Imperialism
in
Transition:
British
Business
and
the
Chinese
Authorities,
1931-37
JOrgen Osterhammel
According
to
current
Chinese views,
in
1949 China was liberated from
three
major
evils: feudalism. imperialism and bureaucratic capitalism.
The
present
article takes a closer look at the relationship between
the
two
last mentioned.
The
period chosen
is
the
early and mid 1930s, which was
marked by growing tensions between the powers
in
East Asia, by acute
economic depression and subsequent recovery, and
by
the gradual
extension
of
the
Nanjing Government's control
over
the country.
On
the
foreigner's side,
the
focus will be
on
the British experience
at
a time when
Great Britain's political position in the Far East was being overshadowed
by
Japan's
thrust towards hegemony. It will be argued. the widening gap
between Britain's political
and
economic presence
in
China was partly
bridged by increasingly close co-operation between British business and
the Chinese ruling elite.
The Legacy
of
the J 92
Os
A few months after war had broken
out
between Japan and China,
Julean
Arnold.
the veteran American commercial attache,
ruminated
nostalgically upon
shattered
opportunities
...
China at the beginning
of
July 1937," he
wrote,"
presented a
more
glowing prospect for the future
of commerce and economic advancement
than
at
any time
in
its history.
"I
Such a view reflected
the
confidence
in
the future prospects of the China
market which prevailed among western businessmen and diplomats
on
the eve
of
Japanese aggression.
The
German
Chamber
of
Commerce in
Shanghai was enthusiastic
about
the"
booming
development"
in
China."
E. Manico Gull,
the
secretary of the London-hased China Association.
saw
"no
risk of painting too optimistic a picture.'" Sir Frederick
Leith-Ross, the chief adviser to the Treasury, who
in
June 1936 had
returned from a lengthy mission to the Far East, expected China to grow
into
"perhaps
the most important market
in
the world for highly
manufactured goods."" just as for
D.
G.
M.
Bernard
of Jardine. Matheson
& Co
..
it
remained"
the only great undeveloped market
in
the
worJd."~
More specifically Sir Louis Beale, the commercial counsellor
in
Shanghai.
linked
China's
emerging prosperity to Britain's future role
in
East Asia.
..
There
has never been a
time:'
he assured H.M. Ambassador, .. where
1
United
State~
Department
of
Commerce.
Bureau
of
foreign
and Domestic Com-
merce, Economic
R~vlt'w
of
Fort"gn Countries
/9.i7
(Washington,
D,e:
Government
Printing Office, 1938).
p.
22.
2. Deutsche
Handelskammer
Shanghai, Jahresfumchl
und
Ubrrsicht uht'r dje
Tiuighil
des
Vontandes
dn
Deuuchm
HrUlde/skammer Shanghai fur dos
Gnchiiftsjahr
1937138
(Shanghai:
Deutsche
Handclskammer
ShanghaI,
1938),
r 6.
3.
The Financial
New.~
(London),
30 March 1937.
p.
26.
4. Public
Record
Office
London
(hereafter
PRO).
Treasury
(hereafter
T)
188/134
Leith-Ross
...
Notes
on a
meelin~
held at the
Board
of
Tradt- on 30th
October,
1936,"
5.
firulflu
and
Com,"('rn'
(Shanghai), 8 July
1936.
p. 34.
we were so pre-eminent
in
prestige
in
China as
we
are
today, and, if
we
adopt an enterprising policy
of
co-operation with China
in
the develop-
ment
of
her vast potential resources,
there
is no reason why
we
should not
stay permanently in the lead.'"
The
image evoked
here
is,
of
course,
that
of
the boundless China
market
which has
not
ceased
to
stir western fancy since
the
days when Sir
Henry Pottinger,
the
author
of
the
Treaty
of
Nanking, persuaded himself
that he had opened
up
a new world
..
so
vast
that
all the mills
of
Lancashire could
not
make
stocking stuff for one
of
its provinces.'" Yet
the
men
who professed a reinvigorated optimism
in
the
mid 1930s were
by
no
means misguided visionaries. They were among the most experi-
enced observers
in
the
field.
From
the British point
of
view, some measure
of
optimism could
indeed be justified
on
the
grounds
of
past performance. British economic
interests
in
China had weathered
the
years
of
popular anti-imperialism
from the Hong Kong-Canton general strike
to
the clamp-down
on
the
mass movements in 1927. In spite
of
warlord anarchy and revolutionary
upheaval, the 1920s had even been a period marked
by
..
easy profits
without much effort
or
risk.'" During the early 1930s
the
British held
on
to their major economic assets
in
China
in
the
face
of
both Japanese
encroachment and
the
acutely depressed condition of China's domestic
economy.
By
1936 the British Empire as a whole
stiH
headed the list
of
China's
trading partners, even though the United States came a close
second. and Japan and
Gennany
were vigorously pushing to extend their
shares of the market. Britain still led
in
direct investment within the
borders of China
proper.
and she alone among the western powers
maintained a widespread system
of
business interests comprising the
entire scale
of
possible investment
outlets
from banking. import-export
business and manufacturing industry
to
coal mining, transport, public
utilities and the
property
market.
While the number
of
small trading
and
service establishments along the
China coast. mainly in Shanghai and Hong Kong, waxed and waned. the
big companies which
fonned
the core
of
the British business system in
China stood their ground: Jardine. Matheson & Co
.•
Butterfield & Swire.
Sassoon (E.D.) & Co
..
the
Hong Kong and Shanghai Banking Corpora-
tion, the Chartered Bank
of
India. Australia and China. the Chinese
Engineering and Mining Co. (the British partner
in
the
Kailan Mining
Administration).
the
Peking Syndicate.
the
British-American Tobacco
Corporation, Imperial Chemical Industries, the Asiatic Petroleum Co.,
Unilever's China Soap
Co
.•
the
International Export
Co
.•
Arnhold& Co.,
Dodwell
& Co., the Shanghai Dockyards and
the
public utility companies
in
Shanghai (the most
important
of
which, the Shanghai Power Co., had.
however, passed into American hands in 1929). Each
of
them had been
established
in
China during
the
era
of
.. high imperialism" before the
6.
PRO, Foreign Office
(hereafter
Fa)
]71/20%5/F3975
Beale
10
Knatchhull-
Hugess.en,
fl
April 1937.
7.
Quoted
in
A.
1.
Sargent. Anxio-Chint'5t' Commt',Ct' and Diplomac,y 1ft/airily in tht'
Nint'tunrh
Ct'ntu,...vJ,
(Oxford:
Clarendon
Press. 1907), p. 106.
8.
Fa
371/2021HIF4498
Pr-m. mmute. 6 August J 936.
261
First publ. in: The China Quarterly 98 (1984), pp. 260-286
Konstanzer Online-Publikations-System (KOPS)
URN: http://nbn-resolving.de/urn:nbn:de:bsz:352-opus-83646
URL: http://kops.ub.uni-konstanz.de/volltexte/2009/8364/
262
First World War.
In
1937 they were still well entrenched in the China
market. No major British property was nationalized
by a Chinese
government
up
to 1949. and there was no Chinese equivalent
to
the
expropriation
of
foreign business interests
in
Mexico and Spain. Simi-
larly, although Chinese loans showed a sorry record of default for British
lenders, still none
ofthem
was repudiated. Indeed, in 1935/36 Leith-Ross
negotiated an adjustment
of
the outstanding railway debts
that
satisfied
the London
City and restored China's credit on the international capital
markets."
Thus, looking back from
the
heady spring
of
1937, the British
had
reason
to
congratulate themselves.
The
business component
of
their
informal empire in China had comfortably survived a quarter-century of
political turmoil
and
economic dislocation. As far as
the
political
component
is
concerned, that is,
the
official presence
of
Britain in China,
the
overall impression
is
once again
one
of
fundamental continuity.
The
.. New
China"
of
the
Kuomintang continued to be what radical nationalists
called
either
a .. hypo-colony," following Sun Yat-sen,
or,
foHowing
Lenin, a ..
semi-colonial"
country.
to
Most significantly,
the
legal
privileges secured by
the
powers during
the
19th century
remained
in
force, with the sole exception
of
foreign control over customs tariffs
which
had
been
abandoned
by March 1930.
11
British nationals were still
exempt
from Chinese jurisdiction - as they had been since
1842.
They
still had
the
right
to
uninhibited navigation in China's coastal
and
inland
waters, protected if necessary by His Majesty's vessels
on
the
China
Station. A British subject did
not
require a visa to travel in China, only a
passport signed by a British consul
and
perfunctorily countersigned by a
local Chinese authority.
There
were no restrictions on foreign residence
and
trade
in
places enjoying
the
status of
::tn
open
port.
Missionary
societies were free
to
proselytize wherever they wished,
and
had
permission to
rent
or
lease in perpetuity lands and buildings in all
parts
of
the
country. Although Britain had surrendered her concessions in
Hankou
and Jiujiang in early 1927, and
had
returned
the
leased territory
of Weihaiwei
to
China
in
October
1930,
an
area which had
been
a liability
rather
than an asset. she still retained the vastly
more
important
concession at Tianjin along with
the
smaller one at Canton. Even though,
as
Marie-Claire Bergere has pointed out.
the"
reconquest
of
Shanghai
from the
foreigners"
started as early as
1927,12
nevertheless the
9.
Chang
Kia-ngau, China'5 Struggle
for
Railroad Dt'velopment
(New
York:
John
Day,
194.1). pp.
153-72:
Chao
Yung
Seen, Le5
chnnins
de fer Chinois: frudehisrorique,pofln·que.
ecrmomique
et finaneiere (Paris: Librairie Sociale et Economique.
1939).
passim; Mi
Ruchcng.
Di/iuozhuYI vu
Zhongguo
tielu
1847-1949
(Shanghai:
Renmin
chubanshe.
1980).
pp.
287-90.
10.
For
a later
comprehensive
exposition
of
the
meaning of
..
semi-colonialism"
see
Wang
Yanan.
Zhon88uo
banfen8Jian
banzhimindl
jingli' xingtai yanjiu (Beijing:
Renmin
chubanshe.1957).
11.
On
the
diplomatic
background
see
Edmund
S.
K.
FtIng." Britain.
Japan
and
Chinese
tariff
autonomy.
1927-1921'1," Proceedings
of
the British AS.wC/ation for Japanese Studies,
Vol. 6, No. 1
(1981).
pp.
23-36
12. Maric·Claire
Berghe,
'"
The
other
China
': Shanghai from
1919
to
1949,"
in
Christopher
Howe (ed.). Shanghai:
Revolwion
and
Development in an Asian Metropolis
(Cambridge: Cambridge University
Pre<;s.
1981).
p. 16.
International Settlement continued
to
be ruled by a virtually autonomous
Municipal Council that was
dominated
by
the
representatives of foreign
and. above all, British big business.
And
yet between 1927 and
1937
things changed much more visibly
on
the
political than
on
the
economic front. Foreign governments. with the
notable exception
of
the
Japanese.
were no
longer"
thinking
in
terms
of
tutelage
and
foreign
control"
as
one
knowledgeable British diplomat put
it.
13
They were instead preparing for a gradual retreat from the more
spectacular - and
more
vulnerable - outposts
of
imperialist domination.
Germany. after all. had lost
her
privileges
in
1919.
and
yet her trade with
and
in
China had miraculously recovered, unimpeded
by
nationalist
hostility. Britain switched from a policy of antagonism to one of cautious
compromise with the Chinese nationalists. (The story of the Sino-British
rapprochement, triggered by Sir Austen Chamberlain's famous
memorandum
of
December
1926.
need
not be recounted here.
lot
) Just as
symptomatic
of
the
change as was top-level diplomatic conciliation was
the
fate
of
the"
synarchic"
institutions, as John King Fairbank has
termed them.
The
Salt Administration. which was reorganized after
1913,
under
stipulations in
the
Reorganization Loan Agreement, by the
British assistant chief inspector. Sir Richard Dane. virtually collapsed
in
1926.15
It
was then reconstituted by the National Government without
any significant foreign assistance.
The
British Associate Chief Inspector
Frederick Hussey-Freke. a man
in
whom the Foreign Office did not really
confide. left office
in
1931. His successor was the American, Dr Frederick
Albert Oeveland, who recruited
the
upper strata of the service from among
returned
students with an American baCkground. HI By 1936 the number
of
Britons employed had
dropped
to
11,17
but the Foreign Office still felt
satisfied with its ability to
get its views
across"
in
an
informal way.
"U
As
early as March
1927
Song Ziwen (T.
V.
Soong). then finance minister
of
the
Wuhan Government. had secretly recognized
the
validity of the
foreign obligations secured
on
the
salt revenue.
19
Debt
service was partly
resumed in
1928,"8 and from
that
time onwards the administration
operated
to
the complete satisfaction
of
the British bondholders.
Britain's formal influence also receded
in
the much more important
13. Sir
John
Pratt. War
a"d
Politics
in
Chi"a
(London:
Jonathan
Cape.
11.14.1),
p
20l.
]4.
See Wm.
Roger
LoUIS.
Brlllsn SrTategy
In
the
FaT
East
/9/9-/939
(Oxford:
Clarendon
Pres~.
11.171).
pp. \09--70;
Peter
Gaffney Clark,
..
Britam and the
Chine~e
revolution,
1925-1927
" (Ph.D. tbesis. Univer<;lty
of
California. Berkeley. 1973), pp. 325
et
SCq.;
Edmund
S.
K.
Fung, "
The
Sino-Bntish
rapprochement.
1927-1931." Modern
Asian Studies, Vo!.
17,
No. 1
(February
1983),
pp. 79--105
15.
FO
371/l2447/F4969
Dane.
memo
.
.11
March 1927;
FO
371/124481F7389 Mead,
memo.
13 July 1927.
On
the
reorganization
under
Dane
see
S.
A.
M.
Adshead, The
Modernizatio"
of
the Chinese Salt
Admlrtl~Hration,
1900-/920
(Cambridge, Mass.:
Harvard
University Press,
1(70).
pp. 90-·177
16. Esson
M.
Gale,
.t;alr
for the Drago,,: A Pt'rsrmai History
of
China (East Lansmg:
MiChigan State College Press,
1(53),
p. 191
17.
FO
371/20234/F4212
Buxton
to Leith-Ross,
21
April
1936
18.
FO
371/20274/F5485
Pratt.
memo.
7
September
1936
19.
FO
371/12447/F5269
Hussey.Frcke,
memo,
13
Apri11927.
See also
Li
lianchang.
Guanliao
zihenyu
yanye
(Beijing:
Renmin
chubanshe,
1963), pp.
20-21.
20.
Arthur
N.
Young,
Chi"a's
Nation·Building
Effort,
/927-/937:
The Fina"cial
and
Economic
Record
(Stanford:
Hoover
Institution
Press. 1 (171). pp.
115-18.
263
264
Chinese Maritime Customs (CMC). a service which. unlike
the
Salt
Administration, had
not
been infused with a foreign
element
at
a
comparatively
late
stage in its development,
but
had
been
built up almost
from scratch
by
the
Englishman. Sir Robert Hart. Again, the decline
is
visihle in sheer numbers. Whereas in 1924 the
CMC
had employed
767
Britons.
by
1935 the
number
had fallen to 258.:
11
The
Foreign Office,
lobbied by the banks
and
the shipping companies, insisted on the head
of
the
service being a British
sUb.iect.
But when in January 1929 the Chinese
finance minister appointed Mr (later Sir) Frederick Maze to the post
of
Inspector-General. the Foreign Office had not been consulted in advance.
Throughout
his term
of
office Maze was denounced
as
a traitor
hy
the
more vociferous
Old
China Hands
in
the treaty ports, while on the otheT
hand
earning Song Ziwen's praise as a
"loyal
servant"
of
the Nanjing
Government.
22
The morc helligerent voice"
in
the treaty ports notwith-
<;,tanding,
the partially
rc-~iniclz('d
CMC llld nothing to harm those British
intcrc<;ts directly concerned, Since
then'
now
cxio;tcd a Chinese govern-
ment
cnmmittcd
to honouring the financial ohlig.:ltion" of its predeces--
<;OfS,
the
<-
'MC
lost
much
of
H"
cf"twhiJe
ImrOrfancc
<IS
a pi!Jar
of
financial
imrcriJlism,
Mnst
slr.,nificn.ntly,lhc s;'''tcm
{It"
Cl1SI(ldIlJO
hnnks," set up
in
1912
:,'-
the
Chine,,!.'
v('rsion
of
a
('(m
,I',.
(if'
fo
(kt/I'.
was formally
t('rn1mn~{'d
in
M;lfrh
1 (1:'2
;}ffn
a period
pf
dccJine.
2
!1
Thereafter.
all
CII<;,\nnl<;
r!'Vl'nu('
w;t~
p;nd
dlrccth
ml(,
!he
gp\"{'tnmcnt-crmtrolled
Cl'otral
Haflk
of
China.
which
in
tmn
tTiln\fcrrcd tll Ihe foreign
hanks
"IJch fune'" as
were
p,'quireu
for
the
currl.'nf
~ervicin!!
of
IOlln<;.
The
('MC.
Ihl'rcfor~',
no
lOT1£!Cr
acted
a<;
the
l'hn<;cll
a~t'nt
of
either
the
Forei!!n Office
N
the
II{lIlg
Kong
and
Shanghai
H;lnkm.1!
Corporation.
Its
function
of
,,;1
fq.'.U;l
rdlllg
the
int<:rc<;t:o;
of
f(lfelgn
h<
lndhnldcr
..
had
heen
ta
ken
over
hy
the
Chin':~('
"ta!~'
~;lOkin~',
"ystcm
I
h,-,
t\\
In
1''':Hn:~!n
(\1
the
Cll<.,f{l!ll~
and
<,.}i'
",cl'\'ict.'" ill11"trate
Il
~C'neral
f'Plnt:
IIl'pl'liJli,:rn
,in']
CbTflCSC
natipnlh';!11,
J('
Il<;t.'
hnliliar
btw]<;, were
i~\'
nflITlC:ln'·
1",·1·;CtJ
in;\
7('rO-Q,tll
)!<l1111'
I'!
"'hi,:h
011('
pnrty's
los<;
is,
by
"l'
fin,:" 'n.
Ill'
,II'~'
r ",
<:ain
The
il k':l
of
<l
1" (
,IT
ilt:tt,',
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h.1Ck
(If
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In
lTlr::'rhnd, ,;)('::-d
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l'ntl';llly
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'-fl!<"l:d
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(,,(lntHlIJily
In
modern
and
contemporan
Chinese
~'i'
f'
.,
Tt
III
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h(1wc\(,I.
;llkqUClTC1\,
:lrr(1unt
for
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r~'l:!II()Il~
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in l/rc Earl\' TI'.Tntl('lh
('r-mur\,
(!\nn
/\rhor
('('n!CI
jl1r
(·hip~·~c
Studlc-,
147(',),
rp
f,"-(',f,
()n
the
chan,l!l:~
efferted
In
1'),"/
v'e
Fe)
.17!;1~fl'I<i;1
(,710\
M"~'!I'
1.~l11r~()n.
<i
Nov('lTIher
lQ~9
24.
hn
(',aml'l!'.
Hpherl
l·
l\ede~k1.
,~I(/I'"
nurlrlme
111
Mod,.rrr
China'
Tht' Kuomimun!!
II!
the pr,.
....
""
}''''-I/1(J
(Brr~t'Il'\'.
Cenler
;pr
('hmt""
'!Udle\
JlIi<1 L
rr,
()7-!~:'
modest achievements
of
the
Kuomintang, committed rhetorically. at least,
to anti-imperialism. in reasserting China's sovereignty cannot totally be
explained
by
reference
to
.. external pressures."u in
other
words. to an
imbalance
of
power in favour
of
China's imperialist adversaries. Instead,
China had traditionally found ways to deflect
and
absorb such pressures
and
to
create equilibrium, however unstable
under
specific circum-
stances.
in
order
to
maintain Sino-foreign coexistence.- In the 1930s this
tradition re-emerged in a modified way,
In general terms
the
concept
of
collaboration. as
an
essential ingredient
of
fonnal as well as informal inperialist influence
and
domination,
provides a rough framework for analysing the tensions that arose
wherever the expanding western powers
attempted
to
achieve supre-
macy over societies at the periphery.n Essential
to
this concept
is
the idea
that gunboats
and
expeditionary armies can
buDy
a weak country into
submission. as happened
to
China from the
Opium
Wars onwards, but
that stable conditions favourable to foreign trade
and
investment can only
be attained if some measure
of
support can be attracted from within the
subjected
polity and society. Indigenous power elites have to be found
which are willing to smooth the way for foreign interests, but which also
command a minimum
of
legitimate authority within domestic society.
Puppet regimes with just enough scope
to
rubber-stamp the orders passed
down
by
their imperial masters are to little avail, as the Japanese were
to
discover after 1937. What was required to maintain
an
informal empire at
reasonable cost was,
in
Joseph Levenson's apt phrase, .. a Chinese agent
to facilitate a peace-time foreign remote
control."
211
Collaboration
of
this
kind demanded its price, since it did not rest on outright subordination
but on bargained
arrangements, The terms
of
such bargains, ever
precarious. changed
amid
fluid domestic and international circum-
stances. During the Nanjing decade. it
will
be argued, the balance tilted
slightly in favour of the Chinese
side. Within the enduring framework
of
" semi-colonial
.•
dependency the Chinese
power
ehtes were able to
obtain a higher price for collahorative services
that
were more urgently
desired than ever before.
This
also helps to explain why British business
in China continued while Britain's political
and
military presence
in
East
Asia was gradually whittled
away,
25. Ibid. p. 122.
26.
On
the dialectics
of
equilibrium and destabilization
see
E. Zurcher,
...
Western
expansion and
Chinese reaction': a theme reconsidered," in
H.
L. Wesseling (ed.),
£.rpamion and
R~action
(Leiden:
Centre
for
the History
of
European
Expansion. 1978),
pp. 59-77.
27,
For
the theoretical foundations see Ronald E. Robinson, ., Non-European founda-
tions of
European
imperialism:
sketch
for a theory
of
collaboration,"
in
Roger Owen and
Bob Sutdiffe (eds,). Studie! in
th~
Th~ory
of
Jmp~rialism
(London: Longman, 1972), pp.
117-42; also
his"
Imperial
theory
and the question
of
imperialism after Empire," in
Wolfgang J.
Mommsen
and
Jiirgen Osterhammel (ed!;.), ImpvJaiism and
Aft",
Co"tinuitio
and
Di.Jcontinu;ti~!
(forthcoming).
28.
Joseph R. Leven50n, Confucian China
and
la
Mod~rn
Fat~,
A Trilogy, Vol.
1:
Tht'
ProblmJ
of
Jnt~lIectual
Continuity (Berkeley and London: University
of
Califomia Press.
1958).
p,
153
265
266
Beyond the Citadels: Domestic Constraints on Market Penetration
If
the
British economic establishment
in
China had effectively been
confined
to
Hong
Kong,
the
International
Settlement
at Shanghai
and
the
small
number
of
concessionary areas, it would have
been
much easier to
create
an
environment
in which expatriate business was left
to
flourish.
It
would have
been
sufficient
to
screen these enclaves off from the
surrounding host
country.
to provide
adequate
defence
against incursions
from without
and
police
power
to quell unrest among
the
native
population within. Given such
basic"
business security." as .. Shang-
hailanders " were fond
of
calling
it,"
everything else could be left to the
free play
of
market
forces. This was the case
in
the
laissez-faire
International Settlement and, tinged with a smattering
of
colonial
benevolence, in Hong Kong.
The
vast majority
of
British firms in China
had never experienced anything but a business environment which
looked like
the
dream
of
19th-century Manchester liberalism come true
and
where contact with Chinese authorities was non-existent
or
kept
to a
minimum. According
to
C.
F.
Remer's well-known estimates.
in
1929
76·6
per
cent
of
all British direct investments in China were located
in
Shanghai. 9·3
per
cent
in
Hong
Kong and 14·1
per
cent
in
the
rest of
China including
Manchuria.
so
The
practical significance
of
these figures.
however. can easily be overrated. Companies which had their headquar-
ters
in
Shanghai
or
Hong Kong and whose capital. from an accountant's
point of view, was undoubtedly concentrated there. nevertheless
extended their operations far beyond the littoral centres.
If
one envisages British interests
in
China not merely as a collection of
static assets,
but also pays attention to the actual activities of individual
firms, the
penetration
of
markets beyond
areas
of foreign privilege
emerges Ic'\s clearly as a negligible exception
to
the
general rule than
overall investment data seem
to
suggest.
In
fact.
by
the
late 1920s most of
the economically most
potent
and politically best-connected British
companies
in
China were deeply entangled
in
indigenous commerce and
politics.
A rough classification
of
British husine
...
s interests
in
China
ll
may help
to
clarify the
i.s'me.
The
fundamental distinction
is
that hetween.
on
the
one
hand, those interests which operated eXclusively within
the
big
coastal centres. and on the
other,
those which carried penetration into the
interior of China.
Treaty
port interests.
n
physically limited as they were
to territorial enclaves under de facto non-Chinese rule. can be divided
into four types. First, there were the petty trading and service firms
catering for the
upper
end
of
the market - foreigners and wealthy Chinese
- within the big centre!'.
29.
Rl'pon
ofthl'
Hon. Richard Ft'l'tham. C
M.
G
..
to the Shanf(hai
Mumclpal
CO/met/.
Vol. 1 (Shanghai: North Chma Daily
New~
and Herald.
11.J31).
p.
2nQ.
30. C. F. Remer. Fort'I"n Inves(m('ntJ
In
ChmQ (New York: Macnlll1an.
1(33).
p.
395
(Table 13)
31. Banks
are
not
included
in
the followmg
discu!oosion
32. In recent literature the term
(r('ary
port
has been used
either
in its strict legal
.<.ense
or
to
denote the clusters
of
foreign
settlement
and investment
in
the
hif(
coastal and riverine
centres.
In
the present article the
former
meaning WIll be
preferred
Secondly. the overwhelming majority
of
British import-export houses
were based
on
one
or
several of the
major
treaty ports,
On
the import
side. expatriate firms, yanghang, continued to be essential as mediators
between Chinese consumers and manufacturers abroad. A manual
published
in
1920 for
the
benefit
of
German
firms exporting
to
China
categorically asserted
that
.. direct co-operation between
European
exporters
and
Chinese merchants
is
totally
out
of
the
question.
"U
The
number
of
Chinese companies daring enough to establish direct links with
manufacturers overseas increased during the following
decade,"
but only
as late as 1933 did
the
British
Department
of
Overseas
Trade
encourage
exporters
to
look
out
for Chinese trading partners.
aD
As a rule, the
yanghang proved
to
be indispensable, although
it
was rarely more than
an
intermediary.
The
import
of
cotton piece goods
is
a case
in
point. In the
1930s. as during the 19th century.
the
distribution
of
British cotton goods
was firmly in the hands
of
Chinese dealers who placed orders with
yanghang
in
the big
seaports.-
The
British yanghang had no influence
whatever either
in
the wholesale
or
retail of its import;
it
was
..
really
in
the
nature
of
a commission
agent
and not a merchant."J7 On the export side,
too, most
of
the goods were channelled
abroad
through expatriate export
houses.
Tea
was a fairly typical example. In
the
mid 1930s more than
90
percent
of
Hankou's
tea exports were handled by yanghang, the majority
among them British.
JI
In
Shanghai about 70
per
cent
of
all tea exports
passed through British hands.
n
In contrast to Russian tea merchants
in
Hankou before the First World
War,"o
none
of
the British firms bought
tea leaves directly from
the
planters. Instead, they received the market-
able product through an extended chain
of
Chinese middlemen.uAI-
33. Siegfried Berliner. Orf(anisation
und
Bf'trieh df's Imporl-Gl'scho.fts
;11
China
(Hannover: Hahnsche Buchhandlung. 1920).
p.
8
34. Wang Weiqi
...
Tongzhi maoyi sheng zhongzhi Shanghai jinkou shanghang gaikuang
diaocha."
DOl1gfang
ZQZh,.
Vo!. 34, No.
13
(1 July 1937).
p.
131; Chinese Maritime
Customs, D(,Cl'nllia/ Rf'ports. Fifth /UUf':
1911-193/
(Shanghai: Inspectorate General of
Customs. 1(33),
Voll.
p. 527.
Vo!.
2.
pp. 14.1.155.
35.
United
Kingdom.
D~par1ment
of
()ver~eas
Trade.
Trad~
al1d
ECOl1omic
Conditions
/fI
Chil1a
193/-1933
(London:
His
Maje~ty's
Stationery Office, 1933). p. 28
36. H.
D.
fong.
Conon
Indwtry
al1d
TrodI' in
Chma.
Vo!. 2. rrianllO: Nankai Institute
of
Economics.
1(31),
pp
262-71;
United Kingdom.
Department
of Overseas
Trade,
Rf'port
of
thf' Cotton Commissiol1 (London: His Majesty's Stati(mery Office. 1931).
pp. 59--90; Jiu Zhol1gguo
df:'
::ihel1zhuyi .Ihmgchan gual1xI
(Beijin~
..
Renmin chubanshe.
1977). pp.
2HI-H4.
37.
PRO.
Board
of
Trade
(hereafter BT) 60/2911 Tientsin British Chamber of
Commerce.
memo"
The
present state of British
trade
in
North
China."
24 December 1930.
38. Zhao Lie, Zhol1gguochayt' wf'I1ti(Shanghai: Dadong shuju. 1911). pp. 159--60; Peng
Yuxin.
"Kang
Ri
Zhanzheng
qian Hankou de yanghang he
mainban,"
Ulun
zhanxian
vut'kan
No. 2 (1959). p. 26; Franz Sahelberg. Tel'.
WandJul1gt'11
il1
dn
Eruugunf(
und
Vl'rw('ndung
df:'J
Tf'~s
l1ach
dt'm Wdlkri('g (Leipzig: Bibliographische
..
institul.
1(38).
p.128
39. Calculated
from
data
in
Financf'lIrld
Commua.
19 February 1936,
p.
210.
40. Boris
P.
Torgasheff. China
as
a
T~a
Product'r (Shanghai: Commercial Press. 1926),
pp.
11-12
41. See Wu
Juenong/Hu
liaochuan,
Zhongguo
cha.'I'l'
jUx/flg ;ihua (Shanghai: Shangwu
yirlshuguan.
1935). pp.
59-60;
Wu
Juenonglfan
Hejun,
Zhongguo
chay('
IIIt'nti
(Shanghai:
Shangwu yinshuguan.
19]7).
p. 202: Tian
Sanli."
Xian~
cha
gaijin
lhi
jihua."
GUOK'"n
zhoubao.
Vo!. 13. No. t 7 (4 May 1936). p. 24;
Robert
Paul Gardella.
fukien'stea
industry
and
trade
in
Ch'lOg and
Repuhhcan
China:
The
developmental
con~equences
of a traditional
267
268
though
the
tea
exporters
tended
to be in a
stronger
position vis-a-vis
their Chinese trading
partners
than were
the
importers
of
cotton goods.
common to
both cases were
the
mechanisms
of
old-style treaty
port
trade.
A third
type
of
treaty
port
business consisted
of
public transport and
utility companies which.
by
the very nature
of
their trade. were tied
to
the
areas
of
foreign
settlement
and
rule.
The
Shanghai
Gas
Co.,
the
China
General Omnibus Co.,
and
the
Shanghai Electric Construction Co. -
reputed
to
run the most profitable tramway
in
the world - were
outstanding examples.
Fourthly,
ever
since
the
Treaty
of Shimonoseki in 1895
had
permitted
foreigners
to
establish factories
in
the
treaty ports, a
number
of
British
companies had seized
the
opportunity
to
employ Chinese labour in
manufacturing for an indigenous mass
market
and,
to
a lesser extent, for
consumers abroad.
Some
of
these factories were located in concessions
and
settlements, but
others
were not. Most
of
the
British manufacturing
enterprises
in
Hankou
-
the
British-American Tobacco
Corporation's
two
large cigarette-making plants
and
a
number
of
smaller establishments
for the processing
of
tong oil, eggs, seeds and
other
export
commodities-
lay outside the British concession, a fact that made giving it back
to
China
in
February 1927 tolerable
to
the expatriate business community.
As
early as t
906
BAT
chose as the site for its first huge factory
in
Shanghai
not
the International Settlement, but Pudong, a
part
of
the
City
governed
by Chinese authorities.oII Thus, the fourth type
of
treaty port business,
while still sheltered by extraterritoriality
and
its concomitant privileges,
in
part
already
transcended
the
sphere wherein those privileges could
be
enforced by
the
normal procedures
of
a foreign-controlled administration.
It
pointed the way
to
such foreign business as was conducted outside the
citadels.
Within this second broad category, too, several types of businesses can
be
distinguished.
The
three
most important
ones
were coal mines, shipping
companies and up-country distribution networks.
The
location
of
mining
enterprises
is
determined by the geography of natural resources which
seldom coincides with the geography of
trade
and the geopolitics
of
intervention.
Of
the three coal mines
in
which British capital was invested
only one fitted location ally into the patterns
of
treaty
port
commerce and
imperial security.
The
Kailan Mining Administration
(KMA)
worked
coalfields near Tangshan
in
Hebei province.
The
mines were linked by
rail
to
the
Beijing-Mukden (Shenyang)-Railway and had a rail connec-
tion, 136 kilometres long,
to
the seaport
of
Qinhuangdao
where troops
could easily be landed and sent to protect the collieries. Unlike those
of
the
KMA, the mines
of
the
Peking Syndicate, situated
in
northern
Henan,
commodity
export
(Ph.D.
thesis. University
of
WashinlZton.
1976),
p. 143.
For
similar
conditions
in
the
silk
trade
see
Lillian
M.
Li, China'J
,";ilk
Trade: Traditional Industry
in
th~
Modpm
Wor/d,
1842-1937
(Cambrid!l;e, Mass.
and
London:
Harvard
University Press,
19RI).
pp.
154-62.
42.
Shennan
G.
Cochran,
BiK
RU.finf'ss in China: Sinn.FnreiKn Rivalry in thp Cif{affUf.'
Industry.
1890-/930
(Cambrid)!:e,
Mas~.
and
London:
lIarvard
Unive~ilY
Press. t9RO),
p.16
were"
away
out
in
the backwoods."43 While communications were
adequate
for commercial purposes, they were not sufficient from the
point
of
view
of
defence.
The
only feasible way to send British troops
would have been from Shanghai via
Hankou,
a journey of over t ,000
miles. Hence, from
the
very beginning
of
its mining activities
in
t 907,""
the
Peking Syndicate
lay
beyond the reach
of
direct British intervention.
The
prosperity
of
the Syndicate's business
depended
largely on the
goodwill
of
the Chinese authorities on local, provincial and central
levels.
4
$
Flying
the
British flag on a commercial vessel
in
China's coastal and
inland waters automatically indicated immunity from Chinese inter-
ference. This might have been a sound guarantee against any kind
of
trouble, had it
not
been for the fact that
the
two big British shipping
companies, Swire's China Navigation Co.,
and
lardine's Indo-China
Steam Navigation Co., did the greater part
of
their business with Chinese
shippers. Although
the transport
of
bulk commodities
on
behalf of British
clients was by
no
means insignificant, the mainstay
of
the companies'
business were
the orders placed by Chinese merchants. Statistical
corroboration for this point
is,
unfortunately, somewhat Sketchy.
There
are, however. data
on
the origin of cargo shipped by the China Navigation
Co., the bigger
of
the two British lines, showing
that
during the years
1933 to 1936,
of
goods carried downriver from Hankou to Shanghai an
average of
88 per cent originated with Chinese customers. This left only the
remaining
12
per
cent with foreign
firms.411
Among
them were several
Gennan
houses which had managed to regain the strong position they
had occupied
in
Hankou before the First World War. Far from being
just ancillary to foreign trade, the British shipping lines were intricately
enmeshed
in
the
fabric of China's domestic commerce. Admittedly, by
linking up the
seaports
from Guangzhou
in
the south to Niuzhuang
in
the
north, they knitted together the economic
centreson
the maritime fringe;
and by funnelling foreign goods all along the Yangzi from Shanghai to
Chongqing they
assisted
in
penetrating the markets of innermost China.
But simultaneously they offered
services that were relevant only within
the framework
of
the domestic economy. For the China Navigation
Co
..
for
el(ample, Wuhu, a relatively ohscure treaty
port
in
Anhui, came
second only to
Hankou
in
importance on the Yangzi route.
47
No
British
trading interests
of
any significance were represented there, but the town
4~
FO
3711lH1271Flfi70
Holman
to
ingram,
24
January
1934
44.
On
the
early
history
of
the
Peking.
Syndicate
see
Hou
Chl-mmF.. FOfl'ign /nl'e.Hml'nI
and
Fconomic
[)('I'e/opment
In
China,
/840-/CJ37
(Cambridge.
Ma's:
tl<!r.-ard University
Prcs,.
1(65).
pp.
7i-7~.
4."
The
third
coal
mine
with
Bnll\h
capital
In\'e.~lcd
In
it
wa.\the
Menlougou MininF.
Co
It
Was
oflitt1c
"gOlficance
a~
a
part
of
the
British informal
empire
in
China
On
its
hl~tor.'
up
to
1949
~e
BCljmg shifan daxu{' h\hlXl. MenlOuROIj
fflrikuang
Ji!iKao
(Beijmg:
Renmin
ehubanshe.
II}SH), pp.
1-9
40.
Calculated
from
data
m the School
of
Orient,l\
ilnd African StudlC,
(London),
John
SWlre
& Sons.
l.td.
I'apcr~
(hereafter JSSP) IJ1/2/1K
John
SWlfC
&
~m
..
to BUllcrficld &
SWlTe
(Shanghai).
In
April
19.17
47
JSSP
11l!211~
A Y
Dcan."
Memorandum
on
Briti~h
..
h'ppmg
intereq~
In
the
Yangl\ze
nver
tr'lde."
10
f'el1ruar.
14.17
269