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The Empire and the century/Our Imperial Interests in Nearer and Further Asia

< The Empire and the century



India is the stronghold of British power in Asia, and the security and welfare of India must always be the paramount consideration that governs our Asiatic policy, and, indeed, one of the main considerations that govern the policy of the British Empire as a whole. None the less is it essential that we should bear in mind the large and complex interests which the enterprise of generations of Englishmen have created for us in Asia beyond the immediate frontiers of India. No doubt it is from India, or as a consequence of the position we hold in India, that British influence has been carried west and east along the highways of the seas into other, and, in some cases, geographically remote, regions of the Asiatic continent. But for our possession of India, it is, perhaps, questionable whether, or to what extent, we should have built up at the mouth of the Red Sea, in the Persian Gulf, on the waterways of Mesopotamia, and in the southern provinces of Persia westward of India, or eastward, at Singapore and in Siam, at Hong Kong and throughout the Far East important centres of British interest and influence, either strategical, political, or commercial. However that may be, they exist to-day, and they constitute essential factors of Imperial policy which are apt to receive less attention than they deserve. The object of the following rapid survey is to promote, however imperfectly, a better appreciation of their value, either on account of their intrinsic magnitude, or in their relation to the safety of India.

The Gates of the Red Sea.

Aden, which, for administrative purposes, is actually attached to the Bombay Presidency, needs only cursory mention. Its great fortified harbour, commanding the southern approach to the Red Sea, with the island of Perim right in the middle of the Straits of Bab-el-Mandeb and Sokotra Island off the Horn of Africa, forms, as it were, one of the outer gates of India which we are bound to retain under our control for the protection of the shortest and most important sea-route from the Metropolis to our great Indian dependency, as well as to the Far East and to our Australasian Colonies. Moreover, owing to their insular or quasi-insular position, these possessions lie almost beyond the reach of the disturbing influences at work in other parts of the Asiatic continent. Aden, of course, is situated on the mainland of Asia, but in so remote a comer of the Arabian peninsula that the troubles which arise from time to time with neighbouring tribes of Arabs, or even with Turkey when the Porte elects to extend to them its dubious protection and assert its somewhat shadowy rights of sovereignty in those regions, may be regarded merely as unpleasant incidents of little more than local importance.

The Persian Gulf.

Until a few years ago our position in the Persian Gulf might have seemed equally unassailable. At the cost of no small sacrifices of blood and treasure we had in the course of the nineteenth century restored peace and security to its waters, over which, until we began to show our flag, wholesale piracy had for generations run riot We had gradually taught the turbulent chiefs of the littoral to exchange their hereditary pursuits of slave-raiding and buccaneering for the less exciting, but more commendable, ventures of trade and of pearl-fishing. Some of them we had bound over by treaties, making them directly responsible to the Government of India, whose authority they pledged themselves to recognise. In other cases we had, with perhaps excessive generosity, acquiesced in the revival by Turkey and Persia of an effective authority which, to say the least, they could never have established without our sanction and cooperation. Needless to say, they accepted all the advantages without assuming the slightest share in the responsibilities of the new situation. To the present day British gunboats alone police the Gulf, and it is to British political officers that local differences are in most cases referred for arbitration and settlement. If the Persian Gulf and its ports have been thrown open, and remain open, to the trade and pacific enterprise of the whole world, it has been, and is still, due solely to the unceasing efforts by which, without claiming any exclusive privileges in return, we have established the Pax Britannica throughout the length and breadth of its inhospitable waters.

The Russian Advance in the Middle East.

Though the trade of the British Empire which passes through the Persian Gulf amounts now to a respectable sum—namely, between three and four millions sterling a year—it is not by their commercial value that our interests there can be adequately measured. Their importance at the present day is conditioned upon the pressure of those new forces which are making themselves felt all over Asia. As Lord Curzon observed in one of the most pregnant speeches he delivered during his memorable tenure of the Viceroyalty of India, the great Powers of the European continent are becoming, or visibly aim at becoming, also great Asiatic Powers. The advance of Russia in Western and Central Asia has already caused increasing anxiety to two or three generations of British and Anglo-Indian statesmen, and the mere precautionary measures it has imposed upon us, and especially upon our Indian dependency, have already proved a serious burden to our Imperial resources. The might of Russia has borne down from the north within the last decade upon the decrepit kingdom of Persia with irresistible weight It has, perhaps, been temporarily checked by the blows showered upon Russian prestige in the Far East, but the check can hardly be permanent. Financially, by the loans in which she has entangled the spendthrift Shah Muzaffer-ed-Din, and strategically by her military position, which envelops the Persian frontier from the Caucasus to the Hen Rud, from Tabriz to Meshed, Russia dominates Teheran; nor does this satisfy her ambition, which aims at displacing British influence not only in Northern, but in Central, and even in Southern Persia. The attack was in the first place openly directed against British trade. A lavish system of bounties and drawbacks to promote Russian commerce; a new tariff forced upon Persia for the exclusive benefit of Russian trade; a bank specially created on the lines of the Russo-Chinese Bank, and like the latter, to all intents and purposes a Department of the Russian Ministry of Finance; the reorganization of the Persian Customs Service by a staff of Belgian officials devoted to Russia's interests because dependent upon her favour; the construction of expensive roads in Northern Persia, combining commercial with strategical advantages; the appointment of enterprising consular officers all over Persia, working hand in hand with native agents, drilled in the school of General Kosakowsky's brigade of 'Persian' Cossacks—these were only some of the more salient features of her plan of campaign.

Perhaps the most significant indication of her policy was the engagement she wrung out of the Persian Government not to sanction the construction of any railways in Persian territory without her consent. The Russians themselves have made no secret of the object of this engagement. It was intended to cover the period during which railway construction in the Far East and in Central Asia would necessarily absorb their energies and their resources. Afterwards, Persia might be safely released from this eccentric engagement, on condition, of course, that she placed the construction of her railways in Russian hands. Now, Persia is, on the whole, a poor country; there are few railways that can be profitably built on a purely commercial basis, and those only the lines that would open up communication between North-Western and Central Persia and the Persian Gulf. It is in Southern and Central Persia, on the other hand, that our material interests are chiefly concentrated. We have opened up not only the navigation of the Karun, but an important trade-route from the head of its navigable waters to Isfahan. We have a practical monopoly of the carrying trade by sea to and from all the ports of the Gulf. The Imperial Bank of Persia—the principal institution of credit in the country—is a British bank created under a royal charter. One of the chief lines of telegraphic communication between India and Europe crosses the whole of Persia from the head of the Gulf, and the Indian Government, which constructed that line, is now building a second line direct from Beluchistan, which will connect with the first one at Kashan. These—and I have named only a few of the more important—are not inconsiderable interests, and if adequately supported, they are capable of great development. If Russia really wants commercial railways in Persia, there should therefore be no difficulty in arranging for British cooperation on a business basis. But if she wants to monopolize railway construction throughout Persia for purposes of conquest by railway, she can have but one goal in view, and that goal we cannot allow her to reach if we have any regard for the future safety of India. To tell the truth, she has not been at much pains to disguise her aims. For whilst she has been seeking to project her influence into Khorasan and Seistan with a view to a flanking movement round the Western borders of Afghanistan towards the North-West frontier of India, she has shown her hand scarcely less openly in the Persian Gulf itself The Variag, whose visit to Bunder Abbas a few years ago was the first outward and visible sign of Russia's designs upon a 'warm-water port' in the Gulf, was, it is true, sent to the bottom of the sea off Chemulpo within two days of the rupture between Russia and Japan, but her name can still be read blazoned in huge letters of white paint on the sun-scorched cliffs of the Gulf, and the Sheikh of Koweit can still tell the story of how her captain bade him note the Russian colours which she flew—'the colours which,' he boasted, 'will soon rule these seas.' The danger which she portended was never, it may be admitted, very serious, as far as sea-power was involved, and it has, at any rate, been indefinitely postponed by the events of which her own unhappy ending was the prelude. But it is by no means impossible—many of those who are in the best position to study Russian policy hold it to be probable—that if Russia resigns herself to being effectually headed off from the Pacific, she will at no distant date concentrate all her energies on the Middle East in order to fight her way to the Indian Ocean. It therefore behoves us, in the meantime, to make our position in Southern Persia and in the Gulf secure against the attack.

Germany and the Baghdad Railway.

We cannot, moreover, remain blind to the fact that Russia is no longer the only European power that turns covetous eyes towards the Persian Gulf. The German conquest of Asia Minor by railway may for the present claim to mean nothing more than a policy of 'peaceful penetration.' But the methods of German diplomacy at Constantinople itself, and of German Welt-politik in other parts of the world, bid us be careful how we accept German assurances with regard to the Baghdad Railway. In the first place, it must be borne in mind that the result if not the object, of German railway policy in Anatolia, has been effectually to strangle British railway enterprise in that region. The story of the Smyrna-Aidin and Smyrna-Cassaba Railways, which, under British auspices, first opened up the country, affords conclusive evidence on that point. Nor should we overlook the important commercial interests we have to safeguard in the valley of the Tigris and Euphrates, where hitherto they have encountered no hindrance save Turkish obstruction and misgovernment. Our trade with Mesopotamia is at present an entirely seaborne trade viâ the Persian Gulf, and the possible effects of railway competition are at least a factor to be carefully considered. Again, there is the larger and far more important question of the expediency of allowing a great European Power to obtain facilities of uncontrolled access to the Persian Gulf. It will be alleged, no doubt, in the first instance, that those facilities are required solely for commercial purposes, just as Russia alleged originally with regard to the Manchurian Railway, and as Germany alleges in Shantung; but we know how that sort of claim paved the way, in the former case, for political and military supremacy, and, in the latter case, is still being shaped towards economic monopoly and administrative control. Fortunately, with regard to the Baghdad Railway, Great Britain still holds the trump cards in her hand. Germany is hardly yet in a position to carry out this great undertaking without British cooperation, and there are good grounds for believing that she requires our cooperation for political as well as for financial reasons. It is much easier to paint 'Constantinople—Baghdad' in large letters on the rolling-stock of the Anatolian Railway than to raise in Germany the millions required for the completion of the line, especially now that the fat sections of the line are finished, and the lean sections have to be built, which cannot for a long time to come, if ever, pay their expenses.

But that is not all. The influence of Germany at Constantinople is unquestionably in present circumstances very great The fact that she obtained the Baghdad concession is a proof of it But it is based mainly upon the all-powerful favour of the Sultan, whom the Emperor William II. has spared no efforts to conciliate. Turkey trembles before the Sultan, and hates him. Even Abdul Hamid cannot live for ever; and when he disappears the reaction which is bound to follow will seriously affect Germany's position, for by the very methods she has used to ingratiate herself at Yeldiz Kiosk, she has incurred the distrust and animosity of all the best elements in Turkey. British influence, on the other hand, which outside Yeldiz Kiosk is still considerable, will then revive, and it would be no small boon for Germany, when that hour comes, to have British interests tied up with German interests in one of the biggest ventures into which William II. has launched her. It does not, however, follow that, because there were overwhelming objections to the terms upon which Germany invited British cooperation two years ago, we must play dog-in-the-manger, and set our face at all costs against the construction of the line. What we have to guard against is that a line debouching on to the Persian Gulf shall not assume the character of a Manchurian or even of a Shantung Railway, with a Port Arthur or a Kiao-chau as a terminus. The most effectual guarantee against such a contingency, and one to which Germany's consent should be readily given if she is really innocent of any political arriere-pensée, is that the eastern section of the great trunk railway—say from the Gulf to Baghdad, together with the proposed branch on to the Persian frontier—should be built, administered, and worked by this country. It is a demand we are fully entitled to make, for the valley of the Tigris and the Euphrates has been opened up exclusively by British enterprise. Its foreign trade is almost entirely in British hands, and we hold, and intend to retain, the command of the seas which give access to it. Sir William Willcocks, who has recently investigated the subject on the spot, tells us, with the authority of his great experience in India and in Egypt, that it would be an easy task for modern engineering science to irrigate the plains of Mesopotamia, and convert them once more into flourishing granaries, as in the days of yore. In the redundant populations of India we have ready to hand the material required there for purposes both of preliminary labour and ulterior settlement. There are, therefore, excellent reasons of a positive as well as of a negative order why we should claim recognition of the predominant interests we have in the construction of a railway opening up those regions.

With regard to our position in the Persian Gulf, the policy of this country has been laid down on sound and definite lines in the declaration made two years ago by Lord Lansdowne: 'We' (i.e., His Majesty's Government) 'should regard the establishment of a naval base or of a fortified port in the Persian Gulf by any power as a very grave menace to British interests, which we should resist with all the means at our disposal.' But as Captain Mahan, who has written with great weight on the broader issues this question involves for an Empire which rests upon sea-power, has very forcibly observed: 'Naval control is a very imperfect instrument, unless supported and reinforced by the shores on which it acts. Its corollary, therefore, is to attach the inhabitants to the same interests.' We have ample means of doing so from such a base as we possess in the Persian Gulf; and if we make good and timely use of them, we may yet convert our position in that part of the Middle East from a source of weakness into a bulwark of Imperial strength.

The North-West and North-East Frontiers of India.

Questions which concern essentially and almost exclusively the strategical defence of India do not come within the scope of this article, and I therefore leave it to others to deal with the problems connected with Afghanistan and the Pamirs, Chinese Turkestan and Tibet, which, however large and important, are mainly problems of frontier policy. For the present, at any rate, there is no room in those inhospitable regions for the commercial activity and individual enterprise which in other parts of Asia impart a living force and a concrete value to British interests and British influence. Before these again find any adequate field, we must pass from Southern Persia right along the great mountain walls of Northern Hindustan to where Upper Burma marches with China and Siam, and to the wonderful peninsula which stretches up to them northwards from the Straits of Malacca.

Western China and Siam.

Though one of the great overland routes into China leads from Bhamo, in Upper Burma, through Yun-nan to the fertile and populous province of Sze-chuan, in the upper valley of the Yang-Tsze, it can never become an important highway for trade until railway communication is established; and notwithstanding the strategical and commercial advantages of such a line, the difficulties and cost of construction are so great, owing to the natural obstacles presented by a succession of deep valleys and rugged mountains running at right angles to the only possible tracé that the Indian Government has finally decided against its feasibility, and private enterprise will presumably be even more reluctant to face so gigantic an undertaking. To the south dense tropical forests, covering the recesses of a little-known country, stretch from Burma into the upper valley of the Menam, and for many years to come it is chiefly through the southern ports, and especially through Bangkok, that the natural avenues of access to Siam will lie. Fortunately, the specific agreements concluded between this country and France with regard to Siam, as well as the general understanding which has placed Anglo-French relations on a new footing of cordiality and mutual confidence, have removed the danger of international friction in the valley of the Menam, as well as in that of the Mekong, where the Shan States, under British protection, are now separated only by the river from the western provinces of French Indo-China. That a Siamese loan on very reasonable terms has been issued this year with great success, under the joint auspices of French and British financial houses, is both a tribute to the growing prosperity of Siam and a proof of the genuine desire on both sides of the Channel for friendly cooperation in what was a few years ago a dangerous arena of jealousy and strife. It was indeed high time that we and the French composed our differences, for whilst we were fighting over shadows, Germany, as the tertius gaudens, was possessing herself of the substance. Railway construction was becoming a German monopoly, and the German flag was taking the first place, which had so long been undisputedly ours, in Siamese ports. In fact, in 1908 more than half the tonnage entered and cleared at Bangkok was German.

Singapore and the Malay Peninsula.

It is, however, still with Singapore that the prosperity of Bangkok is, and must remain, most intimately connected. For Singapore, owing to its splendid position on the Straits of Malacca and to the magnificent hinterland opened up in the Federated Malay States, is the great emporium of South-Eastern Asia, and, indeed, one of the corner-stones of our Empire. Commanding the chief ocean highway to the Far East, its fortified harbour, with dockyards and wharves and coal-stores, is a naval station of the first importance, and one of the busiest commercial ports in the whole world. The shipping entered and cleared at Singapore, which, together with Penang and Malacca, constitutes the Colony officially known as the Straits Settlements, amounted, in 1908, to nearly 18,500,000 tons exclusive of native craft—an amount second only to Hong Kong and London in the shipping returns of the Empire. In the same years the value of exports and imports (exclusive of inter-Settlement trade) totalled, roughly, £32,000,000 and £39,000,000 respectively, or considerably more than double what they had been a decade ago. Much of this prosperity no doubt is due to the development of the Federated Malay States, which occupy a large portion of the Malay Peninsula, and constitute one of the finest estates in the whole length and breadth of the Empire, yielding in abundance not only all the fruits of a fertile tropical soil, but also great mineral wealth. It has been developed almost entirely within the last twenty years, and, thanks in no small measure to the genius of Sir Frank Swettenham, a born Empire-builder, such as our race seems almost alone able to bring forth, the Federated Malay States show already a trade of some £12,000,000 exports and imports and a revenue of £2,000,000, and they own over 850 miles of railway, built entirely out of current revenue. Whether British North Borneo and the adjoining Protectorates of Brunei and Sarawak, which lie in the same latitude some 500 miles further east, will ever rival Malaya may be doubted, though they have many natural features in common, and the excellent work done by Rajah Brooke in Sarawak deserves more than mere honourable mention. Space, however, does not allow me to do more than refer incidentally to Borneo, where the extension of Rajah Brooke's authority, at any rate to Brunei, seems to be urgently needed.

Hong Kong and the Far East.

The Malayan Peninsula, notwithstanding its great intrinsic value, is itself only the stepping-stone from India to the Far East. Not till Hong Kong is reached does one stand actually on the threshold of a region where we have built up interests of immense actual and potential importance which have made us a power in the Northern Pacific, and given us a share in the future destinies of Asia largely distinct from that conferred upon us by our position in India. Hong Kong itself, which we have transformed, since we first occupied it sixty years ago, from a bare and almost untenanted rock into a magnificent clearing-house for the trade of the Far East, with a population of 800,000 souls, with a fortified and well-equipped naval station, with a splendid natural harbour and excellent dock accommodation, scarcely, however, yet adequate to the needs of a port where the annual entries and clearances (nearly 22,000,000 tons in 1908) represent a larger tonnage of ocean shipping than any other port in the Empire, not excepting London—Hong Kong, as a British possession, exists solely as the warden of the British settlements and markets in the Far East.

The Opening up of China.

The first successful attempts to open up intercourse with China were made from India. In the enterprising days of 'Good Queen Bess' three ships had, it is true, been despatched, in charge of one Benjamin Wood, to convey letters from Elizabeth to the Emperor Wanleh, the last of the great rulers of the Ming Dynasty. But Wood's expedition came to grief on the way, and, though some forty years later, in 1637, a squadron of four British vessels under Captain Weddell actually reached Canton, and by the preliminary argument of a three hours' bombardment appear to have temporarily convinced the Chinese of the advantages of international trade, the results achieved were not of a permanent character. It was the East India Company that, under a charter from the British Crown, first established, in 1664, and maintained thereafter for more than a century and a half, regular commercial relations, though often by very irregular methods, with the Middle Kingdom. The China trade, centred at Canton, remained an actual monopoly of the Company until 1884. But by that time it had come to be regarded as one of the most important of British oversea enterprises, and it was for its preservation and extension that the British Government then determined to assume direct control over our relations with the Chinese Empire, and that the two China wars were afterwards waged by which the wall of Chinese isolation was irrevocably breached. The Treaty of Nanking of 1842, and the Treaty of Tientsin of 1858 (which was not, however, ratified until we occupied Peking in 1860), constituted, until quite recently, the fundamental charters of Western intercourse with China. The action which we had initiated served also as a precedent for similar intervention—though with unexpectedly different results—in Japan. It is unnecessary, for my purpose, to dwell at any length upon the history of our relations with the Far East, or to investigate closely the merits of our policy, in those earlier phases. What I am concerned with is the results that were achieved, and in this country their magnitude seems seldom to receive adequate recognition.

The Present and Potential Value of the Chinese Markets.

It is now universally admitted that no country in the world possesses greater natural resources than the vast Empire of China, or offers, owing to its teeming and industrious population, a greater potential field for foreign commercial and industrial enterprise. Those resources have hardly yet begun to be developed, and we have touched but the fringe of that field. Yet, according to the official returns of the Chinese Imperial Maritime Customs, the foreign trade of China amounted, in 1908,[1] to a value of 326,739,133 H.Tls.[2] as to imports, and 214,352,467 H.Tls. as to exports, or, together, 540,691,600 H.Tls. (roughly, £70,000,000). Of the imports, 50,603,772 H.Tls. came direct from Great Britain, 33,856,203 H.Tls. direct from India, and 136,520,458 H.Tls. from Hong Kong—a very large proportion of the latter being transhipments from ports of the British Empire. As to exports. Great Britain took 10,024,095 H.Tls.; India, 1,944,043 H.Tls.; and Hong Kong, 89,195,605 H.Tls. The interest of the British Empire in the foreign trade of China amounted, therefore, approximately to over £40,000,000, or, in other words, to four-sevenths of the whole. To take only one staple of British industry, China imported, in 1908, £5,800,244 worth of British cottons. Of the 57,290,389 tons of shipping, including Chinese shipping, entered and cleared at Chinese ports in 1908, 28,122,987 tons, or nearly half, were British. Of railways built, in construction, or projected in China—though British enterprise has been heavily handicapped in this direction—concessions for 683 miles (93 already open for traffic at the end of 1904) are in exclusively British hands, and British interests are represented as to one-third in an Anglo-German concession for 810 miles of railway connecting Shantung with the Yang-Tsze Valley. Moreover, British capital and British control have a very large share in the Northern Chinese Railway system, consisting of 580 miles, already completed, of which Peking, Tientsin, and Niuchwang are the chief termini. Of the very considerable British interests already engaged in the development of the enormous mineral wealth of China, some idea may be gathered from the fact that the shares of the 'Pekin Syndicate' and its offshoot, the 'Pekin Shansi,' which have obtained important concessions for working the coal-fields and petroleum deposits of Shansi and of part of the province of Houan, stand to-day on the London Stock Exchange at quotations representing a valuation of over £2,000,000. The coal-fields of China, it must be remembered, have been estimated to be sufficient to supply the whole world for 3,000 years; yet, according to Mr. Brenan, late British Consul-General in Shanghai, China is still importing coal from other countries to the extent of 1,400,000 tons per annum, and at a cost of £1,000,000. Nor does coal represent by any means the only form of mineral wealth hidden below the surface of Chinese soil. Last, but not least, we must bear in mind the large amount of British capital—over £22,000,000—invested in Chinese Government loans over and above the share of the war indemnity owing to this country under the terms of the peace protocol, signed at Peking in 1901 after the repression of the Boxer Movement.

Enormous as are these material interests already represented by British capital invested in China and the actual volume of British trade with China, they must, however, pale into insignificance compared with the value of our potential share in the development of that vast Empire. To form an estimate of its capacities, we have only to compare the growth of foreign trade in Japan under an enlightened system of government and liberal institutions with the growth of foreign trade in China under the obstructive misrule of Peking and the obsolete methods of the Chinese authorities all over the country. Japan has barely one-eighth of the population of China, and her people, though more alert, are not more industrious; her natural resources are incomparably smaller. Yet during the last two decades, whilst the foreign trade of China has only increased from, roughly, £48,600,000 (in 1888) to about £70,000,000 (in 1908), the foreign trade of Japan has increased during the same period from a little over £9,000,000 to over £60,500,000, or eight and a half fold.[3] Even ten years ago the foreign trade of Japan was barely half that of China; to-day it is only by one-seventh inferior to it—in other words, the 50,000,000 inhabitants of Japan now deal with foreign countries at the rate of about 24 shillings per head, while the 850,000,000 inhabitants of China still deal with foreign countries only at the rate of less than 4 shillings per head.

We cannot hope for any transformation of China similar to that we have witnessed in Japan, for the ruling classes in China lack those elements of patriotism and enlightenment which alone rendered possible such an evolution as Japan has accomplished. Nevertheless, things are moving, even in China. The commercial genius of the Chinese people will not be denied, let the Mandarins hamper it as they may. The obstinate conservatism of official China cannot in the long-run keep the Chinese markets closed against the commercial enterprise of this country. That is a question merely of time and patience. The real danger that threatens it is the policy of economic exclusion based on political ascendancy, of which Russia and Germany have already given us a foretaste in Manchuria and Shantung.

The British Settlements in China.

I have dealt so far with various British interests which can be more or less closely reduced to terms of money. Not so, however, the interests of another and more complex order represented by the British communities that have struck root in the 'Treaty Ports' of China. Yet they constitute in many ways an Imperial asset of a still higher order. In virtue of our treaties with the Chinese Empire, British subjects have right of access for purposes of trade and residence to thirty-five towns in China, which, by an extension of an originally accurate description, are still technically designated as 'Treaty Ports, even where they are situated far inland, away both from the sea and from the great navigable rivers. Under treaty, foreigners residing in certain areas set apart as 'settlements' or 'concessions'—a distinction upon which it is needless here to enter—enjoy rights and privileges of a far-reaching character. The British communities, more especially, being the oldest and the most enterprising, have thus been free to put into practice in the more important centres those methods of self-government which are characteristic of our race. At Canton, at Tientsin, at Hankow, at Niuchwang, and, above all, at Shanghai, flourishing settlements have grown up, largely governed by their own laws, and differentiated in degree rather than in kind, by treaty limitations, from British Colonies in the ordinary acceptation of the term. Shanghai has well earned for itself the title of the 'Model Settlement,' and may therefore be taken as a pre-eminent type of all other settlements of a similar or kindred order in China. Except in the matter of political sovereignty, Shanghai is to all intents and purposes as essentially a British city as Hong Kong or Singapore. It comprises, it is true, a native city subject exclusively to Chinese administration, and therefore squalid and decaying, and a French settlement subject to special municipal laws framed in the somewhat narrow spirit of French bureaucracy, which have served only to hamper its prosperity. But the real Shanghai, the great, thriving, bustling emporium of commerce and industry in the Far East, is the so-called 'Mixed Settlement,' which is so entirely dominated by the British element that, although cosmopolitan in theory, it is a thoroughly British city. Of the foreign, i.e., non-Chinese, population, which is increasing by leaps and bounds, two-thirds are British subjects. Its magnificent quays, its stately public buildings, its docks and warehouses and banks, its goodly private houses, its churches and hospitals, its clubs and theatre and race-course and golf-links, all testify to the supremacy of the Anglo-Saxon spirit, which is equally reflected in the constitution and the methods of the municipal authority that governs this great city. The municipality of Shanghai is a representative body elected by and from among the 'land-renters' or qualified citizens. This modest body, consisting of ten members, is practically responsible for the good government and security of a 'settlement' with a population of close upon 400,000 souls within an area of nearly 9 square miles. The rates and taxes which it levies provide a revenue of about £200,000, which defrays the expenses of a mixed body of police—European and Asiatic—of a volunteer corps about 700 strong, and of an efficient fire-brigade, besides different administrative departments, the most important of which are, perhaps, those of public works and public health. Of the wealth of the community, whose interests are committed to this municipal body, some slight idea may be gathered from the fact that the land tax of 5 per mill. is levied on property assessed at a value in the aggregate of about £9,000,000, and the general rate on house property—10 per cent, on actual or assessed rentals—represents nearly another £10,000,000 worth of real property. Of the enormous amount of capital invested in trade, finance, and industry, centred at Shanghai, it is difficult to frame an exact estimate; but it may safely be computed at over £200,000,000. More than half the import and export trade of China passes the port of Shanghai, to the value, in 1908, of about £40,000,000, and it is the chief centre of the growing native cotton industry.

Though no other 'settlement' or 'concession' in China approaches Shanghai in importance, it would be easy to show that many others reproduce on a smaller scale results similar to those which British energy and the British aptitude for self-government have achieved in the 'Model Settlement.' I have dwelt at some length on this aspect of British interests in China because it is not easily realized by those who have not had an opportunity of seeing with their own eyes these robust offshoots of the British tree transplanted with all their indigenous vitality on to Chinese soil. The conditions under which they have grown up are, moreover, changing so rapidly that the methods which have hitherto sufficed for their protection are breaking down under the pressure of new forces.

The Decline of British Influence in the Far East.

Until a little more than ten years ago—i.e., until the war between China and Japan—our position in the Far East was one of undisputed ascendancy. The preponderancy of our commerce and shipping was overwhelming; our settlements in the Treaty Ports open to foreign trade set an example of orderly self-government and prosperity; our language had become the accepted lingua franca of the coast and the chief medium of intercourse between the more educated natives and the world of Western thought; and the commanding naval force we maintained in the China seas, resting on such strategical bases as Hong Kong and Singapore, amply sustained our prestige as a great Asiatic Empire. Our diplomacy, it is true, conforming to the laissez-faire attitude of the British Government, often hesitated to push these advantages, and, in China especially, the innate obstructiveness of the Peking Government and the awakening rivalry of European competitors were often treated with improvident supineness. But the enterprise of our fellow-countrymen held the field in spite of this handicap. With the disclosure of the unfathomed weakness of the Chinese Empire in its struggle with Japan, and with the aggressive intervention of Russia, France, and Germany against Japan at the close of the war, the whole situation was, within a brief twelve-month, completely revolutionized to our detriment. We had failed to avert the war; we had failed to stop it; and in the end we had failed to prevent a compulsory settlement being effected by others which we ourselves avowedly disapproved, but did not venture to oppose. We could no longer pretend to any primacy of influence either at Peking or at Tokio. We had obstinately closed our eyes to the development of Russia's power in Eastern Asia ever since Ignatieff snatched the Maritime Province from China under cover of the Anglo-French Expedition to Peking; and just as, in spite of Khiva and Geök Tepe and Merv, we only woke up to the full significance of Russia's advance in the Middle East when we found her securely entrenched on the frontiers of Afghanistan, so it was only when she had got the Chinese Government in her grip that we began suddenly to realize the meaning of the naval station she had created at Vladivostok, 'the Ruler of the East,' and of the 5,000 miles of railway she was building across Siberia in order to bring her European possessions mto close contact with her new base on the Pacific. Nor had Russia appeared alone on the scene: she had brought France and Germany in her train; and though the former was content merely to nibble tentatively at the southern extremities of the huge 'yellow corpse,' Germany, with the voracity of a youthful appetite in such matters, lost no time in snatching at one of the choicest morsels. The seizure of Kiao-chau by Germany served as a welcome excuse for Russia to seize Port Arthur and Talienwan, and then the absorption of the whole of Manchuria became merely a question of time. First, the Siberian Railway had to be deflected to the long-coveted warm-water port,' and military precautions taken for its safety; then the Boxer Movement had to be stamped out by armed occupation, and that occupation could not, it was contended, be terminated without 'guarantees,' of which the nature was constantly modified so as to exclude finality.

The story of British policy in China during that eventful period, from 1895 down to 1902, will not constitute a very creditable chapter in our annals. It was a period in which painful exhibitions of weakness alternated with needlessly strong language, and vigorous protests were invariably followed by 'graceful' concessions. We seemed to have borrowed the most futile leaf out of the book of China's own statecraft, and to have no other aim than to save our faces by the most puerile devices. Thus, Wei-Hai-Wei, which we took with a great flourish of trumpets as a counterpoise to Port Arthur, dwindled down ultimately into a pleasant sanatorium, or at most a useful dépôt for our ships. We juggled for a time with 'spheres of influence,' or, 'of interest' until the hollowness of these pretensions grew as wearisome as a worn-out joke. Russia in Manchuria, and Germany in Shantung, gave us plainly to understand that their motto was: 'What is mine is mine, but what is yours is not by any means your own.' We tried to arrive at a direct understanding with Russia, but the negotiations were gradually watered down to an indifferent agreement with regard to railways in the North, the value of which Russia illustrated in her own way by a bold attempt to retain possession of the Peking-Shanhaikwan line after the Boxer rising. We then concluded a formal convention with Germany, which she promptly interpreted in her own way as having no force with regard to Manchuria, but very peculiar force with regard to the valley of the Yang-Tsze. From the wretched Chinese Government we obtained 'assurances' galore and an abundant promise of 'open ports' and facilities for inland navigation and concessions for railways. But whilst German railways materialized in Shantung and Russian railways in Manchuria, and so-called Belgian railways, under the auspices of Franco-Russian diplomacy, worked down from Peking into the Yang-Tsze Valley at Hankow—i.e., into the heart of our own much-vaunted 'sphere'—most of the achievements of British diplomacy remained mere paper, and, for what they were worth, might have gone straight into the waste-paper basket. In the midst of all these perplexities there had come the South African War, and it had not only absorbed our energies, but it had effectually diverted public attention from the imbroglio, and even the creditable part played by our Indian troops in the relief of the Peking Legations only temporarily revived it.

The Anglo-Japanese Agreement of 1902.

British interests in the Far East seemed to be drifting rapidly towards a débâcle when the situation was suddenly transformed by the conclusion of the Anglo-Japanese Agreement of 1902. In spite of many blunders and much futile groping about for mere palliatives, the British Government had fortunately never lost sight of the great issues involved in the Far Eastern question. The failure of the various expedients to which they had had recourse had in itself demonstrated the necessity of working out the solution on entirely fresh lines, based on the fullest recognition of a new and most important factor. That factor was Japan, and, to the credit of British statesmanship be it said, this country was the first to appreciate its value.

The Rise of Japan.

The future historian will not improbably give to the evolution of Japan in the era of Meiji the foremost place amongst the great events of the second half of the nineteenth century. Only fifty-one years have even now elapsed since the nations of the West, applying to Japan the same forceful methods that had already been applied to China, compelled her most reluctantly to reopen to foreign intercourse the doors which she had kept hermetically sealed for two hundred years against the outer world. Happily for Japan, isolation had not meant in her case, as it had in that of China, stagnation and degeneracy. She had preserved with her pristine forms of society the pristine virtues of a race imbued with great ideals of self-sacrifice and devotion to the common weal, and at the same time endowed with great intellectual capacity. The extraordinary rapidity with which, under the guidance of her ruling classes, she borrowed from the alien civilization of the West its scientific and mechanical equipment, together with many of its outward forms and methods, was so unprecedented a phenomenon that it provoked at first nothing but scepticism, and, from superficial observers, derision. The relations between this country and Japan had, indeed, assumed a very friendly character as soon as the old reactionary forces which resented foreign intrusion had been finally overcome. It was a great Englishman, Sir Harry Parkes, who first unravelled the tangled thread of Western diplomacy in Japan, and the makers of modern Japan soon realized that they had no more sincere and enlightened well-wisher than the plain-spoken British Minister who represented his country in Tokio from 1865 to 1888. But there was one unfortunate circumstance which militated for a long time against a generous recognition in this as in other European countries of the real character of Japan. Most of the British residents were engaged in trade, and lived in the treaty ports set apart under our earlier treaties, as in China, for foreign settlement. Thus it happened that they were brought almost exclusively into contact with the Japanese trading-class, a class which, under the old feudal system, occupied a very low place in the social hierarchy, and was the last to adapt its methods to the new conditions of Western intercourse. The British merchants in Japan were, therefore, apt not merely to compare the Japanese merchant unfavourably with the same class in China—where it represents per contra the healthiest and most intelligent element in the social organism—but also to judge the whole of Japan equally unfavourably by the light of their limited experience. Sounder views, nevertheless, prevailed in the long run, and in spite of considerable opposition from the British communities in Japan, Lord Rosebery's Government had the courage to admit, even before the signal proof of national efficiency she gave to the world in the course of her war against China, that Japan was entitled to be released from the disabilities in matters of international intercourse, which it has been the custom of Western Powers to impose upon Oriental nations on a lower plane of civilization. The revision of the British treaties with Japan in 1894, and our renunciation of the special privileges of extra-territoriality and of exclusive jurisdiction over British subjects, were fully justified by the event. The social evolution of Japan progressed steadily and quickly—so quickly, indeed, that her enemies still remained blind to it until they suddenly found themselves confronted with the stem reality they had so lightly challenged.

The Community of British and Japanese Interests.

Meanwhile our refusal to join in the coercion of Japan after the Treaty of Shimonoseki had been the first step towards a political rapprochement, to which Japan made willing and practical response by lending at our instance, her invaluable cooperation, as prompt as it was efficient, in the relief of the Peking Legations and the restoration of order in Northern China in 1900. The more openly the aggressive policy of other Powers in the Far East stood revealed, the more fully did Great Britain and Japan come to realize their own community of interests. Japan had become in contact with the West a great commercial and industrial power. I have already alluded incidentally to the growth of her foreign trade. Twenty years ago it did not amount to £10,000,000; in 1893 it had increased to about £30,000,000, and in 1903 it reached over £60,000,000. It had grown more than sixfold within two decades. This immense expansion of foreign trade has been only commensurate with the economic development of Japan's resources in every other direction. The tonnage of her shipping, excluding junks, grew from 225,000 tons in 1893 to nearly 1,000,000 tons in 1903. During the same period her railway system, built entirely out of her own resources, grew from under 2,000 to over 4,500 miles; the production of silk, cotton, and other textiles was trebled; the number of male and female operatives employed in her cotton-mills alone increased from 25,000 to 72,000; and what, perhaps, most graphically illustrates the general growth of commercial activity, the amount of bills cleared at various clearing-houses rose from about £21,000,000 to over £350,000,000. At the same time the ordinary revenue of the State grew from £8,500,000 to nearly £22,000,000 in the last financial year before the war; and the population of the country, which at the first census in 1872 was only 33,000,000, has steadily increased, until it now exceeds 50,000,000 souls (including Formosa).

In these circumstances the preservation of foreign markets tor her trade and of a convenient outlet for her redundant population gradually assumed as great an importance in the eyes of Japanese statesmen as it has long possessed in the eyes of British statesmen. It was naturally towards China that Japan looked for the former, and towards Korea for the latter. She thus necessarily found herself brought into line with the Powers whose policy was that of the 'open door,' as against those whose object was to create for their own benefit zones of political ascendancy which were also to be zones of economic monopoly. To that extent she could count on the moral support of the United States as well as of Great Britain. But she wanted more than merely moral support. For if her economic interests were threatened by the general trend of events in China, her very security as a nation was threatened by Russia's ambitions. Not content merely to entrench herself in Manchuria and to dominate Peking from the Great Wall, Russia was already clutching at Korea, and casting about for another Port Arthur at Masampo, which faces the Japanese islands across the now famous Tsushima Straits. The advance of Russia in the Far East was an even greater menace to the safety of Japan than the advance of the same Power in the Middle East was to the safety of India. The community of commercial interests in China was thus reinforced by a community of political interests, and of both the Anglo-Japanese Agreement of 1902 merely constituted the logical corollary and the public expression.

The Japanese Alliance opened up a new era in the history not only of our relations with the Far East, but of our position as an Asiatic Empire. It showed not only that we had no intention of surrendering the great commercial interests bound up with the preservation of China as a field of industrial enterprise open to all comers, but also that we realized the fundamental unity of the Asiatic problem, whether it be looked at from Teheran or from the North-West Frontier, from Peking or from Seoul. It cannot be rightfully alleged that either Great Britain or Japan have sought to deny to Russia an ample sphere of expansion in Asia. The conciliatory spirit in which we have negotiated with her in regard to a whole series of Central Asian questions, and the conspicuous moderation of the proposals put forward by Japan in St. Petersburg before the outbreak of war, bear conclusive evidence to the contrary. Neither in England nor in Japan has the desirability of a general understanding with Russia on a broad and liberal basis lacked recognition. But it takes two to make an understanding, just as it takes two to make a quarrel, and Russia never exhibited any genuine disposition to respond to the advances made to her. Had she listened to the overtures of Lord Salisbury, even after the Port Arthur episode in 1898, or to those of Marquis Ito, when he travelled to St. Petersburg at the end of 1901, the Anglo-Japanese Agreement might never have come to pass. But she chose on both occasions to reject the proffered hand, and the methods and purpose of her public policy from Persia to Korea were more and more openly directed towards the goal which some of her most influential spokesmen have repeatedly proclaimed—namely, that of exclusive domination in Asia, which is held to be her appointed destiny or mission.

That is a claim which Great Britain and Japan are equally bound in self-defence to traverse. Eastern Asia being the point of most urgent danger, it was there that the alliance of Great Britain and Japan first took effect. That it did not suffice to avert war is no reflection upon the foresight and statesmanship of those who concluded the Anglo-Japanese Agreement For if the existence of that agreement failed to restrain the ambitions of Russia within limits which she might have peacefully compassed, is it conceivable that they would have been more effectually restrained by the protests of Japan, had she continued to stand absolutely alone and unsupported? Is it not obvious, on the contrary, that Russia would have forced matters even more relentlessly to an issue? In that case Japan would either have been driven to recognise the paramount power of Russia in the Far East, or, as from what we know of the Japanese spirit is far more probable, she would have accepted the challenge, with the heavy odds of a possible and even probable revival of the old coalition of 1895 against her. For, failing such a public pledge as the Anglo-Japanese Agreement contained that Great Britain would keep the ring, France would hardly have been able to resist the solicitations of her ally, and Germany would assuredly not have missed the opportunity of placing her 'mailed fist' at the service of her Eastern neighbour in return for future favours. The Anglo-Japanese Agreement, by restoring even in this negative shape the balance of power in Asia, localized the war, and enabled Japan to concentrate all her energies upon its prosecution without fear of interference from other quarters, with the result that she has carried it to a successful conclusion, and that the aggressive tendencies of Russia in the Far East have received a severe check.

The Renewal and Extension of the Anglo-Japanese Alliance.

Long before the war itself had come to an end, both British and Japanese statesmen were naturally compelled to consider the question of the renewal of an alliance which had rendered such good service, not only to the interests of both the contracting parties, but to the peace of the whole world. The Russian armies had been repeatedly defeated, the Russian fleets annihilated; but however protracted might be the struggle, however unbroken the course of Japanese victories, it was not to be for a moment expected, nor indeed was it to be desired, that the might of Russia, who is a great European as well as a great Asiatic power, should be crushed. It would have been rash even to assume that her ambitions would be permanently arrested even in the Far East, and still less in other parts of Asia. Nothing would, at any rate, have tended more than a dissolution of the alliance between the two Powers who represent the forces of conservation in Asia, to revive the hopes of those who represent the forces of disintegration.

In these circumstances the British and Japanese Governments wisely decided that the true guarantee for the maintenance of peace in the future was not to loosen but to strengthen the ties uniting the two countries. As the result of their friendly consultations a new Agreement was signed in London on August 12 last. Its purpose, like that of the Agreement of 1902, is purely defensive, but it brings both Powers immediately into line if the interests which it is designed to protect are attacked by another Power. It is concluded for a term of ten years instead of five; and it covers not only the Far East, but the whole sphere of British and Japanese interests in Asia from the Pacific to the Indian Ocean, and opposes a practically insuperable barrier to the restless ambitions which have disturbed the peace of the Far East ever since the adventures of Kiao-chau and Port Arthur, and still threaten, as they have done for generations past, the peace of the Middle East.

This alliance will fulfil in Asia the same purposes which the Dual Alliance was originally intended to fulfil in Europe, and no more than the latter can it be rightly regarded as an aggressive alliance. It will be a powerful combination for the maintenance of the status quo in Asia; and Russia, one may even hope, will in the face of it, gradually be brought to a more reasonable frame of mind, and, it may be added, more in consonance with her own interests as a great European Power, and with those of her continental ally. There must be many Russians even now who realize with scarcely less consternation than it is already realized in France how disastrously the Asiatic adventures into which Russia has wantonly plunged have weakened her power in Europe. It is surely not unreasonable to hope that, the hour of recueillement having come in St. Petersburg, there may be statesmen there who will recognise that there is and always will be room for an understanding with both England and Japan in regard to Asiatic affairs as conducive to the higher interests of all parties as the understandings which have recently taken place between France and England, and between France and Italy. This is, however, a digression. Great Britain and Japan had to look in the first place to the protection of their own interests, and there could be no doubt as to the direction in which it pointed. The chief weakness of the British position in Asia is due to the fact that, whereas our strength resides mainly in our naval power, we can no longer rely mainly on naval power for the defence of our Asiatic interests; and, on the other hand, the experience of the present war shows that, even against Russia alone, the naval power of Japan had to be strained to the uttermost, and would scarcely have proved adequate against a coalition of Powers. In combination, however. Great Britain and Japan will each contribute what the other lacks, to the common benefit of both.


To conclude. It is doubtful whether our position in India itself could be permanently safeguarded by trusting merely to some given line of strategic frontiers, and sacrificing the great interests which generations of Englishmen have built up beyond them in both nearer and further Asia. Prestige is a word which may be easily abused, and be turned to derision. But it represents, nevertheless, a living force, especially in the East, and we should soon discover to our cost what it means in India if we were to shrink from the responsibilities inseparable from our position as one of the great Asiatic Powers in the widest sense of the term. At home, too, the loss of that position would speedily be felt by our working-classes not less than by their employers, for whether we cling to the practice of what is called Free Trade, or whether we make the experiment of a new Tariff policy, we may be sure that the markets of the world will be more and more fiercely disputed to us by our competitors wherever they can extend their political influence at the expense of our own, and no continent at the present day possesses markets of such potential value or such undeveloped fields of industrial activity as those which still remain to be opened up in Asia. Our alliance with Japan, based on either side, as all durable alliances must be, on an enlightened sense of self-interest, will go far to avert the dangers which have begun to threaten our position as an Asiatic Power, and with it the stability of our whole Empire.

But in the long-run we must rely, not upon any alliance, however solid, but upon ourselves. If, as the consequence of an alliance with Japan, we were to relax our energies, and allow ourselves to be lulled into a sense of false security, then that alliance would ultimately prove to have been not a boon, but a curse to the Empire. What we are justified in expecting from that alliance is that it will secure peace in Asia for a long term of years, and that it will therefore give us time to put our house in order, to reform and strengthen our military organization at home and in India, to place the economic future of India on a sound basis by fostering the new spirit of industrial and commercial enterprise which is already astir, to extend the great system of railway and irrigation works which is doing so much to mitigate the ruin periodically wrought by famine; and, beyond the borders of India, to coordinate and develop the forces which make for the peaceful consolidation of our influence and the expansion of our trade, alike in Mesopotamia and Southern Persia, in the Valley of the Menam and in the busy markets of China. Above all in China. For it is in China that we must chiefly look to reap the economic advantages of the new position created by the Russo-Japanese war and the Anglo-Japanese alliance. But to reap them effectively we shall have to display greater individual energy and more sustained diplomatic activity than our people have shown of late years in China. Moreover, we must remember that in this field our allies will be our rivals, and very formidable rivals, unless we can extend to the domain of commerce and industry the same mutually beneficial cooperation which is now assured in the domain of politics. Neither in China nor in Persia, nor anywhere else in Asia, do we need or seek territorial aggrandisement, but in both the Nearer and the Further East we must look to it that the doors we have opened shall not be closed against us, that the claims we have pegged out shall not be 'jumped' by others; and that not only the treaty rights of this country, but the interests created by the enterprise and industry of our fellow-countrymen shall not be injured or curtailed. Videant Consules ne quid detrimenti res publica capiat.

Our Asiatic Empire firmly planted in India has struck deep and far-spreading roots, and thrown up vigorous off-shoots which cannot be allowed to perish and decay without grave and even fatal damage to its vitality.

  1. I have taken the statistics of the year 1903, in preference to those of 1904, for the trade of the Far East, as the former year was not subjected to the disturbing influences of the Russo-Japanese War.
  2. The value of the Haikwan tael, which fluctuates with the market value of silver, averaged 2s. 7⅔d. for the year 1908.
  3. The figures for 1904 show another enormous increase in the foreign trade of Japan, which rose during the first year of the war to £69,032,000; but the increase, which was mainly in imports, may have been to a considerable extent artificial and due to army requirements.