Quarterly Report of the Legation in China for the Period April 1–June 30, 1920 12

In the early part of April all eyes were centered upon Mr. Thomas W. Lamont’s arrival in China, the American Group representative of the new Consortium, who, in his maiden speech at Shanghai on April 3, made a most favorable impression by definitely stating that the Consortium was organized for the benefit of the Chinese people as opposed to any faction or clique of the Chinese Government. Mr. Lamont arrived in Peking on April 7, and although meeting with a very cordial personal reception, the general attitude of the Chinese Government officials was as was foretold in the Chinese venicular [vernacular?] press “that of cold, weak tea”. In his various interviews Mr. Lamont apparently continued to create a favorable impression, although he felt conscious of considerable intangible opposition which did not cease during his stay in Peking. It was felt that this might be attributed to the Japanese desire that the completion of the Consortium be arrived at in Tokyo subsequent to Mr. Lamont’s departure from China, and it is to be noted that the final exchange of notes and Japan’s entry into the Consortium was consummated in Tokyo just prior to Mr. Lamont’s departure for America.

The statements made that the new Consortium would only lend money for purposes other than political and also that any negotiations for loans must be preceded by the payment of the Hukuang bond coupons by the Chinese Government apparently had a discouraging effect on members of the Central Government, the latter condition being definitely refused. Mr. Lamont on leaving China made the following statement:

“I am returning to America, having accomplished the object of my visit in China which was to obtain for the proposed new consortium a more adequate view of the Far Eastern situation. It must be appreciated that my brief visit is but the first step which the International Banking Group must take, in the way of investigation and planning, if they are to render effective assistance to China in the development of certain of her great public enterprises. The situation here is so complex and so important that so far as the banking groups are concerned, its study and development must be matters not for a day, but for a patient future that I trust, may be marked with cordial cooperation between the Chinese people and that great body of investors of the Western world which the Banking groups represent.”

which was accepted as meaning his firm belief in the ultimate success of his undertaking. On May 13, 1920, the Legation informed the Chinese Foreign Office of the exchange of notes between Mr. Lamont [Page 434] and the representative of the Japanese Banking Group in Tokyo and Japan’s entry into the Consortium, to which a reply was made on June 2, requesting any further details regarding the Consortium which the Legation might be able to furnish.

In April the Chinese Foreign Office formally urged upon the Legation the retention of Mr. Stevens in his post on the Chinese Eastern Railway and at this time it was informally urged upon Mr. Lamont by various Chinese and also the Manager of the Russo-Asiatic Bank in Peking that this railway should be taken under the protection of the Consortium and be extended a loan with the various amounts due it from those nations who had used it for military purposes as additional security. Considerable credence was given to the rumor that Chinese bandits were being armed and placed along the Chinese Eastern Railway by the Japanese with the object of disturbing traffic conditions to the end that the Japanese might feel warranted in placing more troops along the line. In this connection it might be noted that by a note to China from the Soviet Government dated April it was suggested that upon China’s recognition of the Moscow Government it would in turn deliver to China the Russian interest in the Chinese Eastern Railway and waive the Boxer indemnity.

In early April General Horvath resigned from his post in the Chinese Eastern and in June Military Governor Pao Kuei Ch’ing resigned as president and was replaced by Sung Hsiao-lien, former Military Governor of Heilungchiang. At this time also the Chinese railway guards were put under a separate command.

The perplexing monetary situation along the railway line resulted in a general extension of the Yen as a medium of exchange.

In this quarter there should be noticed several diplomatic changes in Peking: 1. The announcement of an unofficial exchange of representatives between China and Germany, Mr. von Borch and two Secretaries subsequently arriving as a committee of investigation and occupying the German Legation, although these buildings are still under Dutch protection. 2. Mr. Beilby Alston, former British Chargé d’Affaires with the rank of Minister in Tokyo succeeded Sir John Jordan as British Minister to China. In the interim between Sir John Jordan’s departure and Mr. Alston’s arrival in Peking Mr. Miles Lampson, Counselor of the Legation, acted as Chargé d’Affaires. 3. On June 12 Mr. Charles R. Crane presented his letter of credence as American Minister. Mr. Crane’s press statement on his arrival at Shanghai on May 29, 1920,

“From now on it will not make any Government popular to try to harass this new Chinese democracy by following the old menacing processes of corruption, poisoning and interfering with its internal affairs.”

[Page 435]

was generally accepted as outlining his sympathies with the Chinese people. 4. Mr. Robert Everts assumed his duties as Belgian Minister to China, and 5. Mr. J. P. R. Alves as Brazilian Minister to China.

On April 11 Admiral Lin Pao-yi resigned from the Canton Government, which left only one member of the seven commissioners of the Southern Government, and on April 17, Dr. Wu Ting Fang returned to Shanghai from Canton … It is difficult at present to consider the Canton Government other than as individuals expressing their personal interests.

On June 5, Mr. Tong Shao-yi, former Chief Delegate of the Canton Military Government called on Mr. Wang-I-T’ang, in Shanghai, Peace delegate of the Central Government, for the purpose of entering into peace negotiations between the North and the South. This was coincident with a statement issued on June 4 by Tuan Chi Jui and Hsu Shu Cheng that they were mobilizing with the intention of attacking the Southern forces. These negotiations were futile as Tong Shao-yi, Sun Yat-sen, Wu Ting-fang and C. T. Wang were disowned by the Canton Government, and on July 11, Wu P’ei Fu, a Northern General under the Military Governor of the Province of Hunan, General Chang Ching Yao, evacuated the southern part of Hunan Province and Southern troops under T’an Yen-kai occupied Changsha which had been partially burned by Chang Ching Yao. Chang Ching Yao retired to Yochow and on June 13, during disorders there on the part of his troops, William A. Reimert, an American missionary was shot. The Legation immediately informed the Chinese Foreign Office that, in spite of a request from the American Consul to Chang Ching Yao for protection of the Missionaries previous to this murder, inadequate provision having been made for their safety, it held Chang Ching Yao personally responsible.

By mandates issued June 13 and 29 Chang Ching Yao was deprived of his office of Military and Civil Governor of Hunan and of all military command in consequence of his loss of the province to the Southern Forces. It is to be noted in this connection that this in no way meets the demands for punishment made by the Legation for the death of Mr. Reimert.

The situation of the Central Government was much embarrassed on May 14 by the action of Premier Chin Yun P’eng in presenting his resignation, which was, however, not accepted, but leave of absence was granted to him for ten days which has been renewed at various times, so that from May 14 to date Admiral Sah Chen-ping has been acting Premier. Premier Chin’s action may be partially explained by the pressure brought to bear on him through the refusal of the Chinese Government to open direct negotiations with Japan on the question of the return of Tsingtao and the lack of settlement [Page 436] of the Foochow incident with Japan. The Chinese refusal to the Japanese note regarding the retrocession of Shantung was based on the ground that (1) China was not a party to the peace treaty with Germany, and (2) in view of the public mind in China it was essential that the Government should take no steps that would act against public popular wishes.

The political situation was also complicated by the attempted establishment by General Hsu Shu-chen of a Fourth Frontier Division of the Army to be composed of half Chinese and half Mongolian troops to be employed for service in Outer Mongolia for frontier defense. This action, it was felt, would strengthen Japanese control in Mongolia and the pro-Japanese members of the Anfu clique under Tuan Chi-jui and was in direct contradiction of a desire expressed by the Military Governor of Manchuria that the Sino-Japanese Military Pact be discontinued. The result of these conflicting forces in the Central Government was the attempt of the Anfu group in late June to establish themselves strongly in the Central Government with Tuan Chi Jui as Premier and possibly later as President if President Hsu could be brought to resign. The military leaders in this combination divided with Generals Tuan Chi-jui, Hsu Shucheng, General Ni Shih Ch’ung, Chang Ching Yao, Ch’en Shu Fan, as Anfu Club sympathizers, as opposed to Generals Chang Tso Lin, Li Shun, Ts’ao K’un, Wu Pei Fu, and Feng Yii Hsiang. On June 19, Chang Tso Lin arrived in Peking to consult with the President and apparently to determine for himself that the Anfu party should not override his interests.

In this quarter also should be noted the increased sale of American goods in China, which can only in part be attributed to a result of the Japanese boycott, and also the consequent improvement of foreign exchange which was so rapid as to cause failures in a few important Chinese firms in Shanghai. It is stated by shipping men that cargo from China to the United States is less than [it] has been for a considerable period of time. Due to the export of rice, which rose steadily in price throughout the quarter in the local markets, there was considerable social unrest among the workingmen, more especially in Shanghai where they were encouraged by the students’ movement, and on May 1 Shanghai laborers observed the first Labor Day in the history of China. Their demonstration was later halted by the police.

On May 20 the Italian Legation gave a reception to celebrate the arrival of Lieutenant Ferrarin in Peking in the course of the Rome-Tokyo flight.

It may be also noted in this quarter that persistent rumors are brought to the attention of the Legation by American firms and business men in China of the violation of the arms embargo (1) by the [Page 437] sale of war planes to the Chinese by the British for alleged commercial purposes; (2) the sale of arms by American manufacturers to Japanese in Dairen to be subsequently delivered in China; (3) it is stated in the press freely that the Southern forces in their advance in Hunan captured more than 20 field guns, 30 machine guns and 10,000 rifles, practically all new equipment of Japanese manufacture; (4) the delivery of arms by Italians and Belgians.

The question of the renewal of the Anglo-Japanese alliance has been freely discussed in the venicular [vernacular?] press and the Chinese Government formally protested against the specific mention of China within its terms.

On June 18 the treaty with Austria was promulgated by Presidential mandate.

  1. Embodied in despatch no. 581, Dec. 16, 1920, from the Minister in China; received Feb. 2, 1921.