British interests in China: April, 1897 : extract from a letter from T. H. Whitehead to a friend in England

British interests in China: April, 1897 : extract from a letter from T. H. Whitehead to afriend in England.Author(s): Whitehead, Thomas HendersonSource: Foreign and Commonwealth Office Collection, (1897)Published by: The University of Manchester, The John Rylands University LibraryStable URL: http://www.jstor.org/stable/60230472 .

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BRITISH INTERESTS IF CHINA.

APRIL, 189*7.

II EXTEAGT FKOM A LETTEE

rnoir

T. II. WHITEHEAD, r.>.s., MEMBER 01 THE LEGISLATIVE COUNCIL, n(»GKOM,,

TO A FRIEND IN ENGLAND.

Feinted by Noronha & Co., HONGKONG.

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(With the Author's Compliments.)

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BRITISH INTERESTS IN CHINA.

APEIL, 1897.

EXTEAOT FEOM A LETTEE

FROM

T. H. WHITEHEAD, f.s.s.,

MKHEEIl OF TKE LEGISLATIVE COCSC1I, H6SGEOSG,

TO A FRIEND IN ENGLAND.

Peisted by JJokosha &. Co., HfWGKOXS.

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k BRITISH INTERESTS IN CHINA. J\ ^1 APRIL, 1897.

EXTRACT FROM A LETTER PROM T. H. "WHITEHEAD,

HONGKONG, TO A FRIEND IN ENGLAND.

Your query as to what view is taken out here of the

supposed Russian-Chinese Treaty is opportune, as no one in Hongkong, I think, has given the question more close attention or followed every turn in recent Far Eastern

,J~\ events more carefully than I have done.

Vj British interests were sacrificed in recent years and « our late Minister to China would not believe in Russia's

designs. During his tenure of office he remained from one

year's end to another in Peking instead of paying an annual visit to the Treaty Ports of China and keeping in touch with the needs and the aspirations of British trade.

England has now an able and skilful Minister possessed of commendable energy, and during the last twelve months he has given evidence that he is the right man in the right

place. Partly owing to his efforts the Peking Government has at last been moved to authorise the opening to the

^ world of the West River, or the principal waterway con¬

necting Hongkong and Canton with South China, to foreign trade and steam navigation from 4th June next which, if the provincial officials are not permitted by the British

v



BRITISH INTERESTS IN CHINA. v

V

i-

Government to violate existing treaties, is a most import¬ ant concession and one Hongkong has urged for during the last three decades with all the strength of argument which could be adduced in the interests of all nations but

more particularly in the interests of China herself. The

British Minister is now in Hongkong on an official visit

to the open ports of China, and it is earnestly to be hoped the visit will be an annual one as personal interviews and

an exchange of opinions vivd voce with those engaged in

conducting and carrying on Britain's vast commerce in

these regions must be attended with distinct advantages.

Business with the Chinese Government took me to

Peking for some three weeks in the autumn of 1895, and

my visit to the capital was a particularly useful education and a most interesting experience as it afforded the oppor¬ tunity of observing on the spot the actual state of affairs k- and the strange proceedings of the "Tsung-li Yamen," or

Foreign Office. Speaking of this unique institution the ft late Sir Harry Parkes when British Minister at Peking

^

wrote—" To get a definite answer out of them was like

trying to draw water from a well with a bottomless bucket." Forced to admit the hated foreigner to her capital China defeated him by creating the "

Tsung-li Yamen." Its members quickly acquire an exact knowledge of the out¬ ward forms of diplomatic intercourse. Masters of etiquette and politeness they adhere to every jot and title of that law. Fat, imbecile and fatuous they sit in a solid row and deliver their non possimus with the smiling placidity of a set of joss-house idols. They use the one weapon r with which "Western diplomats cannot fight—the vis inertice of profound and self-satisfied ignorance. After reassurino-

myself from independent sources—Russian, Chinese, Ja-

I




panese, official and otherwise—in Japan, Peking, Tientsin, Shanghai, Canton, and Hongkong, of the real condition

> of the situation, I telegraphed to the London Times on

J 24th October, 1895:—' I " Private Treaty between China and Rus¬

sia of last autumn concedes the right of an¬

chorage to the Russian fleet at Port Arthur, and Russian Railways from Nertchinsk via Tsit-dkar to Vladivostock, and from Tsitsikar to Port Arthur besides other trade advantages iu respect of which the favoured-nation clause is

inapplicable, but the Chinese reserve the option to purchase the railways after thirty-six years, the price to be arranged hereafter. About the

~*ffy authority on which my information is based there is no doubt;" and on 28th idem I again wired to the Times:—" At a public banquet in Vladi¬

vostock on 27 th September last His Excellency Doufelskoy, Governor-General of Eastern Siberia,

returning to Europe on 28th idem in his address

referred to the new concessions obtained from

Cbina in Manchuria, strongly urged the com¬

munity to retain confidence in Vladivostock as

it must remain the head-quarters of the Russian

fleet, though a portion thereof would subsequently be stationed at Port Arthur. The Governor and

the Port Admiral of Vladivostock confirmed the

Governor-General's speech. This year's Russian

calendar printed, at St. Petersburg, for use in

Siberia contains Russian-Manchurian Railways. Three missions chiefly experts, naval, military

engineers with guard 100 Cossacks each started




from Nertchinsk, Blagovinsk, Nikolsk, survey

explore interior Manchuria. Urgent necessity for prompt action on the part of England: insist upon extension Hongkong boundaries,

present frontier unsafe; enforce opening West

Canton River to foreign trade and steam naviga¬

tion; very desirable appoint Commercial Attache

British Legation China visiting Treaty Ports.

Military Attache useless."

These news clearly indicated the beginning of the parti¬ tion of China, but the use of the expression

" private Treaty"

was extremelv unfortunate inasmuch as it gave the Russian

Government the opportunity to plausibly deny the existence,

in writing, of such a document and their lucid, unqualified, official contradiction tended in England to shake con¬

fidence in the report that Russia had in fact acquired very considerable concessions from China. The secret under¬

standing which has been consummated by the two Govern¬

ments is, however, as binding as any written treaty or

agreement could possibly be and it is being conclusively demonstratad daily. Though not literally accurate in

certain minor details the articles—" Russia and England down the long Avenue" and "The Secret History of the

Russo-Chinese Treaty" in the Contemporary of February this year, No. 374, are substantially true as regards the

territorial and other concessions which Russia has acquired from China.

British prestige in the Far East two years ago fell to

zero; certainly below that of France, Germany and Russia,

yet of China's total foreign trade the British share is

almost 70 % or upwards of thirty-two million pounds ster¬

ling per annum, while British trade exports and imports



w BRITISH INTERESTS IN CHINA.

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from the mother country with the Straits Settlements, Siam, China, Corea, the Philippine Islands, Japan and

Hongkong combined exceeds £130,000,000 per annum as

compared with Great Britain's total annual trade exports and imports with 'India of £109,000.000 (see page 37 of the minutes of evidence taken in 1893 by the Indian

Currency Committee). In view of the menacing character and possible con¬

sequences of the "Russo-Chinese understanding" we

naturally ask what steps have been decide! upon by the British Government, for safeguarding the before mentioned vital interests and maintaining British rights as well as a

just balance of power in the Far East. Are the British

people awake to the real danger which threatens, or are

they too much absorbed with local affairs, South Africa, India, questions of secondary importance, and with the state of Eastern Europe? Lord Rosebery when Prime Minister predicted that "the Far Eastern question is one which in its essential importance and the magnitude of the

interests concerned bids fair to overshadow all other

subjects of international debate." In the preliminary skir¬

mishes of the Far Eastern campaign Russia has displayed an immutable policy of vigour and resolution which has

completely out-distanced the British and other European nations and given her a commanding influence in the Celestial Kingdom and in Corca. So much is this the case that the whole of the north of China and its capital are

already well within the power of Russia and of this there is unfortunately not any doubt. In writing from Peking on 30th April last the Times Special Correspondent says: —

"Russian activity is increasing in the north

of China. There i& no use disguising the fact

\



BRITISH INTERESTS IN CHINA. <3

that the ascendency of Russia is the most powerful factor in the present situation in Peking. All

concessions in the north demanded by the Agents of other nationalities are checked by Russia.

Mining schemes to develop the immense mineral

resources of Chili and Kirin received by the

Tsung-li-Yamen from important English syndi¬ cates are considered—are even assented to—and

then, in deference to a hint that such concessions

are in territory to the north of Peking, which

must be regarded as within the sphere of the

influence of Russia, are ultimately shelved. Even

the negotiations for the new loan are tentative

only and the settlement must remain in abeyance

pending the arrival of Prince Oukhtomsky. It

will remain for him to decide whether the loan

for the remainder of the indemnity is to be

obtained on the open market or is to be made

under a Russian guarantee so that by new

financial obligations China may be drawn still

closer into the toils of her northern neighbour.

"Activity is shown in many directions. A

military attache, an engineer officer, has been

stationed in Chefoo within easy distance of

Kiaochau Ba3T, the reputed stronghold of the

future Chinese navy, and the harbour which, under certain eventualities, ma}', if reliance can be

placed on the terms of the Cassini Convention

be 'leased' to Russia. Another military attache

from the staff of the Governor-General of Eastern Siberia is in Peking, a third is in Tientsin.

Experts in many departments—war, mining and

4



V BRITISH INTERESTS IN CHINA.

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finance—are on the spot while the staff in the

service of Russia is still further strengthened in

the person of Mr. Von Grot, one of the ablest

officers of Sir Robert, Hart, who has resigned the

Customs to join the directorate of the Russo-

Chinese Bank. Mr. Von Grot is known to enjoy the confidence, as the term is understood in China, of Li Hung Chang and other high officials in

Peking, and as Chief Chinese Secretary he has

had exceptional opportunities of acquiring an

intimate knowledge of the inner working of the

Customs Service. New premises for the Russo-

Chinese Bank and the Eastern Chinese Railway are being built in Legation Street in Peking. A new branch is also to be opened in Newchwang while schools for teaching Russian are already established in Tientsin, Pekin, Kirin and Mukden.

In the west of China the influence of Russia is

spreading apace; it has penetrated even more

deeply than one cares to admit. Kashgaria and

Hi are hers whenever she cares to stretch out her

arm to seize them. All Chinese Turkestan must

follow the Khanates of Central Asia in swelling the Asiatic dominions of the Tsar. It surely was an ominous sign for China during +he recent

recrudescence of Mahomedan disaffection in Kan-

su; the Chinese officials recognised the powerless condition of China and appealed for aid to Russia

&c &c.'

And a recent commercial circular issued at Shanghai

says ;—

"A serious obstacle is gradually being built



10 BRITISH INTERESTS IN CHINA. V <i

up that threatens to usurp the English and American trade in the northern provinces, the latter more especially in the near future. This is the quiet but steady advance of the Russians into Manchuria. While the two nations most concerned from a commercial point of view are

apparently quite indifferent, she is slowly but

surely absorbing that valuable province. She is

quietly mobilising her troops and has already in the neighbourhood an army of 80,000 men, while Russian steamers are running on the river as far as Kirin. China is under her thumb and dare not move, and the Treaties made or pending between Russia. France and Germany as recently reported by Renter have a significance that

Anglo-Saxons interested in this part of the world had best beware of without delay."

During the critical times of the recent struggle between Japan and China, deep, dark and tortuous schemes were carefully elaborated and pushed forward by our com¬ mercial and political rivals and England was but indifferently served in her diplomacy. Our representatives refused to

open their eyes to what was going on around them not¬

withstanding the repeated warnings of the Press in China. British statesmen had no watchful, resolute, fixed policy, and our bureaucrats did not act as the course of events dictated but merely followed, at the critical moment, in the

footsteps of their predecessors in the belief that the pivot of Imperial policy in the Far East was the conciliation at

any cost of a Government which they regarded as a valu ible bulwark against Russian aggression. This misplaced con¬

fidence had, for years past, led our Government in par-

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BRITISH INTERESTS IN CHINA. 11

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tieular to continue blind to the general trend and actual

position of Chinese affairs; and we have to thank the

Japanese for definitely opening their eyes to the weakness and inability of China, and exploding theories which, but for them, might have dominated British policy until Russia had completely set up a protectorate in Peking. Our states¬ men made a conspicuous display of diplomatic weakness. Their silence and inaction left Count Cassini in charge of the Peking stage and enabled Russia to gain a prepon¬ derating influence over the Chinese notwithstanding the latter's undue assumption of superiority, vaunted astute¬

ness, conceit and vanity. The destruction of a cherished belief is invariably rather bewildering, and evidently our official world has not yet quite made up its mind in re the actual situation.

The French availed of the opportunity and induced

Peking to concede all they then wanted in South China ; but France, so long as she pursues her present suicidal colonial policy and keeps her markets closed to other

countries by hostile tariffs, can herself derive small material benefit even from her most valuable acquisitions.

By patient secret use of her resources, unlimited

secret service money, and by methods which no constitu¬

tional Government is able to employ, Russia, to our serious

detriment, has greatly increased her power in the Far East and to-day we have the Russo-Chinese Bank and an off¬

shoot thereof—the Eastern Chinese Railway Company. The Articles of Association of the latter company have been sanctioned by a Russian Imperial Ordinance issued in St.

Petersburg on 23rd December last, and shareholders in the

company are limited to Russian and Chinese subjects.



12 BRITISH INTERESTS IN CHINA.

The President is Chinese but his position is purely honorary ; while the Vice-President, who is the nominee of the Rus¬

sian Minister of Finance, is the real man ; and the other

Directors are Russian, and the head office of the company is in St. Petersburg, the Peking branch office being in the

same palatial building as the Russo-Chinese Bank in

Legation Street. The charter of the Russo-Chinese Bank

for the construction of the " Eastern Chinese Manchurian

Railway," the capital for which is found by Russia, could

never have been granted proprio motu by the Emperor of

China but must have resulted from and have been the

sequence of some secret convention or understanding verbal

or written. Russian diplomacy has acquired for her a

predominant influence, large concessions and territorial

advantages which, judging from her customary policy elsewhere, will be worked exclusively in favour of Russian

interests and Russian trade. The servants of the Tsar, with fearless activity and subtle ability, have manipulated matters very dexterously. The management of the railway throughout Manchuria connecting with the Siberian trunk-

line will be Russian entirely, the advantages conceded by China in that connection are not to the Russian Government but are in favour of the Railway Company (a private association), and the company having the power to levy prohibitive tariff the door may be effectively closed to the trade of any one other Power gaining admission under the "favoured-nation clause" to the somewhat considerable markets of Manchuria which will strike the death-blow to British import trade in those regions.

The immoral alliance between France, Germany and Russia for their own aggrandisement, and their imperious intervention on behalf of China, prevented Japan from

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<. BRITISH INTERESTS IN CHINA. u

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annexing the Liaoutung peninsula (the southern portion of

Manchuria) and from entering into possession of the fruits of her victory. China, with the loyal aid of Russia and by paying Japan an indemnity of five million pounds sterling, was enabled to recover the Liaoutung in order that, as events have proved, Russia might have the present loan and the ultimate possession of it though the Chinese refused the Japanese to bind themselves from ceding that territory to any other Power. The first instalment of China's

indemnity to Japan, viz., £18.000,000 Russia borrowed from France on easy terms and loaned it to China to

protect China from being imposed upon by greedy English and German money-lenders. Manchuria is not one of the

eighteen provinces of China proper but a dependency of the Empire since the present Manchu dyuasty came to the Throne and it is possessed of great natural resources. It is known as the " heaven-ordained " home of the dynasty and as " the cradle of the Manchu race," while Liaoutung is generally regarded as " the Regent's sword" and is

really the gateway of Peking. Mauchuria is rich in

minerals, arable land, pasture and otherwise. Russian

surveyors and engineers are already there ; it is now practi¬ cally under Russian control and will be completely under Muscovite administration before very man}'- years have

passed. Kirin, the provincial capital, is being rapidly transformed into a Russian garrison town, and the Russian

language is being taught in the schools ; while the Chinese

Empire is ncfw virtually subjected to an unexpressed but

implied and very effective suzerainty. Russia invades,

conquers and annexes without war. A Russian pro¬ tection obtains in the " Hermit Kingdom." In many of the schools Russian is being taught, a Corean army is




under Russian control and is being trained and drilled by Russian officers in the Russian language. The young Chinese Emperor in utter despair, the so-called ministers

who form his council in the " Tsung-li Yamen" or Foreign

Office, in a moment of panic having been appealed to and

had their fears increased by the able and astute Russian statesman and impressed with the idea that Peking was in

imminent peril from another Japanese attack, and the "Son of Heaven "

having been convinced that his only salvation

lay in a defensive alliance with Russia, has been cajoled and

inveigled into ratifying the "secret understanding" which

permitted his old adversary to firmly install himself within China's gates. To Russia Manchuria was a necessity, an

open port for her fleet being indispensable, as Vladivostock has hitherto been practically ice-bound for nearly halt' the year. It is somewhat remarkable that China's recent difficulties have not produced any one man capable of

effectively grappling with the situation, and her only hope now is that "time" and "events" will come to her aid and modify this irremediable calamity; but a verj- strong combination of force will be required to lessen the effect of Muscovite diplomatic successes or oust Russia from the

advantages she has already gained in the north of China.

No such signal diplomatic triumph has in recent years fallen to the lot of any Minister as that achieved by Count

Cassini. Few have been trusted with such wide powers and fewer still have had the opportunity to play the bold and daring game he did or to win such a prize. Russia moves slowly but resolutely and seldom or never deviates from the fixed course deliberately decided upon beforehand whatever length of time is required to accomplish her

object. The Great Bear creeps along by degrees so

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1 BRITISH INTERESTS IN CHINA. 15

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stealthily, so gradually, and so continuously that his

progress does not attract public attention and is scarcely at the moment noticeable or appreciable.

Japan gained comparatively little from the conquest of the corrupt Celestial. Her action forced Russia's hand and she now realises more keenly than ever that the

alliance formed by Russia deprived her of the spoils of her

victory. Russia, France and Germany having once com¬ bined against Japan and compelled her to retrocede the"

Liaoutung peninsula, a repetition of such a confederacy will be again possible whenever these Powers agree to a

joint operation for any purpose in the Far East. The success of these Powers in regard to the Liaoutung affair was a dangerous lesson for them to have learnt and should the combination be repeated, of what avail against such

powerful foes would Japan's naval and military strength prove, upon which she is lavishing so much money and

mortgaging the future exertions of her people by the con¬

stantly growiog weight of taxation which has to be

imposed to meet the expenses of excessive preparedness for eventualities? Japan's policy iu this respect will not

only prove burdensome to the industries of the country but may tend to provoke and exasperate Russia into

aggression. The latter is not only possessed of giant strength of its own but is apparently able, when necessary, to command the assistance of first class European Powers whose united hostility would be capable of crushing Japan, as an independent Power, out of existence. The Japanese are the French of Asia, are very anxious to copy \Vestern

methods, and their most recent bid for admission into the

front rank of civilisation was to, suddenly and with undue

haste, essay to adopt gold monometallism instead of silver

\




monometallism. The latter has hitherto been her standard

of value and during its continuance the country has pros¬

pered in no ordinary degree but by leaps and bounds. The sudden change is a dangerous experiment and has

been brought into operation at an inopportune moment. Time alone will solve the problem her hasty resolve has

raised.

Germany's share in the spoil so far amounts to little more than a joint interest with England in financing the second indemnity loan of £18,000,000 and a few com¬ mercial contracts, but doubtless she is biding her time and

opportunity.

As an evidence of how public undertakings are

managed in the Celestial Empire quite lately a syndicate headed by an extremely able but thoroughly unscrupulous and notoriously corrupt mandarin negotiated and obtained from the Imperial Government a concession for the construc¬ tion and the management of the railways throughout Chiua. It is believed that the Imperial Edict sanctioning this con¬

cession cost the syndicate upwards of one and a half million of dollars. The money went to eunuchs in the

Imperial palace, several censors, one powerful but needy Viceroy and certain high officials in Peking; and the question naturally arises, if successful, how and at whose expense will the syndicate obtain reimbursement. This is a retro¬

grade movement of no ordinary magnitude and is destined to delay the building of railways generally in China for a decade or more. When in Tientsin in 1895 Li Hung Chang, then Viceroy of Chili, favoured me with an interview which extended over three hours, and the present Chinese Minister to London acted as interpreter. At this meeting the

V

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ci'eation of a foreign service for the construction and the

management of railways throughout the Empire was advocated and favourably received, the service to be on the same lines as the Imperial Foreign Chinese Customs service and established under Imperial decree with full

power to borrow money solely on account of railway construction from the nations of the world, the railroads, rolling stock and other property to be pledged as security to the bond-holders until repayment of the railway loans, and the loans to be recognised in some way by international

agreement. This view was put forward as at the time British interests politically and commercially would be best conserved by anything that would tend to postpone the

partition of the oldest, if not the richest, Empire in the

world, though the preservation of a Government so putrid and so effete is neither desirable nor possible. Alas Li's adversaries were too many and too powerful and they desired not another service like unto the Imperial Foreign Chinese Customs (the only honest Government service in

China) as it would deprive, to some extent, the official classes of the chances of squeezing and lining their pockets. Squeezing is an institution of the country not generally regarded in the same light that embezzlement is regarded

by European nations. The whole fiscal system of China

is rotten and corrupt while the Central Government in

Peking, existing in an atmosphere laden with the oppressive odour of decay, is loose, shiftless and helpless, and blocks

the paths of progress, the development of the human welfare, and is a grave stumbling-block to civilisation as well as a source of positive danger to the political equilibrium in the Far East. China is now to the Great White Bear

nothing more than a gross, broken-backed, corpulent hog




that can, if necessary, be prodded into acquiescent action without any cost or effort, always, of course, provided that she is not sustained by some other power as a check upon Russian aggrandisement. The governing classes in China are the mandarins, and they are not more hopelessly out¬ side of the scope of improvement and effective reform than the "unspeakable Turk"; they worship their ancestors;

they live in the past and are not only non-progressive but are travelling backward. Reform to the mandarin means the loss of recognised opportunities for corruption and extortion which to him are the salt of life. The Imperial Chinese Government is positively so hopeless and so im¬

potent that voluntary reform from within, or without

foreign assistance, is utterly impossible. Its position is

pitiable. The ultimate fate of the vast Celestial Empire over two thousand years old and possessed of upwards of

three hundred millions of frugal, temperate, hardy, virile,

hard-working, industrious, enterprising, shrewd and intel¬

ligent people and of a country with practically unlimited

natural resources of every description—agricultural and

mineral—will probably be the cause of an unprecedented

upheaval, economic and otherwise. If any large portion of China comes under Russian administration, British com¬

merce and the important section of British white labour

that depends upon this silver-using people as customers

for the surplus products of British labour will be adversely affected, as hereafter explained. The great influence

which Russia already exercises in China and her having the complete control of the Eastern Chinese Railway will

give her an immense advantage over other countries.

This, coupled with the disabilities which the gold mono¬

metallic law imposes on British labour and British industries

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generally, makes it painfully evident that Russia, if allowed her*own way, will assuredly be the dominant power in

China, and if combined Russia and China must become an increasingly dangerous factor in the industrial develop¬ ment of the world to the serious disadvantage of British industries. The younger generation may look forward to the time when the centre of gravity of the world's trade and industry will be greatly changed in position. In

fact, the fulcrum of the world's balance of power is already shifting from the West to the East, from the Mediterranean to the Pacific, and Hongkong, an important strategic posi¬ tion, the Clapham junction and principal dockyard on the

Far Eastern sea-ways, may yet occupy a more prominent

place in the future history of the British Empire. The indirect effects of the completion of the Trans-

Siberian Railway which connects with the Eastern Chi¬ nese Railway must needs be of great importance. The

already large volume of trade with the Far Ea.st may not be much affected in direction but it will be much increased and considerable changes in the present arrangements will

follow though perhaps slowly at first. The indirect results

will lead to momentous consequences and to substantial

developments between the Western and Eastern Hemis¬

pheres as the railway will yield facilities for the conveyance and movement of passengers, correspondence, light goods, &c. It is almost certain to cause an immense expansion in commerce generally as the railway will connect, within

fourteen days, the capitals of Europe with China, Japan and

Corea—three countries with a population of about one-

third of the entire population of the habitable globe and

simply enormous tracts of territory largely undeveloped. As territories of considerable magnitude will be opened

\




up in the course of time by branch railways, new markets will be available which cannot now be reached for Jack of communication and the absence of the means of trans¬

port. The varied wants of this immense population will grow, and, with a measure of value common to the

Universe, these wants^vould at first be largely supplied by the resources of Great Britain if the British monometallic law of 1816 did not in this and in other silver-using countries subject to serious disadvantage the products of our skilled labour classes. The British measure of value was

legalised by an Act of the Imperial Parliament in 1816. The Bill enacted that one standard ounce of gold should be equivalent to £3. 17s. 10-^rf. and that the latter sum could be obtained from the mint in exchange for one standard ounce. The cost of producing the standard ounce was

immaterial, the cost might be more or it might be less : the law fixed its equivalent at £3. 17s. 10^d. The gold metal has in reality no price, the law or Act of man having made a standard ounce thereof the measure of value. It is not unnatural to ask the reason why so very odd a sum as £3. 17*. 10^d. should have been fixed upon in 1816 as

the equivalent of a standard ounce of gold, and the expla¬ nation in the light of our present civilisation is humilia¬

ting. At that period and for centuries before history re¬

lates that the governments of Europe were in the habit of

cheating their unsuspecting subjects by adulterating the

various coins put into circulation and it was deemed

expedient to surround the coinage with as much my¬

stery as possible. Hence the odd sum, and to ask

why the standard ounce of gold continues at this exact

price is just as absurd as it would be to ask why a

foot continues to be equal to twelve inches, for there can

A




O be no variation until the law is amended. The legislature in 1816 having given a fixed value to the English shilling and said that twenty shillings shall be the equivalent of one pound so it continues, though in 1816 the value of one ounce of silver was about 61 d. whereas this year it fell to under 24c?., and our shillings and other silver money continue to do full duty without let or hindrance. In Great Britain

to-day there is in circulation silver money representing a

legal value of more than £20,000,000, and the people could not get on without it or its equivalent in some shape though its intrinsic value is now less than £10,000,000. In 1872 a pound or sovereign was theequivalent of five silver

dollars, whereas now silver having been demonetized and

legislated against by one country after another the same

sovereign is now equal to about ten silver dollars of simi¬ lar weight aud fineness as the five silver dollars before referred to. In England to-day the sovereign will employ about the same amount of labour as it did twenty-five years ago, whereas the identical sovereign is now equal to about ten instead of five silver dollars and will employ upwards of 100 per cent, more Asiatic labour than it did in 1872. To this extent are British industries and British labour handi¬

capped, and it is an insurmountable disability which will exist so long as our monetary law remains unamended and so long as England continues so distinctly hostile towards silver—the money of the countries who are her principal customers.

During the period when the joint standard was in force it gave to the world a common measure of value in

gold and silver. Under this system the wages of labour in gold countries and in silver countries were adjusted ; in fact, a relationship was established between the wages

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of labour in the East and the West according to the ratio

then existing between gold and silver, and they adjusted themselves thereunder to each other. In 1873 the inter¬

national bond connecting gold and silver, which had justly

given an equality to European and Asiatic labour and to

all trading relations, was broken. It was of the most vital

importance that that system should have been continued

for all time in the interests of the nations of the East and the West. Silver discharges one-half of the whole duty of metallic money in the world. It is the money of two- thirds of the human race. While France and, later on, the Latin Union, of which she was a member, maintained the value of gold and silver at the then agreed ratio the wages of European and Asiatic labour adjusted themselves on that basis, and the prices of commodities in gold and silver-

using countries were kept on a reasonably stable level. British labour cannot compete against the unnatural disabi¬

lities created by our monetary law, and the cheaper produc¬ tions of silver-using countries and Asiatic labour. Labour is

the basis and the very foundation upon which the whole social

superstructure of the world is built. The price of labour

is the chief factor in determining the prices of wholesale

commodities. No act of any legislature can exempt gold from the influences of economic law which governs the

value of labour and the prices of commodities. France,

Germany and other countries maintained gold and silver

at a fixed ratio up to 1872, and so long as this was clone our monetary law caused on estrangement between the pre¬ cious metals and did not adversely affect British labour ; but in 1872 Germany demonetized silver and many other countries have since done likewise. Japan, with her desire to imitate European customs, is the latest convert to

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X- BRITISH INTERESTS IN CHINA. 23

favour the yellow metal and to degrade silver by closing her mint to the coinage thereof, probably, not fully real¬

ising what it means or the possible consequences. The

closing of the Indian Mints was a hazardous experiment and is developing grave evils which could not have been fully realised in. 1893 but which are inseparable from every artificial system of currency. Mr. Boissevain, one of the

delegates of the Netherlands Government at the International

Monetary Conference at Brussels in 1892, writes:—

"The great majority of the three hundred million natives in India turn their savings in

rupees into silver ornaments and so hoard. The

practice is as follows:—A man has saved, say,

twenty-five rupees. He takes his twenty-five rupees to the silversmith ; the rupees are put into one scale the silver ornaments he wishes to

buy into the other. Apart from cost of manu- ^ facture he gets the ornaments against the weight "r of the rupees he gives. I fe'ar, till famine and

the plague, this practice of determining the value

of the rupee from its weight was common; it

certainly held good in every case till 1893. Npw that famine and plague have come those affected

fell back on their hoards for means of support. What do they find They find the rupee has a

fictitious value; they find on taking rupees for

their ornaments they get fewer rupees than they

gave for their ornaments. They ask the silver-

^ smith why he defrauds them He replies : ' It

r"*^i is the Sirkar's—the Government's—order.' The

unlettered ryot goes away feeling he has been

robbed—robbed by the Sirkar. This is not a

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24 BRITISH INTERESTS IN CHINA. -1

question of a mosque in Calcutta, of incon¬

venience from segregation in Bombay. Such

questions affect the few ; this absolute loss of

savings affects the mass. And' I say it is the

undoubted basis of the present undoubted political unrest in India. So long as India has had a

history, so long has the rupee been true money,

money taking its value from weight. Now, from

1893 we have given it a fictitious value, and

every man of the 300,000,000 who has hoarded

in silver feels that the Sirkar has robbed him."

Notwithstanding the gigantic material progress and commercial expansion witnessed in the nineteenth century the world is yet in its infancy and whatever comes to mankind in a natural way is good if used wisely. If gold and silver, which have been regarded as the precious metals from the remotest ages, had not been required they would not have been sent us. The continuance of British exports and probable increase would be assured for generations if the old partnership were restored between the two pre¬ cious metals. The growing divergence between them is a matter of the greatest possible public moment; and is one of the most important questions of the century. In the

supplementary report (just published in Blue-book) of the

Royal Commission on Agriculture (appointed nearly four

years ago) signed by a majority of the Commissioners, ten out of sixteen, the following conclusions were arrived at:—

First, the fall in prices being by general admission at the root of all the agricultural difficulty, none of the recom¬ mendations in the main report pretend to be remedies or anything more than palliatives for distress.

Secondly, no attempt is made in that report to ascer¬ tain whether and how far this primary cause of depression

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could be mitigated or removed, and it was felt by many of the Commissioners that their inquiry might be held in many quarters to be more or loss barren, and to a great extent

i useless, unless this aspect of the question was examined.

*f (1.) That the fall in prices, as stated in the main report, is primarily responsible for agricultural depression.

(2.) That while to some extent, no doubt, the prices of agricultural produce had been affected by increased pro¬ duction and facilities for tiansport, there "was no evidence to show that compared with the increase of population the food products of the world to-day were materially greater than they were before the fall in prices commenced.

(3.) That with regard to wheat, the commodity which had fallen probably more than any other, the views of Sir Robert Giffen contained in the appendix, the evidence of

Major Craigie, and such statistics as were available, ap¬ peared to point rather in the opposite direction, viz., that,

L in Sir R. Giffen's words, "the growth of the acreage of wheat has lagged behind the growth of population."

(4.) That agricultural depression is not confined by f- any means to England ; but from the information received

by the Commission it appeared to be more or less general in Europe and in the Australasian colonies, and to be

specially severe in the United States of America; that it

prevailed alike in countries with protective duties and. those which had adopted the principles of free trade; and that the heavy protective duties imposed in Germany and France had failed to give security to either of those countries against severe agricultural depression.

(5.) That for this complaint, so widespread, so unani¬ mous, and so prolonged, there must be, apart from foreign competition, some other and some general cause which was common to them all, and such a cause might probably be found in the great monetary changes which were made in certain countries in Europe and in the United States of America in 1S73 and 1874.



26 BRITISH INTERESTS IN CHINA. J

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(6.) That the only two countries which appeared to be' free from agricultural depression as understood in the United Kingdom, and not to have been similarly affected

by those changes, are India and the Argentine Republic, the one with a silver and the other with a paper currency.

(7.) That a prima facie case has been established for the contention that agriculture has suffered and is suffering severely from both of two results which have followed from these changes—(1) from the general fall in prices which is expressed in the term "appreciation of gold," and (2) from the divergence in the value of metals, which

gives an artificial advantage to producers in silver-using countries.

(8.) That pending a general adjustment of prices, which has not yet occurred and which may be still remote, that advantage must continue, and that the price of wheat in England is being and has been for some years in conse¬

quence artificially depressed.

(9.) That putting aside the recommendations pre¬ viously made, which do not touch the question of depression so far as it is due to a collapse in prices, there only remains the question how far relief is possible by a reversal of the

monetary policy of 1873.

(10.) That if such a change is to be accomplished it must be by intei'national arrangement.

(11.) That while not suggesting the abandonment of the gold standard in this country, if a conference of the Powers were assembled and their deliberations resulted in an international arrangement for the re-opening of the- mints abroad and in India, and the restoration of silver either wholly or partially to the position it filled prior to 1873, it would be of the greatest benefit to the industry of agriculture.

(12.) That to promote such a conference Her Majesty's Government should heartily co-operate with foreign Powers, and thereby give effect to the unanimous resolution of the House of Commons iu February, 189,5.

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rBRITISH INTERESTS IN CHINA. 27

J The resolution in question reads :—

That this House regards with increasing apprehen¬ sion the constant fluctuations and the growing divergence in the relative value of gold and silver, and heartily concurs in the recent expression of opinion on the part of the Government of France, and the Government and Parliament of Germany, as to the serious evils resulting therefrom. It, therefore, urges upon Her Majesty's Government the desirability of co-operating with the other Powers in an International Conference, for the purpose of considering what measures can be taken to remove or mitigate these evils.

Our monetary Act of 1816, has been found to sub¬

ject an important section of British labour, agricultural and other industries to unnatural disadvantages. The monetary

ii> question, though complex and recondite to many, vitally concerns the welfare of the British people ; including India

^Y find the Colonies. This being the case Parliament and

y British public men whose duty it is to guide public opinion a into the right groove should endeavour to approach the

question without bias or prejudice and amend our monetary law. The rehabilitation of silver in the Western world, and its restoration to its former position as a recognised standard of value concurrently with gold by international

agreement can alone give what is essential, viz., a world¬ wide standard of value which would possess the maximum of stability.

It is impossible for any one who fully realises the real

position, political and monetary, not to feel grave anxiety. The Times is alive to the changes which are taking place; they have a special correspondent now in Peking ; he will travel in Manchuria this summer and possibly over the course the railway now being constructed will follow, and



28 BRITISH INTERESTS IN CHINA*

in bringing the facts to the notice of the British public im¬

portant service is being rendered. Mr. Henry Norman con¬

cludes his exhaustive article in the Contemporary, previously referred to, with an appeal to our Members of Parliament, Merchants, Chambers of Commerce and the Provincial

Press of England to see that "we care as much for our

heirs as our fathers have cared for us;" but I much fear

that Great Britain's vast interests in these far-distant lands

and the opening of the largest unexploited markets in the

world, viz., the interior of China, will not for the present, and perhaps not until it is too late, receive the attention

which they deserve at the hands of Her Majesty's Govern¬

ment possibly, parti}', in consequence of the people not

being completely informed as to the actual situation. It

is no secret that, Russia and France have conspired and

strenuously endeavoured to oust Sir Robert Hart, from

the important position of Inspector-General of the Chinese

Imperial Maritime Customs at Peking which office he has

filled with great tact and consumate ability for the long

period of over thirty years. Woe betide British trade and

British interests in China if a Russian or a Frenchman

succeeds to the Inspector-Generalship of the Chinese Cus¬

toms. There may be room in Asia for Russia, France,

Germany and England, but other governments are leaving no stone unturned to facilitate and promote trade for their

subjects, and this renders it the more imperative that the British Government should now have a fixed and a definite as well as a consistent policy, as regards the new situation and its present and future course of action in the Far

East. There should have been an agreement between Russia and England defining the spheres of influence of

the two Empires in the Middle Kingdom when the China-

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Japan struggle terminated; but Her Majesty's Government

appeared to be indifferent, at all events they allowed that

opportunity to pass with disastrous results to British interests. It is essential that the Government should now show the determination that England means to maintain/ British rights and interests, and it is earnestly to be hoped I

that our statesman will have the foresight and the judg¬ ment to take decisive action at the moment when the maintenance of these rights and interests can be most

efficaciously and surely accomplished. British interests in China and the Far East are already so vast and of such vital importance that every practical means and every nerve should be strained to fully and completely safe¬

guard our old markets and develop new ones as, on its commercial supremacy, the maintenance of the British

Empire depends.

Punted by NoRONHA & Co., Nos. 5, 7 and 9, Zetland Street, Hongkong.



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Documents

British interests in China: April, 1897 : extract from a letter from T. H. Whitehead to a friend in England