Rising Sun--Falling Profits
I
WHEN Japan, almost a year ago, set out on what our strangely mild post-war vocabulary calls its ‘latest adventure,’ it was very generally believed that China, this time, was done for. The most extreme Chinese courage would be able to achieve nothing more than a gallant gesture of resistance. Only foreign aid could prolong the resistance beyond a few weeks. Yet it is now quite clear that, this was altogether the wrong way to put it. Japan is the one that cannot possibly succeed without strong backing from other countries.
The situation is worth a little realistic study, especially by those who urge indifference to the fate of the Far East, on the ground that Japan is first on the spot and strong enough to get what it wants. But is it? The argument of the bogus realists is that Americans, while sympathizing with the helplessness of China, ought to be careful not to antagonize Japan, because it is a victorious Japan that America will have to deal with after the war. But what if China turns out to be the winner?
The point to begin with is that even Japan’s first great victories and terrilorial gains were only tactical. They hid for a while, but could not hide permanently, a strategic defeat. Japan’s ‘continental policy’ of empire over Manchuria, Mongolia, and China has always been based on a theory of conquest in carefully regulated stages. At each move, the Chinese Government should be crowded out of a little more territory; but not kicked out so abruptly as to stampede the whole of China into general resistance. China, as the Japanese knew from the study of past history, has always been a loose collection of regions. All conquerors of the past had worked by breaking those regions apart, and then conquering some of them directly and some of them indirectly.
The Japanese theory assumes that this is precisely the kind of country that China is to-day; that China is the Unchanging East; that a provincial war lord or political boss always hates his own national government more than he fears a foreign invader, and will always talk business if allowed to retain part of his local power and to take a cut of the profits of conquest. The British and the French, when they marched on Peking in 1860-1861, brought coolies from the South who cheerfully helped them to subdue the North, doing the transport and other dirty work that colonial conquerors always hate to do for themselves.
Somewhere or other the theory went wrong; but where? It worked pretty well in Manchuria in 1931 (helped by the Chinese Government’s gamble on foreign intervention). It worked very nicely when Jehol was added to Manchuria, in 1933. Why has it worked less well since, and finally broken down altogether?
There is more than one answer. For one thing, the frontier provinces were China’s margin of expansion. Cutting off the margin of expansion inflicts a lot of suffering, but it is not like cutting into the body of the nation itself. The situation of China has become much more acute since then. The famous raw materials of North China, which Japan claims it must have or perish, — the coal and iron of Hopei, Shansi, and Chahar, the cotton of Hopei, Honan, and Shantung, — are even more desperately needed by China’s own young industries, which Japan hates and fears, and has for years tried to destroy by financial attacks and political demands for tariffs that would cripple Chinese enterprise. China’s industry is in mid-China, in the Yangtze Valley, but its raw materials come from the North. This was one reason for the hostility between midChina and North China under civil-war conditions; but the internal quarrels arising out of the Yangtze Valley’s attempts to subordinate the North were converted, for the first time, into a lifeand-death alliance by Japan’s attempt to conquer them both, separately.
II
Even more important, however, are certain changes that have happened in the Unchanging East. For a hundred years, the blood stream of China has been receiving repeated and increasing injections of strange and potent cultures from the West: new kinds of banking, industry, trade; new kinds of religion and education; new kinds of political and social thought. Nothing seemed to take much effect. Any Old China Hand could point out to you that modernstyle Chinese banking, industry, shipping, Chinese Christianity, Chinese returned-student sophistication, even the republican form of the government itself, were unhealthy excrescences. Under the partly mutilated and partly decorated integument, there was still the same old China, the Unchanging East. Now Japan — Japan was different. Japan had organically incorporated what it had taken from the West. There was iron in the Japanese blood. The Japanese were not going to be victimized. They took from the West what they could use, but they ‘retained the best values of the old Japanese culture.’ The Japanese were pretty formidable; but the Chinese were predestined to be bossed by somebody.
It seems to have occurred to surprisingly few people that Japan, when Perry muscled in on it, was a country under pretty tight control. The people who ran it had things the way they wanted them. Consequently, when they sized up Perry and saw that more like him would be coming around, they could do something about it. They had to change the way they ran things, but they still ran them. They had to cut out the Shogun and cut in the Mikado, but otherwise it was the same old deck, and they were still doing the dealing. This explains why, if you look into the pedigrees of the huge cartelized corporations that speak authoritatively for modern Japan, you will find that they (and the admirals and generals who run the navy and army) trace back to exactly the same families that ran feudal Japan. They have taken on a few recruits, yes; but that makes no more difference than in England, where soap, properly applied, will slide you into the House of Lords.
China, on the contrary, was not under anybody’s vigorous control when the Treaty Port era began. The Manchus, an alien dynasty, were in decay. The great families of the ‘scholar-gentry,’ the Aristocracy of the Educated, were also corrupt. There was no one to control and guide China’s borrowings from the West — not even the foreigners, who were competing with each other. It is no wonder that Westernization in China has always looked like gaudy banderillas on a Spanish bull — more irritating than penetrating. Old vested interests — the bureaucracy and the landlords — fought against new vested interests — the banks, industry, shipping. Between them, they begat warlordism. Both of them fought against the interests that were not ‘vested’ — the interests of the unprivileged. Civil wars were inevitable, and so were peasant risings; but no issue could ever be decided by them, because the assembled nations of the world were looking on and calling the rules. They demanded ‘law and order,’ which meant that nothing could be fought to a finish. Diplomatic notes defined the rules of ‘ law and order,’ and gunboats and garrisons enforced them.
Nevertheless, the effects of the injections China was getting were cumulative. They have all begun to operate at once, without any loss of their stored-up energy; and it is Japan that provides the explanation. Great Britain and America have submitted to being pushed aside by Japan, which has declared a fight to a finish. This means that China, as long as it can hold off Japan, can for the first time settle its own affairs in its own way. Neither Great Britain nor America can ring the bell and declare the end of a round, to prevent each faction in China from proving exactly how strong it really is. Since, at the same time, Japanese pressure forces the Chinese to settle their internal issues constructively, by pooling their resources, all China’s ‘revolutionary’ problems are being converted into a phase of unbelievably rapid evolution.
This ought to surprise Americans less than any other people. Our original Thirteen Colonies were badly disunited at the beginning of our War of Independence. If Great Britain had turned us loose in disgust at the very beginning, there would have been sanguinary fighting between our Tories and our extreme revolutionaries. It was the common war against the British and their alien mercenaries that forced us to settle all internal issues as quickly and as constructively as possible — with the result that, by the time we had our freedom, civil war was impossible. In spite of the deep-going differences between the slaveholding South and the free North, it took us two generations to work up a civil war.
III
If Japan were obviously going to conquer China in short order, we might dodge the issues I have so briefly indicated. We might pretend to be hardboiled realists and say it is all none of our business. The now obvious probability that China can win without being propped up, and the certainty that Japan cannot pull through without a heavy investment of British and American industrial resources, materials, and credits (Germany and Italy could not swing it), demand a more genuine realism in attempting to forecast the significance of the alternatives of Japanese and Chinese victory.
The men who modernized Japan did so by adding new kinds of power and wealth to the kinds they already had. The result is that the men and girls who turn out fantastic man-hour-machine results in the shining, ultra-rationalized factories of modern Japan are recruited from an agricultural population which is still on a standard that requires men, women, and children to stand knee-deep in the mud of rice paddies. The food production of Japan is very high per acre, but phenomenally low per manhour of labor. This means that the people who produce the food also supply the factories with labor at wages low enough to disturb the world. Japan invades the world market because it has to; because it strangles its domestic market. The Japanese cannot buy, use, and consume the things they make. Japan desperately needs raw materials, but it cannot use them in raising the standard of living of its own people, because it converts them either into armaments, for aggression, or into commodities for cut-rate sale on the world market, in order to get the income which can no longer be squeezed out of its strangled domestic market.
This is a state of affairs which carries over into the Japanese colonial empire. Korea, after twenty-seven years of Japanese rule, is so sullenly rebellious that the Japanese have never dared to arm the Koreans and use them as soldiers. The Korean standard of living has fallen so low that pauperized Korean labor is a serious menace in Japan itself. In 1935 the Korean Government-General published a book called Thriving Chosen, to celebrate the twenty-fifth anniversary of annexation. Unfortunately it has never been translated. This official publication divides ‘representative’ Korean farmers into three classes. A ‘first-class’ farmer is a man who has an annual deficit of 23.20 yen and an accumulated debt of 130 yen. Second-class and third-class farmers have slightly smaller annual deficits and debts - simply because their scale of living is so low that it resists further squeezing. The typical ‘first-class’ farmer is partly an owner and partly a tenant; he cultivates about four and one-half acres of land, and he and his family have no less than 290 days a year that are curiously described as ‘utilizable for further work’ — which means that they cannot get enough land to keep them busy, and are forced by their annual deficit and their debts to look for any other work they can get at pauper rates.
Things are not yet as bad as that in Manchukuo, but they are going that way; cheap Korean and Manchurian labor is creating a new cheap industrialism which competes even with that of Japan itself. Nor can things be improved. Korea and Manchuria cannot be made contented and prosperous unless their standard of living is raised, so that the people get some benefit out of being ruled by Japan. That is impossible, because the people of Japan are promised that eventually it is they themselves who are to be made prosperous by the riches of empire. If the standard of living of the empire were to be raised, but not that of Japan, the Japanese would be disillusioned and furious; but if the standard of living of Japan were raised, Japan could not get money for armaments by selling at cut rates on the world market. It is either prosperity at home or war abroad; and those who rule Japan prefer war abroad, because the price of prosperity at home is the surrender of the controlling oligarchy to drastic social-economic reforms.
The result is that all Japan’s conquests, instead of solving Japan’s problems, actually make them even worse, and at the same time hugely increase the geographical area in which they have to be met — or evaded — and decrease the area of profitable trade for other countries. It is this question of evasion that is vital for countries like America. A new Japanese ‘realism’ has lately become more and more articulate. The argument runs like this: We are the only bulwark against a Bolshevizcd Asia. We have to be rough about it; but you know how things are in this hard, real world. At the same time, we have practical propositions to make. We are going to rule China, but we are willing to admit that we have n’t the money or the resources to exploit it. While we do the ruling, you can invest profitably in our enterprises. You won’t have any control, and you won’t have any Open Door, but your dividends will be guaranteed — look at the South Manchuria Railway and its whacking dividends — and China will be policed and orderly, and there won’t be any Red Menace.
IV
What this says and what it means are two very different things. How would these American investments be used? Korea and Manchuria and Japan, where American investments are a good deal heavier than they are in China, provide the answer. They would be used to energize Japanese competition outside the Japanese empire. They would result in wider Japanese competition all over the world, cutting into America’s foreign shipping revenue, trading profits, banking profits, and insurance profits, and at the same time throwing Americans in America out of work. This is not only a general statement: it can be made specific. One of Japan’s declared purposes is to develop a North China cotton supply that would free it of dependence on American cotton. As in cotton, so in everything else; the money of some Americans, invested in North China, would be used to compete with and lower the standard of living of all Americans.
As for China, it is frequently said that an independent China would be simply a bigger and more dangerous Japan. I do not think so, and for definite reasons; and besides, a China ruled by Japan would certainly make a bigger and more dangerous Japan. In order to forecast the character of a victorious post-war China it is necessary to remember that the nation which comes out of a war is never the same nation that it was when it went into the war. The difference depends largely on what it was lighting for, and whether the result is disillusioning (as it was for us in 1919) or inspiring (as it was for us when we won our independence).
China went into this war a backward country. It cannot win unless it becomes vastly more progressive and constructive. It cannot win without appalling sacrifices on the part of the whole nation — the lives of those who have lives to give, and the money of those who have money to give. It cannot win unless, in the course of the war, it tremendously increases the strength of the National Government and improves the democratic mechanism by which the government serves the interest of the nation and hears and acts on the will of the people.
The last thing that the Chinese will tolerate, after the sacrifices they are now making, is a further sacrifice in peacetime to the special interests of any group. Neither the Kuomintang nor the Communists, nor provincial war lords like Pai Chung-hsi and Li Tsungjen (immensely powerful in their own bailiwick before the war, but now throwing everything they have into the common struggle), will be able to ‘capture’ the government or part of the country after a victorious peace. The only way that a Chinese government will be able to stay in power will be by acting swiftly and effectively in the national interest.
Immense constructive enterprises will have to be undertaken, immediately. That will mean investment for everybody, in any part of the world, who has money to invest. In order to assure the people that they really have something worth their sacrifices, the whole standard of living in China will have to be raised. That will mean trade, production, and enterprise of every kind. It will mean wide competition, of the only kind healthy to capitalistic enterprise: competition geared to a rising standard of living.
Both in order to get what they need as cheap as possible and in order to avoid falling under the control of any one power, the Chinese will have to throw the Open Door wide open, and keep it open. That, I think, is the clinching argument. America’s classic Far Eastern policy of the Open Door has never been anything but a gamble in futures. It was founded in the first place on the clear and logical assumption that China must some day develop, and that the development must not be monopolized by any one country; that there must be competition and that it must be healthy. It would be the most disastrous defeat in the history of America’s participation in world affairs if, just as we are coming within reach of the evolutionary, nonrevolutionary liberation of China foreseen by John Hay and guarded as an article of faith in our Far Eastern policy ever since, we should bring it to abortion by lending our money, our industry, and our political influence to the uses of Japan.