New Opportunities for American Commerce

THE possibilities of extending the commercial relations of the United States with foreign countries present no feature more inviting than the suggested opening of Asia to the trade and influence of the West. China may be exploited under European methods, and even under European domination. With the fall of Spanish rule in the Philippines will disappear the last vestige of the exclusive colonial policy so rigidly applied by all colonizing powers in the last century. The effect of bringing into new or greater activity not merely millions, but hundreds of millions of producers and consumers, hitherto carefully guarded from the modern commercial spirit, offers a study of immediate interest and of the highest importance to this country. It is appreciated that the industrial power of the United States, applied to its remarkable resources and with its equally remarkable ingenuity, is now able to compete with other nations on its own merits, without the factitious aid of legislation conferring partial or entire monopoly privileges. At the moment when, conscious of their own strength, the industries of the United States are realizing the inadequacy of the home market, and the necessity of other vents to permit a continuance of growth, or even a continuance of actual production, a continent swings into view as a possible market, and many islands, of unknown because untried capacity, are placed within reach of commercial influence, if not of political accession.

China has held the same relation to the commerce of the world as have the Spanish colonies in America and Asia. They have been territory closed to enterprise and development from the outside, and the policy that controls in the one case differs but little in essence from that imposed in the other. Only a superficial knowledge of the actual resources of China is available. A few ports in that vast empire, opened to trade reluctantly and under threats of or a virtual resort to force, and forming only depots for collecting what is sent to them from the interior or surrounding territory, have handled a large trade, but one that is incomparable to the vast domestic exchanges of hundreds of millions of souls. The merchant must take what is sent to him ; but he cannot establish factories of production, control plantations for cultivation, or utilize the mineral wealth of the empire. The development under foreign direction and management, which has made so many colonies and states important commercial factors, has been entirely wanting in China. In an economic sense, she is today little other than she was a century ago. Her commerce has increased somewhat, reflecting the growth of neighboring countries rather than her own ; but the details have remained rigidly fixed. Even in the few lines of production once peculiar to herself, the ability to compete has been impaired, as well in Asia, where Japan and India have used with such effect the resources of modern art and industry, as in Europe and the United States, where science has supplanted many of the distinctive products of the East. It remains true that China is yet to be studied as a commercial power, for her trade policy has been as strange and exclusive as her political régime, and may prove as weak when touched by some outside and more active influence. The administrative failure of China in the war with Japan may foreshadow a like surprise when her resources of commerce and industry are put to a similar test.

As little is known of the Spanish colonies, for they have been held to be exploited for the benefit of the mother country. They were made Spanish markets only by excluding the products and shipping of other powers, thus forcing upon the consumers in these islands the manufactures of Spain. This was readily accomplished by framing the colonial customs tariffs on a double plan. Under one and a lower set of duties, Spanish products were admitted ; under another set of duties, penal in their amount, foreign products were kept at a distance, and competition was out of the question. The same system of differential or discriminating duties was applied to shipping; and thus it happened that, as a rule, only a vessel flying the Spanish flag could find a profit in the colonial trade. The introduction of foreign capital was discouraged, and under the incompetency of Spanish agents any management entrusted to them was hazardous, almost inviting failure. While it was insisted that the colonies should purchase only Spanish manufactures, no market in the Peninsula was maintained for colonial products. The leading interests of the possessions were obliged to seek their own markets, outside of Spain, and in the face of the world’s competition. Buying all that they consumed, even the flour for their bread, under a monopoly system, they sold what they raised or manufactured in open market. Only one product appeared to be favored,— Spain did purchase Cuban tobacco. The favor was illusory, as the tobacco régime was framed for the benefit of those at home, with little regard for the interests of the tobacco-grower. With these conditions, it has been impossible to gauge the abilities of the islands to produce or consume, for they must be tested under some system other than monopoly.

In the face of this ignorance of actual economic power, it is easier to take too sanguine a view of the possible power than calmly to weigh influences and estimate a new distribution of ability. Whatever have been the defects of the commercial policy applied to these possessions and to China, certain lines of production have been adopted as best suited to the soil, climate, and form of labor. Like other forces, economic forces work along the lines of least resistance. It would be a long story to relate why Cuba grows sugar and tobacco as her leading products, or the Philippines sugar and hemp, or China tea and silk; but for more than a century these articles have been closely associated with those countries, and have fed their foreign trade. They come into the market with clearly defined commercial uses, for which experience of many years proves them to be best suited. Under a new control, Cuba will still send to the market sugar, fruit, and tobacco ; Porto Rico will still offer sugar and coffee ; the Ladrones will go on in the growing of cocoanuts; and Manila hemp and sugar will still form the contribution of the Philipjnnes to commerce.

What may be changed is the relation of the native to the responsible producer, a delicate problem certain to arise in the Spanish islands. The introduction of foreign capital, and the extraordinary activity that follows the opening of a new and promising field of investment, will create a demand for labor very different from that now existing. The white races of Europe have found it difficult to live in the tropics, and they constitute a very small though ruling element of the population. Even when they have attempted to amalgamate with the natives, the descendants have soon lost their inherited energy, and dropped back into the ranks of the lowest cultivators or idlers. In this dilemma aid has been sought from the outside. Slavery, and subsequently coolie labor, prevailed in Cuba. In the Philippines slavery does not exist, and never has existed ; but the native races have no initiative, and are subject to an invariable routine and discipline, such as the priestly orders enforced in California and Paraguay. This rule is not favorable to economic activity, and little progress appears to have been made in using the resources of the islands. The Chinese have migrated to those parts just as they have crept down the Asiatic peninsula, giving an abundant and cheap form of labor. It is hardly desirable, however, to resold to them further, even though they now form the real labor supply of the islands. A European control of the Philippines might not be particular as to the kind of labor it obtained, but the attitude of Australia and the United States toward the Chinese is too pronounced to be modified.

A lesson may be learned from the policy of the Dutch in Java. Whether the conclusion could be applied to the Spanish islands is doubtful, for the system was adopted more than seventy years ago, when very different ideas of the responsibility of the state to its subjects were entertained. For many years after claiming Java the Dutch were only merchants in their East Indian possessions, opening factories and establishing trading - centres, but not assuming any control over the natives, or imposing upon them the task of cultivating the lands for the benefit of Dutch commerce. The mercantile company trading with the island was a monopoly, and almost held a monopoly in the world’s supply of spices; but it was a commercial organization only, and not a political or administrative instrument. After the company had ceased to exist, the government of the Netherlands introduced a system of colonial management for its own benefit, not unattended with success. The government merely took the places of the native kings or rulers, receiving their tributes or levies, reducing these potentates to salaried agents of the administration. The king of a province thus stood between his people and the government, and acted as revenue collector for the latter. The levies were one fifth of the year’s product, and one day’s labor in every five, from each cultivator.

In realizing the new relations thus entered into by Holland, the authorities directed that one fifth of the land subject to the levy should be devoted to such products only as found favor in the markets of Europe, as coffee, sugar, tobacco, indigo, tea, and certain spices. The commodities raised on this land were sold at a profit in Holland, giving a handsome revenue to the state, and feeding a colonial commerce of some magnitude. In course of time this system was modified. It was seen that the highest profits were obtained from coffee and sugar, and the government lands were devoted to those crops. The tribute of labor could be commuted, and greater freedom was accorded to individual cultivators, on condition of their selling one fifth of their crops to the officials, and even a larger proportion of the product at a mean price. At the present time the corvee applies only to coffee lands, and the exports of individuals far exceed those of the government. There is little doubt that this system has done much to build up the commerce of Java, and has produced a practical solution of the labor problem. The native was interested and encouraged in his planting, and the state obtained large profits through a long period of time. The decay of the sugar industry would offer one serious obstacle to any extension of the system, and private initiative could not apply its leading features to the Philippines without resorting to means but little short of slavery.

In each instance the native population is stationary in civilization. Indian, Chinese, and Malayan are alike in presenting few promises of awakening. A stagnating civilization is modified with difficulty, for custom has become wellnigh absolute, and determines even the particular activity of the individual in the community. In British India is to be seen a remarkable instance of such a modification, but the results are as yet in an embryonic form. The mere conquest of the many tribes of that vast and varied empire was a problem of secondary importance to that of governing them after conquest. The occupation of territory sparsely settled by native tribes of nomads, or tribes lightly held to one locality, was a familiar experience in colonization, and the general course of events led to a solution acceptable to the colonists, however repulsive to the moral sense. The natives were exterminated or contracted into a few settlements, entirely subordinated to the newcomers, and protected in much the same manner in which a disappearing species of animal is preserved. They are not sufficiently strong to offer resistance to the change, nor are they possessed of such cohesion as to present a serious obstacle to being governed as wards of the nation, without any share whatever in the government or any voice in the disposal of their own property. The American Indian has long been in a similar position of inferiority, and the same conditions were found in Australia and exist in South Africa.

In India another set of problems presented itself. The economy of the communities of natives had become rigid through centuries of inertia. The rule of custom, absolute and unchangeable, was as opposed to the freer system of contract of the West as the mental attitude of the East was opposed to that of the invaders and conquerors. In the attempt to introduce into India the principles of government as understood in England, strange anomalies were encountered, not only neutralizing the good expected from the change, but producing such confusion as to give greater opportunity for injustice and oppression than could have occurred under the customary rule of the native princes. Years of careful study and intelligent experiment were required to devise a working system, and the process is still going on, for the subject now bristles with difficulties awaiting adjustment.

A measure of success has followed this application of an administrative system to an alien and not receptive people. The economic consequences alone concern us, but they are necessarily connected with, and more or less dependent upon, the moral and social results. In place of diminishing in numbers, the natives are increasing so rapidly as to excite anxious forebodings in their governors. Now that they are freed from war, and relieved in part from the periodical recurrence of plague and famine, — not very long ago recognized as inevitable incidents, — few natural checks to the growth of population remain in force. Crowded as many parts of the empire are, the entire country threatens to become a huge “ congested district ” through the large birth-rate and the immovability of the population. The problem of employing this mass of humanity solved itself under native rule. A great part, ranging from eighty to ninety-five per cent, according to the province, was connected with the cultivation of the land and dependent upon its produce. The other part of the population lived by household industry, catering to the wants of a village or restricted territory outside of the village, and making and selling under the iron laws of custom.

About 1860 it was noticed that this household industry was suffering in many branches through outside competition, a factor almost unknown in India up to that time. The bazaars no longer dealt in native cloth, but displayed the cottons of the English looms. The metal-work of the Indian was supplanted by the products of Birmingham. The hand-workers of the East could not compete with the machinery of the West, and so they were gradually crowded from their markets and occupations, and driven to seek a living from the land, already tilled to its utmost capacity. The added burden on the agriculture of the country threatened to produce a crisis, and would have done so had it not been for the phenomenal though temporary profits of cotton culture. The failure of the United States to grow even a share of its usual cotton crop gave India its opportunity. At the end of our civil war, India continued to raise cotton and to manufacture it on an experimental scale. Jute, rising into great commercial importance because of its cheapness and suitability for many purposes, gave another commercial interest and manufacturing industry. Finally, wheat added its somewhat uncertain profits, creating employment for many native agriculturists, and furnishing an article of export whenever the wheat markets of Europe were in need of a further supply. In this manner, after nearly forty years of slow development, India has corrected the tendency of foreign competition to crowd the entire population upon the land, and not only produces enough food for its own people, but is a large and increasingly important exporter of manufactured cotton and jute.

This record of industrial change has been dwelt upon, because it presents in a clear light certain difficulties to be encountered in seeking to develop the commerce and industry of such a country as China, where the conditions of population are not unlike those found in India. It is true the village community is not so important a social factor, and the population is freer in its movement and thought. The beliefs and superstitions of the Chinese have opposed in the past all attempts to introduce the mechanism of modern progress, and there is little reason to expect any notable reduction in this opposition for the present. The passive Indian permitted the construction of military roads, railroads, and canals of navigation and irrigation, with only a dim perception of what they might mean, and eventually with a ready acceptance of what they might offer. The Chinese see in works of a like nature a violation of their most cherished beliefs, and a most potent agency for introducing and fastening upon them the influence of the hated foreigner. Concessions for railroads have been granted, and are being granted ; and trading and mining privileges are still extorted from the court of Peking. The immensity of the field to be worked, and the local obstacles studiously interposed to the accomplishment of these undertakings, make a realization of the hopes of the undertakers somewhat distant and problematical.

Given the means of transportation, it does not follow that a new market of import or export would spring into being. Even the food of the Chinese, rice and beans, cannot be of European or American origin ; and meats, one of the great articles of export from the United States, will find no market in the East. As to manufactured goods, at the very threshold of the Chinese market stands Japan, eager and able to seize upon every opening offered. It must be remembered, also, that at the peace Japan obtained the privilege of erecting mills and manufactories in Chinese ports, — a privilege as yet unused, because of the determined opposition encountered. If a neighboring state, whose people are in a better position to understand the wants of China, cannot make its advantage from this privilege, how unreasonable it is to expect a distant and very alien people to get more favorable results !

Japan is yearly becoming of greater importance in the commerce of Asia, and with a twofold effect. On the one hand, her growing industries buy more foreign materials, such as American cotton and Indian yarn, English machinery and American petroleum ; to that extent her progress is reflected in the widening commercial relations with the United States and Europe. On the other hand, this very progress serves as a barrier to extending the foreign trade of China with Western powers. The machinery obtained from Europe and the raw materials secured from the United States are employed in manufacturing for China and other parts of Asia, at the expense of the countries of the West. More than that, Chinese trade suffers through the competition of Japan, the result of a more intelligent application of science to some of the leading products of that country. In any estimate of the commercial possibilities of the East, due prominence must be given to the ability of Japan to reap the larger share of any gain.

If the opportunities offered to American trade on the continent of Asia promise little, will such islands as the Philippines give better results ? The market for our products will be small, limited to supplying the wants of a few white settlers. The native Malayans do not make any demand for manufactured goods, and their wants are of the most primitive description. The supposition that the islands are so rich in minerals that a new population will flow in is one as yet not proven, and at best could not create a market commensurate with the predictions of those who believe that trade follows the flag.

Until a new population is introduced into the islands, and the industrial spirit of China awakened into activity on new lines, the existing conditions will supply whatever trade will demand. Before there can be such a development of commerce as the more sanguine count upon, China must pass through the same change that British India and Japan have endured. No merely colonial régime, in which the lands and people are regarded as plantations, to be exploited as Java and Cuba have been, will suffice. A great social revolution, one of farreaching results, must be initiated and superintended until it is well under way. The lessons of the Dutch and English in the East deserve careful study, because they represent serious and on the whole successful attempts to solve the problem of ruling an inferior people in such a way as to bring into force a latent economic power. If it is concluded that the policies of Germany and Russia, so far as they can be known, do not contain this fertile germ of colonization for the benefit of the governed as well as of the governors, those countries are not desirable occupants and controllers of Asia. If the extreme tariff policy of the United States is to be applied to such possessions as may fall to it at the termination of this war, the highest and most desired results cannot be attained. A century ago the colony or dependency alone had duties to perform, and duties almost entirely commercial ; to-day the responsibility has been shifted to the mother country, and is mainly political. The creation of self-supporting and self-governing communities is the end of colonization. In this light Great Britain and Spain represent the two extremes; for Spain has never left a possession in a position of self-sufficiency. Only through revolutions could a stable government be secured.

If political control, with its many and serious responsibilities, be set aside, an alternative presents itself. An open port in the Philippines, it is urged, would give our exporters a fulcrum for securing immense benefits from the Asiatic trade. In support of this view the experience of the English in Hong Kong is accepted as conclusive. The plea is on its face a promising one. Since 1881 the tonnage of shipping in the foreign trade entering and clearing at Hong Kong has more than doubled in quantity, and the shipping of England has more than held its own in the increase. The actual movement of merchandise at this port is not recorded, and only indirect evidence can be obtained from the returns of other countries. As it naturally forms a distributing centre for the China coast trade, the returns of that empire should be first consulted. The value of imports into China from Hong Kong has nearly trebled since 1881, and the same rate of increase has held for exports from China to the free port. The transactions of Japan with Hong Kong have nearly doubled, and are increasing every year at a rapid rate. So far the record is clear, and points to the advantages of a free or open port. No light is thrown on the principal point to be determined, — how far has England, or the United States, or Germany benefited by this increase ?

Take British India, a possession that has much to turn into its commerce with its neighbors, and a decided advantage over distant rivals in geographical position. The entire export movement to Hong Kong, including merchandise and specie, on private and government account, was less in 1896 than it was in 1882, and the import movement had not materially altered, showing, if anything, a tendency to decrease. The mother country gives an even more discouraging showing. The exports of British goods to this Asiatic port have fallen off in value by one half since 1881, and the imports by one third. The entire trade forms but a very small item in the total movement of England’s foreign commerce. The United States might be looked upon as somewhat more favored than the United Kingdom in its trade relations with the East, but it has not derived material benefit from this development of Hong Kong. The imports into the United States have decreased more than one third in a period of seventeen years, and the exports to Hong Kong have increased in about the same proportion. With this change, Hong Kong figures in the total trade of the United States for less than four tenths of one per cent, — a proportion hardly worth considering. Even Germany, with its restless and pushing commercial policy, passes over Hong Kong, and seeks to build up its interests in China itself, with only partial success. In the face of such a showing, covering a series of years marked by an almost phenomenal increase in the world’s commerce, it is difficult to accept the theory of a free port in the Philippines as an agency to increase the importance of the United States in the East. Asia is feeding Asiatic trade, and will continue to do so without respect to any outside agency. Asia must cease to be Asia before the West can participate in its development.

The prospect of gain to ourselves becomes even less when the contingency of a partition of China among European powers is presented. If we regard recent experiments in colonization, that of the French in Tonquin must be taken as an example of a decided failure. No one of the benefits anticipated from conquest has followed the occupation of the land, and they seem as remote to-day as they ever have been. The genius of the French people has not shown itself in their colonial settlements, and the desire to exploit the new possessions by companies enjoying special and monopoly concessions has given a flavor of jobbery little creditable to the administration of these dependencies. A number of such companies, and a host of functionaries sent out from France to govern the colonies, have produced a policy costly and wearisome to the home government, distasteful to the people, who are not inclined to emigrate, and productive of profit only to a favored few. Whether in Tonquin or Madagascar, the result has been the same, and only in Algiers does France enjoy the semblance of successful management of a dependency.

The advent of Germany and Russia as claimants to a large share of the apparently moribund empire of China would mean the practical exclusion of the United States from such markets as should fall under the control of those powers. In this they would only be following the example set to them by our tariff policy, and our government would be in no position to protest while that policy remains in force. The possible union or combination of England, Japan, and the United States against the Russian and German claims, territorial and commercial, could only postpone the event, not alter the current of the inevitable. Germany might secure a foothold in China, but it would be not unlike that now enjoyed by France. She would represent an alien race, with no sympathies for the subject people, and more intent upon aggrandizement of self than upon the establishment of a dependency, to become in the future a self-governing state. An outlet for her teeming population, and a market for the ever rising tide of home manufactures, already dependent upon foreign demands for profit, would be her first aim. A purely commercial colony has little excuse for existing, and is more apt to end in disaster than with credit to the state recognizing it. Even England, with a vast and varied record in all forms of colonizing, cannot regard the Niger or the South Africa company an unalloyed success. Russia, with its genius for controlling Asiatic peoples, itself a power more Asiatic than European, will prove of greater political strength in China than Germany, but even less disposed to share commercial privileges with the outside world. Modern diplomacy is commercial and financial rather than political.

Under existing conditions, in which the United States enjoys in Chinese ports commercial privileges equal to those of any other power, the share of the trade coming to us is small, — only four per cent of the imports and twelve per cent of the exports. Were it not for silk and tea, the exports would be reduced by more than one half, and would be confined to opium, sugar, and a few articles so distinctively Chinese that they could not be obtained from any other country. With the gradual decay of the sugar trade, and the successful competition from Japan and Italy in silk, no decided increase in the takings of these commodities may be expected. On the other side, that of imports, petroleum and cotton cloths give the greatest part of the values from the United States. In each of these articles competition is encountered. The Russian oil is making inroads into the Asiatic markets, but not to the exclusion of the American product. Japan and British India manufacture a cloth equally well adapted for the Chinese market, and it is believed at a lower cost than the American goods. This advantage, now slight, may be increased as the wants of the market are better known, and the cotton industry of Japan is better equipped in labor and machinery.

It is not in Asia that new opportunities for American commerce should be sought. A monopoly, even partial in its nature, of the Cuban and Porto Rican markets would offer far larger returns in a year than a long period of Asian trade. Not finding a market in Spain for their chief products, these islands sought others, and the United States naturally absorbed a good part. In sugar here was the only market; and under the stimulus of free sugar the cultivation of the cane was greatly extended in Cuba, often with American capital. In 1894 nearly one half of the entire import of sugars into the United States was obtained from Cuba, and it is stated with confidence that a continuance of a free market would have led to a growth in the island sufficient to meet all the needs of this country, or more than four and a half billion pounds a year. In tobacco, in fruit, in coffee, and in all tropical products, the two possessions now slipping from Spain could rise to any demand made upon them. Nor is this an idle boast, though savoring of exaggeration. The existing populations of the islands would not be equal to it, and the scheme of making them dependent on the United States, whether under a protectorate or as annexed territory, looks to the introduction of a more active and less inert race, and the stimulus of larger capital, working for its own gains rather than for a band of foreign extortioners serving as the administration. The trade of a single year under favorable conditions in the past — and they could be only relatively favorable — has been six times the amount of the trade of the United States with China.

Nor would the advantage be only on the side of imports from these islands. The West Indies have always looked to the United States for certain supplies : flour and fish and such meats as are used, machinery, and wooden staves or box-shooks for packing their sugar and sugar products. The good quality of these articles was quite as potent in determining the direction of the trade as any question of actual cheapness. Early in the century England sought to restrict the transactions of her West Indies with the United States, and inflicted lasting damage upon their interests. Spain has maintained the same policy in all its vigor up to the present war, and has sucked the life-blood from her colonies by that tribute and a host of similar taxes. The reciprocity agreement entered into with Spain in 1891 opened the Cuban market to American flour, and gave proof of the importance of that market to our millers. Apart from certain articles of luxury, the United States could hold its own in the two islands, and here will be found the true openings for our commerce.

Worthington C. Ford.