ºsº
ji
ºf s


SEp 3 - 1919
AMERICAN DEFEAT
IN THE PACIFIC
BY
KAI-HUNG WU
UNIVERSITY OF MICHIGAN
CONTENTS
I. Introduction, criticism.
II. Causes of Defeat.
1. Japanese Influence.
a. Territorial Aggrandizement.
b. Economic Supremacy. 3
c. Double-Dealing Diplomacy.
2. American Indifference.
a. Government Indifference.
b. Merchants' Indifference.
III. Conclusion.
Published by
The Publicity Committee
Chinese Citigens' Alliance in Michigan
NO. 2 AUGUST 20, 1919
\,
º

TX3.
14O 5
, 0.5
L33
13 tº
All communications addressed to
KAI-HUNG WU
(Secretary of the Chinese Citizens’ Alliance in Michigan)
616 Church St.
Ann Arbor, Michigan.
This publication will be mailed upon application to the
Secretary of the Chinese Citizens’ Alliance
in Michigan.
American Defeat in the Pacific
With the dispersion of the stormy clouds hanging over Europe
for the past four years, by which the interests of the Western Powers
in the Far East have been highly encumbered, the great political pen-
dulum is, once more, vibrating with high speed between the Pacific
and the Atlantic. The commercial barometer has shifted from the
Mediterranean to the Indian Ocean, and from the Indian Ocean to the
Pacific. The speech of William H. Seward to the United States Sen-
ate, “The Pacific Ocean with its shores, islands, and the vast regions
beyond will become the chief theatre of the world's greatest here-
after,” was true fifty years ago, is true to-day and will be true in the
fifty years to come. As in this modern stage of civilization and espe-
cially after the formation of the League of Nations, the iron rifles will
be inefficacious as to the economic weapons. Moreover, for the recon-
struction of the world and for the reciprocity of the nations, it is high
time to discuss the problem of world market.
China is a nation of huge population, one-fourth of the entire hu-
man race, and of immense purchasing power as recognized by the
world. This animates the economic ambition of the greedy Empire of
the Rising Sun. Her sinister designs of peaceful, economic penetra-
t’ on have been utilized. As a result, she got the upper hand of Far
Eastern trade. Prior to the Russo-Japanese War 47% of the foreign
trade of China was taken by the United States, but since that time
American trade declined and reached its lowest ebb. In 1904 the
United States shared in China’s foreign trade 14.9%, but ten years
later, the percentage fell to 8.9%. At present her share in the total
China’s foreign trade is about 8%, being far outranked by Japan. As
early as 1911 Mr. Frederick McCormick declared “American Defeat in
the Pacific.” The cause of the decline of American trade in China is
easily discerned by studying the situation carefully. -
There may be several factors for the decline of American trade
in China, but the crowning ones are, THE JAPANESE INFLUENCE
AND THE AMERICAN INDIFFERENCE TOWARD CHINA TRADE.
It is true that Japan, owing to her geographical situation and liguistic
relationship, has better advantages than any other country in trading
with China. But has not the United States acquired several highly
distinguished, strategic footholds, (Philippine Islands, Hawaii, Alaska,
etc.) in the Far East? Has not the goodwill been cultivated between
the governments and the peoples of China and the United States?
For the last score of years, the American scientific method of compe-
tition has become keen and yet the United States has been standing-
still during the age of swift advancement. Undoubtedly, the fore-
3
going statement attributes the principal causes. In order to under-
stand them an analytical study is necessary.
Japanese Influence
To many an American, the Japanese Influence—great in magni-
tude and augmentative in power—has been fervently practising the
Teutonic aggressive policy and exclusively using her self-invented,
nefarious diplomacy, Machiavelian and double-dealing in character.
Indeed, after the victory in the Russo-Japanese War, she was intoxi-
cated with the ambition of Asiatic Imperialism. In order to make
her ideal attainable, she must isolate the Occidental powers and inter-
ests in China. Naturally, the Open Door Policy, is an inevitable ob-
stacle and obsolescently adverse to her path of imperialism. There-
fore, she embarked here deleterious schemes in world politics and in
international diplomacy. Thanks to God, as the Japanese said, the
Schemes proved successful and the door was opened to her only. The
Open Door Policy has been overthrown and the Equal Opportunities
have been virtually shaken. The deleterious schemes used by the
Japanese Government may be enumerated as the following:
Territorial Aggrandizement. It is universally recognized by the
Japanese that economic and commercial supremacy will come after
territorial acquisition. Since her victories over China and over Rus-
sia, Japan, being proud of her potence of achievement, set out her
aggressive contrivances to secure permanent economical as well as
strategical footings in continental Asia. Realizing that a stage of
active self-assertion of military and naval power must be reached be-
fore the scheme of territorial aggrandizement can be practiced suc-
cessfully, Japan turned her internal policy to a huge increase of arma-
ments, army and navy. A glance at her military and naval statistics
will suffice to show that the fighting forces of Japan both on land and
on Sea are more than doubled since the Russo-Japanese War. Indeed,
her aggressive forces are today threatening many nations and domi-
nating the Far East. In the words of Thomas F. Millard, “The basic
principle of the policy which Hayashi was called to promote, is the
economical and commercial domination of the Far East by the use, if
the occasion requires, of the military and naval strength of the na-
tion. . . . . . . . ” Now let us review the perpetration of spoils that Japan
committed in securing the economic supremacy in the Far East.
It requires volumes to describe all the details of the history of
Japan's territorial aggrandizement. With the limited time and space
at our disposal, it is quite sufficient to satisfy our purpose by bring-
ing out the principal evidences. As early as 1870 Japan showed her
territorial ambition. Without the least reason, but dominating over
4
it as a Japanese prefecture, Japan annexed Loochow Island, a tribu-
tary to China since 605 A. D. Great vindication was aroused in the
Chinese Government. But thanks to General Grant, who offered to
mediate and brought about the partition of the island by the two dis-
puting nations. This certainly is not a satisfacotry settlement. As
Japan increased in national strength, she annexed the island. The
Chino-Japanese War offered an unusual chance for Japan’s territorial
aggrandizement, as China was at her grip after being defeated. And
she did demand a huge indemnity and an excessive number of con-
cessions as the price of peace—the cession of Formosa, Pescadores
Islands, Liaotung Peninsula, which are of great strategical and eco-
nomical importance—for the bases of future Asiatic Imperialism. This
unreasonable demand, naturally induced the intervention of the en-
vious European powers, Germany, France and Russia, who threatened
war, unless Japan abandoned the claim of Liaotung Peninsula. Japan
was forced to do so, though it was not her wish. Her appetite for
territories is ever insatiable, Considering Russia as the great stumb-
ling-block obstructing her way of territorial aggrandizement, Japan
devoted her whole national strength to fight the inevitable and deci-
sive war with Russia. Luckily, Japan won the war. So all the
rights of Russia in Manchuria and China fell into the hands of Japan.
Thus, the political, territorial and economical privileges and commer-
cal rights in the Orient are at her mercy. The annexation of Korea
to Japan was declared in 1910, five years after the victory over Russia.
Great influence has been dominating Manchuria in the north, Shan-
tung in the middle, and the Fukein province in the south of China.
Now she claims the permanent possession of all the rights in the Shan-
tung Peninsula. With these paramount and effectual bases in Asia,
given to such a greedy and ambitious nation, unquestionably Japan
secures the upper-hand of the Far Eastern trade as well as other
privileges.
Economic Supremacy. The modern theory of national greatness
is measured not only in terms of fighting strength, but also in terms
of economic forces. This theory becomes a dead germ in the minds
of the Japanese and consequently it actuates the intrigue and reckless
manoeuvre of Japan's economic ambitions. Together with the dele-
terious designs of Japan’s territorial aggrandizement, there are many
more subtle and wily avenues through which Japan is working for the
ultimate control of the Far Eastern trade, which may be called
“economic penetration.” The very commencing step that Japan has
to do in order to make “economic penetration” successful, is eliminat-
ing the Occidental Powers in China as far as possible so that Japan
will be free and alone in the game. To make it clear let me cite one
5
instance. In 1911 a group of American, English, French and German
bankers known as the “Four-Power-Group” were asked to place a loan
of $300,000,000 on the Provisional Government to carry out reforms.
and industrial developments in China. Japan, having no share in the
loan and fearing that China’s industrial privileges would fall into
their grip, asked for participation. Once admitted, she proved a great
stumbling-block and the group was almost broken up. Although her
demand could not be excessive in dealing with the Great Powers, yet
she was able to insist that no part of the loan could be used for the
development in Manchuria, for it would injure Japanese economic and
commercial interests. How bold and dreadful was the demand 7 How-
ever, owing to her fighting strength and diplomatic intrigue, her de-
mand proved successful.
One of the most powerful devices of “Japanese economic penetra-
tion” is “ever ready issuing loans to China” with any seeming pretext.
But as a matter of fact, Japan would never lend money to China if
the pretexts as industrial development and reform were a truth, for it
would injure her interests. It was well said that, China inherits the
habit of ostensible borrowing and Japan inherits one of ostensible
lending. Pre-War Japanese loans to China amounted to Yen 49,670,-
000 and since the Great War there are Yen 198,430,000, making a total
Yen 248,100,000. Besides the huge pecuniary profit from interest at
a rate of 8%, numerous mortgages—economic rights and commercial
privileges—have been pledged. It does not need a scholar of eco-
nomics to discern that Japan has been trying hard to get the monopo-
ly of Far Eastern trade. Territorial acquisition is the initial step,
and control of highways is the next. Japan employs her “ever ready
issuing loans to China” policy to get hold of the railways of China
already built or to be built in the future. Of the following list, we
owe to the editor of Eastanian:
Railroads under Japanese control: Miles.
Dairen-Changohun . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 435.8
Mukden-Antung . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 170.2
Dairen-Port Arthur . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37.1
Suehiatun-Fushun . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.09
Tsinan-Tsingtao . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.93.3
Railroads under Japanese financial influence: Gold.
Nanchang-Payang . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,000,000
Kirin-Changchun . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 430,000
Peking-Hankow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,440,000
Mukden-Simman-tun . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 64,000
Sze-Ping-Chi to Changchia-tun. . . . . . . . . . . . . . . . . . 1,000,000
6
Tuntung-Ching . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,000
Lun Chun-Yue Hai . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200,000.
Railroads which Japan demanded the right to build:
Miles.
Chai Yuan-Hai Shing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
Sze-Ping-Chi-Taonan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 230
Taonan-Yit-Ho-Kan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 450
Changchun-Taonan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 450
Kirin-Hai Lung . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Tsinan-Suntuck . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
Japan's economic penetration is not confined in continental Asia
but also extends to the Pacific. Realizing that control of navigation
is one of the highly essential devices to economic supremacy, Japan
outspreads this enterprise. Prior to the outbreak of war, Japan pos-
sessed only six shipyards capable of constructing ships of 1,000 tons
annually. But now the number has been increased to thirty and the
annual output is over 600,000 tons, being 600 times greater than that
of five years ago. To show the progress of Japan in navigation it
will be much clearer by contrasting the American tonnage and that of
Japan in the China Seas; in 1914 American tonnage was 1,047,423 and
that of Japan, 23,997,000. In 1916 American tonnage dropped to 799,-
900, while that of Japan increased to 24,233,800. No doubt American
trade with China is under Japanese control.
Double-Dealing Diplomacy. So far we have told the story of ter-
ritorial acquisition and the subtle devices of economic supremacy.
There is another preeminent factor engaged by the statesmen of
Tokyo, who, observing that East and West are antithetic in strength,
invented a “Double-dealing policy”—an Eastern policy for the Orient
and a Western policy for the Occident. I think of this policy as a
double-edged weapon which injures both sides—the Oriental and Occi-
dental nations. You will realize it as facts are attested. It has been
long and fervently known that the Japanese advocate the principle of
Count Hayashi, “No Power is to be blamed, if it takes the advantages
of the weakness of another and gain advantages itself thereby.” In
dealing with Powers he said, “Lull all the suspicions that have arisen
against her, (Japan)” that is to make black white through diplomatic
manipulation. As it has been recognized that diplomacy alone cannot
go very far, unless there are fighting strength and economic force be-
hind it, Japan hitched her wagon to the star of great national strength
and economic supremacy in China. After the Russo-Japanese War,
Japan, being victorious over Russia, becoming world-wide significant,
was admitted to the family of World Powers. With forces on one
7
hand and diplomacy on the other, Japan has been moving heaven and
earth in the Far East specially while the Western Powers were behind
the scene of activities in the past four years. -
Disregarding generalities, let us have a glance of her diplomatic
movements. Before the Chino-Japanese War, Japanese diplomacy
was insignificant or rather illusory, but after that, Japan began to
exhibit her diplomatic display. Foreseeing that Great Britain would
interfere with her conflict with Russia, she made the Anglo-Japanese
Alliance in 1902. As Great Britain has been the supreme-naval power,
Japan, again and again, renewed the alliance in 1904 and 1911, so as
to tie up the hands of Great Britain in the Far Eastern affairs. In-
deed, by such alliances she and Russia were left alone in the game of
the Asiatic field. Japan, measuring that her fighting strength and
eccnomic force were equal to that of Russia, if not transcendent, de-
clared war on Russia on the pretext of the independence of Korea.
Russia, being defeated, was forced to sign the treaty acknowledging
the independence of Korea and turning her rights in Manchuria and
China to Japan. No doubt, China also was forced to admit whatever
terms Japan imposed upon her. Russia could not secure an outlet in
the East, being blocked up by Japan, then turned her way to the
West. But as Great Britain and Germany would never allow her ac-
tion, and realizing that Japan had become one of the Six Great Pow-
ers, Russia, once a bitter enemy to Japan, wanted to be friendly with
her. Japan, seiznig such a golden opportunity, formed the alliance,
with Russia in 1907, two years after the conclusion of the Russo-
Japanese War with a Machiavellian motive behind. The Franco-
Japanese Convention was held in the same year. Ostensibly all the
agreements were to guarantee peace in the Far East, which looked as
innocent as beautiful flowers, but there was a Japanese serpent under
them. Alas, while the curtain of Machiavellian diplomacy was pulled
up, the whole scene of aggressive intrigue was revealed to the world,
after the annexation of Korea. By agreements and alliances Japan
was able to persuade Great Britain and France to wash their hands of
Korea in the future.
It has always been the diplomatic manoeuvre of Japan to tie up
the hands of the Western Powers outside the scene of “Asiatic stage”
and banish the inevitable suspicions arisen againt her. The question
naturally raised is why the United States remains silent, when viola-
tion is done upon her “Open Door Policy.” The Americans, indifferent
and disinterested in the Far Eastern affairs, were easily blinded by
the Japanese through publicity and able diplomats in Washington.
The Lansing-Ishii Agreement was a triumph of Japanese diplomacy
toward America, in which special interests in China were granted to
8
Japan. Therefore, elminating German Power, binding up Great
Brtain and France with agreements and deceiving America with a
false treaty, Japan, surely, is free in the Far East and can take what-
ever measure she desires. -
American Indifference
The idea of provincialism or domesticism of commerce in the
minds of Americans is still predominant. Being too much absorbed
in the home problems, they ignore the larger half of the modern idea
of trade, which is international in character. They still do not dis-
cern the reason why Great Britain and Germany have become bitter
enemies in fetching oversea possessions in order to create new mar-
kets, and stretched their eager hands to trade with China three de-
cades ago. In fact, they cannot see that there is a huge market in
the East with a population four times as great as that of their own
and one-fourth of the whole human race.
In recent years the American merchants are making a grand rush
into South America, as if there were an unlimited market. Now they
come to realize its emptiness and shallowness, and what they thought
of it was merely exaggeration if not imagination. The whole popula-
tion of the continent is 55,000,000, one-eighth as large as that of
China. Surely, commercially speaking, the potential buying power is
increditably small compared with that of China. But why do the
American merchants disregard the immense possibilities in the Far
Eastern market? To answer this question, a beam of light flashed
upon the American commercial idea toward the Far East is necessi-
tated. As it has been said, one of the leading causes of the decline of
American trade in China is American indifference, so let us turn this
beam of light to solve this phenomenon.
Government Indifference. The essence of international trade indi-
cates no national character, but it is one that trading between persons
representing different national units. Therefore, it is highly essential
to have consistent government support besides the cooperation of the
producers, distributors and enterprisers, to make the trade successful.
In the case of China’s foreign trade, it is particularly true. The Euro-
pean and the Japanese governments have established organizations to
assist their merchants in foreign trade in the Far East. But, on the
other hand, such organizations have not been endeavored to any great
extent, if attempted at all, by the American government. Of course,
in some occasions, the American government did make some earnest
promises to support her merchants in the development of foreign
trade in China. But on account of her inconsistency, the merchants
dare not launch any business of gigantic risk in so far a country. In
9
1911 President Taft entered into the participation of the Six Power
Group. But later the United States withdrew from it and not very
long since that withdrawal, President Wilson encouraged American
bankers to negotiate loans with China. Curious as it is, the Lansing-
Ishii Agreement was signed confirming the special interests of Japan
in China. How inconsistent were the actions 7
Moreover, the American government, not only declines to help
her merchants but also hinders their activities by limiting their scope
and by narrowing their horizon. The American trust law, for in-
stance, prohibits the combination for foreign trade as well as for
domestic trade. Indeed, in many a case, the trust laws and the ship-
ping laws discourage and block the advancement in international trade.
The address of the president of the National City Bank of New York,
Mr. Vanderlip, before the National Foreign Trade Convention at New
Orleans, in which he said, “We shall have the handicap in the exten-
sion of our foreign trade of a government so devoted to peace, that
justice to its citizens in foreign countries weighs but scantily in the
balance against its advantages of peace at home, while even less than
the interest in the welfare of its citizens abroad, is its interest in the
capital of its investors abroad,” shows clearly the attitude of Ameri-
can government toward foreign trade. In other words, the United
States failed to maintain the Open Door Policy of John Hay, which
was early established for the purpose of providing equal trade oppor-
tunities to all nations in China. It is true that Japan closed it by in-
trigues and “double-dealing diplomacy,” but it is also the responsi-
bility of the United States government to confirm Japanese special
rights in China. Under the great influence that Japan has had in
China, China cannot live up to the Open Door Policy, even though she
is highly anxious to trade with all nations and to strengthen her
friendship with all nations, especially with the United States. If
American trade in China is to flourish, the American government must
put forth a greater effort to uphold her Open Door Policy.
Merchants’ Indifference. Of all the causes of the decline of Am-
erican trade in China, one of the crowning ones is the indifference of
the American merchants in Oriental trade. They very seldom, if ever,
attempt to extend their business in China. They fail to realize the
theorv of foreign trade that to reap the harvests of international trade
is to labor for it but not to wait for it. According to the words of
Honorable W. J. Calhaun in 1914: “We have no ships, no foreign
trade to speak of. We shall not have any ships until we have cargoes
for 'hem. We shall not have any cargoes, until we have markets for
them and we will not have any markets until our manufacturers go
abroad and establish them.”
10
To very few it is the natural tendency but to many it is a great
Surprise of the indifference of Americans toward Oriental trade. As
the point has been brought out that the idea of provincialism pre-
dominated, they do not have the intention to take further risk in
Orinetal trade. But how did the idea come into existence, despite the
fact that they are a great industrial people? To be specific and brief,
let me enumerate the main reasons. The discovery of gold in Cali-
fornia, in 1848, the founding of the great Union Pacific in 1866 and
many more other railways, the applications of electricity to industrial
development, and the growth of enormous commercial cities attracted
all of their attention for investment. As a result, this led to the
feeling of no necessity of trading with foreign countries. Although
the United States is a great producing nation, yet she is a great con-
Suming nation, imigration being increased in the past two or three
decades. -
A country in this modern stage of civilization can hardly supply
all that she wants economically and consume all that she produces in
Some particular commodities. Nowadays, some Americans, more or
less, come to realize this theory, but they turn their compass to a
wrong direction, South America. Of course, South America is much
nearer to the United States than China and consequently the risk is
not so great, as compared with that in trading with China. Although
they find the scanty opportunity in South American markets and be.
gin to turn their eyes to the Far East, yet they do not know how to
trade with the Oriental people. In fact, they lacked Oriental knowl-
edge and consequently failed to use many facilities. Partly, the United
States government is responsible for the lack of facilities, but should
the American merchants not share this responsibility ? Can they not
better their trade by some facilities 2 Japanese merchants have de-
veloped theirs to a great extent, but I have not seen any American
merchants exert fair effort in it. Shipping facilities, banking facili-
ties, organizatons of export, and studying of the market are exceed-
ingly necessary in foreign trade. Prior to war 70% of China’s for-
eign trade was carried by German ships but since the war broke out
most of the shipping facilities are supplied by the Japanese. Ameri-
cans do not have any banking system to facilitate their foreign trade
in China except the International Banking Corporation, which depends
largely on British capital. On this account, many American merchants
import and export through Japanese agency in order to avoid fluctua-
tion in exchange. But will the Japanese commission houses suffer
the loss in exchange and not charge for the fluctuations 2 Therefore
it is eventually necessary to have a real American bank in China to
open a Mexican account with that in America. The way of market-
11
pushing of American goods is mostly entrusted to foreign agencies.
The agents may be their competitors and so naturally American goods
can receive only secondary consideration. So organizations of export
are very important both for propaganda and distribution of trade at
the same time. Moreover, they can study the demand of the market
and the way of improving the business. But such organizations have
not been established by American merchants. With the lack of these
facilities the decline of the American foreign trade in China is in-
evtable. - t
Conclusion
The sole aim of this paper is to give an outlook of American for-
eign trade in China in the past decade or two. The causes of the de-
cline are many, but the crowning ones, as we have seen, are Japanese
influence and American indifference. The United States is known as
a distinguished commercial nation, so this result is all the more sur-
prising. She is the best friend of China and has extended her hands
in aiding China. The Open Door Policy has saved China from falling
into foreign yokes. China thanks the United States for her help and
wants to trade with her under the Open Door Policy. She wants the
door opened for all nations but not for Japan only; she wants to be a
friend to all nations, but not a subject of Japan. America has fought
the war for human democracy; shall she not fight for economic demo-
cracy? She has been a leading nation of high principle; shall she not
fight for her high principle which she offered to China, the Open Door
Policy?
|
90.15
12

2. A ºff
#4 f º
‘....
#::::::::::::: -
######
‘. .
:
#º
#
º:
gºš
º;
º
Kºº
:
;
#
*::::::::::
:*::::::::::
º
sº
gº ºf
######
#
t -
*]
;
;
#: º
#
#
#:
º
: §:
º
#
t
f
f
i
º
º
º
i
#:
;
~;
§
s
i
§ sly
#ſº
§
#4 #
fºº: §:
*::::: "...º... . .
ºsº.º.
ºš: