Modern Asian Studies 40,3(2006)pp.737-759.2006 Cambridge University Press doi:10.1017/S0026749X06002174 Printed in the United Kingdom Foreign Devils,Finance and Informal Empire:Britain and China c.1900-19I2* IAN PHIMISTER University of Sheffield and University of Pretoria 'An imperial policy is essentially a commercial policy' (Charles Addis,1905) Look at the way we have swindled the Chinese in the case of the Pekin Syndicate and still worse in the case of the Chinese Engineering and Mining Company' (G.E.Morrison,1906) The template for British policy towards China from the 18gos until the collapse of the Manchu dynasty in 1911,write Peter Cain and Tony Hopkins,was 'an effective if sometimes awkward collaboration between...the Foreign Office and the Hongkong and Shanghai Bank'. It was this alliance that underpinned the successful achievement of Whitehall'stwin aims of upholding China's territorial integrity while also advancing Britain's economic and especially financial interests during a period of intense international rivalry in the Far East'. In the course of moving towards this goal even as they maintained the credit-worthiness of the Chinese government,the Foreign Office and the Hongkong and Shanghai Bank 'cooperated so closely that it is misleading as well as unnecessary to speak of one dominating the other,not least because they were manned by the same sort of [gentlemanly capitalist]people.One such individual was Sir Charles Addis,from 1905 onwards in charge of the London Office of the Hongkong and Shanghai Bank,and close confidant of the Foreign Office.Declaring his belief that 'to resent the intrusion of politics into business is to do injury to both',Addis and other agents of gentlemanly capitalism like him not only hoped that China 'would remain strong and independent',but also that it would be converted to progress "Financial assistance from The Leverhulme Trust is gratefully acknowledged. P.Cain and A.Hopkins,British Imperialism 1688-2000(Harlow:Longman,2002), Pp.361,38o. 0026-749X/o6/s7-50+$0.10 737
Modern Asian Studies 40, 3 (2006) pp. 737–759. C 2006 Cambridge University Press doi:10.1017/S0026749X06002174 Printed in the United Kingdom Foreign Devils, Finance and Informal Empire: Britain and China c.1900–1912∗ IAN PHIMISTER University of Sheffield and University of Pretoria ‘An imperial policy is essentially a commercial policy’ (Charles Addis, 1905) ‘Look at the way we have swindled the Chinese in the case of the Pekin Syndicate and still worse in the case of the Chinese Engineering and Mining Company’ (G.E. Morrison, 1906) The template for British policy towards China from the 1890s until the collapse of the Manchu dynasty in 1911, write Peter Cain and Tony Hopkins, was ‘an effective if sometimes awkward collaboration between ...the Foreign Office and the Hongkong and Shanghai Bank’. It was this alliance that underpinned the successful achievement of Whitehall’s ‘twin aims of upholding China’s territorial integrity while also advancing Britain’s economic and especially financial interests during a period of intense international rivalry in the Far East’. In the course of moving towards this goal even as they maintained the credit-worthiness of the Chinese government, the Foreign Office and the Hongkong and Shanghai Bank ‘cooperated so closely that it is misleading as well as unnecessary to speak of one dominating the other, not least because they were manned by the same sort of [gentlemanly capitalist] people’.1 One such individual was Sir Charles Addis, from 1905 onwards in charge of the London Office of the Hongkong and Shanghai Bank, and close confidant of the Foreign Office. Declaring his belief that ‘to resent the intrusion of politics into business is to do injury to both’, Addis and other agents of gentlemanly capitalism like him not only hoped that China ‘would remain strong and independent’, but also that ‘it would be converted to progress ∗Financial assistance from The Leverhulme Trust is gratefully acknowledged. 1 P. Cain and A. Hopkins, British Imperialism1688−2000 (Harlow: Longman, 2002), pp. 361, 380. 0026–749X/06/$7.50+$0.10 737
738 IAN PHIMISTER through a programme of "responsible lending"which Britain was uniquely qualified,and therefore morally obliged,to undertake'? Yet for all its many merits in explaining the important shift in emphasis from an initial concern with markets for exports from India and Britain to a preoccupation with opportunities for finance, such a view of British business interests in China may be too narrowly focused.Because it remains largely within a framework established by earlier studies all of which concentrated on banking and railways,3 it completely ignores mining,the most sought-after sphere of concessions after railways themselves.Arguably too,it is a perspective that pays insufficient attention to links between the non-banking companies actually involved in China at this time.When this is done-and the larger part of this paper looks in some detail at the interests and operations of two of the largest City-registered companies and their relationship with the Foreign Office-a quite different picture emerges.Scrutiny of the affairs of the Chinese Engineering and Mining Company,and the Pekin Syndicate,and to a lesser extent the Yangtse Valley Company,reveals a world far removed from the one described in the subject's conventional wisdom. It is one in which the cross-cutting cosmopolitan interests subsumed under 'the City'pulled in different directions at different times. Frequently highly speculative,they were occasionally fraudulent as well.The ensuing relationship with British imperial interests was considerably more ragged than either smooth assertions of 'credit worthiness'or seamless formulations of 'gentlemanly capitalism' presently acknowledge I As is well-established in the scholarly literature,the battle for railway and mining concessions in China reached its height between 1895 and 1goo,that is,in the years after the Sino-Japanese War and the end of the Boxer Rising.Less frequently noted,though,is that 2 Ibid,pp.374-5.For Addis,see especially R.Dayer,Finance and Empire:Sir Charles Addis,1861-1945 (London:Macmillan,1989). 3 Most notably,F.King,The History of the Hongkong and Shanghai Bank (Cambridge: Cambridge University Press,1987);and E.Edwards,British Diplomacy and Finance in China,1895-1914(Oxford:Clarendon Press,1987). N.Pelcovits,Old China Hands and the Foreign Office (New York:King's Crown Press, 1948),p.190
738 IAN PHIMISTER through a programme of “responsible lending” which Britain was uniquely qualified, and therefore morally obliged, to undertake’.2 Yet for all its many merits in explaining the important shift in emphasis from an initial concern with markets for exports from India and Britain to a preoccupation with opportunities for finance, such a view of British business interests in China may be too narrowly focused. Because it remains largely within a framework established by earlier studies all of which concentrated on banking and railways,3 it completely ignores mining, the most sought-after sphere of concessions after railways themselves. Arguably too, it is a perspective that pays insufficient attention to links between the non-banking companies actually involved in China at this time. When this is done – and the larger part of this paper looks in some detail at the interests and operations of two of the largest City-registered companies and their relationship with the Foreign Office – a quite different picture emerges. Scrutiny of the affairs of the Chinese Engineering and Mining Company, and the Pekin Syndicate, and to a lesser extent the Yangtse Valley Company, reveals a world far removed from the one described in the subject’s conventional wisdom. It is one in which the cross-cutting cosmopolitan interests subsumed under ‘the City’ pulled in different directions at different times. Frequently highly speculative, they were occasionally fraudulent as well. The ensuing relationship with British imperial interests was considerably more ragged than either smooth assertions of ‘credit worthiness’ or seamless formulations of ‘gentlemanly capitalism’ presently acknowledge. I As is well-established in the scholarly literature, the battle for railway and mining concessions in China reached its height between 1895 and 1900, that is, in the years after the Sino-Japanese War and the end of the Boxer Rising.4 Less frequently noted, though, is that 2 Ibid., pp. 374−5. For Addis, see especially R. Dayer, Finance and Empire: Sir Charles Addis, 1861−1945 (London: Macmillan, 1989). 3 Most notably, F. King, The History of the Hongkong and Shanghai Bank (Cambridge: Cambridge University Press, 1987); and E. Edwards, British Diplomacy and Finance in China, 1895−1914 (Oxford: Clarendon Press, 1987). 4 N. Pelcovits, Old China Hands and the Foreign Office (New York: King’s Crown Press, 1948), p. 190
BRITAIN AND CHINA 739 much this same period was characterised by a succession of share manias in mining and other City of London markets.So pervasive was the atmosphere of speculation that in 1898,following a speech by the Lord Chief Justice,Lord Russell,in which he deprecated the prostitution of the limited liability system to the greed of unscrupu- lous persons',several London newspapers denounced the tide of demoralisation which has threatened at times to turn the British Empire into a more or less shady company concern'.This was the context in which the Pekin Syndicate (1898),the Yangtse Valley Syn- dicate (1899),and the Oriental Syndicate (1899)were all launched. These concerns,variously described as 'respectable British enter- prises',6 and as financial instruments'exemplifying free-standing companies',7 were not in fact what they were taken for by later historians.In the first place,they were not straightforwardly British' companies.The London-registered Pekin Syndicate,for example, which started life as an Anglo-Italian concern,soon came to depend on French investors for its continued existence.8 Secondly,as some con- temporaries appreciated,these enterprises were less than respectable. They were also closely interlinked.From the start,they were directed or advised by three important individuals:Carl Meyer(representing Rothschilds money),Percy Tarbutt (representing South African mining groups),and Edmund Davis(representing Belgian interests). Often enough,they sat on the same board of directors.All of them played key roles in shaping the pattern of British investment in China, not least in the case of the Chinese Engineering and Mining Company, the largest single industrial firm in China registered in the City. 5 S.and B.Webb,The Decay of Capitalist Civilisation (London:The Fabian Society, 1923),p.106;and Daily Chronicle,1o November 1898;both as cited in G.Searle, Corruption in British Politics 1895-1930(Oxford:Clarendon Press,1987),pp.38-9. 6 D.McLean,Chinese Railways and the Townley Agreement of 1903',Modern Asian Studies,7:2(1973),p.145- Cain and Hopkins,British Imperialism,p.371.For Edwards,the Pekin Syndicate was a 'substantial concern'backed by 'solid City interests';see his British Diplomacy and Finance,pp.196,33. 8 J.Osterhammel,British business in China,1860s-195os',in R.Davenport- Hines and G.Jones(eds),British Business in Asia Since r860(Cambridge:Cambridge University Press,198g),p.197.See also,The Critic,12 November 1898. 9 For directors of,and shareholders in,the Yangtse Valley Syndicate;the Pekin Syndicate Investment Trust Ltd;and the Chinese Mining and Engineering Company; see respectively BT s1/8558/62317;BT31/8o76/5821g;and BT31/9233/68532, PRO.For the Oriental Syndicate,see E.Davis to Lord Lansdowne,26 June 1903, FO 17/1759,PRO.The Oriental Syndicate was itself largely owned by Davis' Anglo-Continental Gold Syndicate,for which see The Stock Exchange Year Book,1897;
BRITAIN AND CHINA 739 much this same period was characterised by a succession of share manias in mining and other City of London markets. So pervasive was the atmosphere of speculation that in 1898, following a speech by the Lord Chief Justice, Lord Russell, in which he deprecated the prostitution of the limited liability system to ‘the greed of unscrupulous persons’, several London newspapers denounced ‘the tide of demoralisation which has threatened at times to turn the British Empire into a more or less shady company concern’.5 This was the context in which the Pekin Syndicate (1898), the Yangtse Valley Syndicate (1899), and the Oriental Syndicate (1899) were all launched. These concerns, variously described as ‘respectable British enterprises’,6 and as ‘financial instruments’ exemplifying ‘free-standing companies’,7 were not in fact what they were taken for by later historians. In the first place, they were not straightforwardly ‘British’ companies. The London-registered Pekin Syndicate, for example, which started life as an Anglo-Italian concern, soon came to depend on French investors for its continued existence.8 Secondly, as some contemporaries appreciated, these enterprises were less than respectable. They were also closely interlinked. From the start, they were directed or advised by three important individuals: Carl Meyer (representing Rothschilds money), Percy Tarbutt (representing South African mining groups), and Edmund Davis (representing Belgian interests). Often enough, they sat on the same board of directors. All of them played key roles in shaping the pattern of British investment in China, not least in the case of the Chinese Engineering and Mining Company, the largest single industrial firm in China registered in the City.9 5 S. and B. Webb, The Decay of Capitalist Civilisation (London: The Fabian Society, 1923), p. 106; and Daily Chronicle, 10 November 1898; both as cited in G. Searle, Corruption in British Politics 1895−1930 (Oxford: Clarendon Press, 1987), pp. 38−9. 6 D. McLean, ‘Chinese Railways and the Townley Agreement of 1903’, Modern Asian Studies, 7:2 (1973), p. 145. 7 Cain and Hopkins, British Imperialism, p. 371. For Edwards, the Pekin Syndicate was a ‘substantial concern’ backed by ‘solid City interests’; see his British Diplomacy and Finance, pp. 196, 33. 8 J. Osterhammel, ‘British business in China, 1860s–1950s’, in R. DavenportHines and G. Jones (eds), British Business in Asia Since 1860 (Cambridge: Cambridge University Press, 1989), p. 197. See also, The Critic, 12 November 1898. 9 For directors of, and shareholders in, the Yangtse Valley Syndicate; the Pekin Syndicate Investment Trust Ltd; and the Chinese Mining and Engineering Company; see respectively BT 31/8558/62317; BT 31/8076/58219; and BT 31/9233/68532, PRO. For the Oriental Syndicate, see E. Davis to Lord Lansdowne, 26 June 1903, FO 17/1759, PRO. The Oriental Syndicate was itself largely owned by Davis’ Anglo-Continental Gold Syndicate, for which see The Stock Exchange Year Book, 1897;
740 IAN PHIMISTER The first Chinese Engineering and Mining Company was established in 1878 to work extensive coal deposits in and around Kaiping.10 Entirely Chinese owned,it expanded more or less steadily until the late 18gos,by which time annual output was c.780,oo0 tons.Some gooo labourers were employed.I Foreign capital was not sought before 1898,when a loan of f2o0,ooo was raised to develop the ice-free deep water port of Chingwangtao.These funds and related issues had earlier been discussed by the Director General of the Kaiping Collieries,Zhang Yi,12 with Charles Moreing,a well-known City figure and chief partner in the London-based firm of Bewick,Moreing, mining consultants.13 On the lookout for new mining prospects in the aftermath of the recent collapse of the Westralian'boom,Moreing was quick to see that the proposed modernisation of China's mining industry promised rich pickings.His firm promptly applied for half of the bonds of the Chingwantao loan,and he arranged for one of Bewick,Moreing's most talented mining engineers to take charge of the newly established Bureau of Mines in northern China.This was Herbert Hoover,who much later on was to become President of the United States of America.14 Hoover arrived in Tienstin in 1899,but had barely taken up the reins before an already difficult situation was rendered immeasurably more complicated by the Boxer Rising. In the ensuing chaos,it seemed to some Chinese officials that the only way of preventing foreign Powers from seizing Chinese assets as compensation for the murder of their citizens and damage to property, was to involve overseas investors in them.And when Russian and Japanese troops began occupying the Kaiping Collieries complex,this prompted Zhang Yi to cast about for ways of rapidly transforming the existing Chinese Engineering and Mining Company into a and especially His Excellency Chang Yen Mao...v.Beioick Moreing and Company,Herbert Charles Hoover,Charles Algernon Moreing,Edmund Davis,Walton Fitzjames Turner and Albert Thys,High Court of Justice,Chancery Division,10 April 1905,pp.4-11,J4/6971, PRO. 10E.Carlson,The Kaiping Mines,1877-19r2(Cambridge,Mass:Harvard University Press,1971),passim.The wider context is discussed in T.Wright,Coal Mining in China's Economy and Society 1895-1937(Cambridge:Cambridge University Press,1984). i1 The Statist,20July 1901. 12 Variously Zhang Yanmou'and 'Chan yen Mao'.See Wang Yuru,Capital Formation and Operating Profits of the Kailuan Mining Administration (1903- enChacles gmo in D Jeremy (ed.),Dictionary of Business Biography (London:Butterworth,1984). 14 G.Nash,The Life of Herbert Hoover.The Engineer,1874-1914(New York:Norton, 198g)
740 IAN PHIMISTER The first Chinese Engineering and Mining Company was established in 1878 to work extensive coal deposits in and around Kaiping.10 Entirely Chinese owned, it expanded more or less steadily until the late 1890s, by which time annual output was c.780,000 tons. Some 9000 labourers were employed.11 Foreign capital was not sought before 1898, when a loan of £200,000 was raised to develop the ice-free deep water port of Chingwangtao. These funds and related issues had earlier been discussed by the Director General of the Kaiping Collieries, Zhang Yi,12 with Charles Moreing, a well-known City figure and chief partner in the London-based firm of Bewick, Moreing, mining consultants.13 On the lookout for new mining prospects in the aftermath of the recent collapse of the ‘Westralian’ boom, Moreing was quick to see that the proposed modernisation of China’s mining industry promised rich pickings. His firm promptly applied for half of the bonds of the Chingwantao loan, and he arranged for one of Bewick, Moreing’s most talented mining engineers to take charge of the newly established Bureau of Mines in northern China. This was Herbert Hoover, who much later on was to become President of the United States of America.14 Hoover arrived in Tienstin in 1899, but had barely taken up the reins before an already difficult situation was rendered immeasurably more complicated by the Boxer Rising. In the ensuing chaos, it seemed to some Chinese officials that the only way of preventing foreign Powers from seizing Chinese assets as compensation for the murder of their citizens and damage to property, was to involve overseas investors in them. And when Russian and Japanese troops began occupying the Kaiping Collieries complex, this prompted Zhang Yi to cast about for ways of rapidly transforming the existing Chinese Engineering and Mining Company into a and especially His Excellency Chang Yen Mao... v. Bewick Moreing and Company, Herbert Charles Hoover, Charles Algernon Moreing, Edmund Davis, Walton Fitzjames Turner and Albert Thys, High Court of Justice, Chancery Division, 10 April 1905, pp. 4–11, J4/6971, PRO. 10 E. Carlson,The Kaiping Mines, 1877–1912 (Cambridge, Mass: Harvard University Press, 1971), passim. The wider context is discussed in T. Wright, Coal Mining in China’s Economy and Society 1895–1937 (Cambridge: Cambridge University Press, 1984). 11 The Statist, 20 July 1901. 12 Variously ‘Zhang Yanmou’ and ‘Chan yen Mao’. See Wang Yuru, ‘Capital Formation and Operating Profits of the Kailuan Mining Administration (1903– 1937)’, Modern Asian Studies, 28, 1 (1994), p. 100. 13 For details of his career, see G. Burke, ‘Moreing, Charles Algernon’, in D. Jeremy (ed.), Dictionary of Business Biography (London: Butterworth, 1984). 14 G. Nash, The Life of Herbert Hoover. The Engineer, 1874–1914 (New York: Norton, 1983)
BRITAIN AND CHINA 741 London-registered entity.That Zhang's motives were entirely altrui- stic was later hotly disputed,but whatever they were,he very soon found himself out-maneuvered by those with whom he had chosen to work.15 Documents drawn up on Moreing and Hoover's instructions, which apparently replaced the existing Chinese Engineering and Mining Company with a new company of the same name (hereafter CEMC),to be jointly managed by Chinese and European interests following a substantial injection of foreign capital,actually had the effect by May 1901 of transferring the entire ownership, including the newly developed harbour facilities at Chingwantao, into European hands.Not to put too fine a point on it,the previous Chinese owners were defrauded of their property.16 With the CEMC capitalised at f1,o0o,ooo,its promoters profited handsomely from their involvement in the affair.The interlocking syndicates and companies which they variously directed did even better.At no cost to themselves,they took possession of625,o00 CEMC shares distributed at par once the mining rights obtained by Moreing had been made over. Holders of the old Kaiping shares received the balance of 375,000 shares,not enough to threaten control now exercised in London and Brussels by people who had paid nothing for their shares'.A further f500,ooo in debentures was raised to clear the debts of the old company and provide working capital for the new one.A large number of free shares were given to those friends of the promoters who took up this issue.Everything was done 'quietly and privately, and at no stage were the debentures placed on the open market.Once again the promotional profits were...tremendous'17 Working behind the scenes and pulling the financial strings was the Oriental Syndicate in which Edmund Davis was the leading light.18 With the City not surprisingly wary of Chinese issues 15 Far Eastern Review,November 1928.See also,Carlson,Kaiping Mines,pp.67-9; and Nash,Hoover,pp.125-81. 16 Hou Chi-ming,Foreign Investment and Economic Development in China,1840-1937 (Cambridge,Mass:Harvard University Press,1965),pp.73-4. 17 Carlson,Kaiping Mines,pp.69-73.See also,Nash,Hoover,pp.170-6. 8For Davis's business career,see R.Davenport-Hines,Sir Edmund Gabriel Davis', in Jeremy (ed.),Dictionary of Business Biography.More of Davis'social and cultural background is sketched in I.Phimister,Sir Edmund Davis',Oxford Dictionary ofNational Biography (Oxford:Oxford University Press,2004)
BRITAIN AND CHINA 741 London-registered entity. That Zhang’s motives were entirely altruistic was later hotly disputed, but whatever they were, he very soon found himself out-maneuvered by those with whom he had chosen to work.15 Documents drawn up on Moreing and Hoover’s instructions, which apparently replaced the existing Chinese Engineering and Mining Company with a new company of the same name (hereafter CEMC), to be jointly managed by Chinese and European interests following a substantial injection of foreign capital, actually had the effect by May 1901 of transferring the entire ownership, including the newly developed harbour facilities at Chingwantao, into European hands. Not to put too fine a point on it, the previous Chinese owners were defrauded of their property.16 With the CEMC capitalised at £1,000,000, its promoters profited handsomely from their involvement in the affair. The interlocking syndicates and companies which they variously directed did even better. At no cost to themselves, they took possession of 625,000 CEMC shares distributed at par once the mining rights obtained by Moreing had been made over. Holders of the old Kaiping shares received the balance of 375,000 shares, not enough to threaten control now exercised in London and Brussels by ‘people who had paid nothing for their shares’. A further £500,000 in debentures was raised to clear the debts of the old company and provide working capital for the new one. A large number of free shares were given to those friends of the promoters who took up this issue. Everything was done ‘quietly and privately’, and at no stage were the debentures placed on the open market. Once again the ‘promotional profits were ...tremendous’.17 Working behind the scenes and pulling the financial strings was the Oriental Syndicate in which Edmund Davis was the leading light.18 With the City not surprisingly wary of Chinese issues 15 Far Eastern Review, November 1928. See also, Carlson, Kaiping Mines, pp. 67–9; and Nash, Hoover, pp. 125–81. 16 Hou Chi-ming, Foreign Investment and Economic Development in China, 1840–1937 (Cambridge, Mass: Harvard University Press, 1965), pp. 73–4. 17 Carlson, Kaiping Mines, pp. 69–73. See also, Nash, Hoover, pp. 170–6. 18 For Davis’s business career, see R. Davenport-Hines, ‘Sir Edmund Gabriel Davis’, in Jeremy (ed.), Dictionary of Business Biography. More of Davis’ social and cultural background is sketched in I. Phimister, ‘Sir Edmund Davis’, Oxford Dictionary of National Biography (Oxford: Oxford University Press, 2004)
742 IAN PHIMISTER during the Boxer upheavals,19 and lacking sufficient financial clout himself,Moreing initially turned to Brussels,where the Compagne Internationale d'Orient had been formed in March 1goo with the express intention of exploiting what it believed to be 'the boundless resources of the Orient'.Backed by the most important people in Belgian and international industry,commerce and finance',its shareholders included the International Bank of Brussels,the Central Bank of Antwerp,the Bank of Outremer,as well as French,German and Russian banking houses.Railway and shipping interests were also prominently represented.They were joined within a year by the Hongkong and Shanghai Bank,and by Japanese investors.The chairman of the Compagnie Internationale was Colonel Albert Thys, at that time chief financial advisor to Leopold II,King of Belgium.20 Moreing knew that the Compagne Internationale had been buying up Chingwantao bonds,but for his part,Thys was not persuaded that Moreing on his own could give legal and financial effect to the CEMC documents in his possession.Thys was,however,prepared to invest in any 'well-formed English group of which the Moreing firm was part'?1 This is where Davis and the Oriental Syndicate came in.Davis and Moreing knew each other from the Westralian'market,and Davis was of course already involved in China through the Pekin Syndicate and the Yangtse Valley Company.Still more to the point,Davis had recently demonstrated an extraordinary ability to raise capital in the most unpropitious of circumstances,securing French backing during the Boxer Uprising for a Pekin Syndicate issue.Subsequently celebrated by his Belgian partners as a man'endowed with a stubborn will and a rare energy,2 it was Davis who carried the thing through from start to finish.In the course of much coming and going between 19 At the Chinese Engineering and Mining Company's Third General Meeting held on 13th September 1904,Moreing told shareholders that 'at that time all the largest firms involved in Chinese affairs were disdainful of this project'. 20 Louis Magne,Kaiping',Le Courrier de la Bourse et de la Banque,26-7June 1904. 2G.Kurgan-Van Hentenryk,Leopold II et les groupes financiers belges en Chine:La politique royale et ses prolongements (1895-1914)(Brussels:Palais des Academies,1972), p.69o.For a wider look at Leopold's business concerns,see N.Ascherson,The King Incorporated (New York:Doubleday,1964);and L.Bauer,Leopold the Unloved.King of the Belgians and of Money (London:Cassell,1934). 22J-M.Frochisse,La Belgique et la Chine:Relations Diplomatiques et Economiques(1839 rgog)(Louvain,1936),p.387:Edmund Davis...doue d'une volonte tenace et d'une energie peu commune.C'est Davis qui reunit la majorite des capitaux indispensables a l'acquisition de Kaiping'.French investment in the Pekin Syndicate is discussed further in King,Heritage of the Boxer Uprising-the Boxer Indemnity and related consequences',unpub.2001
742 IAN PHIMISTER during the Boxer upheavals,19 and lacking sufficient financial clout himself, Moreing initially turned to Brussels, where the Compagne Internationale d’Orient had been formed in March 1900 with the express intention of exploiting what it believed to be ‘the boundless resources of the Orient’. Backed by ‘the most important people in Belgian and international industry, commerce and finance’, its shareholders included the International Bank of Brussels, the Central Bank of Antwerp, the Bank of Outremer, as well as French, German and Russian banking houses. Railway and shipping interests were also prominently represented. They were joined within a year by the Hongkong and Shanghai Bank, and by Japanese investors. The chairman of the Compagnie Internationale was Colonel Albert Thys, at that time chief financial advisor to Leopold II, King of Belgium.20 Moreing knew that the Compagne Internationale had been buying up Chingwantao bonds, but for his part, Thys was not persuaded that Moreing on his own could give legal and financial effect to the CEMC documents in his possession. Thys was, however, prepared to invest in any ‘well-formed English group of which the Moreing firm was part’.21 This is where Davis and the Oriental Syndicate came in. Davis and Moreing knew each other from the ‘Westralian’ market, and Davis was of course already involved in China through the Pekin Syndicate and the Yangtse Valley Company. Still more to the point, Davis had recently demonstrated an extraordinary ability to raise capital in the most unpropitious of circumstances, securing French backing during the Boxer Uprising for a Pekin Syndicate issue. Subsequently celebrated by his Belgian partners as a man ‘endowed with a stubborn will and a rare energy’,22 it was Davis who carried the thing through from start to finish. In the course of much coming and going between 19 At the Chinese Engineering and Mining Company’s Third General Meeting held on 13th September 1904, Moreing told shareholders that ‘at that time all the largest firms involved in Chinese affairs were disdainful of this project’. 20 Louis Magne, ‘Kaiping’, Le Courrier de la Bourse et de la Banque, 26–7 June 1904. 21 G. Kurgan-Van Hentenryk, Leopold II et les groupes financiers belges en Chine: La politique royale et ses prolongements (1895–1914) (Brussels: Palais des Academies, 1972), p. 690. For a wider look at Leopold’s business concerns, see N. Ascherson, The King Incorporated (New York: Doubleday, 1964); and L. Bauer, Leopold the Unloved. King of the Belgians and of Money (London: Cassell, 1934). 22 J-M. Frochisse, La Belgique et la Chine: Relations Diplomatiques et Economiques (1839– 1909)(Louvain, 1936), p. 387: ‘Edmund Davis... dou´e d’une volont´e tenace et d’une ´energie peu commune. C’est Davis qui r´eunit la majorit´e des capitaux indispensables `a l’acquisition de Kaiping’. French investment in the Pekin Syndicate is discussed further in King, ‘Heritage of the Boxer Uprising – the Boxer Indemnity and related consequences’, unpub. 2001
BRITAIN AND CHINA 743 London and Brussels between 1901 and 1904,Davis and Thys built up a close working relationship At first,Thys and those close to Leopold were suspicious,going so far as to look for other possible partners. Believing that France is the only country not to view Belgian efforts in China with toojealous an eye',Leopold's circle were initially worried that the English government [would]exert pressure on its nationals, who are involved in the matter,to prevent them from keeping the rather risky commitments that they have undertaken'.But Thys soon enough changed his mind.To some extent,he was left with little choice after his covert approaches to various French and Russian banks were rebuffed,but mainly it was because he too came to appreciate the value of having the CEMC protected by the Union Jack.Between them,Davis and Thys succeeded in winning additional support from a number of German banks and wealthy City investors.The Hongkong and Shanghai Bank was persuaded to increase its stake.23 From mid-1902,Davis and Thys also found common cause in working together against Moreing,whom they suspected of having needlessly further antagonised Zhang Yi.They came to believe that Moreing had profited from the delayed transfer ofbearer shares meant to smooth Zhang's ruffled feathers,and were convinced early in the New Year that Moreing had outlived his usefulness when he made such a poor impression during a meeting with the Foreign Office that he was shown the door.24 Here too it was Davis who succeeded in easing Moreing away from the centre of the CEMC,and eventually out of the company altogether.By 1907,Moreing was completely out of the picture.In return for strengthening Brussel's influence to the point where,by the second half of 1903,the CEMC was practically'Belgian-controlled,even if the Foreign Office was led to believe otherwise,Davis won Compagne Internationale d'Orient investment for his Yangtse Valley Syndicate.As Thys explained to Leopold,the Syndicate had a list of shareholders of the highest order which includes the largest houses in London.It has no interest in the Kaiping Company,but is directed by the same people who are with us,against Moreing....The proposed arrangement,which has a moderate financial commitment on our part,would give us the right to 50%in all the business dealt with by this group and notably in the 2 Emile Franqui to King Leopold,8 August 1901,19 May 1902;Emile Franqui Papers File 108,Archives Generales du Royaume,Brussels. 24 Kurgan-Van Hentenryk,Leopold II,pp.708,711
BRITAIN AND CHINA 743 London and Brussels between 1901 and 1904, Davis and Thys built up a close working relationship At first, Thys and those close to Leopold were suspicious, going so far as to look for other possible partners. Believing that ‘France is the only country not to view Belgian efforts in China with too jealous an eye’, Leopold’s circle were initially worried that ‘the English government [would] exert pressure on its nationals, who are involved in the matter, to prevent them from keeping the rather risky commitments that they have undertaken’. But Thys soon enough changed his mind. To some extent, he was left with little choice after his covert approaches to various French and Russian banks were rebuffed, but mainly it was because he too came to appreciate the value of having the CEMC protected by the Union Jack. Between them, Davis and Thys succeeded in winning additional support from a number of German banks and wealthy City investors. The Hongkong and Shanghai Bank was persuaded to increase its stake.23 From mid-1902, Davis and Thys also found common cause in working together against Moreing, whom they suspected of having needlessly further antagonised Zhang Yi. They came to believe that Moreing had profited from the delayed transfer of bearer shares meant to smooth Zhang’s ruffled feathers, and were convinced early in the New Year that Moreing had outlived his usefulness when he made such a poor impression during a meeting with the Foreign Office that he was shown the door.24 Here too it was Davis who succeeded in easing Moreing away from the centre of the CEMC, and eventually out of the company altogether. By 1907, Moreing was completely out of the picture. In return for strengthening Brussel’s influence to the point where, by the second half of 1903, the CEMC was ‘practically’ Belgian-controlled, even if the Foreign Office was led to believe otherwise, Davis won Compagne Internationale d’Orient investment for his Yangtse Valley Syndicate. As Thys explained to Leopold, the Syndicate had ‘a list of shareholders of the highest order which includes the largest houses in London. It has no interest in the Kaiping Company, but is directed by the same people who are with us, against Moreing ... . The proposed arrangement, which has a moderate financial commitment on our part, would give us the right to 50% in all the business dealt with by this group and notably in the 23 Emile Franqui to King Leopold, 8 August 1901, 19 May 1902; Emile Franqui Papers File 108, Archives G´en´erales du Royaume, Brussels. 24 Kurgan-Van Hentenryk, Leopold II, pp. 708, 711
744 IAN PHIMISTER tramways of Singapore and Hong Kong'25 Quite what were British' or Belgian'companies by this stage was increasingly a moot point. Certainly it had no apparent bearing on wildly speculative shifts in both Kaipings',as CEMC shares were called,and Pekins',the term for shares in the Syndicate of the same name,as the market was pulled in one direction and then another.26 As early as July 1902,the China Gazette reported that Kaipings were pushed up as rapidly as the rest,only to sustain a horrid drop of 80 percent'as insiders banged' the market.27 Manipulated market movements of this kind infuriated The Times'well-informed Peking correspondent,Dr G.E.Morrison. After some initial hesitation,he developed a pronounced dislike for Davis.During and after a visit to Tsientsin and the Kaiping Collieries in May 1904,Davis had tried hard to ingratiate himself with the influential Morrison,but to no avail.Presenting himself as a champion of purely British interests opposed to Belgian schemes to 'completely shut out British trade',Davis denied any interest in the Pekin Syndicate,even as he offered to keep Morrison confidentially appraised of financial issues affecting China.It was an offer that Morrison found easy to refuse.He also ignored an invitation to join the Davis party on a tour of Japan.28 Instead,Morrison took a close look at the operations of both the Pekin Syndicate and the Chinese Engineering and Mining Company.What he saw appalled him. By early July 1905,Morrison was confident enough of his facts to describe the Pekin Syndicate as 'a dirty business altogether.... The shares have been boomed by lying circulars till the value of the property stands at f2,720,000.There is not the faintest chance of the railway paying,...[and although]the Syndicate have not yet extracted a pound of coal yet they are advertising their exhibit of coal at the 25 Thys to King Leopold,12July 1g02;Archives du Cabinet du roi Leopold II- documents relatifs au developpement exterieur de la Belgique,File 253,Archives du Palais Royal a Bruxelles;Franqui to Leopold,1o December 1go2,Emile Franqui Papers File 108,Archives Generales du Royaume;Joostens to Favereau,3o December 1903,Kaiping Mines,File 2821,Archives du Ministere des Affaires Etrangeres, Brussels;and A.Barry to G.Detring,1 May 1g03,W.S.Nathan Papers,Bodleian Library. 26 Informed contemporaries believed that London is in it only for other float- ations tinkering with the funds to make windfall profit...[while]Belgium believe in the thing is solidly in it for dividends';see unsigned,List of CEMC shareholders', 1o June 1904,Nathan Papers. 2 China Gazette,25July 1902. Davis to Morrison,19 May,6 October 1904;Morrison Papers,ML.MSS 312/48, and MSS 312/232,Mitchell Library,Sydney
744 IAN PHIMISTER tramways of Singapore and Hong Kong’.25 Quite what were ‘British’ or ‘Belgian’ companies by this stage was increasingly a moot point. Certainly it had no apparent bearing on wildly speculative shifts in both ‘Kaipings’, as CEMC shares were called, and ‘Pekins’, the term for shares in the Syndicate of the same name, as the market was pulled in one direction and then another.26 As early as July 1902, the China Gazette reported that ‘Kaipings were pushed up as rapidly as the rest, only to sustain a horrid drop of 80 percent’ as insiders ‘banged’ the market.27 Manipulated market movements of this kind infuriated The Times’ well-informed Peking correspondent, Dr G.E. Morrison. After some initial hesitation, he developed a pronounced dislike for Davis. During and after a visit to Tsientsin and the Kaiping Collieries in May 1904, Davis had tried hard to ingratiate himself with the influential Morrison, but to no avail. Presenting himself as a champion of purely British interests opposed to Belgian schemes to ‘completely shut out British trade’, Davis denied any interest in the Pekin Syndicate, even as he offered to keep Morrison confidentially appraised of financial issues affecting China. It was an offer that Morrison found easy to refuse. He also ignored an invitation to join the Davis party on a tour of Japan.28 Instead, Morrison took a close look at the operations of both the Pekin Syndicate and the Chinese Engineering and Mining Company. What he saw appalled him. By early July 1905, Morrison was confident enough of his facts to describe the Pekin Syndicate as ‘a dirty business altogether ... . The shares have been boomed by lying circulars till the value of the property stands at £2,720,000. There is not the faintest chance of the railway paying, ...[and although] the Syndicate have not yet extracted a pound of coal yet they are advertising their exhibit of coal at the 25 Thys to King Leopold, 12 July 1902; Archives du Cabinet du roi Leopold II – documents relatifs au d´eveloppement ext´erieur de la Belgique, File 253, Archives du Palais Royal a Bruxelles; Franqui to Leopold, 10 December 1902, Emile Franqui Papers File 108, Archives G´en´erales du Royaume; Joostens to Favereau, 30 December 1903, Kaiping Mines, File 2821, Archives du Minist`ere des Affaires Etrang`eres, Brussels; and A. Barry to G. Detring, 1 May 1903, W. S. Nathan Papers, Bodleian Library. 26 Informed contemporaries believed that ‘London is in it only for other floatations & tinkering with the funds to make windfall profit...[while] Belgium believe in the thing & is solidly in it for dividends’; see unsigned, ‘List of CEMC shareholders’, 10 June 1904, Nathan Papers. 27 China Gazette, 25 July 1902. 28 Davis to Morrison, 19 May, 6 October 1904; Morrison Papers, ML. MSS 312/48, and MSS 312/232, Mitchell Library, Sydney
BRITAIN AND CHINA 745 St Louis Exposition'?9 Under the affable chairmanship of Carl Meyer, a well-known City figure in the employ of the Rothschilds,who also sat on the boards of the Hongkong and Shanghai Bank and De Beers Consolidated Mines,the Pekin Syndicate had been a highly speculative enterprise from its inception.30 The significant beneficiary of mineral and railway concessions won from a weakened Chinese government during the battle of concessions'after the Sino-Japanese War,the Syndicate successfully embroiled the Foreign Office in a series of stand-offs with Peking over the precise terms of its railway grant.31 Working in tandem with the British and Chinese Corporation,another Whitehall favourite about whom Morrison came to express strong reservations,32 the Pekin Syndicate,in which French investors loomed increasingly large,sought to persuade the Foreign Office that no other [financial]combination can be formed more powerful or more likely to carry out these large undertakings...[of]vast importance to British interests and prestige'.33 At the same time,though,the Pekin Syndicate displayed a marked reluctance to get down to the hard slog of developing its holdings along the lines specified in the concessions. Its hands were full playing a market carefully primed with knowledge of Foreign Office support for the Syndicate.34 There is a great deal of speculation in Pekin Syndicate shares...[and they]have risen higher than ever before which is most gratifying',Meyer confided to his wife 5 in March 1905. In the circumstances,Morrison's 'attitude of unfriendliness to the Pekin Syndicate'was capable of'doing incalculable harm',and Meyer Morrison to V.Chirol,2July 1905,in Lo Hui-Min(ed.),The Correspondence fGE Morrison.I.1895-ror2(Cambridge:Cambridge University Press,1976),p.324. 30 The Critic,March 1goo;and the Pall Mall Gazette,11 April 1900.See also,En- Han Lee,'China's Response to Foreign Investment in Her Mining Industry (1902- 1912)',Journal of Asian Studies,28 (1968),p.59.For Meyer himself,see especially J.Orbell,'Sir Carl Ferdinand Meyer',Oxford Dictionary of National Biography (Oxford: Oxford University Press,2004). 3I McLean,'Chinese Railways',pp.148-151.See also,D.Kynaston,The City of London.Volume II.Golden Years 1890-1914 (London:Chatto Windus,1995), Pp.394-5 Morrison to Chirol,8September 1906,in Lo (ed.),Correspondence ofG.E.Morrison, p.375.For the British and China Corporation,see especially Pelkovits,Old China Hands,p.230;and J.Bland,Recent Events and Present Policies in China (London:William Heinemann,1912),pp.266-7. The Secretary,Pekin Syndicate,to Lord Lansdowne,14July 1903,FO 17/1619. 34 The Economist,23 December 1905. 3Meyer to wife,6 March 1905 Carl Meyer Letters 1900-1905,Papers in the private possession of Sir Anthony Meyer
BRITAIN AND CHINA 745 St Louis Exposition’.29 Under the affable chairmanship of Carl Meyer, a well-known City figure in the employ of the Rothschilds, who also sat on the boards of the Hongkong and Shanghai Bank and De Beers Consolidated Mines, the Pekin Syndicate had been a highly speculative enterprise from its inception.30 The significant beneficiary of mineral and railway concessions won from a weakened Chinese government during the ‘battle of concessions’ after the Sino-Japanese War, the Syndicate successfully embroiled the Foreign Office in a series of stand-offs with Peking over the precise terms of its railway grant.31 Working in tandem with the British and Chinese Corporation, another Whitehall favourite about whom Morrison came to express strong reservations,32 the Pekin Syndicate, in which French investors loomed increasingly large, sought to persuade the Foreign Office that ‘no other [financial] combination can be formed more powerful or more likely to carry out these large undertakings...[of] vast importance to British interests and prestige’.33 At the same time, though, the Pekin Syndicate displayed a marked reluctance to get down to the hard slog of developing its holdings along the lines specified in the concessions. Its hands were full playing a market carefully primed with knowledge of Foreign Office support for the Syndicate.34 ‘There is a great deal of speculation in Pekin Syndicate shares...[and they] have risen higher than ever before which is most gratifying’, Meyer confided to his wife in March 1905. 35 In the circumstances, Morrison’s ‘attitude of unfriendliness to the Pekin Syndicate’ was capable of ‘doing incalculable harm’, and Meyer 29 Morrison to V. Chirol, 2 July 1905, in Lo Hui-Min (ed.), The Correspondence of G.E. Morrison. I. 1895–1912 (Cambridge: Cambridge University Press, 1976), p. 324. 30 The Critic, 3 March 1900; and the Pall Mall Gazette, 11 April 1900. See also, EnHan Lee, ‘China’s Response to Foreign Investment in Her Mining Industry (1902– 1912)’, Journal of Asian Studies, 28 (1968), p. 59. For Meyer himself, see especially J. Orbell, ‘Sir Carl Ferdinand Meyer’, Oxford Dictionary of National Biography (Oxford: Oxford University Press, 2004). 31 McLean, ‘Chinese Railways’, pp. 148–151. See also, D. Kynaston, The City of London. Volume II. Golden Years 1890–1914 (London: Chatto & Windus, 1995), pp. 394–5. 32 Morrison to Chirol, 8 September 1906, in Lo (ed.), Correspondence of G.E. Morrison, p. 375. For the British and China Corporation, see especially Pelkovits, Old China Hands, p. 230; and J. Bland, Recent Events and Present Policies in China (London: William Heinemann, 1912), pp. 266–7. 33 The Secretary, Pekin Syndicate, to Lord Lansdowne, 14 July 1903, FO 17/1619. 34 The Economist, 23 December 1905. 35 Meyer to wife, 6 March 1905, Carl Meyer Letters 1900–1905, Papers in the private possession of Sir Anthony Meyer
746 IAN PHIMISTER hastened to ask Moberley Bell,editor of The Times,to rein in his iconoclastic correspondent.36 What steps if any Bell took beyond forwarding a copy of Meyer's letter to Morrison have not survived.Ten months later Morrison was still attacking the Syndicate's fraudulent behaviour.The Pekin Syndicate,he wrote,have recently advertised widely that they are selling Honan coal in Tientsin in the coming winter.They even deceived...[the China Association]into believing that it was their own coal and they must still more have deceived innocent widows and orphans at home.But not a pound of coal is from their own mines.They do not wish the public to know that they have bought this coal from the native mines which surround their own shafts because they have led the public to believe that they have exclusive rights over the whole coal field even as against the Chinese'.Who', Morrison asked,'can support them in such a claim?37 Anyone foolish enough to do so financially got their fingers badly burnt.The fashion in which these [Pekin Syndicate]shares bob about must put money into somebody's pocket',observed The Critic,but that somebody or bodies are not to be found among the general public'.Those who were and are behind the Pekin Syndicate...ought never to have allowed this concern to reach the public,investing or otherwise,until their proposition was reasonably proved,and the company's prospects reasonably assured',it argued.The conduct of that House [Stock Exchange]clique who have repeatedly hoisted the shares on the vaguest of rumours,and...invariably to their own advantage is more than to be deprecated'38 People who were tempted by those sixpenny anonymous pamphlets to pay f25 for Pekin Syndicate Ordinary fI shares will find little in the report just issued to console them for the fall that has since taken place',commented the Pall Mall Gazette in January 1907.Of course,hope springs eternal in the directors'breast, but it would not be surprising if the shareholders were heartily sick of the whole business'39 In the new year,along with the breaking news that the Syndicate's coal mines were 'commercially worthless',came the dawning realisa- tion that its board of directors earlier had acted on inside informa- tion.The Pekin Syndicate...are a crooked lot',wrote Morrison. 36 Meyer to Bell,16 November 1905;Morrison Papers,ML.MSS312/123,Mitchell Library. 37 Morrison to Chirol,8 September 1906,in Lo(ed.),Correspondence ofG.E.Morrison, PP The Critic.20 September 1006.15 December 1006. 39 Pall Mall Gazette,24.January 1907-
746 IAN PHIMISTER hastened to ask Moberley Bell, editor of The Times, to rein in his iconoclastic correspondent.36 What steps if any Bell took beyond forwarding a copy of Meyer’s letter to Morrison have not survived. Ten months later Morrison was still attacking the Syndicate’s fraudulent behaviour. The Pekin Syndicate, he wrote, ‘have recently advertised widely that they are selling Honan coal in Tientsin in the coming winter. They even deceived ...[the China Association] into believing that it was their own coal and they must still more have deceived innocent widows and orphans at home. But not a pound of coal is from their own mines. They do not wish the public to know that they have bought this coal from the native mines which surround their own shafts because they have led the public to believe that they have exclusive rights over the whole coal field even as against the Chinese’. ‘Who’, Morrison asked, ‘can support them in such a claim?’.37 Anyone foolish enough to do so financially got their fingers badly burnt. ‘The fashion in which these [Pekin Syndicate] shares bob about must put money into somebody’s pocket’, observed The Critic, ‘but that somebody or bodies are not to be found among the general public’. ‘Those who were and are behind the Pekin Syndicate ... ought never to have allowed this concern to reach the public, investing or otherwise, until their proposition was reasonably proved, and the company’s prospects reasonably assured’, it argued. ‘The conduct of that House [Stock Exchange] clique who have repeatedly hoisted the shares on the vaguest of rumours, and ... invariably to their own advantage is more than to be deprecated’.38 ‘People who were tempted by those sixpenny anonymous pamphlets to pay £25 for Pekin Syndicate Ordinary £1 shares will find little in the report just issued to console them for the fall that has since taken place’, commented the Pall Mall Gazette in January 1907. ‘Of course, hope springs eternal in the directors’ breast, but it would not be surprising if the shareholders were heartily sick of the whole business’.39 In the new year, along with the breaking news that the Syndicate’s coal mines were ‘commercially worthless’, came the dawning realisation that its board of directors earlier had acted on inside information. ‘The Pekin Syndicate ... are a crooked lot’, wrote Morrison. 36 Meyer to Bell, 16 November 1905; Morrison Papers, ML. MSS 312/123, Mitchell Library. 37 Morrison to Chirol, 8 September 1906, in Lo (ed.), Correspondence of G.E. Morrison, pp. 375–6. 38 The Critic, 29 September 1906, 15 December 1906. 39 Pall Mall Gazette, 24 January 1907