Important steamship lines were then subsidized by the German government to maintain regular services between Germany and the Far East, carrying goods and pa.s.sengers at reasonable charges: and it was known that in his personal capacity the Emperor had become a large shareholder in one of them. Germany was prospering, and the Trade-Lord and his lieutenants were happy. All recognized the possibilities of Oriental business. China was preparing to throw off the conservatism and lethargy of centuries, and trade was the key-note of everything pertaining to Germany's relations with the Pekin government. German diplomatists on service in China were instructed to employ every good office to induce German business, and the Kaiser himself selected and instructed consular officials going to the Flowery Kingdom. Able commercial attaches, with capacity for describing trade conditions, were maintained there, and required to be as industrious as beavers. For trade-promoting capacity German consuls in China have no equal--and they all know that the Kaiser's interest in Chinese trade amounts to mania.

The a.s.sa.s.sination in the streets of Pekin, in 1900, of Minister von Kettler, Germany's envoy, and the subsequent sending of an imperial prince of China to Berlin to express the regrets of the Chinese government, strengthened materially the Kaiser's hold upon Chinese affairs. Reiteration from Washington of the "open door" in China struck no terror to the Kaiser, justified in believing he could hold his position against all comers. As proof of this belief he might point to German steamers in Hong Kong and Shanghai literally vomiting forth each week thousands of tons of goods "Made in Germany," penetrating every section of China even to the upper waters of the Yang-tse. A few years ago nearly all this trade was exclusively British.

The question of Chinese exclusion and the threatened boycott of American goods by China was the occasion of anxiety in this country--but none in Germany. It is well appreciated that the spread of the sentiment in the East that the United States is unjust to Chinamen of the better cla.s.s might undo the splendid work of Secretary Hay in cultivating the friendship of the Celestial Empire by standing fast for China's administrative ent.i.ty and insisting on the "open door" policy.

Knowing that the "awakening" of China would be one of the results of the war, the Master Mind in Berlin had not long to consider where the interest of Germany lay, for he well knew that if they conquered, the j.a.ps might in a few years supply the kindred Chinese with practically every article needed from abroad.

If Russia won, then "Best Friend" William of Germany, one of the most irresistible forces in the world, would have a freer hand in China than ever--and this would mean a prosperous Germany for years to come.

By directing the sympathies of the German people to the Russian side, the Kaiser played a trump card in statecraft, certainly. As a soldier, William II must have known the fighting ability and prowess of the little men of j.a.pan, for German officers had for years been the instructors of the Mikado's army--but the public att.i.tude of the head of a government must ever be that which best serves the State. Whatever the chagrin at Berlin over Russia's defeat, a battle royal will be needed for j.a.pan to overcome Germany's lead in Chinese trade; but in time j.a.pan will have this, provided she is well advised and has the tact to play fair with Uncle Sam and his commercial rights.

What of the German colony in China--Kiau-chau, on the east coast of the Shan-tung peninsula, whose forts frown upon the Yellow Sea? Is there anything like it, strategically and trade wise, in the East? When the Kaiser's glance falls upon the map of Kiau-chau, and he recalls the ease with which he segregated from Pekin's rule a goodly piece of old China, he may be irreverently moved to the extent of again snapping his fingers at the Monroe Doctrine, and at millions of simple Africans who refuse to eat German foods and wear not a st.i.tch of German fabrics. Kiau-chau represents the cleverest feat of colony-building the world has seen since the great powers declared a closure to land-grabbing in the East.

[Ill.u.s.tration: SIMPLE PUNISHMENT OF A CHINESE MENDICANT]

When some German missionaries were murdered a few years since in China, the Kaiser, ever an opportunist, was justly angry, and Pekin shuddered at the possibility of national castigation. "Could the Mighty One at Berlin condone the offense if China gave Germany a harbor to be used as coaling station and naval headquarters?" "Possibly; but how can China bestow territory, in view of the American government's certainty to insist that there be no parceling of China, none whatever!"

"Easily managed," was the reply. "It need not be a transfer of territory, but a 'lease,' say for ninety-nine years. This would save China's 'face,' and not disturb the powers."

Hence a "lease" was prepared for all the territory bounded in a semi-circle drawn fifteen miles from Kiau-chau bay--a goodly piece in all conscience. Then came _pourparlers_ for greater German authority, and more territory. As a consequence, in a supplementary doc.u.ment signed at Pekin, it was additionally agreed that "in a further zone thirty miles from all points of the leased territory the Chinese government shall no longer for a s.p.a.ce of ninety-nine years be ent.i.tled to take any step without previous authorization from the German government."

This amounted in substance to saying farewell on China's part to a slice of domain in all more than twice the size of the state of Rhode Island.

The "sphere of influence," so-called, measures 2,750 square miles.

Germany was given as well the equivalent of sovereignty over the harbor of Kiau-chau, no end of mining and railway rights, and other privileges.

The lease dates from March 6th, 1898. England was to give Wei-haiwei back to China should Russia retire or be driven from Port Arthur, but has not done so. In all probability Germany, as well as Great Britain, is located on the Yellow Sea under a tenure that will be found to be permanent.

Kiau-chau harbor is one of the most s.p.a.cious and best protected on the coast of China. The small native town of Tsing-tau, admirably situated on the harbor, was adopted by Germany as the seat of government, and all the appurtenances of a military and naval station have there been erected. A look of permanency characterizes every structure. The house of the naval governor is even pretentious. The capital is laid out with generous regard to broad streets, designated on name-plates as "stra.s.ses." A bank and hotels await the coming of business. The harbor has been dredged, and two miles of the best wharves in Asia constructed of masonry. Warehouses, barracks, hospitals, administrative buildings and coal sheds are there, all in German style, and intended to last hundreds of years.

Tsing-tau as a seat of deputed government may not have found its way into school-books--but the inquisitive traveler in Northeast China readily learns of its existence. Perhaps it is meant to be complimentary to China to retain the name Tsing-tau--but that is all about the place that is Chinese, save the coolies executing the white man's behest.

There are 3,000 Europeans, almost exclusively Germans, in William II's capital on Kiau-chau Bay. Soldiers and officials predominate, of course, but merchant and industrial experts are in the pioneer band in conspicuous number.

And what of the "hinterland," compa.s.sed by the 45-mile semicircle, dotted with thirty odd native towns, the whole having a population of 1,200,000? This patch of China is surely in process of being awakened: there are numerous schools wherein European missionaries are teaching the German language, and enterprise greets the eye everywhere.

Locomotives "Made in Germany" screech warnings to Chinese yokels to clear the way for trains heavy with merchandise of German origin--and this is but an incident in the great scheme of Germanizing the Chinese Empire. Incidentally, it is provided by the agreement between the Pekin and Berlin governments that a native land-owner in the leased section can sell only to the German authorities. This ruling conveys a meaning perfectly clear.

Less than a hundred miles up-country are the enormous coal fields of Weihsien and Poshan, by agreement worked with German capital, and connected with the harbor by railways built with German money and so devoted to Teutonic interests that the name of the company is spread on the cars in the language of the dear old Fatherland. The whole is a magnificent piece of propagandism, surely.

And what is back of it? What is the purpose of the appropriation of 14,000,000 marks for Kiau-chau in last year's official budget of the German government? Trade, little else; and Trade spelled best with a large T. Kiau-chau is a free port, like Hamburg. Why not make it the Hamburg of the East? is the question asked wherever German merchants foregather and affairs of the nation are discussed. From the standpoint of German trade, an Eastern Hamburg is alluring and laudatory--but few American manufactures, let it be plainly stated, will penetrate China through a gateway so controlled.

America's seeming indifference to Chinese trade, let it plainly be stated, is the only solace that commercial Europe is finding in our wonderful national growth. The subject is almost never referred to in the columns of British journals, nor in those of Germany, France, or Belgium. But manufacturers and exporters of these countries need no spur from their newspapers--without the accompaniment of beating drums all are seeking to make the Chinese their permanent customers. And, b.u.t.tressed by undeniable advantages, j.a.pan takes up the quest and means to spread her goods, largely fabricated from Uncle Sam's raw products, wherever the tenant of the earth be a Mongol.

[Ill.u.s.tration: CHINESE BUDDHIST PRIESTS]

Could a human being be more complaisant, more materially philanthropic, than the United States manufacturer or other producer? He surely cannot be blind to the undebatable fact that America cannot always wax opulent on home trade alone; he must know that in time we are certain to reach a period of overproduction, when it will aid the nation to have alien peoples for customers of our mills and workshops. Every land in Asia east of Singapore can be commercially exploited by the United States more easily, and with greater success, than by any other people, if the task be gone about systematically and practically.

The Chinese envoy of a few years ago to Washington, Minister Wu, said many wise things, and no epigram fell from his lips containing a profounder sermon for the American people than when he remarked that two inches added to the length of the skirts of every Chinese would double the market value of every pound of cotton.

Small as it was, our commerce in China was severely lessened last year, not alone by the boycott, but through the enterprise shown by other nations having a share in Celestial trade. The cotton cloth exports of the United States to China and Manchuria for the nine months ending September 30 fell off by over ten million dollars as compared with the same period of 1905. The respective amounts were $15,416,152 and $25,566,286. The Chinese buyers gave preference to the British, taking $34,245,129 worth of cotton fabrics from the United Kingdom for the first nine months of 1906, a decrease of $3,770,584 from last year. The British loss on bleached and gray goods was about half that of America's total loss, but the English exporters made up a large part of the shortage by much larger sales of printed and dyed goods. But while America remained almost stationary last year in selling cotton manufactures to the world, Great Britain made a tremendous stride. Her cotton fabric exports for the first nine months of 1906 were valued at a little more than two hundred and seventy-six million dollars, an increase of about twenty million dollars over the same period of 1905, and of nearly fifty million dollars over the first nine months of 1904.

This was accomplished almost wholly by marketing wares wrought from fiber grown in our Southern States, let it be remembered.

And what would happen to British trade, let us inquire, were America to cease exporting raw cotton, to permit our staple to emerge from our land in a manufactured state, only?

The mere suggestion of the thing is sufficient to cause a cold shudder to play down the spinal column of John Bull. But the American people will never play the game of commerce in that way.

CHAPTER XV

j.a.pAN'S COMMERCIAL FUTURE

A nation has risen in the Far East that is earning high place among enlightened governments, and in all probability the new-comer may already be ent.i.tled to permanently rank with the first-cla.s.s powers of the earth. j.a.pan is day by day a growing surprise to the world.

That the diminutive Island Empire should have been able to humble the Muscovite pride was no greater marvel than that she should in a brief half-century advance from the position of a weak and unknown country to the station of a highly civilized nation. The government of the Mikado is to-day the best exponent of Asiatic progressiveness. And of a people with a capacity to perform in two generations such amazing things who shall dare say what to them is impossible?

Europe has never been in joyful mood over the rise in j.a.panese prestige, and she was more than reluctant to recognize the New j.a.pan as the dominant force in the East. That a yellow people should claim fellowship with European countries guided by houses of lofty lineage was never believed to be possible. Continental Europe was unprepared to admit that j.a.pan's triumph proved anything beyond a genius in the art of war that was nothing short of a menace to the rest of mankind, and that luck and geographical position helped the Mikado's legions in all ways. The great Hohenzollern spoke of the j.a.panese as the "scourge of G.o.d"; in France the "yellow peril"--a phrase really made in Germany--was seriously debated; while Russia many times sought sympathy from the Christian world on the ground that she was fighting the white man's battle against paganism. Solitary in her preference for the j.a.panese, expressed in the form of an astute and fortunate alliance, England gloried when her Oriental ally revealed the weakness of the vaunted power of the north that had dared to cast covetous eyes at India. All these nations hold Asiatic possessions, each has aspired to have a say in Chinese affairs, and each confesses to having a panacea for the innumerable ills of the Celestial Empire--each is hungry, likewise, to extend her trade with the awakening Orient.

j.a.pan intruded, and deranged the plans of all and sundry for rousing China to a realization of her greatness; and in all human probability j.a.pan will do for herself what several European powers wanted to do for Asia. j.a.pan can always justify her claim that she was driven to war to preserve her national existence, by pointing to her rapidly-increasing population, existing in an archipelago incapable of producing food for even two thirds of her people, since every possibility of obtaining a foothold on the adjacent continent had been cut off by self-imposed Russian rule. There was no room for expansion, that was clear.

When j.a.pan shattered the strength of Russia she gained many coveted advantages. One of these was the opportunity to commercialize neighboring Korea, a goodly section of Manchuria, and practically the whole of China--enough to recoup the war's outlay; and once entered upon, why not perfect and extend the enterprise wherever she might, thereby providing occupation for her increasing millions of people?

For a long time to come j.a.pan will remain conspicuously in the public eye, but her achievements and victories hereafter are to be those of peace. Her scheme for national betterment, already well under way, is as thoughtfully prepared as was her war program. The Mikado's people emerged from the Russian conflict with energies enormously aroused, and a few months later every condition was favorable to a realization of the dream of empire giving to j.a.pan an importance amounting almost to sovereignty over a vast section of the Far East. The new treaty with Great Britain, which Germans claimed to be anything but altruistic, is having a steadying influence on the policy of the Tokyo government.

With the conversion of j.a.pan from war to peace, the process of fiscal recuperation and industrial development has been observed by students of Eastern affairs with the keenest interest. The debt of the nation at the close of the war in 1905 was approximately $870,000,000, which sum, apportioned among Nippon's 47,000,000 inhabitants, was $18.71 per capita. The amount properly chargeable to the campaign was $600,000,000, or thereabouts. A characteristic of the war commanding widespread attention was that the j.a.panese side was conducted from start to finish on the soundest financial principles, with her credit abroad scarcely lessened by successive bond issues. It was the criticism of students of finance that j.a.pan conducted her campaign throughout on a gold basis, as if exploiting a vast commercial program, without subjecting herself to usurious commissions, and without resorting to the issuance of fiat or negligible currency. The financing of the Asiatic side of the great Russo-j.a.panese conflict was certainly as businesslike as anything ever done by a European power compelled to raise funds by foreign bond sales.

[Ill.u.s.tration: BRONZE DAIBUTSU AT KAMAKURA, j.a.pAN]

When a candid history of the war is penned, the writer must perforce acknowledge the "luck" attaching to j.a.pan when Russia expelled the Jews, and when thousands of that faith were ruthlessly slaughtered at Kishineff. Whether the purse-strings of the world are controlled by Hebrew bankers may be a moot question, but it was a fact distinctly clear that j.a.pan could place her bonds in any money-lending country in the world, while Russia could scarcely raise a rouble upon her foreign credit. Even Germany, the sentimental ally of Russia, almost begged for the privilege of lending to j.a.pan. There was no disputing that the great Hebraic banking houses of London, New York and Frankfort found it an easy task to supply the Mikado's country with every needed sinew of war, and the ma.s.sacres of Kishineff may have been avenged in a measure at Port Arthur and Mukden.

The ambitious and st.u.r.dy people of j.a.pan are indisposed to regard the war debt as an excessive burden, and it is their determination to treat their bonded obligations as a spur to active industry. It must be confessed that j.a.pan's debt is but a trifle less than that of the United States, and is carried at double the interest rates of the American debt; and further, that j.a.pan's total area is smaller than that of our state of California. The portentous aspect of the national obligation of j.a.pan is that it must absorb in interest charges fully a third of the empire's income for many years of peace and prosperity to come.

A large part of the debt incurred before the war was for public works, most of which are productive. Funds realized from early loans, both foreign and domestic, as well as a portion of the income from the indemnity earned by the war with China, were invested in commercial enterprises owned or fostered by the empire, and the government receives a considerable benefit from the public railways, tobacco monopoly, woolen mills, and a few other industrial ventures. The railways are extremely profitable, and the large sums spent in the creation of post-offices, telephone and telegraph lines, port facilities, etc., have proved wise investments.

Observers of national statistics have long known that a country without heavy indebtedness amounts to little in a worldly and industrial sense.

Abundantly solvent, France has a debt averaging $151.70 per person, and the United Kingdom (Great Britain and Ireland), a pro rata debt of $91.80. Portugal owes $143.82 per subject, Holland $90.74, and Belgium $75.63. The heaviest governmental obligation is that of Australia, averaging $263.90 per inhabitant; and the lightest responsibility among important nations is that of the United States, gradually lessening, now standing at but $10.93. Our Cuban neighbors, owing $21.88 per capita, make little complaint of fiscal burden. Whether a debt be burdensome or otherwise depends as much upon the character of the people as upon natural resources. Decaying Portugal could not by industry liberate herself from pecuniary thraldom in a century, while the j.a.panese probably could liquidate every obligation in fifteen years, were they pressed to do so.

No country can present a better foundation for industrial and commercial development at this time than j.a.pan, and the signing at Portsmouth of the peace agreement marked the beginning of an era of national growth that may challenge the admiration of the world as did the feats of arms of Oyama and Togo. The war cemented cla.s.ses in j.a.pan almost to a condition of h.o.m.ogeneity--practically every subject of the Mikado believed in the necessity for the conflict, and made sacrifices to contribute to the cost thereof. Distinctions of cla.s.s are now seldom thought of, and it contributes mightily to the material improvement of a nation to have a single language. The descendants of the samurai cla.s.s acknowledge now the need for trade on a grand scale, and they are only too ready to embark in manufacturing and trading enterprises. There are scarcely ten great fortunes in the realm, and the number of subjects removed from activity by even moderate affluence is remarkably small.

Likewise, the number of persons reckoned in the non-producing cla.s.s, through dissipation or infirmity, is insignificant. And, more potent than all these reasons uniting to a.s.sist in the expansion of j.a.panese industry and thrift, is the intense patriotism of the people, stimulated by glorious success in two wars against foreign nations of overwhelming populations, as well as the recognition from high and low that j.a.pan's golden opportunity has arrived. Almost to a man the j.a.panese want to employ their sinews and intellect in elevating the Land of the Rising Sun to an honored place among progressive nations.

The j.a.panese exchequer is at present a long way from depletion, by reason of the $150,000,000 loan secured in America, England and Germany.

Probably two thirds of this remained unexpended. Many Tokyo bankers believed the loan unnecessary, inasmuch as there were funds in hand sufficient to finance the war well into 1906, had peace not been agreed upon. But the flotation was deemed wise, not alone because of prevailing ease in the money market, but for the effect that an oversubscribed loan in America and Europe would have upon the Czar's government. The portion of the loan remaining unused for war was employed for giving effect to j.a.pan's industrial propaganda, and presumably has been spent for the endless machinery demanded by the factories and shipyards that are transforming j.a.pan into a vast workshop, for structural metal, and for steel rails, cars and locomotives for railways in Manchuria and Korea; and generally for the hundred and one purposes playing a part in the development of lands. .h.i.therto out of step in the march of enterprise, and where strife has until recently stifled the usual manifestations of man's desire to improve his surroundings. The j.a.panese government in 1906 purchased six railways, which were profit earners, paying for them $125,000,000 in five per cent. bonds that may be redeemed in five years. There is no likelihood of a reduction in j.a.pan's debt for a long time, but its weight upon the people may be reduced by conversions. As the national credit strengthens, the interest on borrowings may be correspondingly decreased. Consequently, there may be frequent funding operations and new issues, until seven and six per cent. bonds have given place to obligations bearing five per cent.

interest or less. To provide funds for early railway building, considerable capital was borrowed at as high a rate as ten per cent.

When these obligations expire all necessary money can be found in the country at less than half the original rate. j.a.pan is fortunate in having many sound financiers to invite to her official councils, and it is helpful to the country that Tokyo and Yokohama bankers are competent and progressive. These men p.r.o.nounce j.a.pan's present financial position sound, and claim that the country can easily carry the existing debt.

In natural resources j.a.pan is not well to do, it must be frankly said.

Examine the country in as friendly a spirit as one may, little is developed to support any statement that the country may become prosperous from the products of her own soil. In truth j.a.pan is nearly as unproductive as Greece and Norway, for only sixteen per cent. of her soil is arable. The mountain ranges and peaks and terraced hills that make the country scenically attractive to the tourist come near to prohibiting agriculture. The lowlands, separating seacoast from the foothills, and the valleys generally, are given over to rice culture, and these contribute largely towards sustaining the people. Where valleys are narrow, and on hillside patches, cultivation is carried on wholly by hand. In recent years phosphates and artificial fertilizers have been encouraged by the government, and with the educational work now in hand science may give an increase of crops from the circ.u.mscribed tillable area. The country's forests cannot be sacrificed, and grazing lands for flocks and herds scarcely exist.

A recent magazine writer, holding a doleful view of j.a.pan's agricultural condition, wholly overlooked the silk and tea crops in his search for native products, an error obviously fallen into through the fact that these are not raised on what governmental reports call "tillable ground,"--meaning that they are produced outside the sixteen per cent.