amounts of, 362 ; New- 
chwang, 56. 

Rice, 187; Wuchow trade in, 265; 
Fluctuation in price of, 375. 

Rifles, in use in Chinese army, 279 ; 
Factory at Hankow, 299. 

River, Reports on, Han, 343; Liao, 
342: Pei Ho, 341; Siang, 345; 
Wangpoo, 340; West, 329; Yangtse, 
320; Yellow, 337. 

R i vers. ( See Waterways, 318). 

Roods, 346. 



Russia, Army of, in Manchuria, 286 ; 

British interests affected by, 145 ; 

Manchurian trade of, 47 ; Policy of, 

I3» 18, 36, 51. 
Russian courtesy to author, 156, 52. 

Salaries, Official, 220-225; Evils 
caused by small, 364. 

Salt, Effects of illegal taxation of, 411 ; 
Swatow manufacture of, 179; Mo- 
nopoly of, 186. 

Salt Fish, Trade in, 185. 

Samshui. {See table, 198-202.) 

Schools, Japanese military, 427. 

Seaweed, Kewchwang Imports of, 

57. 

Shanghai, Report of Chamber of Com- 
merce, 472 ; Visit to, 76. 

Shansi, Mineral wealth of, 313. 

Shantung, Soldiers of, 271. 

Sheng, Director of Chinese Railway, 
Interview with, 161. 

Shipbuilding, Japan, 419 ; San Fran- 
cisco, 433. 

Shipping, British, 41. 

Shiung Yo, Trouble at, 48. 

Siberia, Position of Russian army in 
Eastern, 286. 

Silk, Export of Canton, 235-259 ; of 
Wuchow, 265 : Taxation of, 410. 

Silver, 39 ; Relation between copper 
cash and, 370. 

Singapore, Emigration to, 189. 

Skins, Tientsin trade in, 18, 60. 

Soon Ching, Army of General, 273. 

Spheres of Influence, Canton mer^ 
chants protest against, 259; Evils 
of, 215-217 ; Finance affected by, 
367 ; French in Kwangsi and 
Kwangtung, 235 ; In Yangtse Val- 
ley, 325; llong Kong, 196; Result 
of, 452 ; Shanghai Chamber of Com- 
merce report on, 468 ; Yangtse 
Valley in. 317. 

Spirits, Trade in, 40. 

Statistics {see Summary of Trade), 
483; Amoy trade, 182: Canton 
trade, 232 ; Chefoo trade, 65 ; Chin- 
kiang trade, 120 ; Foochow trade, 
169; Hankow trade, 139; Hong 
Kong trade, 19 1 ; Imports cotton 
into all China, 92 ; Kiukiang trade, 
117; Newchwang, export, 58 ; trade, 
32 ; Peking, i ; Shanghai, cotton 
imports, 90; trade, 76; Swatow 
trade, 177 ; Tables, 198-203 ; Tient- 
sin, 14 ; Tongshan coal, 30 ; Work- 



489 



INDEX 



shop and locomotive, 25 ; Wuchow 
trade, 264 ; Wuhu trade, 115. 

Steel, Hanyang Mills, 164 ; Opening 
for British manufacture of, 418; 
used in Shanghai arsenal, 296. 

Stuhlman, Dr., Report on copper 
cash, 377. 

Sugar, Staple trade of Swatow, 177 ; 
Export of Wuchow, 265. 

Summary of trade statistics, 483. 

Sung, Army of General, 273. 

Swatow, Visit to, 177-181. (5// table, 
198-202.) 

Szechuan, In French Sphere of In- 
fluence, 325. 

Tables. Analysis of Coin, 371, 379 ; 
British trade with China, 198 ; Can- 
ton exports, 259 ; Cotton imports 
into all China, 92 ; Currency, 360 ; 
Newchwang imports, 83 ; Summary 
of trade statistics of, 483; Tong- 
shan. Workshop and locomotive sta- 
tistics, 25. 

Tael, Commercial Standard of, 368. 

Taku Tug and Lighter Company, 18. 

Tan, Viceroy of Canton : Letters in 
Banker & Co. case, 238-244. 

Tan Chung Lin. 261 ; Army of, 278. 

Taotais, Officers of International 
Board of Trade, 171, 181. 

Tariff, Revision of, 413. (Sei chapter 
on, 389.) 

Tax, Chingfui, 40s ; Evils of likin, 
170, 178, 184, 189, 234, 238; Area 
of exemption from likin, 241 ; Hai 
Kow, 405 ; Land, 411. 

Taxation, Evils of illegal, 134, 410 ; 
Chinese feeling about, 157. 

Taxes, Illegal, 405. 

Taylor, F. E., Report on depreciation 
of silver, 376. 

Tea, Amoy trade in, 182 ; Foochow, 
170 ; Formosa, 184 ; Oolong, 183 ; 
Swatow, 177; Wuchow, 265. 

Tientsin, Arsenal of, 292 ; Banks of, 
16; Mints of, 293; Trade of, 15 ; 
Treaty of, 242 ; Report of Cham- 
ber of Commerce of, 470 ; Visit lo, 

14. 
Tin, Trade in, 165. 

Tobacco, 40. 

Tokio, Visit to, 425. 

Tongshan, Coal-fields of, 35 ; Manu- 
factures of, 25. 

Torpedo Boats, Gennan built, 224* 
285. 



Trade (s^e chapter on, 389), American, 
with China, 444 ; with Shanghai, 
92 ; Amoy, 182 ; Anglo-Saxon, De- 
pendent on Russia's good-will, 53 ; 
British extent of, 5 ; With Man- 
churia, 47 ; Protection of, 2 ; In 
Hankow, 139-168; Canton, Effect 
of piracy on, 248-258 ; Chefoo, 66 ; 
Chma compared with Japan, 417 ; 
Chinkiang, Discussion of, 121 ; Rus- 
sian occupation of Manchuria, effect 
on, 36 ; Foreign. Reason for limit- 
ed, 79 ; Hong Kong, 191 {set ta- 
bles, 198 - 203) ; Development of 
foreign, 205 ; Opium, 204 ; Intema- 
tionu Board of, 171 ; Manchuria, 
Effect of Russian occupation on, 
36 ; Newchwang, Value of, 40, 41, 
56 ; Review of 1898, 63 ; Shanghiu, 
76 ; Cotton, 90, 93 ; Summary of 
statistics of, 483; Swatow, 177; 
Tientsin, 15 ; Wahu, Importance 
of trade of, 115. 

Trade Intelligence Department, need 
for, 456. 

Transit Passes, Enactment of Chefoo 
Convention, 401 ; Enactment of 
Tsung Li Yamen, 403 ; Free, 87, 
' 234, 356 ; Utter failure, 81. 

Treaty (j/^ chapter on 389); Chefoo, 
401 ; Nankii^t, 395 ; Tientsin, 17, 
19, 177, 242. 

Tseng, His Excellency, 245. 

Tsung Chee, 171. 

Tsung -li Yamen, 2; Obstacles to 
plan of, 159 ; Interview with, a. 

Tug and Lighter Co., Taku, 118. 

Tung Fu Chan, Army of, 274. 

Union Steel and Iron Works, San 

Francisco, Visit to, 433. 
United States, Competition of, in 

cotton trade, 92, 94 ; Visit to, 433. 

Value, Standard of, 368. 
Vladivostock, Russian dodqfmnlB at, 
289. 

Wade, Sir Thomas, Opinion on likin, 

409. 
WasBngton». Visit to, 436. 
Waterways, 318. 
Wei-hai-Wei, Population of, 71; 

Harbors of, 72. 
Wheat, 187, 188. 
Wong Chi Tong, Visit to, 163. 



490