5
Mr. Donald Spence, then a member of His Majesty's Consular Service in China, to assist them in pushing especially this class of business, and another able gentleman, Mr. Anson, now a partner in the firm at Shanghae, was detached expressly for this purpose for some years. But, so far as the trade in arms and ammunition was concerned, these efforts were in vain.
My informant attributes the success of German firms to the strong political support which they originally received in pressing the Chinese Government for orders, and which gave them à footing from which it is now difficult to dislodge them. It seems to me more likely that the explanation offered by Mr. Fraser in his despatch to you, Hankow No. 9 of the 25th January, copy of which he has sent to me, applies to the North as well as to Hankow, namely, that the influence of German military German instructors was used to forward the interests of German manufacturers.
In this military instructors are, however, so far as I know, no longer employed here. connection I may note a remark frequently made by British merchants, to the effect that a German officer in Chinese employ will advise the placing of orders with German firms, while a British officer in similar circumstances is as likely as not to advise calling for open tenders. If this is true, it only shows that British officers serve foreign employers with more honesty and disinterestedness than those of other nationalities, and this characteristic should prove in the long run advantageous to British interests.
As regards German business methods, it is generally admitted that their agents do succeed in maintaining close relations with Chinese officials charged with the purchase of munitions of war; but British merchants deliberately refuse to lose their time and their self-respect in the cajoling and feasting of Mandarins necessary in order to get orders under the present system. I do not think there are any real technical experts in China, German or others, with a knowledge of the Chinese language, and as for corresponding in Chinese direct with Government Departments, British firms can do this, if necessary, as readily as German. That secret commissions are paid in order to secure orders is not unlikely; but neither this nor the other allegations frequently made as to lax practices on the part of German merchants would furnish a sufficient explanation of the German monopoly.
With reference to Mr. Fraser's remarks as to British arms and ammunition makers heing represented in China by German firms, I may add that in Tien-tsin, as in Hankow, Sir W. G. Armstrong, Whitworth, and Co. (Limited) are represented by Messrs. Buchheister and Co.; and Messrs. Vickers, Sons, and Maxim (Limited) are represented both by Telge and Schroeter and by Von Daring, Wibel, and Co., the latter firm being also agents for Messrs. John L. Thorneycroft and Co. (Limited).
I have, &c. (Signed)
}
(No. 9.) Sir,
Inclosure 3 in No. 1.
Consul-General Fraser to Sir J. Jordun.
W. P. KER.
Hankew, January 25, 1909,
IN reply to your despatch No. 3 of the 13th instant, I have the honour to report that there are at Hankow no British firms concerned in the traffic in ammunition and arms for Chinese military purposes.
Here, as elsewhere, this trade was until lately entirely in the hands of certain German firms, but latterly the Japanese endeavour to compete.
This condition is, in my opinion, natural enough.
When this Provincial Government set about the adoption of Western army organization, they sought equipment and instructors from the nation generally recognized as the most efficient in these respects, and when they started the making of guns, rifles, and ammunition, they obtained the plant and experts from the same
source.
German instructors (there are three in the Hupeh Military School) were in a position to press upon the military authorities the superiority of their makers of warlike munitions, and their large local firms took full advantage of the openings thus presented to them exclusively.
Whether from this cause or for other reasons, British arms and ammunition makers seem to prefer to be represented in China by these German firms. Thus, in Hankow, Messrs. Buchheister and Co. are agents for Sir W. G. Armstrong, Whitworth, and Co.
(Limited); and Carlowitz and Co. are the agents of Vickers, Sons, and Maxim (Limited), of London, as well as of Friedrich Krupp, of Essen.
Here at least the negotiations are conducted by special Chinese employés, who obtain prompt news of any orders pending; but the Hanyang Arsonal and Powder Factory supply almost all the actual weapons and cartridges, both of German patterns.
That secret commissions are paid is common report, and in accordance with native official practice, as stated in the Chinese newspapers, an extract from which, describing the arms business in scathing terms, formed No. 10 in my despatel No. 71 of the 11th November, 1908. Charges of purchasing, at prices extravagant for the newest and best, old and inferior munitions crop up not infrequently in the native press, where I have never met with any attempt to deny such malpractices. Even such an opposition paper as the "Universal Gazette
appears convinced of the necessity for the purchase of munitions being intrusted entirely to the central authorities with the aid and advice of the Chinese Legations abroad. Should this reform be adopted, even though supplies were invited by open tender, there is little likelihood of the Government's facing the expense of altering the prevalent type of But the influence of military instructors on the source to be drawn
gun and rifle. on for weapons was shown by his Excellency Chang Chih-Tung's purchase of complete field batteries, with horses, from Japan for the use of the Hupeh troops at the 1907 manoeuvres, while the agent of the Rexer automatic gun and Mr. Banld, the traveller for Vickers, Sons, and Maxim (Limited), both found General Chang Piao too much engaged to receive them.
I have, &c.
(Signed)
Inclosure 4 in No. 1.
Acting Consul-General Fow to Sir J. Jordan.
E. H. FRASER.
(No. 10.) Sir,
Canton, February 5, 1909, IN reply to your despatch No. 3, dated the 13th ultimo, I have the honour to report that there are no British firms engaged in the importation of munitions of war in this Consular district.
The trade is entirely in the hands of German firms, of whom two-Messrs. Carlowitz and Co. and Messrs. Arnhold Karberg aud Co.-have succeeded in establishing a practical monopoly,
The former, who two or three years ago took over Messrs. Mandl and Co.'s business, are agents for Krupp and Vickers, Sons, and Maxim; the latter represent Mauser's and other German factories.
Both firms employ Chinese agents or compradores of Taotai's rank, whose special business it is to keep in touch with the Viceroy's yamên, the Shan Hou Chu (Board of Reorganization), and the naval authorities, in fact, all the spending Departments of the Provincial Government, and obtain timely information regarding intended purchases of war material. At the same time one or more German employés of both firms are teclmical experts with a working knowledge of the Chinese language. Their Canton managers make a point of keeping on good terms with the Chinese officials, whose interest they cultivate with frequent entertainments and timely loans. They apparently have no difficulty in gaining access to the Viceroy himself, and one at least is the holder of a Chinese decoration.
If British merchants in Canton are asked why they take no share in this lucrative traffic, they invariably reply "the arms business is not one we care to touch," and they go on to explain that the system of secret commissions and doctored invoices which has become inseparably connected with the trade makes it impossible for any self-respecting firm to engage in it.
Making due allowance for our merchants' not unnatural feeling of bitterness at the large share of Government business, not only in munitions of war, but in machinery, electrical appliances, building contracts, &c., which their German rivals obtain in Canton, I believe this explanation describes fairly accurately the position of British firms with regard to the arms trade.
It is within my own knowledge that one of the best known German agents for war material openly stated that, in order to obtain an order in Canton he was obliged to bribe every official concerned from the Viceroy downwards, and it is a fact that
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