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- The Fight For The Republic In China - 3/86 -

thus being the only pure and untinctured democracy the world has ever known.] The chain which bound provincial China to the metropolitan government was therefore in the last analysis finance and nothing but finance; and if the system broke down in 1911 it was because financial reform--to discount the new forces of which the steam engine was the symbol--had been attempted, like military reform, both too late and in the wrong way, and instead of strengthening, had vastly weakened the authority of the Throne.

In pursuance of the reform-plan which became popular after the Boxer Settlement had allowed the court to return to Peking from Hsianfu, the viceroys found their most essential prerogative, which was the control of the provincial purse, largely taken from them and handed over to Financial Commissioners who were directly responsible to the Peking Ministry of Finance, a Department which was attempting to replace the loose system of matricular contributions by the European system of a directly controlled taxation every penny of which would be shown in an annual Budget. No doubt had time been vouchsafed, and had European help been enlisted on a large scale, this change could ultimately have been made successful. But it was precisely time which was lacking; and the Manchus consequently paid the penalty which is always paid by those who delay until it is too late. The old theories having been openly abandoned, it needed only the promise of a Parliament completely to destroy the dignity of the Son of Heaven, and to leave the viceroys as mere hostages in the hands of rebels. A few short weeks of rebellion was sufficient in 1911 to cause the provinces to revert to their condition of the earlier centuries when they had been vast unfettered agricultural communities. And once they had tasted the joys of this new independence, it was impossible to conceive of their becoming "obedient" again.

Here another word of explanation is necessary to show clearly the precise meaning of regionalism in China.

What had originally created each province was the chief city in each region, such cities necessarily being the walled repositories of all increment. Greedy of territory to enhance their wealth, and jealous of their power, these provincial capitals throughout the ages had left no stone unturned to extend their influence in every possible direction and bring under their economic control as much land as possible, a fact which is abundantly proved by the highly diversified system of weights and measures throughout the land deliberately drawn-up to serve as economic barriers. River- courses, mountain-ranges, climate and soil, no doubt assisted in governing this expansion, but commercial and financial greed was the principal force. Of this we have an exceedingly interesting and conclusive illustration in the struggle still proceeding between the three Manchurian provinces, Fengtien, Kirin and Heilungchiang, to seize the lion's share of the virgin land of Eastern Inner Mongolia which has an "open frontier" of rolling prairies. Having the strongest provincial capital--Moukden--it has been Fengtien province which has encroached on the Mongolian grasslands to such an extent that its jurisdiction to-day envelops the entire western flank of Kirin province (as can be seen in the latest Chinese maps) in the form of a salamander, effectively preventing the latter province from controlling territory that geographically belongs to it. In the same way in the land- settlement which is still going on the Mongolian plateau immediately above Peking, much of what should be Shansi territory has been added to the metropolitan province of Chihli. Though adjustments of provincial boundaries have been summarily made in times past, in the main the considerations we have indicated have been the dominant factors in determining the area of each unit.

Now in many provinces where settlement is age-old, the regionalism which results from great distances and bad communications has been greatly increased by race-admixture. Canton province, which was largely settled by Chinese adventurers sailing down the coast from the Yangtsze and intermarrying with Annamese and the older autochthonous races, has a population-mass possessing very distinct characteristics, which sharply conflict with Northern traits. Fuhkien province is not only as diversified but speaks a dialect which is virtually a foreign language. And so on North and West of the Yangtsze it is the same story, temperamental differences of the highest political importance being everywhere in evidence and leading to perpetual bickerings and jealousies. For although Chinese civilization resembles in one great particular the Mahommedan religion, in that it accepts without question all adherents irrespective of racial origin, POLITICALLY the effect of this regionalism has been such that up to very recent times the Central Government has been almost as much a foreign government in the eyes of many provinces as the government of Japan. Money alone formed the bond of union; so long as questions of taxation were not involved, Peking was as far removed from daily life as the planet Mars.

As we are now able to see very clearly, fifty years ago--that is at the time of the Taiping Rebellion--the old power and spell of the National Capital as a military centre had really vanished. Though in ancient days horsemen armed with bows and lances could sweep like a tornado over the land, levelling everything save the walled cities, in the Nineteenth Century such methods had become impossible. Mongolia and Manchuria had also ceased to be inexhaustible reservoirs of warlike men; the more adjacent portions had become commercialized; whilst the outer regions had sunk to depopulated graziers' lands. The Government, after the collapse of the Rebellion, being greatly impoverished, had openly fallen to balancing province against province and personality against personality, hoping that by some means it would be able to regain its prestige and a portion of its former wealth. Taking down the ledgers containing the lists of provincial contributions, the mandarins of Peking completely revised every schedule, redistributed every weight, and saw to it that the matricular levies should fall in such a way as to be crushing. The new taxation, likin, which, like the income-tax in England, is in origin purely a war-tax, by gripping inter-provincial commerce by the throat and rudely controlling it by the barrier-system, was suddenly disclosed as a new and excellent way of making felt the menaced sovereignty of the Manchus; and though the system was plainly a two-edged weapon, the first edge to cut was the Imperial edge; that is largely why for several decades after the Taipings China was relatively quiet.

Time was also giving birth to another important development-- important in the sense that it was to prove finally decisive. It would have been impossible for Peking, unless men of outstanding genius had been living, to have foreseen that not only had the real bases of government now become entirely economic control, but that the very moment that control faltered the central government of China would openly and absolutely cease to be any government at all. Modern commercialism, already invading China at many points through the medium of the treaty-ports, was a force which in the long run could not be denied. Every year that passed tended to emphasize the fact that modern conditions were cutting Peking more and more adrift from the real centres of power--the economic centres which, with the single exception of Tientsin, lie from 800 to 1,500 miles away. It was these centres that were developing revolutionary ideas--i. e., ideas at variance with the Socio- economic principles on which the old Chinese commonwealth had been slowly built up, and which foreign dynasties such as the Mongol and the Manchu had never touched. The Government of the post- Taiping period still imagined that by making their hands lie more heavily than ever on the people and by tightening the taxation control--not by true creative work--they could rehabilitate themselves.

It would take too long, and would weary the indulgence of the reader to establish in a conclusive manner this thesis which had long been a subject of inquiry on the part of political students. Chinese society, being essentially a society organized on a credit-co-operative system, so nicely adjusted that money, either coined or fiduciary, was not wanted save for the petty daily purchases of the people, any system which boldly clutched at the financial establishments undertaking the movement of sycee (silver) from province to province for the settlement of trade- balances, was bound to be effective so long as those financial establishments remained unshaken.

The best known establishments, united in the great group known as the Shansi Bankers, being the government bankers, undertook not only all the remittances of surpluses to Peking, but controlled by an intricate pass-book system the perquisites of almost every office-holder in the empire. No sooner did an official, under the system which had grown up, receive a provincial appointment than there hastened to him a confidential clerk of one of these accommodating houses, who in the name of his employers advanced all the sums necessary for the payment of the official's post, and then proceeded with him to his province so that moiety by moiety, as taxation flowed in, advances could be paid off and the equilibrium re-established. A very intimate and far-reaching connection thus existed between provincial money-interests and the official classes. The practical work of governing China was the balancing of tax-books and native bankers' accounts. Even the "melting-houses," where sycee was "standardized" for provincial use, were the joint enterprises of officials and merchants; bargaining governing every transaction; and only when a violent break occurred in the machinery, owing to famine or rebellion, did any other force than money intervene.

There was nothing exceptional in these practices, in the use of which the old Chinese empire was merely following the precedent of the Roman Empire. The vast polity that was formed before the time of Christ by the military and commercial expansion of Rome in the Mediterranean Basin, and among the wild tribes of Northern Europe, depended very largely on the genius of Italian financiers and tax- collectors to whom the revenues were either directly "farmed," or who "assisted" precisely after the Chinese method in financing officials and local administrations, and in replenishing a central treasury which no wealth could satisfy. The Chinese phenomenon was therefore in no sense new; the dearth of coined money and the variety of local standards made the methods used economic necessities. The system was not in itself a bad system: its fatal quality lay in its woodenness, its lack of adaptability, and in its growing weakness in the face of foreign competition which it could never understand. Foreign competition--that was the enemy destined to achieve an overwhelming triumph and dash to ruins a hoary survival.

War with Japan sounded the first trumpet-blast which should have been heeded. In the year 1894, being faced with the necessity of finding immediately a large sum of specie for purpose of war, the native bankers proclaimed their total inability to do so, and the first great foreign loan contract was signed.

[Footnote: (a) This loan was the so-called 7 per cent Silver loan of 1894 for Shanghai Taels 10,000,000 negotiated by the Hongkong & Shanghai Bank. It was followed in 1895 by a 3,000,000 pounds Gold 6 per cent Loan, then by two more 6 per cent loans for a million each in the same year, making a total of 6,635,000 pounds sterling

The Fight For The Republic In China - 3/86

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