The open door doctrine in relation to China

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Preface

Tue Open Door Doctrine, as is well known, has become a cardinal principle of American diplomacy. Just as the Monroe Doctrine governs American diplomacy in relations with Latin America, so the Open Door -Doctrine guides American diplomacy in the Orient, particularly with respect to China. In fact, American foreign relations with China may be said to be conducted in terms of the Open Door Doctrine. Hence, a correct understanding of this policy is of vital importance.

The author has searched diligently for studies on this subject, but he has found few writings that gave a satisfactory presentation. While there are fragmentary essays, he has been impressed with the lack of a comprehensive work relating to the Doctrine. It is, therefore, hoped that this work may fill this need.

Particular endeavors have been made to obtain the highest and the most authoritative sources of information and materials. Adopting this attitude, while consulting works of secondary character, a number of which appear in footnotes or references, he has made special efforts to draw materials mainly from the publications of the United States Government and from the British Foreign Office, such as the Foreign

Relations of the United States and the State Papers of ix

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Great Britain. He has based his work mainly on these authorities; and has ventured to write these chapters from the original sources, except in some instances where he has drawn on his former work The Foreign Relations of China, and for the sake of consistency similar expression has been employed.

This study treats of the origin, history, meaning and application of the Open Door Doctrine. The work is concluded by an appendix comprising all the important documents relating to the Doctrine.

The author wishes to express his gratitude and indebtedness to the Knights of Columbus Historicai Commission for the kind suggestion that he undertake this work, and particularly to Dr. Edward F. McSweeney, Chairman, for various courtesies, and to Miss Gertrude M. Carey, Executive Secretary, for assistance in the several stages of the work in connection with the publication of the book.

MINGCHIEN JosHUA Bau.

Washington, D. C.

Introduction

The Open Door Doctrine is a commercial and political principle which, like the Monroe Doctrine, has become an international law. Because it still remains a principle as well as a law, no declaration or legal definition is likely ever fully to contain its meaning.

The phrase itself is so expressive and appears to be so definite as to have been from the outset misleading. The Open Door Doctrine never connoted what the phrase itself, disassociated from the political facts to which it had relation, would appear to have meant. It will, therefore, be helpful to the reader to approach Dr. Bau’s scholarly analysis through a vestibule which will exhibit the historical relations of the doctrine and the various transformations through which it has passed in the course of its long history.

If by the “Open Door” one means an absolutely free and unrestricted trade in which everyone goes and comes at pleasure, then it ought to be noted that in the regions to which the doctrine has been applied such a door never existed. Only in some of the islands of the Pacific and in other regions of the earth inhabited by disorganized and more or less uncivilized tribes, and then only for the briefest of periods in the last century, did such a trade exist. Wherever organized xi xil INTRODUCTION government appeared, native or alien, there stood its representatives, jealous of sovereign rights and insistent upon trade regulations, tonnage dues, or customs, and these men became the doorkeepers. In the Far East, such doorkeepers have always been present and their rights have always been recognized. Even as late as 1858 there were only five ports in China, only twoor three in Japan and none in Korea, at which Western merchants were allowed to trade under any conditions whatever. While it was always the purpose of the merchants and their governments as rapidly as possible to open new doors to trade and to reduce the trade restrictions to the minimum, the Open Door Doctrine does not refer to this commercial policy. The doctrine of most-favored-nation treatment is the parent of the Open Door. The sovereignty of the Asiatic states was uniformly recognized by the earliest foreign traders and in the nineteenth century it was always accepted that the trade in the open ports of Eastern Asia was subject to such restrictions as an enlightened sovereign had a right to impose, and that the trade ought to bear, by payment of dues and duties, some share of the expenses of the government which maintained order and created the political conditions favorable to commercial intercourse. On the other hand, the commercial policy of each trading nation was governed by the fear that its merchants might meet with some discrimination which their competitors escaped. The demand for most-favored-nation treatment, therefore, was paramount. This demand jis seen to be, in principle, the demand for the Open Door, al-

INTRODUCTION : xili though the phrase itself did not appear until 1898 in England and in the United States not until a year later.

The most-favored-nation clause is a characteristically American doctrine. It appeared in the first commercial treaty ever negotiated by the United States and all subsequent commercial treaties retained it. It was the most fundamental American commercial policy. As late as 1815 Thomas Jefferson wrote that in his judgment commercial treaties need contain no other stipulation. It was therefore not an accident that the most-favored-nation clause appeared in the first treaties between the United States and Eastern nations in 1833. [here was no other purpose in the treaties negotiated by Edmund Roberts with Siam and Muscat than to obtain an open door, that is, equality of commercial privilege for American citizens. The Roberts treaties did, however, mark a departure from traditional American policy in that they were unilateral and unconditional. In these compacts the demand for most-favored-nation treatment took the broad and unconditional form of stipulation that under any and all conditions American merchants must receive every privilege granted to the merchants of any nation. These treaties, antedating by nine years the first treaty with China, were fairly representative of the prevailing spirit of the age. They were the corner-stone of American commercial policy in Eastern Asia. The Americans would accept no discrimination which restricted perfect freedom of competitive trade. Already, for at least a generation, at old Canton, the only xiv ' INTRODUCTION open port with the exception of Manila east of Batavia, the doctrine had been in practice and was recognized and accepted by everyone.

Originally the most-favored-nation doctrine had been a purely commercial policy. However, trade and politics have never been actually confined to the water-tight, non-communicating compartments to which they have been assigned by theorists, and it soon developed in the Far East that the most-favored-nation doctrine, and likewise the Open Door, had political connotations. When England engaged China in war in 1839, the intention may have been non-political and may have comprised only the determination to force open a little wider the door of commercial intercourse, but it is notable that the war was concluded in a treaty three years later which was by no means purely commercial. The treaty of Nanking (1842) stipulated the cession of Hongkong to Great Britain and there were other provisions in this treaty as well as in the treaty and trade regulations of the following year which were of more or less political import. That is to say, the British Government adopted in 1842 and 1843 certain political measures to make doubly sure that the Open Door for British trade could not be closed. This action immediately transformed the most-favored-nation policy into a political as well as a commercial doctrine not merely for the British but also for their competitors. It is of the utmost importance to recognize this, the more so because the fact was usually ignored by the American Government, though not by others, and never found its way into general recognition by treaties and

INTRODUCTION XV agreements until after the World War. There has never been a time since 1842 when the Open Door Doctrine was not, potentially at least, a political as well as a commercial principle. Equality of commercial privilege came to be more and more dependent upon equality of political privilege.

A contemporaneous contribution to the doctrine came from the Chinese who appear clearly to have recognized the political aspects of the doctrine. It is especially fitting that Dr. Bau should be the first to give us an exhaustive analysis of the Open Door Doctrine, for the doctrine itself appears to have been recognized and appropriated by China even before it appeared as a treaty stipulation. It had been the uniform practice of the Imperial Government at old Canton to treat all nations alike. When Sir Henry Pottinger presented his demands at Nanking, the Chinese commissioners appear to have fully considered the relation of those demands to the prospective demands of other nations for equality of privilege and to have concluded that it would be advantageous to China to allow no discrimination between nations and to admit other nationals to all the advantages which they were willing to concede to the British. Elsewhere the present writer has discussed the reasons for believing that this decision of the Chinese was made freely and not as the result of the representations of Sir Henry Pottinger. The Open Door with equality of privilege was a better bulwark to the tottering Chinese Government than a door open to one nation and closed to another. With commercial equality among the traders of all nations China would xvi INTRODUCTION

find some protection for itself behind the conflicting pretensions of the Western nations. The Chinese text of the treaty of Nanking would appear to indicate that the elementary principle of the Open Door in China was first defined not by Sir Henry Pottinger, not by Secretary of State Hay, but by the Chinese commissioners in August, 1842.

Immediately following the signing of the treaty of Nanking, Commodore Lawrence Kearny of the American Navy, who happened to be cruising in the China seas at the time, demanded and received the assurance that Americans would be placed on the footing of the most favored nation. Caleb Cushing, however, who two years later negotiated the first treaty between the United States and China, did not demand the complete fulfillment of the promise. He did not demand a territorial equivalent for Hongkong by which alone he could have made sure of actual most-favored-nation treatment for his fellow citizens. Indeed, he was specifically instructed not to ask for a territorial base, and he contented himself with elaborating the doctrine of extraterritoriality, which had been granted in principle to the British the preceding year, and with securing certain minor advantages which he hoped would result in giving to American merchants commercial privileges equal to, though not identical with, those already secured by the British. In other words, Cushing, pursuant to his instructions from Secretary of State Webster, chose to ignore the fact that the Open Door Doctrine was prospectively dependent upon equality of political privilege.

INTRODUCTION xvii

This early Open Door Doctrine of commercial equality reached its maximum of theoretical development in 1858 when the treaties with China were revised and the first commercial treaties were made with Japan. In that year all the foreigners trading with the Far East were on an equal footing and the geographical area to which the doctrine was or might be applicable was at its maximum. Immediately thereafter the doctrine was subjected to a series of shrinkages, theoretical, actual, or geographical, so that, as incorporated in the treaties of 1922, it bears only a resemblance to the principle which was accepted by all, with the possible exception of Russia, in 1858. ‘The territories of China are now much contracted, for the Russians, the French, and the Japanese have acquired title to regions in the North, South, and East, which were then prospectively subject to the Open Door Doctrine. Japan has recovered the sovereign rights which had been surrendered in her earlier treaties and has emancipated herself from their unilateral and non-reciprocal provisions. Meanwhile Japan has expanded, adding to her empire the Liu Chius, the Bonins, the Pescadores, Formosa, Korea and part of Sakhalen, and in time all of these areas have been subtracted from the territories to which the Open Door Doctrine was applicable. Likewise there has been a contraction of the actual, though perhaps not of the theoretical, sovereign right of China to offer equality of commercial privilege to any merchant who comes along, in vast areas throughout the republic. Exclusive water-front privileges have been granted in open ports, strategic harbors have been leased, mineral resources

XViil INTRODUCTION have been preémpted and ear-marked, lines of communication have been monopolized in such a way as to embarrass perfectly free trade, a system of foreign advisory supervision has been introduced which every year has threatened free competition more and more. Exclusive and arbitrary banking privileges have appeared in connection with loans, and a general atmosphere of restriction and repression has been created which has had the effect of closing the door to many commercial privileges which are still theoretically open. China is in the position of an impoverished man who has mortgaged his property at needlessly severe terms. It is beside the point to argue that the mortgages are perfectly legal, for whether they are or not the fact remains that China is no longer free to grant as open a door as formerly.

It may be helpful for the American citizen, in seeking to comprehend the Far Eastern problem as it exists to-day, to view the Washington Conference of 1921-2 as an effort to recover, as far as possible, the open doors in Eastern Asia which have been closed in the course of the last forty years. At this conference it was quickly discovered that water once over the dam cannot be made to return and at best the prospective open door in 1923 is very much less than the prospective open door in 1858. Let this be remembered by the American citizen when domestic issues again roll in upon him and threaten to obscure the importance of foreign relations. The intermittent playing of international politics is never successful. Constancy even more than consistency is important in foreign policy.

INTRODUCTION xix

The United States cannot now recover the potential place in the Far East which it lost long ago through inattention, and it can still easily lose even more in the same way if the inattention is repeated.

The Open Door Doctrine, as Dr. Bau shows, received its first full legal definition in the treaties of Washington in 1922. However, definition implies exclusion as well as inclusion. It was soon discovered that Mr. Hay’s definition in 1899 was wholly inadequate because of what it excluded and his effort to restate the doctrine in 1900 was only a little more successful. The Taft Administration attempted to restore to the doctrine a most important element which Mr. Hay for some unexplained reason had omitted, namely, that the Open Door involved equality of opportunity for loans and investments as well as for the exchange of commodities. On the other hand, Secretary of State Knox failed to see that the doctrine was political as well as commercial. At the beginning of the following administration, Mr. Wilson sacrificed much that had been gained by his predecessors by failing to recognize that the Open Door Doctrine is essentially a codperative one which will not work unless the United States is prepared to cooperate with the other interested powers. Irreparable damage was done to commercial equality in China by the withdrawal of the American group from the Six-Power Loan, and it was only when the same administration happily reversed itself a few years later and made a place for American bankers in the new Consortium that a beginning was made toward the xx INTRODUCTION recovery of so much of the Open Door as might still be regained.

Notwithstanding the fact that the doctrine has now received what appears to be a definitive legal definition in the new treaties, it is well to point out that not all of its essential elements appear clearly in the texts of those treaties. There are at least three important implications of the doctrine as now defined which every thoughtful American citizen ought fully to understand.

First, the Chinese themselves, who are the parties with the greatest interest in the maintenance of the Open Door Doctrine, regard the presence of the United States in these international engagements not merely as a guarantee that justice will be done but also as a special protection to the Chinese Republic. Dr. Bau clearly shows the fatality to Chinese as well as to American interests which followed the retirement of the American group from the Six-Power Loan in 1912. It is very important that the American people fully understand this fact, the more so because Mr. Wilson’s action in causing the withdrawal of the American bankers bore the appearance of a friendly act towards China and was widely greeted as an exhibition of American Far Eastern policy at its best. A full examination of the results which followed now reveals this action to have been petulant and naive. Its actual result was again to open the floodgates for still further disaster to China and to the Open Door Doctrine. In the next few years still more of China was withdrawn from the field of free commercial opportunity. By withdrawal from codperation the United States immediately re-

INTRODUCTION Xxi, moved itself from the only position where it could have exercised effective influence for the correction of the evils complained of.

Second, it must be fully understood that the Open Door Doctrine has now become in the most complete way an international rather than a national doctrine. The ratification of the Nine-Power treaty brought to the American Government an international legal and moral obligation as perfect as would have been involved in membership in the League of Nations even though the area of operation is more restricted. The United States has assumed a legal obligation not merely to China but also to all the other powers signatory to the treaty to codperate. It has, moreover, because of the approval given to the Consortium by the executive branch of the government, assumed a much wider moral obligation, as the following pages reveal, and this obligation has been tacitly accepted by Congress in that the executive action has been permitted to pass unchallenged. The Consortium has in it a very great element of hope and encouragement, but it also provides for eventualities. So long as China is able to manage her own affairs without default in her international obligations, well and good. But the Consortium is obviously designed as a method by which, in case of necessity, international intervention in one form or another may be accomplished with a minimum of international disturbance. Looming up in the background, even, is the contingency of an international receivership such as all friends of China as well as the Chinese themselves devoutly hope may never be necesxxii INTRODUCTION sary. In any event, whether intervention or receivership, if either becomes necessary, the United States is under the most solemn obligations to assume a joint responsibility. In fact, because of its geographical position, its financial resources and its traditional policy in the Far East, the United States holds and will continue to hold the balance of power and will therefore be cast for the leading role in whatever measures may be taken.

This fact brings us to the third point to which we have already alluded in our brief historical survey, namely, that the Open Door Doctrine has now become more than ever a question which concerns the entire nation. If the problem were purely commercial, a device for securing access to surplus markets, then the vast majority of American citizens who have no surplus produce which can be disposed of to advantage in China might feel themselves released from obligation to study the Open Door. Doctrine. Superficially, the doctrine still bears the appearance of a bankers’ and exporters’ proposition, but actually it is far more than that, concerning itself not merely with justice to a quarter of the population of the globe but also with the peace of the entire world. No citizen can escape the obligation to be informed upon this subject. There are no diplomatic problems of the American Government which can be solved sectionally or by separate commercial or industrial groups. The Open Door Doctrine, quite as much as the Monroe Doctrine, belongs to the American people. That this is as yet fully realized in the United States does not appear.

INTRODUCTION xxili

Nor is it evident that the American people are at all prepared to meet the problems which are plainly in prospect.

Specifically the discharge of the obligations thus assumed implies a knowledge of the international relationships of the associated powers, particularly Japan and Great Britain, and more especially it calls for a willingness to conciliate and codperate rather than a disposition to insult and antagonize. Furthermore, it calls for a firm policy on the part of the American Government such as is never possible except when the American people are alert to the issues and intelligently support the Executive. It required more than seventy years to place the Monroe Doctrine above the point where it was subject to challenge either by partisan interests within the United States or by transatlantic powers. It may require an even longer time to establish the Open Door policy as an axiom of international relations.

For these reasons it is an encouraging sign when such a study as Dr. Bau’s finds sponsors, disinterested except as American citizens, who are willing to provide a medium for placing it before the American people. American diplomatic literature is not rich in impartial, exact and scientific treatments of the Far Eastern question. Such a contribution as this is, therefore, particularly valuable and timely.

Good citizenship and philanthropy alike demand for the following pages a wide circle of readers.

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CONTENTS PREFACE ee Re ot ae eee

{- Fue.Oricims orerne Docreinz.. « i:... I II “THe GrowTH OF THE DocTRINE .. .. 26 III THe Practica, ASSERTION OF THE DocTRINE . 49 IV THe BREAKDOWN AND THE REASSERTION . .~ 75 V Eovuart Opportunity oF TRADE . . . ©. 107 WiaevlnTecrity OF CHINA’. >. 6 4, - 2. ee TID

VII Opren Door DoctrINE AND SPHERES OF IN- WEUTENCE A ss) ek! cae cct, ae eo WE AO.

VIII Open Door DocrrinE AND CHINESE RAILWAYS 152

IX Open Door DoctTRINE AND JAPAN’S SPECIAL Dir en eet ee ee ae oP a 103

X Open Door Doctrine aNnpD New INTERNA- TIONAL BANKING CONSORTIUM . . . . 176

XI ConpiTIons oF SUCCESSFUL APPLICATION . . 183

SELECTED BIBLIOGRAPHY . +. « «© «© « «+ 229

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APPENDIX i.

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APPENDICES

JoHn Hay’s First Circurar Note, NEPTOGeCn a Oe eas ene oe

JouHN Hay’s SECOND CiRCULAR NOTE, JULY 3, 1900 .

JoHN Hay’s Protest AGAINST THE RussIAN DEMAND FOR THE PREFER- ENCE OR MONOPOLY OF THE INDUs- TRIAL DEVELOPMENT OF MaAn- CHURIA, FEB. I, 1902 ee

JouHn Hay’s Crrcuxar Nore, JAN. 13, 1905, PLEADING FOR THE TERRITO- RIAL INTEGRITY OF CHINA IN ANTICI- PATION OF THE PEACE NEGOTIATIONS BETWEEN RUSSIA AND JAPAN

Root-TAKAHIRA AGREEMENT, Nov. 30, 1908 Lt ie bah elas it

Knox NEUTRALIZATION PROPOSAL, JAN. 6, 1910. STATEMENT GIVEN THE PREss : bas he

Tue Unitep STATES DECLARATION, May 13, 1915, CONCERNING THE TWENTY-ONE DEMANDS . ;

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Appendix

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APPENDICES

LaNsING-IsHit AGREEMENT, Nov. 2, TOL7 inc <> host ae

Tue New INTERNATIONAL BANKING CoNSORTIUM AGREEMENT, OCcT. IS, 1920. SH LOL ee ce eee

Tue Nine Power TREATY, FEB. 6, 1922, RELATING TO PRINCIPLES AND PoLIcIES TO BE FOLLOWED IN MAT- TERS CONCERNING CHINA

RESOLUTION REGARDING A BOARD OF REFERENCE FOR Far EASTERN QUES- TIONS, ADOPTED AT THE SIXTH PLEN- ARY SESSION, WASHINGTON CONFER- ENCE, FEB. 4, 1922

RESOLUTION REGARDING ExIsTING Com- MITMENTS OF CHINA OR WITH RE- SPECT TO CHINA, ADOPTED AT THE FIFTH PLENARY SESSION, WASHING- TON CONFERENCE, FEB, 1, 1922 .

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THE OPEN DOOR DOCTRINE IN RELATION TO CHINA ty eee) As ie

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THE OPEN DOOR DOCTRINE IN RELATION TO CHINA