$4
work, and study the special requirements of the country, would be an invaluable Ink between the entrepreneur" in Great Britain and his representatives on the field.
A local office, while not engaged in actual current banking operations—which could be left to the exchange banks--would nevertheless be able-
(1) to examine and report on schemes pending;
(2) with the co-operation of H.M. Minister and staff, to advise and assist in financial negotiations with the Chinese. (In this connection the repre- sentative of the bank might act as an unofficial financial adviser to II.M. Minister);
(3) to collect information as to the possibilities for British financial enterprise and the efforts of our competitors, which it would submit to the central Bureau d'Études; and
(4) to become a centre for British syndicate operations.
It should be noted that some hostility might at first be received from existing financial institutions, but the bank need never be in direct competition with such institutions, which, after all, have in the past been operated for purely private ends, and while they have pushed British interests in China, owing to their cosmopolitan character and close connections with continental interests, their activities have not in every case worked entirely to national advantage. So far from aiming at loans for railways and other public works entailing the floating of considerable loans on the London market, the Trade Bank would be primarily interested in the many industrial and engineering contracts which are springing up all over China, and which are being largely secured by our German and other competitors on the score of improved linancial facilities alone.
It would appear that the operations of such a bank in China would meet the needs of the British Engineers' Association, as disclosed in their memorandum. It is a matter for consideration whether an Engineers' Trust could not be floated in addition. At all events, the scheme for the Trust is one which might engage the attention of the directors of the bank at an early stage.
I would strongly commend to H.M. Government the case for the extension of the operations of the proposed British Trade Bank to China.
Need for an improved Official Commercial Service in China.
The necessity for drastic reform and complete reorganisation and extension of our commercial service in China is voiced on all sides. The China Association express very clearly in the opening paragraph of their memorandum the prevalent view of British mercantile interests:-
"My Committee assume that as one of the results of the war a change of policy in regard to commercial matters will commend itself to His Majesty's Giovernment, and that the tradition, under which it was formerly held that the greatest assistance which the Government could give to trade was to leave it alone, will give place to an entirely different system. That tradition sets very definite limits to the scope of the Government's activities in the interests of British traders abroad, and proclaims to opponents the limit of support behind the subject, and indeed invites competition from the subjects of other Govern- ments, whose support is given rather according to expediency than to doctrine. A considerable modification of the traditional policy of successive Governments would appear to be a first requisite of any new era of helpfulness, and the adoption in its stead of a changed national attitude towards foreign trade, in which non-interference will give place to active support, both legislative and administrative."
Inasmuch as the inadequacy of the pre-war organisation of a single Commercial Attaché in Peking is generally recognised, and furthermore, as the Board of Trade are already in possession of my views on the subject, any consideration of the merits or demerits of the pre-war situation would appear to be superfluous, and I propose to conline my remarks to a few suggestions for the future.
In the first place, I would express appreciation at the complete change in the attitude of H.M. Legation towards commercial matters, which first became apparent shortly after the outbreak of war. This has been one of the most noticeable features in China during the past two years, and a considerable effort appears to have been made to reform the organisation from within. An assistant Commercial Attaché was
85
appointed in 1915, and this official has done a considerable amount of work in Shanghai during the war period, although his labours appear to have been rendered difficult owing to the fact that his duties have never been clearly defined, and he has suffered from the lack of a definite system and staff. I understand that it is proposed that one member of the staff of H.M. Consulates-General at Tientsin, Hankow and Canton, should devote himself principally to commercial work, and efforts are now being made to encourage junior members of the service, while on leave, to take up economic studies. All these efforts demonstrate some desire for reform, but I venture to suggest that two things are absolutely essential before any real progress can be made, viz. :-
(1) A carefully outlined system; and
(2) Men with adequate knowledge and experience to carry it out.
With regard to the first desideratum, the laying down of the functions and duties of H.M. Commercial Officials in China is so closely bound up with the adoption of a co-ordinated scheme for all the foreign countries, and depends so much upon the organisation which is eventually set up in London to control such work all over the world, that subject to the special needs of the country-the main outlines of the system must of necessity conform to the general model adopted. It would be as well here to point out that considerable discretionary power will have to be given to the Officers in the field to decide as to the best means to be adopted to attain the desired objects. Conditions in the Far East, and especially in China, are peculiar, and in many cases it would not be possible to work to a stereotyped programme.
With reference to the second point, I strongly maintain that Officials with commercial experience are necessary to carry out an adequate system of commercial intelligence. This is not only my own view, but is that advocated by the British Engineers Association, and the Tientsin and Hankow Chambers of Commerce in their memoranda.
As the whole question is one which is receiving the attention of H.M. Government at the moment, I prefer not to enter into details here, but my views are at the disposal of the Board of Trade should they be desired;
I would conclude by stating that the inauguration of an efficient system of commercial intelligence in China, and the appointment of well-qualified officers to carry it out, is the most important step which H.M. Government can take to foster and develop British commercial interests in the country after the war.
C.
SUMMARY OF CONCLUSIONS AND RECOMMENDATIONS.
It must be conceded that the measures to be taken to safeguard and extend British trade interests in China after the war rest mainly in the hands of our merchants and manufacturers themselves. The China trade is a comparatively well- organised trade in the hands of many British hongs of good credit and standing, with an experience of the market in many cases extending for several decades. Two main desiderata, however, remain, viz. :-
(a) That the established hongs should put their own houses in order, and, with the co-operation of their suppliers in this country, should revise their system and organisation to meet the rapidly-changing conditions in China, and that intensification of competition from Germans, Americans, and Japanese--particularly the last-which is bound to be the direct result of the shifting of the commercial balance of power brought about by the war; and
(b) That young British assistants with energy, initiative, and a sound experience of the trade and the peculiar needs of the market should set up in business on their own account in China, and that they should receive every encouragement from British banks to do so. During the past ten years, the number of new British hongs which have been established is almost negligible, while during the same period the extension of new German and Japanese houses-most of them being offshoots from the older frins has been most marked.
There are three important points to which I think the attention of H.M. Government should be called:
(1) While I hold that every effort should be made by British merchants with the aid and co-operation of our manufacturers and exporters to secure the
L 1
639