THE IRON HEEL OR THE HELPING HAND

...Even with the best of us who have time and desire to understand China a false feeling of race superiority which .affects perhaps only subconsciously our attitude*-toward things Chinese Js quickly detected and resented by those whom we seek as friends...

...At the time these were drafted there was little sens* of nstional unity, but with th* development of this new patriotism has coma a determination that China shall no longer be subjected to such humiliation...

...THE last few years have seen industrial unrest on a large seal* in the port cities of China...

...It is generally recognised the world ovtr that the Chines* have been a people who stand for reason as against force and that their moral teachings have been from most ancient times consistently non- < militariafit...

...In this document of the Peking Fellowship of Reconcilistion, the authors emphaiite that the Chines* demonstrations are not direcUd alone to the shooting of Chinese strikers, "not so much on th* incident itself as on past history...

...We suggest, on the contrary, that such an action as the proposal to remove all foreign troops would be justified by its re-salts...

...2. Full powers should be granted I for the establishment of municipal banks with a view especially to the financing of municipal developments and local trading schemes...

...W* have to remember that love alone is creative, thst a healthy, ssne, Christian inters*, tional life is impossible in the atmosphere of hate which exists in too many places today...

...a) The,banks would continue to be distinct legal persons or corporations as now, and would not be assimilated to Government departments...

...b) The banks would be required to keep the bulk of their cash deposits and reserves with the Bank of England, which would now be a regular State Bank...

...W* foreigners' hsv«, whether con...

...toy- We b*U*v* that * cheng* * *^s%**»4ft^P tVl4 .s^^a%n* w^Mf '•WVa'Y^^ iatereet wffl de awash te amaiiorst* t h» oid cdiidi 11 onft• But %v*b pyt h mv designed te ha.ten thi...

...The iih-, portance of this subject, however, has led us to feel the necessity for further study and perhaps to prepare a pamphlet in the near future which will give as complete a statement of facts as possible and which will, we hope, be of aid in effecting much needed reforms...

...4. To reduce the charges made for financing both short and long-term operations...

...Chines* students in Shanghai, out of sympathy for th* workmen, mad* a demonstration in the Settlement on May 30, and in the affray which followed, the police of the Settlement fired on the crowd, and four students were killed and seven mortally injured...

...They want sn opportunity to control their own affairs, and this they cannot do until alien mastery is abolished...

...must come, in short, as a sharer of virtues, Chinese and foreign, not as a bestower of foreign one's...

...Monetary System aad Currency Policy 1. The monetary system and currency policy of fireat Britain require drastic remodelling in the light of post-war conditions for the purpose of realising the following object* amongst others: 1. To regulate the emission of credit and currency in the general interests of th* whole community and' especially of th* industrial classes...

...We regard this aspect of banking and this method of using communal credit as of the utmost importance and likely to be of the greatest value to the extension of, collectivlst enterprise...

...Th*r* it th* furthtr fact that to withhold thi* concluding section of th* r*pott from our reader* would be to present to them only a pari of th* rtport...

...Many of them are onesided wher* the benefit is considered by the Chines* to be all on the side of th* foreigner...

...2. That we will so acquaint ourselves with the best in Chinese Hfe that we may lose our sense of racial superiority and so be able to cooperate with the Chinese in soly...

...c) The Government now virtually stsnds behind all th* big bank* and would be bound always to come to their assistance in emergency as was shown at the outbreak of the war...

...We believe most firmly that the lives of foreigners will not be endangered by either of these two moves...

...For instance: ' L Municipsl banks to which special attention has been drawn...

...Is it not ss nations to meet China more than half wsy by - 1. A frank statement at this time from our Gov*rnm«ntr of their willingness to take immediate steps toward th* revision of unequal treaties, including a removal of extraterritoriality...

...The development of national resources of nationalized industry would also naturally receive priority of treatment as compared with undertakings the profits of which would go into private hands...

...In deciding between different methods of utilising its resources of credit and capital the* State Will, of course, take into account the ultimate value to the community of this or that enterprise...

...We have to mik* the first advances and to m*k* them in a spirit of love and humility...

...Thi* ttction considers th* problem*' of finane* and credit...

...It might be thought natural that we should recognise this but the fact that we do not is probably more of a contributing cause to the pr*»*nt state *f Chinee* f**lmg than *v*n th* most unofual of treaties...

...Within the next few days as the student protests continued there was further loss of life...

...SHALL WE BUY OR SHALL WE TAKE...

...This document has peculiar interest because it is the statement of foreigners who iive in China but who have no pecuniary interest in exploiting the Chinese...

...We, of the F. 0. R., have always held that the use of violent measures only complicates a problem and is never a solution...

...The Board of Directors should not only include representatives of the Treasury, but banking and economic experts and other members with a knowledge of the need* of industry...

...b) In Its policy for controlling the operetions of the tjanks and in influencing and in assisting the investment of savings, the State should pay regard to far wider considerations than those which have prevsiled with banks and other organisations whose sole criterion in the past ha* been the rapid accumulation of profits for their shareholders...

...Far the seme reason they have always managed their affairs with a minimum of external control and have been leu amenable than most people to compulsion...

...On* who has never av*d in aa International Sctttafaeet can hardly appreciate th* feaffer ia sack places aad he* many unhappy instance* of insulting actions an th* part of foreigner* can be quoted to Justify it Foreigners Should Study China Westerner* residing in th* gnat port citis* *f China too often do not trouble to study Chines* ma*., ners snd customs snd show * discourtesy and an impatience towards individual Chinese which the Eastern mind can neither understand nor forgive...

...For example, in financing the wholesale electrification of rsilwsys there is ing their whole working with excessively heavy capital ' charges for a long period as happened to some of the London trsmwsys...

...It might be well to create a special Banking' Advisory Council to coordinate th* individual banks...

...The Use of Credit 4. With regard to the granting of fredits either through banking institutions, or under such schemes as s Trade Facilities Act, the following conditions should obtain: (a) In the cas* of all capital guarantees or other similar facili-I ties provided directly or indirectly by the Government ¦ some measure of public control and participation in ownership of capital assets thereby created should accompany the se-commodstion...

...The whole system of imperialist penetration and political control by Western capitalism, its arrogance, its insufferable insolence and exploitation, are opposed by the awakening Chines...

...We have to create an atmosphere of mutual confidence and esteem in which alone the best plans can be made for preventing the recurrence of such incidents ss the present one and for helping forward the development of a new independent China, th* friend of all the world...

...Among the causes leading up to the deplorable incidents in Shanghai, the most frequently mentioned is the existence of treat,** between China and other power* which gr*w out of China's military defeats and which were of a punitive nature, made against the will of the Chinese, and under social, psychological, and political conditions that do not prevail at present...

...Much that is *aid may not b* applicable to th* United Stat**, but it t* eugget-five of how thorough the problem ha* been con*id*red by th* I. L. P. and reveal* an intereiting ard caution* approach to th* problem...

...The supplying of the needs of the mass of the population would, of course, always receive preference ss against the provision of means for satisfying* the demands of the better-off class...

...P.„ shown an equal interest in the great ealtusai •alas* *** this eoua...

...follows...

...Oftcial FapreesioH Needed We are convinced that a further frank declaration at this time by our Government through their representatives out here, stating their readiness to make an immediate move in this direction, would have an immense effect in allaying th* bad feeling aroused and in producing that atmosphere of real friendship which can be the only basis of the Christian world fox which we* are looking...

...We believe it of the utmost importance to make this clear when submitting the brief statement that...

...and while this incident has been the immediate cause of the outbreak, some event or other must inevitably, sooner or later, have caused China's long smouldering resentment at the actions of foreign nations and the attitude of foreigners towards her to burst into flame...

...c) As the system developed, the existing shareholders would be relieved of all liability on the paid-up and unpaid capital of the banks and given a fixed interest redeemable security charged on the profit of the banks...

...In this emphasis on reason and repudiation of fore* th* true Christian ideal and th*t of the Chinese moralists is one...

...ing political and industrial problems which are ours as well" as theirs ? Finally, we would say that the foreigner, whatever his occupation, who is to be of help to China in the future must come to learn as well ss to teach, to receive as well as to give...

...The Cause of and Cure for the Massacre THE NEW LEADER present* below another document received from China regarding the atudent and strike demonstrations in that country...

...and 2. Agricultural Banks or'Credit Societies for financing agricultural developments snd the trading activities of farmers Snd ('imperative societies...

...Is it not as individuals, whether in China or at home, to determine 1. That all contracts between Westerners and Chinese shall be on a basis of friendship...

...This mutual shsring of whst is most worth while csa only take place in an atmosphere of brotherliness...

...To return to the unequal treaties...

...They want all this to end...

...Th* facts in regard to the case are now being investigated with a view to discovering whether the use of firearms could be justified as an act of self-defense...

...A series of strikes have been Carried on by Chinese workers in Japanese factories during the last few months, in the course of which lives have been lost...

...THE consideration of the financial arrangements by which property should be transferred* from private to Public ownership rapidly led* the' Committee to the conclusion that the financial conditions under which nationalized industry operates in the future must receive very serious attention...

...By these treaties ports were opened, foreign concessions established, extraterritoriality provided for, limitations made to the power of the Chinese Government to control her own customs duties, etc...

...wider . knowledge should be welcomed, la contrast to the conditions (a pert citi** we would call attention to th* outgoing feed will which greets th* missionary throughout the countryside...

...Some Outbreak Was Inevitable There has been fc tremendous outburst of bitter indignation among the students at the shoot-' ing of their fellow nationals by foreigners...

...The Government would guarantee the solvency of the banks (but not any fixed rate of profit), thus giving depositors absolute security...

...Control of Other Banks Acting on these principles the Committee provisionally recommends the following steps, which would be subsequently tsken, lesding progressively to the complete control by the nation of its banking and credit resources...

...Th* farmer who has been treated kindly responds with the most hsarty^apr*ci*Uon and is ev*r r**dr t****Sll to W| power to repay kindnesses...

...Even if the rate of cash return in a particular cake is low, it may still be much more profitable to the community that its capital resources should be used for this purpose than for another...

...Municipal and Agricultural Banks In sddition there will be an important place for other institutions which can cater .for agricultural areas, municipal, suthositi** and the like where money...

...Conclusion In conclusion, then, what is th* challenge to us as Christisns that comes from the Shanghai incident...

...The Socialization of Banking and Credit The following it the concluding tertian of the rtport to the Independent Labor party of England on method* of tramf erring proptrty front privat* to public ownership...

...b) NO Rank amalgamation nOW avoids Treasury supervision...

...If any demonstration of the validity of our position were needed the present state of Shanghai, in our opinion, offers a conclusive one...

...2. To direct the) flow of savings into the most socially useful channels, snd to secure that finance is available on the cheapest terms for undertakings and trading of national importance...

...We propose to desl with sll these points extensively in subsequent report...

...This indignation is directed not against foreigners generally but against eyhat they believe to be the imperialism of Britain and Japan, a belief based not so much on the incident, itself as on past history...

...One-Sided Treaties Let us desl first with the much*-resented attitude of foreign nations...

...Any statement dealing with the Shanghai incident would be inadequate if it did not mention foreign industrial exploitation...

...it makes no ultimste advantage in load-nonsense of the banks' claim that they alone safeguard the public's deposits, that their capital is essential to them or ought to be increased, or that the uncalled liability on bank shares justifies a higher dividend, (d) It is now a recognized principle of sound banking that the whole system should be dependent on and closely controlled by a strong central bank...

...Compensation to existing shareholders should be arranged as provided for in the earlier section of this report...

...Chinese Do Not Beltev* in Fates And w* should remember that th* idea for which the F. 0. R. stands, as th* repudiation of farce i in th* solution of rac* problems, is not a new idea in China...

...and the provisions as to a legal minimum reserve would be designed to give the Bank of England greater control of the credit situation...

...Those clauses would be highly technical snd difficult, but not specially affected by the nationalization proposal...

...We make no pretense that what follows is more than a preliminary survey of a few of the problems concerned with the machinery required to develop a Socialist policy on this question, and submit the observations that follow, proposing, if we are so authorised, to submit later a series of detailed suggestions upon (a) the machinery required in this matter, and (b) the most vital question of all, as yet hardly touched upon by us, the policy that might he adopted with regard to prices and the use of credit power- by the State through the machinery to be proposed...

...The desire for friendship shown by -the rural population which composes eighty per cent of China's .people gives the lie to any representation that th* Chines* art anti-foreign...

...In this connection also should be mentioned immigration lews which discriminated against the Chines* as such, and in the administration of which methods are used by immigration officials which are further causes of friction...

...seiously or unconsciously, helped to stir up this feeling snd therefore on us lies the burden of seeking by eyery mesne in our power not merely to allay but rather to transform it...

...is required on different conditions than in the case of ordinary bank advsnces...

...2. The withdrawal of foreign troops from China...

...We foreigners are all of us her* as the guests of a nation noted for being acutely sensitive to the slightest suggestion of superiority and yet unusually open to a friendly approach...

...It stands to reason that a nation which has received auch perpetuity must in th* course of a long history have discovered values which the people <B>,aanmsm^nm*na^nh*nui dent, but it is not so clear the...

...Let us not encourage the Chinese in sn all prevslent idea that force is the only means the foreigner knows _ hows to employ and the only srgu-' ment to which he will listen...

...We are also convinced that this outbreak is not a recrudescence of the Boxer trouble, and that the landing of troops, far from its being a protection to foreign residents, keeps up and increases the friction and mutual distrust, and tends the more firmly to convince th* Chinese that force, or, as they call it, Imperialism, it dominant in the West...

...Considering it* hi*~ torical importance th* remainder it given...

...3. To secure for the community a larger share of the excessive profits now made by bankers and others in control of the credit resources of the country...

...When each esteems the other better than himself, when every man down to the poorest rickshaw puller is treated with the respect and consideration due.to the divine spark within him, the problem of the foreigner will be solved...

...To come next to the resentment at the attitude of individual foreigners towards Chinese...

...Nationalization of the Bank of England In consequence we recommend: 1. That as the powers exercised by the Bank of England are too great to be entrusted to a purely private concern, its constitution under the Bank Charter Act should, be revised so as to make it a public institution...

...Foreigner* Must Take First Step In the light of these facts we have now to realize that because of the failure of our forerunners here, and our own failures, we cannot afford to take a passive attitude in this'matter of friendship and fellowship...

...We Slso favor SUCh developments of the use of th* resources of th* Post Office and Trustee gave ing* Banks ss weald facilitate th« supply of credit particularly for pocrtr members of the com-munity...

...trisaeraw he* in th...

...3. The community once having taken the most essential step of nationalising the Bank of England, which 'will enable it to exercise a preponderating influence on credit policy, the Socialist program with regard to the.joint stock banks could then be developed and would at the outset have regard to the following important factors that already apply: (a) Parliament has always claimed the right to regulate banking in the public interest by statute...

...and until th«se treaties have been revised in the light of this new national consciousness which resents all infringement of China's sovereignty,* misunderstanding and ill-will must continually inereas...

...To this end the Committee submits the following observations as to the initial steps to be taken towards the adoption of a Socialist policy on banking and the national organisation of credit...

...If they would only take a minimum of pain* to acquaint themselves with the great testing <values in Chinese civilisation the old assumption that Chint ha* but little t* contribute to th* W*st would die a natural death...

...The statement follows: Foreigners In tic New China A, statement concerning the present situation, adopted June 10, 1925, by the English speaking branch of th* Peking Fellowship of Reconciliation...

...This would wipe out the share capital over s period of year...

...This is a fact of enormous importance...

...This will be more particularly the case in the period leading to the proposals we make in the next section...

...Moreover, not only in the choice but in the manner of financing, ultimate national advantages as well as immediate profits would, be given due weight...

...on the one hand, to take immediate steps toward th* abolition of extraterritoriality, tnd on the other, to remove all foreign troop* from China...