principle of "trade follows the flag" comes in. Commercial exploitation is usually the pioneer of political exploitation. There is no question that this act of President Wilson is just and statesman-like, and in line with the American traditional foreign policy. It invoked, as it should have done, universal approval both at home and abroad. But from the Chinese point of view, the withdrawal of American bankers from the "six-power loan" was a disappoint

ment.

The United States has always stood for justice and fair play to China, and has more than once thrown its weight toward the preservation of the administrative and territorial integrity of that tottering nation. Had the American bankers stayed in the group, and been supported by the American Government, it would have made the United States a participant in foreign interests in China; and the State Department at Washington would have an opportunity to wield a moral lever in urging moderation on the part of other creditor nations, as was done by John Hay in the Boxer settlement. But, as it was, the United States became a disinterested power -an outsider with respect to the international struggle for zones of influence in China-leav

8

See "Recognition at Last," Independent, 74: 1009-1010, May 8, 1913; "U. S. Recognizes China," Outlook, 104:41, May 10, 1913.

ing the infant republic to its own fate amid a pack of wolfish nations. The Sherman antitrust law would be an asset in the development of world trade, should it be made an international commercial code. But it is a fatal mistake to apply this restriction to American foreign trade alone, while other foreign capital is not only protected but supported and subsidized by interested governments, and foreign investors are even sometimes encouraged to resort to illegitimate business methods for the capture of foreign markets. The failure of American statesmen to appreciate this fact has caused American trade and investment in China to decline, whereas its powerful competitor, Japanese trade, has increased by leaps and bounds, and is still so increasing.

In 1914 China decided to build a naval base on the coast of Fukien. British, American, and Japanese firms were bidding against one another to supply the material. Finally the Bethlehem Steel Corporation succeeded in getting the contract for the work. Japan immediately made representations to the State Department through Ambassador Chinda that the entrenchment of American interest in Fukien Province, which is in the Japanese "sphere," and the

For Japanese trade methods in China, see Tong, "American Money and Japanese Brains in China," Review of Reviews, 53: 452-455, April, 1916; idem in Harper's Weekly, 62: 298-299, March, 1916.

building of a naval base with American money on Chinese coast right opposite to Formosa would be an "unfriendly act." Secretary Bryan promptly sent a cablegram to Minister Reinsch at Peking to inform the Chinese Government that the United States would not support the American interest. Thus American capital, instead of receiving subsidies and protection from its home government, as does Japanese capital, was hampered by American political leaders.

4. THE TWENTY-ONE DEMANDS

The greatest diplomatic struggle that China has had since the Boxer settlement in 1900-01 was with Japan in 1915 over what was known as the Twenty-one Demands, made upon China by Japan." These demands embody serious encroachments of Chinese rights, such as that the Chinese Government must employ influential Japanese as advisers in political, financial, and military affairs; that the policing of important places in China must be jointly administered by Japanese and Chinese; that China must purchase from Japan fifty per cent. or more of its munitions of war, and that Japanese experts must be employed in the arsenals. There is no

10 Concerning Japan's control of public opinion in connection with the Twenty-one Demands, see Part II, Chapter III, § III.

question but that had China conceded to these demands in toto, the Eastern Republic would be a dependency of Japan to-day.

The demands were first presented to the Chinese Government on January 18, 1915, when representatives of several important news services and papers were absent from Peking in Japan. Japan had intended to intimidate China into concession of these demands in secret. When the news began to leak out, Japan, through her diplomatic representatives abroad, denied the demands; when denial was no longer possible, she gave out a false series of demands for publication abroad." When, however, the real demands began to come to light from the Chinese official source, not only the Chinese themselves, but the foreigners in China were alarmed and indignant. The British commercial interests in China made vigorous representations to their home government for protest against Japan's demands. American missionaries in China sent a memorial to President Wilson asking for American mediation in the crisis."

There was a general uproar of indignation in the House of Commons when the news of the demands reached London. But the British Gov

"Eleven articles published in the London Times, as coming from the Japanese Embassy at London, quoted by Millard, "Our Eastern Question," pp. 146-147.

"See the text of the memorial, Part III, S.

ernment was in no position to oppose Japan. There was only one nation that was in a position to make an effective resistance to the Japanese aggression in China, and that nation was the United States. But all the American Government did was to make an inquiry of Japan as to what she was doing in China, basing the right of inquiry on the American-Japanese agreement of 1908 regarding China: "Should any event occur threatening the status quo or the principle of equal opportunity . . it remains for the two governments to communicate with each other in order to arrive at an understanding as to what measures they may consider it useful to take." "

Publicity compelled Japan to modify somewhat the original demands. On April 26, 1915, the Japanese minister at Peking presented revised demands in twenty-four articles. On May 7th Japan delivered to the Chinese Government an ultimatum providing that unless a satisfactory reply be given to the demands by six o'clock on the ninth day of May, "the Imperial Japanese Government will take such steps as they may deem necessary." The Chinese Government waited as long as it could, hoping for foreign aid to relieve the pressure. But none came. After the agreements had been made demands granted, the American Govfull text of the agreement, Part III, L.