POSTWAR PERCEPTIONS OF THE CHINA MAtYKET; A STUDY

OF AMERICAN B U S I N E S S ATTITUDES, 1943-1949

Lawrence H o b e r t Aronsen

B.A. U n i v e r s i t y o f B r i t i s h Columbia, 1970

A THESIS SUBMITTED TN PARTIAL FULFILLMENT OF

THE REQUIREMENTS FOR THE DEGREE OF

MASTER OF ARTS

i n t h e Department

o f

H i s t o r y

@ LAWRENCE RORERT ARONSEN 1974

SIMON FRASER U N I V E R S I T Y

J u l y 1974

A l l r i g h t s r e s e r v e d . T h i s t h e s i s may n o t be r e p r o d u c e d i n whole o r i n p a r t , b y photocopy o r o t h e r means, w i t h o u t p e r m i s s i o n o f t h e a u t h o r .

APPROVAL

Name r Lawrence R o b e r t Aronsen

Degree: Mas te r o f A r t s

T i t l e o f T h ~ s i s r Postwar P e r c e p t i o r s o f t h e Ch ina M a r k e t t A S tudy o f Amer ican Bus iness A t t i t u d e s , 1963-1949.

Examin ing Committee:

Chairman r E. R. Ingram E l l i s

- Dr. ~~~~~~~~~~~e S e n i o r S u p e r v i s o r

D r . Joan H o f f Wilson--- E x t e r n a l Examiner

P r o f e s s o r , Depar tment o f H i s t o r y C a l i f o r n i a Sta,te U n i v e r s i t y , Sacramento

Date Approved; eb-b

PARTIAL COPYRIGHT LICENSE

I hereby g r a n t t o Simon F r a s e r U n i v e r s i t y t h e r i g h t t o lend

my t h e s i s o r d i s s e r t a t i o n ( t h e t i t l e of which i s shown below) t o u s e r s

of t h e Simon F r a s e r U n i v e r s i t y L i b r a r y , and t o make p a r t i a l o r s i n g l e

c o p i e s o n l y f o r s u c h u s e r s o r i n r e s p o n s e t o a r e q u e s t from t h e l i b r a r y

of a n y o t h e r u n i v e r s i t y , o r o t h e r e d u c a t i o n a l i n s t i t u t i o n , on i t s 'own

b e h a l f o r f o r one of i t s u s e r s . I f u r t h e r a g r e e t h a t pe rmiss ion f o r

m u l t i p l e copying of t h i s t h e s i s f o r s c h o l a r l y purposes may be g r a n t e d

b y me o r t h e Dean of Graduate S t u d i e s . It i s unders tood t h a t copying

o r p u b l i c a t i o n of t h i s t h e s i s f o r f i n a n c i a l g a i n s h a l l n o t be a l lowed

w i t h o u t my w r i t t e n pe rmiss ion .

Author . __f

( s i g n a t u r e )

L t w / L m C E Rfl /4ROdjz-

( d a t e )

ABSTRACT

POSTWAR PERCEPTIONS OF THE C H I N A MARKET: A STUDY OF AMERICAN BUSINESSMEN'S ATTITUDES, 1943-1949

A m e r i c a n s , l i k e o t h e r ! l J e s t e r n e r s , h a v e l o n g b e e n

a t t r a c t e d t o C h i n a . M i s s i o n a r i e s h o p e d t o c o n v e r t t h e

C h i n e s e t o C h r i s t i a n i t y w h i l e t h e i r s e c u l a r c o u n t e r p a r t s ,

t h e P r o g r e s s i v e s , w i s h e d t o e x p o r t A m e r i c a n i d e a s o n

e d u c a t i o n , e c o n o m i c r e f o r m , a n d p o l i t i c a l d e m o c r a c y .

A m e r i c a n b u s i n e s s m e n , on t h e o t h e r h a n d , w e r e less c o n -

c e r n e d w i t h t h e s e h i g h i d e a l s t h a n w i t h v i s i o n s o f m a t e r i a l

g a i n . I n t h e t w e n t i e t h c e n t u r y t h e y p e r c e i v e d C h i n a a s a n

o u t l e t f o r b o t h s u r p l u s c a p i t a l a n d m a n u f a c t u r e d g o o d s .

A t t h e t u r n of t h e c e n t u r y , b a n k i n g h o u s e s a n d f i n a n c i a l

i n s t i t u t i o n s were most i n t e r e s t e d i n C h i n a , b u t i n d u s t r i a l -

is ts , p a r t i c u l a r l y t h o s e i n t h e c o t t o n t r a d e , a l s o l o o k e d

t o t h e F a r E a s t f o r m a r k e t s . A t t h e e n d o f t h e S e c o n d

Wor ld Mar, t h e s i t u a t i o n was r e v e r s e d ; t h e l a r g e i n d u s t r i a l

a n d m a n u f a c t u r i n g c o r p o r a t i o n s saw i n C h i n a l u c r a t i v e

e c o n o m i c o p p o r t u n i t i e s , w h e r e a s t h e b a n k i n g h o u s e s now

p l a y e d a s e c o n d a r y r o l e . E x p a n d i n g e c o n o m i c r e l a t i o n s w i t h

C h i n a a n d e l s e w h e r e a f t e r t h e war were p r o m o t e d b y c o r p o r a t e

l i b e r a l b u s i n e s s m e n , who saw t hem a s n e c e s s a r y t o t h e

s u c c e s s f u l c o n v e r s i o n o f t h e economy t o n o r m a l p e a c e t i m e

iii

p r o d u c t i o n w i t h o u t r e v e r t i n g t o a n e c o n o m i c d e p r e s s i o n

s i m i l a r t o t h e 1 9 3 0 ' s . C h i n a , a l t h o u g h n o t a s i m p o r t a n t

a s Canada o r E u r o p e i n A m e r i c a n p l a n s f o r p o s t w a r f o r e i g n

e c o n o m i c e x p a n s i o n , was f o r a s h o r t p e r i o d , s e e n a s

s i g n i f i c a n t . From 1 9 4 3 t o 1 9 4 6 , b u s i n e s s m e n e n t h u s i a s t i c a l l y d i s -

c u s s e d t h e C h i n a m a r k e t i n t r a d e m a g a z i n e s a n d a t a n n u a l

t r a d e c o n v e n t i o n s s p o n s o r e d by t h e N a t i o n a l F o r e i g n T r a d e

C o u n c i l a n d t h e C h i n a A m e r i c a n C o u n c i l o f Commerce a n d

I n d u s t r y . S i m i l a r l y , a c a d e m i c s w o r k i n g w i t h t h e I n s t i t u t e

o f P a c i f i c R e l a t i o n s p r o d u c e d a number o f d e t a i l e d r e s e a r c h

m o n o g r a p h s t h a t s u p p l e m e n t e d t h e e c o n o m i c n e w s l e t t e r s c o n -

c e r n e d w i t h c o m m e r c i a l a c t i v i t i e s i n t h e O r i e n t . The

v i e w s e x p r e s s e d r a n g e d f r o m c a u t i o u s o p t i m i s m t o c o m p l e t e

a c c e p t a n c e o f t h e o p i n i o n t h a t t h e p o s s i b i l i t i e s f o r

d e v e l o p m e n t were u n l i m i t e d .

A m e r i c a n b u s i n e s s m e n t e n d e d t o a c c e p t t h e more o p t i m i s t i c

r e p o r t s b e c a u s e t h e y b e l i e v e d t h a t t h e p r e - c o n d i t i o n s f o r a

p r o f i t a b l e e c o n o m i c v e n t u r e e x i s t e d i n C h i n a , One r e a s o n

f o r t h i s was t h a t t h e C h i a n g K a i - s h e k r e g i m e h a d p u b l i c l y

c o m m i t t e d i t s e l f t o a m u l t i - b i l l i o n d o l l a r p o s t w a r p r o g r a m

of r e c o n v e r s i o n a n d i n d u s t r i a l i z a t i o n o f t h e n a t i o n a l economy

a n d , t h e r e f o r e , was e a g e r f o r A m e r i c a n c a p i t a l a n d t e c h n i c a l

e x p e r t i s e . A n o t h e r r e a s o n was t h a t t h e p r o s p e c t s o f a s t a b l e

economy w e r e g r e a t l y e n h a n c e d when Mao T s e - t u n g a g r e e d t o

n e g o t i a t e w i t h t h e K u o m i n t a n g i n 1 9 4 5 , F i n a l l y , a s i t

b e c a m e c l e a r t h a t t h e U n i t e d S t a t e s ' g o v e r n m e n t was com-

m i t t e d t o t h e m a i n t e n a n c e o f t h e s t a t u s q u o i n C h i n a a s

p a r t o f i t s s e c u r i t y p o l i c y f o r t h e F a r East , t h e r e was

r e a s o n t o b e l i e v e t h a t a i d p r o g r a m s i n v o l v i n g v a r i o u s com-

m e r c i a l f i r m s , w o u l d b e e x p a n d e d . G i v e n t h e e n o r m o u s

p r o b l e m s r e s u l t i n g f r o m r e c o n v e r t i n g t h e A m e r i c a n e c o n o m y ,

t h e s e c o m m i t m e n t s r e i n f o r c e d t h e b u s i n e s s n e w s p a p e r com-

m u n i t y ' s e n t h u s i a s m f o r m a r k e t e x p a n s i o n . By t h e e n d o f

1 9 4 6 , h o w e v e r , s u c h a d e v e l o p m e n t i n C h i n a was b e c o m i n g

i n c r e a s i n g l y u n l i k e l y .

T h e r e s u m p t i o n o f t h e C i v i l War i n 1 9 4 6 a n d t h e

t e r m i n a t i o n o f t h e O l a r s h a l l M i s s i o n i n e a r l y 1947 m a r k e d a

c h a n g e i n t h e a t t i t u d e o f A m e r i c a n b u s i n e s s m e n t o u ~ a r d s t h e

C h i n a m a r k e t . After 1 9 4 7 , t h e i n c r e a s i n g r e l u c t a n c e o f t h e

C h i a n g K a i - s h e k r e g i m e t o f a c i l i t a t e f o r e i g n c o r p o r a t e

e x p a n s i o n , t h e f a i l u r e t o b e g i n t h e i n d u s t r i a l i z a t i o n

p r o g r a m , a n d t h e s o a r i n g r a t e o f i n f l a t i o n i n C h i n a , a l l

a d d e d t o t h e d i s i l l u s i o n m e n t o f A m e r i c a n b u s i n e s s m e n ,

A l t h o u g h t h e r e was c o n s i d e r a b l e d i s a p p o i n t m e n t 11~hen it

b e c a m e c l e a r t h a t t h e E l d o r a d o i n t h e E a s t w a s n o t h i n g m o r e

t h a n a d r e a m , t h e i m m e d i a t e l o s s was i n c o n s i d e r a b l e b e c a u s e

A m e r i c a n c a p i t a l a n d c o m m o d i t y e x p o r t s t o t h e F a r E a s t

n e v e r a m o u n t e d t o m o r e t h a n f i v e p e r c e n t o f t h e a n n u a l

t o t a l b e f o r e 1 9 4 9 .

B e f o r e t h e e n d o f t h e d e c a d e , A m e r i c a n b u s i n e s s m e n

e a s i l y a d j u s t e d t o t h e new d e v e l o p m e n t s i n C h i n a f o r t w o

r e a s o n s . F i r s t , m a r k e t s i n o t h e r E a s t A s i a n c o u n t r i e s ,

J a p a n , t h e P h i l i p p i n e s , a n d K o r e a , w e r e g r e a t l y e x p a n d e d .

S e c o n d , f o r a w h i l e , s u r p r i s i n g l y e n o u g h , b u s i n e s s m e n

e v e n t r a d e d w i t h t h e C o m m u n i s t s a n d some w e r b o p t i m i s t i c

a b o u t f u t u r e p o s s i b i l i t i e s b e c a u s e t h e new g o v e r n m e n t was

p r o v i n g t o b e e f f i c i e n t a n d h o n o r a b l e i n i t s f o r e i g n

c o m m e r c i a l t r a n s a c t i o n s . T h i s o p t i m i s m was t o b e s h o r t

l i v e d b e c a u s e , l i k e t h e " O l d C h i n a Hands" i n t h e S t a t e

D e p a r t m e n t , t h e C h i n a m a r k e t i n t h e e a r l y 1 9 5 0 ' s b e c a m e a

c a s u a l t y o f t h e C o l d War.

TABLE OF CONTENTS

PAGE

INTHODUCTION , . . . . . . . . . . . 1

CHAPTER

I THE O P T I M I S T I C INTEi7LUDE: A SURVEY OF BUSINESS ATTITUDES, 1 9 4 3 - 1 9 4 6 . . . . . 15

I I NEW PERCEPTIONS AND OLD R E A L I T I E S : THE RECONSIDERATION OF THE CHINA MARKET AND P O S S I 3 L E A L T E 3 N A T I V E S , 1945-1949 . . . 5 9

CONCLUSION . . . . . . . . . . . . . . . . . . . . 112

v i i

TNTRODUCTION

S i n o - A m e r i c a n r e l a t i o n s i m m e d i a t e l y f o l l o w i n g t h e S e c o n d

World Nar i s a r e l a t i v e l y w e l l r e s e a r c h e d f i e l d . Numerous

a r t i c l e s , Ph,D. d i s s e r t a t i o n s a n d b o o k s h a v e a n a l y s e d t h e

p e r i o d f r o m a w i d e r a n g e o f v i e w p o i n t s a n d u s i n g d i f f e r e n t

m e t h o d o l o g i c a l a p p r o a c h e s , %bile some o f t h e s t u d i e s w r i t t e n

d u r i n g t h e C o l d War a r e h i g h l y c o n t r o v e r s i a l t o b e s u r e , m o s t

a t t e m p t t o a n a l y s e t h e p e r i o d f r o m a more d e t a c h e d a n d o b j e c -

t i v e p o s i t i o n , 1 A s i g n i f i c a n t p o r t i o n o f t h i s work e x a m i n e s

t h e d o m e s t i c a s p e c t s o f A m e r i c a n C h i n a p o l i c y , p l a c i n g a

s t r o n g e m p h a s i s o n t h e r o l e o f t h e p o l i t i c a l e l i t e , T h e

A m e r i c a n p o l i t i c a l e l i t e , p a r t i c u l a r l y o f f i c i a l s i n t h e Truman

A d m i n i s t r a t i o n aad t h e S t a t e D e p a r t m e n t , h a v e b e e n t h e s u b -

jec t o f many d e t a i l e d i n q u i r i e s i n t o w h a t h a s come t o b e known

as " t h e l o s s o f C h i n a . " O t h e r s t u d i e s h a v e e x a m i n e d t h e v i e w s

oP i n t e r e s t g r o u p s a n d p u b l i c o p i n i o n on A m e r i c a n f o r e i g n

p o l i c y i n t h e F a r East a n d p o s t w a r d e v e l o p m e n t s u ~ i t h i n C h i n a , 2

A l t h o u g h t h e r o l e o f m i s s i o n a r i e s i n t h e p r e w a r p e r i o d h a s

b e e n t h o r o u g h l y r e s e a r c h e d b y J a m e s C , Thornson, o n e c a n a g r e e

w i t h t h e d e a n o f A m e r i c a n S i n o l a g i s t s , J o h n K . F a i r b a n k , t h a t

more work n e e d s t o b e d o n e i n t h i s a r e a , p a r t i c u l a r l y i n t h e

a b s e n c e o f a n y s t u d i e s o f t h e p o s t w a r p e r i o d . 3 An e v e n

g r e a t e r p r i o r i t y s h o u l d b e g i v e n t o t h e s t u d y o f e c o n o m i c

f a c t o r s b e c a u s e i n t h e p o s t w a r p e r i o d A m e r i c a n d e c i s i o n - m a k e r s

were n o t s o much c o n c e r n e d a b o u t s a v i n g t h e i r s o u l s (o r C h i n e s e

s o u l s ) a s t h e y w e r e a b o u t t h e r e c u r r e n t p o s s i b i l i t y o f a

d e p r e s s i o n ,

I n r e c e n t h i s t o r i o g r a p h y e c o n o m i c a s p e c t s o f S i n o -

A m e r i c a n r e l a t i o n s h a s b e e n p r i m a r i l y t h e p r e s e r v e o f New

L e f t h i s t o r i a n s . ' T h e i r a p p r o a c h , h o w e v e r , i s by n o means a

new b r e a k t h r o u g h i n t h e s t u d y of A m e r i c a n f o r e i g n p o l i c y .

E a r l i e r s c h o l a r s , w r i t i n g a t a t ime when t h e i d e a s o f C h a r l e s

B e a r d r e c e i v e d c o n s i d e r a b l e a t t e n t i o n , saw t h e f o r m u l a t i o n

o f A m e r i c a n f o r e i g n p o l i c y a s a f u n c t i o n o f t h e n a t i o n ' s

p o l i t i c a l economy .= N e v e r t h e l e s s , w i t h t h e e n o r m o u s g r o w t h

of t h e m u l t i - n a t i o n a l c o r p o r a t i o n s a f t e r t h e S e c o n d Wor ld

War a n d A m e r i c a ' s i n c r e a s i n g d e p e n d e n c e o r u n d e r d e v e l o p e d

c o u n t r i e s i n A f r i c a , Asia a n d L a t i n A m e r i c a , l o o k i n g a t t h e

r o o t s o f A m e r i c a n c o r p o r a t e e x p a n s i o n o v e r s e a s h a s a s s u m e d

new i m p o r t a n c e , - F u r t h e r m o r e , t h e p e r c e p t i o n o f t h e V i e t n a m

War a s i n d i r e c t C h i n e s e Communis t a g g r e s s i o n i n n o s m a l l

m e a s u r e i n f l u e n c e d a w h o l e g e n e r a t i o n o f g r a d u a t e s t u d e n t s

i n t h e 1 9 6 0 s . T h e a n a l y t i c a l f r a m e w o r k u s e d b y many

d o c t o r a l s t u d e n t s d u r i n g t h i s p e r i o d was d e v e l o p e d i n W i l l i a m

A * Williams' s e m i n a l w o r k , The T r a g e d y o f A m e r i c a n Dipomacy. 6

LlJilliams' T r a g e d y , p u b l i s h e d i n 1 9 5 9 , was a r a d i c a l d e p a r -

t u r e f r o m t h e m a i n s t r e a m o f A m e r i c a n h i s t o r i o g r a p h y a n d i t s

i n f l u e n c e was r e f l e c t e d i n many s p e c i a l i z e d s t u d i e s o n

A m e r i c a n f o r e i g n p o l i c y . P r o b a b l y t h e m o s t i m p r e s s i v e o f

t h e s e e a r l y s t u d i e s was W a l t e r L a f e b e r ' s T h e New E m p i r e

w h i c h a p p e a r e d i n 1 9 6 4 . ~ The N e w E m p i r e c o n t a i n e d , h o w e v e r ,

3

o n l y o n e c h a p t e r on e c o n o m i c e x p a n s i o n i n t h e F a r E a s t a n d

t h e f i r s t book t o c o n c e n t r a t e e n t i r e l y on t h a t r e g i o n was

Thomas McCormick 's The C h i n a m a r k e t .' rtIcCormick e m p l o y e d

t h e power e l i t e t h e s i s d e v e l o p e d by C . W r i g h t Mills i n

a n a l y s i n g t h e r e l a t i o n s h i p b e t w e e n t h e p o l i t i c a l e l i t e a n d

t h e c o r p o r a t e e l i t e i n t h e f o r m u l a t i o n of C h i n a p o l i c y e a r l y

i n t h e t w e n t i e t h c e n t u r y . J o a n Hoff l ~ j i l s o n , i n h e r A m e r i c a n

B u s i n e s s m e n a n d F o r e i q n P o l i c y , 1 9 2 0 - 1 9 3 3 , was a l s o i n t e r e s t e d - i n e c o n o m i c f a c t o r s i n t h e d e t e r m i n a t i o n o f p o l i c y b u t c o v e r e d

a w i d e r r a n g e o f i s s u e s t h a n ~ c ~ o r m i c k . ' W i l s o n , l i k e L a f e b e r ,

g a v e a g e n e r a l o v e r v i e i u f o r a s p e c i f i c p e r i o d , a n a p p r o a c h a l s o

u s e d by L l o y d G a r d n e r i n Economic A s p e c t s o f New D e a l D i p l o -

macy 1 0

New L e f t h i s t o r i a n s w r i t i n g on t h e C o l d War p e r i o d h a v e

p r o d u c e d s u r p r i s i n g l y l i t t l e on Sfno-Amer ican r e l a t i o n s .

Two n o t a b l e c o l l e c t i o n s o f e s s a y s by D a v i d H o r o w i t z a n d

B a r t o n B e r n s t e i n d e a l t p r i m a r i l y w i t h A m e r i c a n r e l a t i o n s

w i t h E u r o p e . l1 By f a r t h e m o s t t h o r o u g h s t u d y on t h e a t t i -

t u d e s o f t h e c o r p o r a t e e l i t e t o w a r d s p o s t w a r f o r e i g n e c o n o m i c

e x p a n s i o n a n d i t s r o l e i n t h e d e c i s i o n - m a k i n g p r o c e s s was

Thomas G. P a t e r s o n ' s u n p u b l i s h e d Ph.0 . d i s s e r t a t i o n , The Economic C o l d Y a r : A m e r i c a n B u s i n e s s a n d Economic F o r e i q n

P o l i c y . I n t h i s i m p o r t a n t s t u d y , P a t e r s o n a n a l y s e d t h e

v i e w s o f b u s i n e s s m e n on m a j o r i s s u e s c o n f r o n t i n g E u r o p e a n

c o u n t r i e s e a r l y a f t e r World Yar Two m a i n t a i n i n g t h a t E u r o p e ,

more t h a n a n y o t h e r r e g i o n was p e r c e i v e d a s b e i n g v i t a l

t o t h e d e v e l o p m e n t a n d r e c o n v e r s i o n o f t h e A m e r i c a n p o s t w a r

p o l i t i c a l economy,

The P a t e r s o n d i s s e r t a t i o n , a s w e l l a s t h e work o f G .

Ylilliam Domhoff , Dav id E a k i n s , G a b r i e l K o l k o , a n d t h e c o l -

l e c t i o n o f a r t i c l e s c o m p i l e d by D a v i d H o r o w i t z , a l l p r e s e n t

c o g e n t a r g u m e n t s f o r s t u d y i n g t h e a t t i t u d e s o f b u s i n e s s m e n

on t h e i s s u e o f f o r e i g n e c o n o m i c e x p a n s i o n . l3 T W O r e a s o n s

a r e g i v e n f o r t h i s a p p r o a c h . F i r s t , i n t h e i m m e d i a t e p o s t -

war p e r i o d , i s s u e s r e l a t e d t o f o r e i g n e c o n o m i c e x p a n s i o n

r e c e i v e d a h i g h p r i o r i t y n o t o n l y f r o m t h e c o r p o r a t e e l i t e

b u t a l s o f r o m o f f i c i a l s i n t h e Truman A d m i n i s t r a t i o n .

T h e s e o f f i c i a l s h e l d t h a t - d o m e s t i c ,

e c o n o m i c , a n d p o l i t i c a l s t a b i l i t y w e r e r e l a t e d t o t h e a c q u i -

s i t i o n o f f o r e i g n m a r k e t s a n d t h e e x p o r t o f c a p i t a l . S e c o n d ,

c o r p o r a t e l e a d e r s - h a d c o n s i d e r a b l e i n f l u e n c e i n t h e f o r m u l a -

t i o n o f f o r e i g n p o l i c y b e c a u s e t h o s e i n t h e p o l i t i c a l e l i t e

s h a r e d a s i m i l a r i d e o l o g i c a l p e r s p e c t i v e , More i m p o r t a n t ,

h o w e v e r , was t h e a c c e s s i b i l i t y c o r p o r a t e l e a d e r s had t o t h e

d e c i s i o n - m a k i n g p r o c e s s , They w e r e u s e d e i t h e r a s a d v i s e r s

o n c e r t a i n i s s u e s o r w e r e e m p l o y e d d i r e c t l y a s S t a t e D e p a r t -

m e n t o f f i c i a l s o r f u n c t i o n a r i e s i n t h e Truman A d m i n i s t r a -

t i o n . I n s h o r t , a n u n d e r s t a n d i n g o f wha t b u s i n e s s m e n were

s a y i n g a b o u t v a r i o u s p o s t u ~ a r i s s u e s i s e s s e n t i a l f o r a n

u n d e r s t a n d i n g o f t h e e v o l u t i o n o f A m e r i c a n f o r e i g n p o l i c y

a f t e r t h e S e c o n d World PJar.

The f r a m e w o r k d e v e l o p e d P o r a n a l y s i n g t h e c o l d War by

t h o s e h i s t o r i a n s known a s t h e " W i s c o n s i n S c h o o l " h a s n o t t o

a n y g r e a t e x t e n t b e e n a p p l i e d t o C h i n a p o l i c y by a n y o t h e r s

t h a n J o h n G i t t i n g s a n d t h e K o l k o s . l4 W h i l e G i t t i n g s d o e s

n o t c o n c m t r a t e on t h e e c o n o m i c a s p e c t s o f S i n o - A m e r i c a n

r e l a t i o n s h e d o e s n o t e t h e i m p o r t a n c e o f t r a d e i n t h e p o s t -

war p e r i o d . His work i s r e v i s i o n i s t i n t h e s e n s e t h a t

e s t a b l i s h e d m y t h s a b o u t S i n o - A m e r i c a n r e l a t i o n s o v e r t h e

l a s t t h i r t y y e a r s a r e r e - e x a m i n e d . V a r i o u s a s s u m p t i o n s s u c h

a s C h i n a ' s tendency t o i s o l a t e herself f r o m t h e communi ty

o f n z t i o n s a l o n g w i t h t h e c o n s p i r a c y t h e s i s o f t h e c i v i l war

p r e s e n t e d by many Amer ican o f f i c i a l s a r e r e f u t e d i n a non-

p o l e m i c a l a n d r e a s o n s d a n a l y s i s . 15

The K o l k o s , i n t h e i r m a s s i v e l y d o c u m s n t e d book - The

L i m i t s o f Poruer, m a i n t a i n t h a t e c o n o m i c f a c t o r s w e r e d e c i s i v e

i n d e t e r m i n i n g A m e r i c a n p o l i c y n o t o n l y i n E u r o p e b u t a l s o

i n t h e F a r E a s t , l6 L i t t l e a t t e n t i o n i s p a i d t o t h e i n f l u e n c e

o f m i l i t a r y s t r a t e g y b a s e d on g e o - p o l i t i c a l c a l c u l a t i o n s a n d

t h e K o l k o s c o n s c i o u s l y d e - e m p h a s i z e t h e r o l e o f a c c i d e n t o r

m i s u n d e r s t a n d i n g . F o c u s s i n g on m a t e r i a l c o n d i t i o n s a n d t h e r e b y de-err-

phasizing other factors h a s l e f t t h e K o l k o s o p s n t o criticism

f r o m w i t h i n t h e Mew L e f t s c h o o l a s we l l a s f r o m t h e main-

stream o f A m e r i c a n d i p l o m a t i c h i s t o r i a n s , To p u t it s i m p l y ,

e c o n o m i c f a c t o r s s u c h as t r a d e , i n v e s t m e n t , a n d l o a n s ,

c a n n o t b e s e p a r a t e d f r o m t h e i d e o l o g i c a l c o m p o n e n t , P r e s i -

d e n t T r u m a n ' s s p e e c h a t B a y l o r U n i v e r s i t y i n 1 9 4 7 i s b u t o n e

o f many e x a m p l e s s u b s t a n t i a t i n g t h i s p o i n t ,

T h e s e o b j s c t i v e s ( p e a c e a n d f r e e d o m ) a r e b o u n d u p c o m p l e t e l y w i t h a t h i r d o b j e c t i v e - - r e - e s t a b l i s h m e n t o f w o r l d t r a d e . I n f a c t t h e t h r e e - - - p e a c e , f r e e d o m , a n d w o r l d t r a d e - - - a r e i n - s e p a r a b l e . The g r a v e l e s s o n s o f t h e p a s t h a v e p r o v e d i t , I 7

One may q u e s t i o n T r u m a n ' s c o n c e p t OF f r e e d o m a s w e l l as h i s

p r e r e q u i s i t e s f o r p e a c e , b u t t o s a y t h a t t h e y were s i m p l y

r a t i o n a l i z a t i o n s f o r A m e r i c a n e c o n o m i c e x p a n s i o n misses

t h e p o i n t , T h e r e i s t o o much e v i d e n c e t o s u g g e s t t h a t t h e

i n d i v i d u a l c o m p o n e n t s o f A m e r i c a n f o r e i g n p o l i c y w e r e i n t e r -

r e l a t e d i n a way i n w h i c h B e r n a r d B a r u c h c a l l e d " t h e e s s e n -

t i a l o n e - n e s s o f f l n i t e d s t a t e s 7 - e c o n o m i c , p o l i t i c a l a n d

s t r a t e g i c i n t e r e s t s . " 18

A l t h o u g h t h e K o l k o s p r o v i d e s u b s t a n t i a l e v i d e n c e

t o d e m o n s t r a t e t h a t A m e r i c a n p o l i t i c i a n s a n d b u s i n e s s m e n

p e r c e i v e d t h e v a l u e o f m a r k e t s , t h i s d o e s n o t n e c e s s a r i l y

mean t h a t t h e i r u n d e r s t a n d i n g was c o r r e c t , S i n c e t h e t u r n

o f t h e c e n t u r y when J o h n Hay c i r c u l a t e d t h e Open Door N o t e s

w h i c h m a r k e d t h e b e g i n n i n g o f a f o r m a l A m e r i c a n c o m m i t m e n t

i n t h e F a r E a s t , t h e C h i n a m a r k e t h a s b e e n m i s p e r c e i v e d a n d

c o n s t a n t l y i n f l a t e d . P a u l V a r g ? i n a p e r c e p t i v e e s s a y o n

t h e e a r l y p e r i o d , h a s a r g u e d t h a t " t h e r h e t o r i c c o n c e r n i n g

t h e C h i n a m a r k e t r a n s o w i l d a s t o s u g g e s t t h a t F h e

m a r k e t 7 - mas i n t h e n a t u r e o f a m y t h , "19 He c o n c l u d e d t h a t

a n y o b j e c t i v e a n a l y s i s o f t h e m a r k e t p o t e n t i a l of C h i n a

w o u l d h a v e l e d t o a r e a l i z a t i o n t h a t t h e s i t u a t i o n was

h o p e l e s s e v e n f o r e n t e r p r i s i n g e n t r e p r e n e u r s . C h i n a ' s

f e u d a l s o c i a l i n s t i t u t i o n s , p o l i t i c a l i n s t a b i l i t y , a n d

e c o n o m i c b a c k u ~ a r d n e s s w e r e f o r m i d a b l e b a r r i e r s i n t h e way

o f a s u c c e s s f u l m a r k e t 8 a n d i t s c a p a c i t y t o a b s o r b A m e r i c a n

s u r p l u s c a p i t a l a n d c o m m o d i t i e s a f t e r t h e S e c o n d World War

h a d n o t c h a n g e d a p p r e c i a b l y s i n c e t h e f i r s t d e c a d e o f t h e

t w e n t i e t h c e n t u r y . I n f a c t , t h e C h i n e s e p o l i t i c a l economy

w h i c h was n e v e r a model f o r g r o w t h a n d s t a b i l i t y , d e t e r i o r a t e d

f r o m i t s p r e - w a r p o s i t i o n w i t h s e r i o u s c o n s e q u e n c e s f o r t h e

e c o n o m i c e x p a n s i o n o f A m e r i c a n c o r p o r a t i o n s .

T h i s t h e s i s , f o c u s i n g e x p l i c i t l y o n t h e b u s i n e s s

communi ty d u r i n g t h e y e a r s 1 9 4 3 t o 1 9 4 9 , e x a m i n e s e s s e n t i a l l y

t h r e e q u e s t i o n s . LUhat were t h e i n i t i a l p e r c e p t i o n s o f t h e

C h i n a m a r k e t ; w h a t f a c t o r s c a n a c c o u n t f o r t h e d e m i s e o f

t h e m a r k e t : a n d w h a t a l t e r n a t i v e s were c o n s i d e r e d when i t

was r e a l i z e d t h a t t h e m a r k e t would b e s e v e r e l y l i m i t e d ?

I t s h o u l d , h o w e v e r , b e p o i n t e d o u t t h a t t h e r e a r e o t h e r

q u e s t i o n s t h a t c o u l d b e e x a m i n e d i n f u r t h e r r e s e a r c h b e f o r e

a n y d e f i n i t e c o n c l u s i o n s c a n b e made.

F i r s t , w h a t was t h e r e l a t i o n s h i p b e t w e e n t h e

p o l i t i c a l e l i t e a n d t h e c o r p o r a t e e l i t e i n t h e f o r m u l a t i o n

o f C h i n a p o l i c y ? A l t h o u g h e v i d e n c e p r e s e n t e d i n t h e t h e s i s

i s n o t v e r y e x t e n s i v e , i t h a s b e e n t e n t a t i v e l y c o n c l u d e d

t h a t t h e r e was a c l o s e w o r k i n g r e l a t i o n s h i p b e t w e e n c o r -

p o r a t e a n d p o l i t i c a l o f f i c i a l s , o n C h i n a p o l i c y as o n p o l i c y

t o w a r d s o t h e r c o u n t r i e s . What s p e c i f i c i s s u e s were d i s -

c u s s e d a n d wha t p o l i c y o p t i o n s were e x a m i n e d a r e q u e s t i o n s

t h a t c o u l d b e p u r s u e d i n a n o t h e r p a p e r . F o r a t h o r o u g h

i n v e s t i g a t i o n o f t h e s e q u e s t i o n s , a c c e s s t o t h e Truman

L i b r a r y as wel l as t h e p a p e r s o f t h e d e c i s i o n - m a k e r s i n v o l v e d

would b e n e c e s s a r y . The p u b l i c a t i o n o f t h e S t a t e D e p a r t m e n t

p a p e r s f o r 1 9 4 7 t h r o u g h 1 9 4 9 would b e u s e f u l e v e n t h o u g h

t h e s e p a p e r s w i l l b e e d i t e d by Government a u t h o r i t i e s .

N e v e r t h e l e s s , a f t e r t a k i n g i n t o c o n s i d e r a t i o n t h e s e l imi ta -

t i o n s , t h e vo lume f o r 1946 was e s p e c i a l l y r e v e a l i n g , p a r -

t i c u l a r l y t h e m a t e r i a l o n t h e n e g o t i a t i o n s c o n c e r n i n g t h e

T r e a t y o f T r a d e a n d Commerce b e t w e e n C h i n a a n d t h e U n i t e d

S t a t e s . 20

A s e c o n d q u e s t i o n t h a t c o u l d b e p u r s u e d i s how t h e

p e r c e p t i o n o f t h e C h i n a m a r k e t v a r i e d f r o m c o r p o r a t i o n t o

c o r p o r a t i c i n , f r o m r e g i o n t o r e g i o n , a n d f r o m t h e i n d u s t r i a l

m a n u f a c t u r i n g s e c t o r t o t h e b a n k i n g c o m m u n i t y , From t h e

e v i d e n c e g a t h e r e d it i s o n l y p o s s i b l e t o t o u c h b r i e f l y o n

t h e l a s t p a r t o f t h i s q u e s t i o n . Access t o t h e p a p e r s o f t h e

l a r g e c o r p o r a t e o r g a n i z a t i o n s c o n c e r n e d w i t h f o r e i g n t r a d e

i s e s s e n t i a l b u t u n f o r t u n a t e l y m o s t o f them a re r e l u c t a n t

t o l e t r e s e a r c h e r s i n t o t h e i r f i l e s .

A t h i r d q u e s t i o n t h a t s h o u l d b e e x a m i n e d is c o n c e r n e d

w i t h t h e p r o b l e m o f c a u s a t i o n . R e l a t e d s p e c i f i c a l l y t o t h e

t h e s i s , w h a t was t h e p r i m a r y m o t i v a t i o n f o r t h e f o r m u l a t i o n

o f Amer ican-China p o l i c y f r o m 1 9 4 5 - 1 9 4 9 ? Can o n e f a c t o r b e

i s o l a t e d ( e . 9 . t h e s e a r c h f o r m a r k e t s ) a n d be r e g a r d e d a s

d e c i s i v e o v e r o t h e r c o n s i d e r a t i o n s . C l e a r l y e c o n o m i c

a s p e c t s o f A m e r i c a n F a r E a s t e r n p o l i c y a r e i m p o r t a n t , b u t

t h e y c a n n o t b e s e e n i n i s o l a t i o n f r o m o t h e r f a c t o r s .

P r e s i d e n t Truman , f o r e x a m p l e , saw Amer ican e c o n o m i c e x p a n -

s i o n i n C h i n a n o t o n l y i n terms o f t h e b e n e f i t s a c c r u i n g t o

t h e b u s i n e s s communi ty b u t a l s o as t h e r e q u i r e m e n t f o r

s t a b i l i t y i n t h e O r i e n t . B a l a n c e o f power c o n s i d e r a t i o n s

a n d f o r e i g n e c o n o m i c e x p a n s i o n were n o t a n t i t h e t i c a l t o

e a c h o t h e r b u t w e r e m u t u a l l y e x c l u s i v e . The same c a n b e

s a i d f o r t h e n a t i o n a l i n t e r e s t s o f C h i n a a n d o f t h e U n i t e d

S t a t e s . B o t h were p e r c e i v e d as b e i n g p a r t o f t h e same t h i n g

a s t h e f o l l o w i n g s t a t e m e n t made by P r e s i d e n t Truman s u g g e s t s ,

We b e l i e v e t h a t o u r h o p e s f o r C h i n a a r e i d e n t i c a l w i t h w h a t t h e C h i n e s e p e o p l e t h e m s e l v e s m o s t e a r n e s t l y d e s i r e , We s h a l l t h e r e f o r e c o n t i n u e o u r p o s i t i v e a n d r e a l i s t i c p o l i c y t o w a r d C h i n a w h i c h i s b a s e d on f u l l r e s p e c t f o r h e r n a t i o n a l s o v e r e i g n t y a n d on o u r t r a d i t i o n a l f r i e n d - s h i p f o r t h e C h i n e s e p e o p l e a n d i s d e s i g n e d t o p r o m o t e i n t e r n a t i o n a l p e a c e . 2 1

I n T r u m a n ' s mind as tuell a s o t h e r o f f i c i a l s r e s p o n s i b l e f o r

t h e f o r m u l a t i o n o f C h i n a p o l i c y t h e i d e o l o g i c a l , s t r a t e g i c

a n d e c o n o m i c c o m p o n e n t s w e r e i n s e p a r a b l e , However , b e f o r e

a n y i n t e l l i g e n t o v e r v i e w c a n b e g i v e n , a n e x a m i n a t i o n o f

t h a t s e c t o r o f A m e r i c a n s o c i e t y m o s t c o n c e r n e d w i t h e c o n o m i c

i s s u e s ( t h e A m e r i c a n b u s i n e s s m a n ) i s n e c e s s a r y . T h i s t h e s i s

a t t e m p t s i n p a r t t o o v e r c o m e t h a t d e f i c i e n c y .

INTRODUCTION

FOOTNOTES

I Some o b s e r v e r s o f t h e p e r i o d p r e s e n t a c o n s p i r a c y h y p o t h e s i s t o e x p l a i n t h e " l o s s o f C h i n a . " See f o r e x a m p l e J o h n T. F l y n n , The L a t t i m a r e S t o r y ( ~ e w York , 1953) . F l y n n s u b t i t l e s h i s book "The f u l l s t o r y o f t h e m o s t i n c r e d i b l e c o n s p i r a c y o f o u r time." A c o n t e m p o r a r y p o l e m i c u s i n g t h e same a p p r o a c h i s Anthony Kubek, How t h e F a r E a s t Was L o s t , A m e r i c a n P o l i c y a n d t h e C r e a t i o n o f Communist C h i n a , 1941- 1949 - ( C h i c a g o , 1 9 6 3 ) . A more s o p h i s t i c a t e d a n a l y s i s i s p r e s e n t e d i n Tang T s o u , America's F a i l u r e i n C h i n a , 1 9 4 1 - 1 9 5 0 ( C h i c a g o , 1 9 6 3 ) . T a n g T s o u a r g u e s t h a t A m e r i c a n - d e c i s i o n - m a k e r s m i s p e r c e i v e d t h e r e a l i n t e n t i o n s o f t h e C h i n e s e Communis t s a n d saw them as b e i n g e s s e n t i a l l y " a g r a r i a n r e f o r m e r s . " T h e i r e r r o n e o u s p e r c e p t i o n s o f t h e n a t u r e o f C h i n e s e Communism, s o a r g u e s T s o u , c a n b e t r a c e d t o t h e n a t u r e o f t h e A m e r i c a n p o l i t i c a l c u l t u r e w h i c h t e n d s t o d e - e m p h a s i z e p o l i t i c a l i d e o l o g y .

2~~~~ e x c e l l e n t s t u d i e s o f i n t e r e s t a r o u o s a n d A m e r i c a n p u b l i c o p i n i o n a r e R o s s Y . Kosn, The c h i n a ~ o b b ~ i n A m e r i c a n P o l i t i c s ( ~ e w Y o r k , 1 9 6 0 ) , a n d G e o r g e C. Hoche , " P u b l i c O p i n i o n a n d t h e C h i n a P o l i c y o f t h e U n i t e d S t a t e s , 1 9 4 1 - 1 9 5 1 , " ( U n p u b l i s h e d Ph.D. d i s s e r t a t i o n , U n i v e r s i t y o f C o l o r a d o , 1 9 6 5 ) .

' ~ o h n K . F a i r b a n k . ' h e v i e w o f Thomas J . NcCormick. C h i n a M a r k e t : ~ r n e r i c a ' s Q u e s t f o r I n f o r m a l E m p i r e , 1893- 1901%in J o u r n a l o f A m e r i c a n H i s t o r y LIV ( M a r c h , 1 9 6 8 ) - 910-12. I h e m o s t r e c e n t i n d e ~ t h s t u d v o f A m e r i c a n m i s - s i o n a r i e s i n C h i n a i n t h e i n t e r - u a r p e i i o d i s James C . Thornson, !iJhile C h i n a F a c e d Wes t r ~ m e r i c a n R e f o r m e r s i n N a t i o n a l i s t C h i n a , 1938-1937 ( C a m b r i d g e , M a s s a c h u s e t t s , '1969').

4 ~ o r a n o r t h o d o x i n t e r p r e t a t i o n o f wha t N e w L e f t H i s t o r i o g r a p h y i s s e e I r w i n U n g e r , Beyond L i b e r a l i s m : The New Left Views A m e r i c a n H i s t o r y o or onto, 1 4 7 1 ) . The term Left i s m o s t o f t e n u s e d t o d e s c r i b e s t u d e n t p o l i t i c s OF t h e 1 9 6 0 ' s a n d h a s b e e n u s e d a s a l a b e l f o r r e c e n t r e v i s i o n i s t h i s t o r i o g r a p h y . A c c o r d i n g t o U n g e r , t h e r e a r e t h r e e c h a r a c - t e r i s t i c s t h a t s e p a r a t e t h i s s c h o o l f r o m t h e m a i n s t r e a m . F i r s t , m o s t o f t h e a d h e r e n t s a r e " p r e s e n t i s t s " i n t h a t t h e y ask q u e s t i o n s a b o u t t h e p a s t t h a t a r e s u b s t a n t i a l l y i n f l u e n c e d

10

by t h e p r e s e n t . S e c o n d , t h e y a r e i n f l u e n c e d by Marx b u t more s o by C h a r l e s Beard a n d h i s ~ o r k o n A m e r i c a n f o r e i g n p o l i c y . T h i r d , t h e y f o c u s on s p e c i f i c t o p i c s , t h e m o s t i m p o r t a n t b e i n g Amer ican f o r e i g n p o l i c y . A m e r i c a n e x p a n s i o n s i n c e t h o t u r n o f t h e c e n t u r y i s s e v e r e l y c r i t i c i s e d a n d a n i s o l a t i o n i s t p o s i t i o n i s s t r o n g l y s u p p o r t e d .

W h e t h e r s u c h a s c h o o l e x i s t s is d i f f i c u l t t o s a y s i n c e w h a t s u p p o s e d l y c o n s t i t u t e s Neu L e f t H i s t o r i o g r a p h y i s s o i n t e r n a l l y c o n t r o v e r s i a l , F o r e x a m p l e , G a r d n e r a n d F l e m i n g h a v e d i f f e r e n t i n t e r p r e t a t i o n s o f w h e t h e r o r n o t t h e r e was c o n t i n u i t y b e t w e e n t h e F.D.R. a n d Truman a d m i n i s t r a t i o n s , A l p e r o v i t z a n d Kolko h a v e s u b s t a n t i a l l y d i f f e r e n t i n t e r - p r e t a t i o n s o f t h e Atomic bomb c o n t r o v e r s y , a n d i t is c l e a r t h a t L~J i l l i a rns a n d H o r o w i t z h a v e d i f f e r e n t v ie lus r e g a r d i n g t h e r o l e o f t h e b a s e a n d s u p e r s t r u c t u r e i n t h e f o r m a t i o n o f f o r e i g n p o l i c y . A l s o , New L e f t h i s t o r i a n s c h a n g e o v e r t i m e . H o r o w i t z now e x p e r i m e n t s w i t h a M a r x i s t - L e n i n i s t f r a m e w o r k w h i l e G a r d n e r i n h i s l a t e s t v ~ 0 r k h a s g i v e n l i t t l e a t t e n t i o n t o e c o n o m i c f a c t o r s . F i n a l l y , t h o s e i n t h e m a i n s t r e a m l i k e R o n a l d S t e e l h a v e a d o p t e d some R e v i s i o n i s t a r g u m e n t s b u t e x p l i c i t l y p o i n t o u t t h a t t h e y a r e n o t i n t h e N e w L e f t p a r a d i g m ,

I t i s w i t h t h e a b o v e q u a l i f i c a t i o n s t h a t I u s e t h e term N e w L e f t t h r o u g h o u t t h e t h e s i s ,

' 5 h a r l e s B e a r d , The I d e a o f N a t i o n a l I n t e r e s t : Rn A n a l y t i c a l S t u d y i n A m e r i c a n -.- F o r e i g n ~ o l i c y o s t o n , 1 9 6 4 ) , 89-158 ; a n d J o s e p h Freeman a n d S c o t t N e a r i n a . D o l l a r D i l omacy r A s t u ~ i n A m e r i c a n 1 m p e r i a l i s m d ( ~ ~ k , l 9 6 6 ) , & a n d 233-82.

' ~ i l l i a m A . W i l l i a m s , The T r a g e d y o f A m e r i c a n Dip lomacy ( ~ e i u Y o r k , 1959) . F o r a d i s c u s s i o n o f Williams' i n f l u e n c e . see J o s e p h ~ i r a c u s a , "New L e f t D i p l o m a t i c H i s t o r i e s a n d H i s t o r i a n s , " ( u n p u b l i s h e d Ph.D. d i s s e r t a t i o n , U n i v e r s i t y o f C o l o r a d o , 1 9 7 1 ) , a n d R o b e r t T u c k e r , The R a d i c a l L e f t a n d A m e r i c a n F o r e i g n P o l i c y ( ~ a l t i m o r e , T971).

7 ~ a l t e r L a F e b e r , The N e w E m o i r e c An I n t e r o r e t a t i o n of - - - .

A m e r i c a n E x p a n s i o n 1 8 6 r 1 8 9 8 ( ~ t h a c a , New ~ o r k , ' 1 9 6 5 ) .

hornas as J. McCormick, C h i n a M a r k e t ! A m e r i c a ' s Q u e s t f o r I n f o r m a l E m p i r e , 1 8 9 3 - 1 9 0 1 , W h i l e t h e "power e l i t e " c o n c e p t i s a u s e f u l a n a l y t i c a l t o o l , i t a l s o h a s i t s l i m i t a t i o n s . A c c o r d i n g t o NcCormick t h e m a i n d i f f i c u l t y w i t h s u c h a n a p p r o a c h i s t h e f a i l u r e t o c o n s i d e r t h e r o l e o f n o n - e l i t e g r o u p s s u c h a s f a r m e r s a n d t h e i n d u s t r i a l p r o l e t a r i a t i n t h e d e c i s i o n - m a k i n g p r o c e s s , N e v e r t h e l e s s ,

t h e "power e l i t e " s t i l l h a d t h e m o s t i n f l u e n c e o n d e c i s i o n - m a k i n g w h i l e , a t t h e same t i m e , p o l i c y was f o r m u l a t e d t a k i n g i n t o c o n s i d e r a t i o n t h e n e e d s o f o t h e r g r o u p s s u c h a s f a r m e r s . F o r a s t u d y o f n o n - e l i t e g r o u p s a n d t h e i r i n f l u e n c e on d e c i s i o n - m a k i n g , s e e William A . M i l l i a m s , The R o o t s o f t h e A m e r i c a n E m p i r e ( ~ e w York , 1 9 6 9 ) 1 0 7 - 5 7 . Williams d i s c u s s e s - -- t h k a g r a r i a n communi ty w h i l e R o n a l d Radosh i n A m e r i c a n L a b o r - a n d U n i t e d S t a t e s F o r e i g n P o l i c y ( ~ e w Y o r k , 1 9 - m a m i n e s t h e r o l e o f l a b o r .

' ~ o a n Hoff W i l s o n , A m e r i c a n B u s i n e s s & F o r e i q n P o l i c y , 1 9 2 0 - 1 9 3 3 ( ~ e n t u c k y , 1 9 7 1 ) . W i l s o n i s c a r e f u l t o p o i n t o u t % h a t busZnessmen d i d n o t a l w a y s a c t a s a m o n o l i t h i c i n t e r e s t g r o u p e x e r t i n g c o n s t a n t p r e s s k e on d e c i s i o n - m a k e r s res- p o n s i b l e f o r p o l i c y f o r m u l a t i o n . I n s t e a d , t h e i r i n f l u e n c e v a r i e d f r o m i s s u e t o i s s u e b u t more i m p o r t a n t l y , t h e r e o f t e n was c o n s i d e r a b l e d i s a g r e e m e n t b e t w e e n b a n k e r s , m a n u f a c t u r e r s , a n d e x p o r t - i m p o r t c o m p a n i e s .

l U ~ l o y d C . G a r d n e r , - Economic A s p e c t s o f New Deal D i p l o m a c y adis is on , W i s c o n s i n , 1 9 6 4 ) . G a r d n e r , u n l x e W i l s o n makes l i t t l e r e f e r e n c e t o t h e i n f l u e n c e o f b u s i n e s s m e n on p o l i c y f o r m u l a t i o n b u t f o c u s e s o n t h e Open Door i d e o l o g y p r e v a l e n t among t h o s e i n t h e p o l i t i c a l e l i t e . N e v e r t h e l e s s h i s c o n c l u s i o n s a r e somewhat t h e same i n t h a t e c o n o m i c f a c t o r s were a n i m p o r t a n t c o n s i d e r a t i o n i n t h e f o r m u l a t i o n o f p o l i c y .

''Elarton E l e r n s t e i n , e d . , P o l i t i c s a n d P o l i c i e s o f t h e Truman A d m i n i s t r a t i o n ( c h i c a g o , 1 9 7 0 ) , a n d D a v i d H o r o w i t z , -- e d . , C o n t a i n m e n t a n d R e v o l u t i o n ( B o s t o n , 1 9 6 7 ) .

" ~ h o m a s G . P a t e r s o n , "The Economic C o l d War: A m e r i c a n B u s i n e s s a n d Economic F o r e i g n P o l i c y , " ( u n p u b l i s h e d Ph.D. d i s s e r t a t i o n , U n i v e r s i t y o f C a l i f o r n i a , B e r k e l e y , 1 9 6 8 ) . The P a t e r s o n d i s s e r t a t i o n i s t h e m o s t t h o r o u g h l y r e s e a r c h e d s t u d y o f t h e a t t i t u d e s o f A m e r i c a n b u s i n e s s m e n o n t h e C o l d War i n E u r o p e . I t i s n o t h o w e v e r , s i m p l y a n " e c o n o m i c i n t e r p r e t a t i o n o f t h e C o l d War, b u t r a t h e r a n i n v e s t i g a t i o n o f e c o n o m i c p o l i c y . " One o f t h e c e n t r a l t h m e s o f t h e d i s s e r t a t i o n i s t h e " p e a c e a n d p r o s p e r i t y c o n c e p t v ~ h i c h i s a m o d i f i c a t i o n o f t h e t r a d i t i o n a l B e a r d i a n a p p r o a c h . P a t e r s o n ' s work i s r e v i s i o n i s t i n t h e s e n s e t h a t h e f o c u s e s on e c o n o m i c p r o b l e m s a n d i s c r i t i c a l o f A m e r i c a n p o s t w a r p o l i c y . I n & r e c e n t a n t h o l o g y C o l d War C r i t i c s , P a t e r s o n p a r t s company w i t h r a d i c a l s c h o l a r s l i k e G a b r i e l Kolko by a r g u i n g t h a t t h e r e were a l t e r n a t i v e s t o t h e way i n w h i c h t h e C o l d War d e v e l o p e d . I t is d i f f i c u l t t o n e a t l y c l a s s i f y

P a t e r s o n , b u t h i s work h a s b e e n o f s i g n i f i c a n t i m p o r t a n c e t o r e v i s i o n i s t s .

1 3 ~ . William Domhof f , The H i q h e r C i r c l e s : The G o v e r n i n g C l a s s i n --- A m e r i c a ( ~ e w York,-1'"is"0), 1 1 1 - 1 5 5 : D a v i d E a k i n s , "The Deve lopment o f C o r p o r a t e L i b e r a l P o l i c y R e s e a r c h i n t h e U n i t e d S t a t e s 1885-1965" ( ~ n ~ u b l i s h e d Ph.D. d i s s e r t a t i o n , U n i v e r s i t y o f W i s c o n s i n , 1 9 6 6 ) , 3 3 0 - 3 9 0 j Dav id H o r o w i t z , e d . , C o r p o r a t i o n s a n d t h e C o l d VJar ( ~ e w York , 1 9 6 9 ) , pass im. -- . .-

1 4 ~ o h n G i t t i n g s , "The O r i g i n s o f C h i n a ' s F o r e i g n P o l i c y , " i n H o r o w i t z , e d . , C o n t a i n m e n t a n d R e v o l u t i o n ( ~ o s t o n , 1 9 6 7 1 , 1 8 2 - 2 1 7 ; J o y c e a n d G a b r i e l K o l k o , The L i m i t s o f P o u ~ e r : The World a n d U n i t e d S t a t e s F o r e i q n p o l i c y , 1 9 4 5 - 1 9 5 4 1 9 7 2 ) - 7 2 - 4 6 - 2 7 6 X d 534-564. \

1 5 ~ y p i c a l o f t h o s e o f f i c i a l s i n t h e U n i t e d S t a t e s S t a t e D e p a r t m e n t a f t e r t h e McCar thy p u r g e w e r e t h e comments by Dean Rusk. I n a s p e e c h b e f o r e t h e C h i n a I n s t i t u t e i n N e w York i n May o f 1 9 5 1 , Rusk p r e s e n t e d h i s a n a l y s i s o f t h e C h i n e s e R e v o l u t i o n i n 1 9 4 9 .

The p e a c e a n d s e c u r i t y o f C h i n a a r e b e i n g s a c r i f i c e d t o t h e a m b i t i o n s o f t h e Communist c o n s p i r a c y . . . . The P e i p i n g Regime may b e a c o l o n i a l R u s s i a n government - - -a S l a v i c Manchuquo on a l a r a e r s c a l e . I t i s n o t t h e g o v e r n m e n t o f C h i n a . . . . (The NeuJ York T i m e s , May 1 9 , 1 9 5 1 , 38) .

G i t t i n g s a r g u e s t h a t t h e r o l e of t h e S o v i e t Union was n e g l i g i b l e s i n c e S t a l i n on n u m e r o u s o c c a s i o n s e n c o u r a g e d t h e C h i n e s e Communis t s t o work w i t h i n a c o a l i t i o n g o v e r n - m e n t u ~ i t h t h e Kuomin tang . F u r t h e r m o r e , l i t t l e m i l i t a r y a i d was g i v e n a n d i f t h e Communis t s h a d a n y b o d y t o t h a n k f o r m i l i t a r y e q u i p m e n t i t was t h e U n i t e d S t a t e s .

1 6 ~ o l k o s , L i m i t s of Power . The K o l k o s ' c o n c e p t o f c a u s a t i o n i s h i e r a r c h i c a l w i t h t h e e c o n o m i c f a c t o r b e i n g t h e m o s t i m p o r t a n t . O t h e r New L e f t h i s t o r i a n s l i k e Thomas P a t e r s o n p r e f e r t o e x p l a i n p o l i c y f o r m u l a t i o n a s t h e r e s u l t o f a c o m p l e x o f v a r i a b l e s e a c h m u t u a l l y i n t e r d e p e n d e n t on t h e o t h e r .

1 7 ~ r e s i d e n t Truman i n a s p e e c h a t B a y l o r U n i v e r s i t y i n March 1 9 4 7 . Q u o t a t i o n t a k e n f r o m P u b l i c P a p e r s o f t h e

180uoted i n Richard J. Barne t , Roots of War ( ~ e w York, 1972) , 176,

19paul Varg, "The Myth of t h e China Market, 1890-1914,w American H i s t o r i c a l Revieu~, LXXII ( ~ e b r u a r ~ , 1968) , 742-58.

'"u.s. Department of S t a t e , Foreign R e l a t i o n s of t h e United S t a t e s , The Far E a s t : China, 1946 (Yashington, 1$72), 1296-1308. For a survey of t h e r e s e a r c h m a t e r i a l s a v a i l a b l e on t h e Truman p e r i o d s e e Richard S. K i r k e n d a l l , The Truman Per iod a s a Research F i e l d ( ~ o l u m b i a , Missour i , 1967) .

* l ~ h e Commercial h F i n a n c i a l Chron ic l e , January 2 , 1947, 4556

THE OPTIMISTIC INTERLUDE: A SURVEY OF BUSINESS ATTITUDES, 1 9 4 3 - 1 9 4 6

The b u s i n e s s c o m m u n i t y ' s i n t e r e s t i n t h e C h i n a m a r k e t

d a t e s b a c k t o t h e l a t e e i g h t e e n t h c e n t u r y , a p e r i o d o f t e n

r e f e r r e d t o a s t h e "Age o f V l e r c a n t i l i s m . " ' A t t h a t time

t h e l a r g e t r a d i n g company was a n i m p o r t a n t e c o n o m i c u n i t ,

e s s e n t i a l t o t h e e c o n o m i c g r o w t h a n d p r o s p e r i t y o f t h e New

E n g l a n d s t a t e s . T h e e c o n o m i c wel l b e i n g o f t h e t r a d i n g

company was i n t u r n d e p e n d e n t o n t h e d e v e l o p m e n t a n d e x p a n -

s i o n o f a n e x t e n s i v e o v e r s e a s t r a d i n g n e t w o r k . T h i s b e i n g

t h e case, A m e r i c a n m e r c a n t i l i s t s w e r e c o n s t a n t l y on t h e l o o k -

o u t f o r new c o m m e r c i a l o p p o r t u n i t i e s . When news o f t h e

p o t e n t i a l l y l u c r a t i v e t r a d e w i t h t h e O r i e n t r e a c h e d t h e New

E n g l a n d c o a s t , a number o f m e r c a n t i l e l e a d e r s r e f i t t e d

s h i p s p r e v i o u s l y u s e d i n p r i v a t e e r i n g v e n t u r e s d u r i n g t h e

War o f I n d e p e n d e n c e , a n d p r o c e e d e d t o n a v i g a t e t h e s t o r m y

w a t e r s o f t h e P a c i f i c ocean . ' A d v e n t u r o u s t r a d e r s would

s e t o u t i n t h e i r c o n v e r t e d g u n - r u n n e r s f r o m e a s t c o a s t

p o r t s l i k e B o s t o n a n d New York , s a i l a r o u n d Cape Horn t o

t r a d e w i t h w e s t c o a s t I n d i a n s , a n d t h e n d e p a r t f o r C h i n a .

The C h i n a t r a d e was s o p r o s p e r o u s t h a t o n e o r t w o t r i p s

e n a b l e d a s h i p ' s c a p t a i n t o r e t i r e on a c o m f o r t a b l e i n c o m e . 3

16

W i t h t h e e x h a u s t i o n o f t h e s u p p l y o f m a r k e t a b l e f u r s a n d

i n c r e a s e d E u r o p e a n c o m p e t i t i o n , h o w e v e r , t r a d e w i t h t h e F a r

E a s t s t e a d i l y d e c l i n e d i n i m p o r t a n c e u n t i l t h e end o f t h e

n i n e t e e n t h c e n t u r y . 4

L a t e i n t h e n i n e t e e n t h c e n t u r y , v ~ i t h t h e d e v e l o p m e n t

o f i n d u s t r i a l c a p i t a l i s m , t h e A m e r i c a n e c o n o m i c l a n d s c a p e

came t o b e d o m i n a t e d by t h e l a r g e c o r p o r a t i o n a n d a few

p o w e r f u l b a n k i n g h o u s e s . A m e r i c a n b u s i n e s s m e n s o o n r e a l i z e d ,

h o w e v e r , t h a t t h e t r a n s i t i o n f r o m a m e r c a n t i l i s t s y s t e m t o

a c o r p o r a t e p o l i t i c a l economy d i d n o t mark t h e b e g i n n i n g o f

a n e u i n d u s t r i a l u t o p i a . I n s t e a d , a n a c c e l e r a t e d r a t e o f

c a p i t a l i n v e s t m e n t a n d t e c h n o l o g i c a l c h a n g e , c o m b i n e d w i t h

a f a l l i n g r a t e o f p r o f i t , l e d t o a m o u n t i n g s o c i a l cr is is

c h a r a c t e r i z e d by h i g h u n e m p l o y m e n t a n d l a b o r u n r e s t . A s

W a l t e r L a F e b e r h a s o b s e r v e d i n h i s a n a l y s i s o f t h e p e r i o d ,

A m e r i c a n b u s i n e s s m e n c o u l d h a v e p u r s u e d a d o m e s t i c s o l u t i o n

t o t h e p r o b l e m o f d i s p o s i n g o f s u r p l u s p r o d u c t i o n b u t

" i n s t e a d o f s e a r c h i n g f o r f a r m i n g , m i n e r a l o r g r a z i n g l a n d s ,

A m e r i c a n s s o u g h t f o r e i g n m a r k e t s f o r a g r i c u l t u r a l s t a p l e s

o r i n d u s t r i a l g o o d s . w 5 C a n a d a , E u r o p e , L a t i n A m e r i c a , a n d

t h e F a r East came t o b e s e e n a s t h e m o s t i m p o r t a n t a reas f o r

neuj e c o n o m i c o p p o r t u n i t i e s . A l t h o u g h t h e t r a d e u i t h East

A s i a n c o u n t r i e s d i d n o t r e a c h t h e same l e v e l a s o t h e r a r e a s

s u c h a s E u r o p e a n d L a t i n A m e r i c a , t h e i d e a o f a p o t e n t i a l

m a r k e t r e m a i n e d i n t h e m i n d s o f b u s i n e s s m e n t h r o u g h o u t t h e

n i n e t e e n t h a n d f o r m o s t o f t h e f i r s t h a l f o f t h e t w e n t i e t h

c e n t u r y .

I n t h e t w e n k i e t h c e n t u r y o n e c a n d i s c e r n t w o v a r i a b l e s

i n t h e c o m p l i c a t e d C h i n a m a r k e t f o r m u l a . F i r s t , t h e

i n t e n s i t y o f t h e p e r c e p t i o n d e p e n d e d on w h a t s e c t o r o f t h e

b u s i n e s s e l i t e o n e is l o o k i n g a t . The m a n u f a c t u r e r s

r e p r e s e n t e d by t h e A m e r i c a n Asiat ic A s s o c i a t i o n a n d l a t e r

by t h e C h i n a A m e r i c a n C o u n c i l o f Commerce a n d I n d u s t r y ,

r e p e a t e d l y e m p h a s i z e d t h e p o s s i b i l i t y o f a v i r t u a l l y u n l i m i t e d

m a r k e t a b I n c o n t r a s t , t h e b a n k i n g h o u s e s a n d f i n a n c i a l

g r o u p s w e r e s k e p t i c a l a b o u t t h e i n v e s t m e n t o f c a p i t a l i n a n

7 u n s t a b l e p o l i t i c a l a n d e c o n o m i c s i t u a t i o n . B e c a u s e o f t h i s

a t t i t u d e , m a n u f a c t u r e r s o f t e n h a d d i f f i c u l t y e x p o r t i n g com-

m o d i t i e s w h i c h v ~ o u l d h a v e t o b e b o u g h t w i t h . l o a n s s p o n s o r e d

by A m e r i c a n b a n k e r s . I n t h e p e r i o d a f t e r t h e S e c o n d Wor ld

\!Jar, t h i s p r o b l e m was r e s o l v e d d i r e c t l y t h r o u g h t h e f i n a n c -

i n g o f low i n t e r e s t , l o n g term l o a n s a n d i n d i r e c t l y t h r o u g h

t h e g o v e r n m e n t ' s p a r t i c i p a t i o n i n t h e U N R R A r e l i e f p r o g r a m , 8

The s t r e n g t h o r w e a k n e s s o f t h e C h i n a m a r k e t p e r c e p t i o n

a l s o v a r i e d w i t h t h e h i s t o r i c a l p e r i o d , Two f a c t o r s s h o u l d

b e k e p t i n mind when e x a m i n i n g t h i s s e c o n d v a r i a b l e . T h e s e

a r e t h e s t a t e o f t h e i n t e r n a l p o l i t i c a l economy a n d t h e i m -

m e d i a t e c o n s t e l l a t i o n o f f o r c e s i n t h e i n t e r n a t i o n a l m a r k e t -

p l a c e . A t t h e t u r n o f t h e c e n t u r y , t h e e m e r g e n c e o f i n d u s -

t r i a l c a p i t a l i s m a n d t h e r e s u l t i n g s o c i a l a n d e c o n o m i c d i s -

r u p t i o n s c a n p a r t l y a c c o u n t f o r t h e i n t e n s i t y of t h e r h e t o r i c

1 8

t h a t came f r o m t h e b u s i n e s s c o m m u n i t y , T o w a r d s t h e e n d o f

t h e S e c o n d World War, i t was t h e a s c e n d a n c y o f t h e U n i t e d

S t a t e s a s t h e u n q u e s t i o n e d l e a d e r o f t h e c a p i t a l i s t w o r l d

c o m b i n e d w i t h t h e immense p r o b l e m s o f c o n v e r t i n g a war

economy t o a p e a c e t i m e one. ' B u t , A m e r i c a n b u s i n e s s m e n d i d

n o t now h a v e , a s t h e y d i d a t t h e t u r n o f t h e c e n t u r y , t o

c o m p e t e w i t h o t h e r c o u n t r i e s i n o r d e r t o m a i n t a i n t h e Open

Door i n C h i n a . I n s t e a d , t h e c r u c i a l p r o b l e m f a c i n g b u s i -

n e s s m e n was t h e r i s i n g n a t i o n a l c o n s c i o u s n e s s o f e x i s t i n g

t r a d i t i o n a l e l i t e s c o m p l i c a t e d by t h e e m e r g e n c e o f r e v o l u -

t i o n a r y f o r c e s i n t e n t on c o n s o l i d a t i n g g a i n s made d u r i n g

t h e war . F i r s t , t h e Open Door was t h r e a t e n e d by p o l i t i c a l

f o r c e s on t h e r i g h t , c h a r a c t e r i z e d by q u a s i - f a s c i s t e c o n o m i c

a n d p o l i t i c a l p o l i c i e s , a n d , s e c o n d , by l e f t i s t r e v o l u t i o n -

a r y f o r c e s c a l l i n g f o r t h e r e m o v a l o f " f o r e i g n e x p l o i t e r s , "

A m e r i c a n b u s i n e s s m e n i n p o s t w a r C h i n a h a d t o d e a l w i t h b o t h

o f t h e s e d e v e l o p m e n t s a n d t h e y e v e n t u a l l y p r o v e d t o b e a

more d a n g e r o u s t h r e a t t o t h e p r e s e r v a t i o n o f t h e Open Door

t h a n f o r e i g n c o m p e t i t i o n e a r l i e r i n t h e t w e n t i e t h c e n t u r y .

C o n c e r n o v e r t h e p o s i t i o n o f t h e U n i t e d S t a t e s i n t h e

p o s t w a r w o r l d economy was e x p r e s s e d by b u s i n e s s m e n i n 1 9 4 2

a n d 1 9 4 3 when i t became e v i d e n t t h a t t h e war h a d s h i f t e d i n

f a v o u r o f t h e Al l i e s . Mos t o f t h e p r o b l e m s t h a t a t t r a c t e d

s e r i o u s a t t e n t i o n were r e l a t e d t o t h e c o n v e r s i o n f r o m a

war economy t o a p e a c e t i m e o n e . To c a r r y o u t t h e t r a n s i t i o n

a s q u i c k l y a n d e f f e c t i v e l y a s p o s s i b l e , o n e o f two c o u r s e s

19

would h a v e t o b e p u r s u e d . The U n i t e d S t a t e s c o u l d f o l l o w a

p o l i c y o f f r e e t r a d e a n d e c o n o m i c i n t e r n a t i o n a l i s m o r s e t u p

t a r i f f b a r r i e r s a n d d e v e l o p t h e d o m e s t i c m a r k e t . On t h i s

i s s u e , t h e b u s i n e s s communi ty s p l i t i n t o t w o f a c t i o n s w h i c h

M c L e l l a n a n d Woodhouse c a l l t h e " f u n d a m e n t a l i s t s " a n d t h e

" p r o g r e s s i v e s . " lo The " f u n d a m e n t a l i s t s " w e r e b a s i c a l l y

i s o l a t i o n i s t a n d r e j e c t e d a n y g o v e r n m e n t i n t e r f e r e n c e w i t h

t h e m a r k e t mechan i sm, d o m e s t i c a l l y o r i n t e r n a t i o n a l l y ,

T y p i c a l l y , t h e y were small sca le e n t r e p r e n e u r s who f a v o r e d

t a r i f f s a n d a p o l i c y o f p r o t e c t i o n i s m . The " p r o g r e s s i v e s " ,

o n t h e o t h e r h a n d , r e a l i z e d t h a t A m e r i c a n e c o n o m i c s t a b i l i t y

a n d p r o s p e r i t y d e p e n d e d on t h e e c o n o m i c s i t u a t i o n i n t h e

r e s t o f t h e w o r l d .

A l t h o u g h d i f f e r e n c e s b e t w e e n n a t i o n a l i s t s a n d i n t e r -

n a t i o n a l i s t s e x i s t e d t h r o u g h o u t t h e t w e n t i e t h c e n t u r y , d i s -

c o r d b e t w e e n t h e t w o g r o u p s was p a r t i c u l a r l y s t r o n g a f t e r

t h e S e c o n d Wor ld War. I t s h o u l d b e n o t e d , h o w e v e r , t h a t t h e

p o s t w a r s p l i t i n t h e b u s i n e s s communi ty was n o t a c o n t i n u a -

t i o n o f t h e e a r l i e r c o n f l i c t o f i n t e r e s t b e t w e e n b a n k e r s

and c o r p o r a t e i n d u s t r i a l i s t s d u r i n g t h e f i r s t t h r e e d e c a d e s

o f t h e t w e n t i e t h c e n t u r y .

Of t h e two g r o u p s , t h e " p r o g r e s s f v e s " were more power-

f u l e c o n o m i c a l l y a n d came t o d o m i n a t e much o f t h e t h i n k i n g

a b o u t p o s t w a r e c o n o m i c p l a n n i n g . T h i s g r o u p , w h i c h c o n -

s i s t e d of r e p r e s e n t a t i v e s o f t h e b a n k i n g h o u s e s a n d t h e

l a r g e r c o r p o r a t i o n s , e s p e c i a l l y t h o s e w i t h o v e r s e a s h o l d i n g s ,

20

r e a l i z e d t h e t r a g i c c o n s e q u e n c e s o f e c o n o m i c n a t i o n a l i s m

a n d m o n e t a r y w a r f a r e d u r i n g t h e i n t e r w a r p e r i o d . A t t h e

e n d o f t h e war, t h e r e f o r e , t h e y f e l t t h a t i t was A m e r i c a ' s

o b l i g a t i o n t o a s s u m e e c o n o m i c l e a d e r s h i p i n t h e w o r l d i n

i t s own i n t e r e s t a s well a s t h e e c o n o m i c s t a b i l i t y o f

f o r e i g n n a t i o n s . I n t h e e y e s o f A m e r i c a n b u s i n e s s m e n , t h e

turn were i n s e p a r a b l e , l1 The v i e w s o f t h e ' p r o g r e s s i v e s '

w e r e t r a n s l a t e d i n t o p o l i c y ; a n d t h e M a r s h a l l P l a n , t h e

G e n e r a l A g r e e m e n t on T a r i f f s a n d T r a d e , a n d t h e E x p o r t -

I m p o r t Bank p r o g r a m a r e a f e w e x a m p l e s o f t h e i n f l u e n c e

e x e r t e d . More s p e c i f i c a l l y , i n t h e c a s e o f C h i n a p o l i c y ,

t h e r e was t h e B r e t t o n VJoods A g r e e m e n t s o f 1 9 4 4 , t h e Locke

M i s s i o n i n 1 9 4 5 , Lend L e a s e , t h e C h i n a T r a d e Act, U N R R A ,

and t h e l o a n s e x t e n d e d i n 1 9 4 7 a n d 1 9 4 8 .

G e n e r a l l y s - p e a k i n g , t h e " p r o g r e s s i v e s " s u p p o r t e d

p o l i c i e s t h a t i n c l u d e d t h e s e a r c h f o r new m a r k e t s , r a u

mater ia ls a n d i n v e s t m e n t o p p o r t u n i t i e s , Areas t h a t were

u n d e r s t o o d as b e i n g v i t a l t o t h e s u c c e s s o f t h e s e p o l i c i e s

i n c l u d e d E u r o p e , L a t i n America a n d Asia, l2 The p o t e n t i a l

f o r new m a r k e t s i n Asia c a u g h t t h e a t t e n t i o n o f many b u s i -

n e s s m e n , e s p e c i a l l y t h o s e on t h e West C o a s t , l3 The a t t r a c -

t i v e n e s s o f t h e F a r East, a n d o f C h i n a i n p a r t i c u l a r , came

f r o m a l a r g e p o p u l a t i o n , s u b s t a n t i a l n a t u r a l r e s o u r c e s , t h e

a v a i l a b i l i t y o f c h e a p l a b o u r , a n d t h e e a g e r n e s s o f t h e C h i a n g

K a i - s h e k g o v e r n m e n t t o b e g i n a p r o g r a m o f r a p i d e c o n o m i c

development. T h i s p o s i t i v e i m a g e o f C h i n a was c o n v e y e d t o

A m e r i c a n c o r p o r a t e o f f i c i a l s by e n t r e p r e n e u r s l i v i n g i n

C h i n a b e f o r e a n d d u r i n g t h e waras wel l a s by a c a d e m i c s

f a m i l i a r w i t h t h e s i t u a t i o n i n t h o F a r East. T h e i r o p t i m i s m

was r e i n f o r c e d by t h e a s s u r a n c e s o f p r o m i n e n t o f f i c i a l s i n

t h e N a t i o n a l i s t g o v e r n m e n t a n d by t h e G e n e r a l i s s i m o h i m s e l f .

The e c o n o m i c i m p o r t a n c e o f t h e C h i n a m a r k e t was d i s -

c u s s e d i n n u m e r o u s b u s i n e s s j o u r n a l s a s w e l l a s i n s e m i n a r s

s p o n s o r e d by i n s t i t u t i o n s c o n c e r n e d v ~ i t h C h i n e s e h i s t o r y ,

p o l i t i c s , a n d e c o n o m i c s ; 1 4 a n d t h e i d e a s v ~ h i c h e m e r g e d w e r e

t r a n s l a t e d i n t o p r a c t i c e t h r o u g h t h e c r e a t i o n o f t r a d e

o r g a n i z a t i o n s s u c h a s t h e C h i n a - A m e r i c a C o u n c i l o f Commerce

a n d I n d u s t r y a n d t h e F a r East D i v i s i o n o f t h e N a t i o n a l F o r e i g n

T r a d e C o u n c i l . l5 I n o r d e r t o e v a l u a t e t h e p o t e n t i a l m a r k e t ,

t r a d e m i s s i o n s w e r e s e n t t o C h i n a a n d l o c a l o f f i c e s w e r e

e s t a b l i s h e d , T o - f a c i l i t a t e s o l u t i o n s t o a n y p r o b l e m s t h a t

c o u l d a r i s e b e t w e e n t h e C h i n e s e g o v e r n m e n t a n d A m e r i c a n

b u s i n e s s m e n , a c l o s e w o r k i q r e l a t i o n s h i p w i t h t h e D e p a r t m e n t s

o f S t a t e a n d Commerce a r o s e . much e n t h u s i a s m was g e n e r a t e d

o v e r t h e e c o n o m i c p o t e n t i a l o f C h i n a a n d A m e r i c a ' s r o l e i n

i t s d e v e l o p m e n t ; a n d t h i s was t o l a s t u n t i l t h e f a i l u r e of

t h e M a r s h a l l M i s s i o n became a p p a r e n t .

I s s u e s o f v i t a l i n t e r e s t t o b u s i n e s s m e n d i s c u s s e d a t

p e r i o d i c t r a d e c o n v e n t i o n m e e t i n g s a l s o a p p e a r e d i n t h e

p a g e s o f many b u s i n e s s j o u r n a l s a n d I n s t i t u t e o f P a c i f i c

R e l a t i o n s p u b l i c a t i o n s a Some o f t h e s e i n c l u d e d g e n e r a l

i m p o r t a n c e t o t h e U n i t e d S t a t e s ; b u t m o r e s p e c i f i c q u e s t i o n s

d e a l t w i t h t h e c o m m o d i t i e s C h i n a w o u l d n e e d i m m e d i a t e l y a n d

i n t h e d i s t a n t f u t u r e , I n i t i a l l y , C h i n a w o u l d b e c o n c e r n e d

w i t h n e c e s s i t i e s s u c h a s f o o d a n d c l o t h i n g w h i c h w o u l d b e

d i s t r i b u t e d t h r o u g h U N R R A , l7 A f e w o f t h e m o r e i m p o r t a n t

l o n g r a n g e n e e d s i n c l u d e d i n d u s t r i a l e q u i p m e n t a n d i n v e s t -

m e n t c a p i t a l . How C h i n a w o u l d c r e a t e t h e f o r e i g n e x c h a n g e

r e s e r v e s t o f i n a n c e i m p o r t s a n d w h e t h e r t h e a t t i t u d e o f t h e

g o v e r n m e n t t o w a r d s f o r e i g n c a p i t a l was f a v o u r a b l e w e r e

c r i t i c a l q u e s t i o n s ; b u t b u s i n e s s m e n , f o r t h e m o s t p a r t ,

p r o v i d e d o p t i m i s t i c a n s w e r s . I n t h e p a g e s o f u ~ i d e l y r e a d b u s i -

n e s s n e w s l e t t e r s , f e w q u e s t i o n s w e r e a s k e d a b o u t t h e u n s t a b l e

p o l i t i c a l s i t u a t i o n i n C h i n a w h i c h was u l t i m a t e l y t h e d e c i -

s i v e f a c t o r i n e x p l a i n i n g t h e f a i l u r e o f t h e C h i n a m a r k e t

t o become a r e a l i t y i n t h e p o s t w a r p e r i o d . 1 0

A l t h o u g h b u s i n e s s m e n made n o a t t e m p t t o e v a l u a t e

c r i t i c a l l y t h e m a r k e t p o t e n t i a l o f C h i n a , i n f o r m a t i o n was

a v a i l a b l e w h i c h m i g h t h a v e l e d t o a m o r e r e a l i s t i c a s s e s s -

m e n t . B e t w e e n 1 9 4 3 a n d 1 9 4 5 , a n u m b e r o f r e p o r t s a n d

a r t i c l e s w e r e a v a i l a b l e w h i c h o p e n l y q u e s t i o n e d t h e i n t e n -

t i o n s a n d t h e a b i l i t y o f t h e C h i a n g K a i - s h e k g o v e r n m e n t t o

r e a c h a s e t t l e m e n t w i t h t h e C o m m u n i s t s . T h e l i k e l i h o o d

o f a n a t i o n a l p r o g r a m f o r e c o n o m i c r e c o n s t r u c t i o n i n w h i c h

A m e r i c a n b u s i n e s s m e n w o u l d p a r t i c i p a t e was r e m o t e i f a

c o m p r o m i s e b e t w e e n t h e t w o c o n t e n d i n g f a c t i o n s was n o t

w o r k e d o u t . G e n e r a l l y , A m e r i c a n b u s i n e s s m e n were c o n f i d e n t

23

t h a t C h i a n g ~ u o u l d f i n d a s o l u t i o n t o C h i n a ' s p o l i t i c a l

p r o b l e m s a n d f o l l o w t h r o u g h o n h i s p r o m i s e s r e g a r d i n g a

n a t i o n a l p r o g r a m f o r i n d u s t r i a l i z a t i o n . The p e s s i m i s t i c

c o n c l u s i o n s o f s k e p t i c a l S t a t e D e p a r t m e n t a n d m i l i t a r y

o f f i c i a l s a s wel l as n e w s p a p e r j o u r n a l i s t s were n o t t a k e n

i n t o c o n s i d e r a t i o n . Even C h i a n g ' s e x t r e m e l y n a t i o n a l i s t i c

p r o p o s a l s f o r p o s t w a r r e c o n s t r u c t i o n d i s c u s s e d i n h i s b o o k ,

C h i n a ' s a e s t i ~ , mere o v e r l o o k e d w h i l e many o f h i s l a t e r

s t a t e m e n t s on t h e n e e d f o r c o o p e r a t i o n w i t h f o r e i g n b u s i n e s s -

men were t a k e n a t f a c e v a l u e . '' B u s i n e s s m e n , i n s t e a d o f

c o n s u l t i n g t h e s e s o u r c e s , l o o k e d t o v a r i o u s b u s i n e s s j o u r n a l s

as wel l a s t h e n u m e r o u s s t u d i e s d o n e i n t h e a c a d e m i c com-

m u n i t y .

mos t o f t h e a c a d e m i c o b s e r v e r s , ~ h o w e r e p r i m a r i l y

r e s p o n s i b l e f o r i n f o r m i n g t h e b u s i n e s s c o m m u n i t y , a r g u e d

t h a t t h e C h i n a m a r k e t would b e q u i t e s u b s t a n t i a l a n d t h e r e -

f o r e o f g r e a t i m p o r t a n c e t o t h e U n i t e d S t a t e s , A c c o r d i n g

t o L a w r e n c e R o s i n g e r , a n o f f i c i a l f r o m t h e F ~ r e i g n P o l i c y

A s s o c i a t i o n , t h e n e e d f o r m a r k e t s was e s s e n t i a l t o t h e

U n i t e d S t a t e s s i n c e t h e Lend L e a s e Program was t o b e terminated

a t t h e e n d o f t h e war . 22 I n 1 9 4 4 t h e U n i t e d S t a t e s was e x p o r t -

i n g a b o u t $ 1 4 . 3 b i l l i o n w o r t h o f m a t e r i a l s a n n u a l l y a n d $ 1 1 . 5

b i l l i o n c o n s i s t e d of l e n d - l e a s e e x p o r t s . W i t h t h e end o f t h e

p r o g r a m , new m a r k e t s would h a v e t o b e f o u n d t o m a i n t a i n war-

time l e v e l s o f employment a n d n a t i o n a l i n c o m e . S i n c e t h e

d o m e s t i c m a r k e t c o u l d n o t c o m p e n s a t e e n t i r e l y f o r t h e s u r p l u s

p r o d u c t i o n , i n t e r n a t i o n a l m a r k e t s would h a v e t o b e c r e a t e d .

C h i n a was o n e p o s s i b i l i t y a n d , t o p r o v e h i s p o i n t , R o s i n g e r

c i t e d a s t u d y s h o u ~ i n g t h a t , i f t h e m o s t p o p u l a t e d c o u n t r y

i n t h e ivor1.d i n d u s t r i a l i z e d a t t h e same r a t e a s J a p a n h a d

f o r t h e f i r s t t h i r d o f t h e t ~ u e n t i e t h c e n t u r y , e n o r m o u s

a m o u n t s o f c a p i t a l would b e r e q u i r e d . 23 C h i n a would n e e d

$ 1 3 . 6 b i l l i o n , i n t h e f i r s t p o s t w a r d e c a d e , $ 2 3 . 1 b i l l i o n

i n t h e s e c o n d , a n d 5 4 4 . 9 b i l l i o n i n t h e t h i r d . The amount

o f c a p i t a l g o o d s r e q u i r e d , a g a i n u s i n g J a p a n as t h e

b a s i s f o r c o m p a r i s o n , ~81ould amount t o $ 5 . 5 b i l l i o n i n t h e

f i r s t d e c a d e , 24 To b e s u r e , R o s i n g e r ' s f i g u r e s were

e x t r e m e l y h i g h b u t more c o n s e r v a t i v e e s t i m a t e s s t i l l i n d i -

c a t e d a s u b s t a n t i a l n e e d f o r c a p i t a l a n d c o m m o d i t i e s . E l s a

G i d l o v ~ , w r i t i n g i n S a l e s Management , c a l c u l a t e d t h a t , w i t h i n t e n

y e a r s f r o m t h e e n d of t h e war C h i n a , would b e a b s o r b i n g

$277 m i l l i o n a y e a r i n i m p o r t s a n d t h a t t h e r e would b e

u n l i m i t e d i n v e s t m e n t o p p o r t u n i t i e s . 25 Gidlotu a l s o n o t e d

t h a t t h e s e f i g u r e s f o r i m p o r t s v ~ o u l d b e m u l t i p l i e d s e v e r a l

t i m e s i f C h i n a ' s i n d u s t r i a l i z a t i o n p r o c e e d e d a c c o r d i n g t o

p l a n s p r o p o s e d by t h e N a t i o n a l i s t g o v e r n m e n t . 2 6

P r o m i n e n t o f f i c i a l s i n t h e N a t i o n a l i s t g o v e r n m e n t w e r e

q u i t e c o n v i n c e d t h a t p o s t w a r i n d u s t r i a l i z a t i o n u ~ o u l d become

a r e a l i t y a n d t h i s is r e f l e c t e d i n t h e i r e s t i m a t e s o f t h e

n e e d f o r f o r e i g n c a p i t a l . A f t e r t h e r e p e a l o f t h e e x t r a -

t e r r i t o r i a l i t y t r e a t i e s i n 1 9 4 3 , F o r e i g n m i n i s t e r T , V. Soong

r e a s s u r e d f o r e i g n b a n k e r s a n d i n d u s t r i a l i s t s by s t a t i n g t h a t

C h i n a would tuelcome a T o r e i g n i n v e s t m e n t of t e n b i l l i o n

d o l l a r s o v e r t h e n e x t f e w y e a r s . 27 S e e n i n t h e c o n t e x t o f

t h e p r e w a r f i g u r e s f o r f o r e i g n i n v e s t m e n t , t h i s was i n d e e d

a n e n o r m o u s sum. F i n a n c i n g M i n i s t e r H . H . Kung, r e a l i z i n g

t h a t s u c h l a r g e a m o u n t s o f i n v e s t m e n t c a p i t a l wou ld r e q u i r e

some k i n d o f g u a r a n t e e , p r o p o s e d t o t h e E x e c u t i v e Yuan t h a t

new r e g u l a t i o n s b e d r a f t e d w h i c h would " p r o v i d e d u e p r o t e c -

t i o n o f l a w " t o t h e f o r e i g n i n v e s t o r . 28 T r a d e o r g a n i z a t i o n s

s u c h a s C A C C I g r e e t e d t h e s e p r o p o s a l s e n t h u s i a s t i c a l l y a n d

l o o k e d f o r w a r d i n t h e f u t u r e t o w o r k i n g o u t a new t r a d e

t r e a t y a c c e p t a b l e t o b o t h c o u n t r i e s .

P e r h a p s t h e a t t i t u d e o f C h i n e s e o f f i c i a l s i s b e s t

summed up i n a n e d i t o r i a l i n t h e j o u r n a l , C o n t e m p o r a r y C h i n a ,

p u b l i s h e d i n New -York by t h e C h i n e s e News S e r v i c e , a n a g e n c y

o f t h e N a t i o n a l i s t g o v e r n m e n t . As t h e j o u r n a l r e p r e s e n t e d

t h e o f f i c i a l v i e u ~ s o f t h e C h i a n g K a i - s h e k g o v e r n m e n t a n d was

c i r c u l a t e d i n t h e A m e r i c a n b u s i n e s s c o m m u n i t y , i t s comments

a r e i t ~ o r t h n o t i n g ,

NOWJ f o r t h e f i r s t time i n modern h i s t o r y , t h e p r o m i s e o f t h e C h i n a m a r k e t a p p e a r s t o h a v e a good c h a n c e o f f u l f i l l m e n t . And t h a t m a r k e t i s g o i n g t o b e p r i m a r i l y a m a r k e t o f A m e r i c a n g o o d s a n d s e r v i c e s a n d p r o b a b l y t o a l e s s e x t e n t t h a t o f B r i t i s h g o o d s a n d s e r v i c e s . 2 9

I t was e v i d e n t t o Kuomin tang o f f i c i a l s t h a t t h e s u n was

s e t t i n g on t h e B r i t i s h E m p i r e i n A s i a a n d t h a t t h e r i s i n g

i m p e r i a l s t a r was t h a t o f t h e U n i t e d S t a t e s . The f a v o r a b l e

r e a c t i o n i n p u b l i c s t a t e m e n t s t o A m e r i c a n e c o n o m i c e x p a n s i o n

was p a r t l y d u e t o t h e e f f o r t s o f t h e U n i t e d S t a t e s t o

r emove t h e e x t r a t e r r i t o r i a l i t y s y s t e m a n d t h e r e p e a l o f t h e

A n t i - C h i n e s e E x c l u s i o n Act. Kuomin tang o f f i c i a l s w e r e a l s o

c o n c e r n e d a b o u t t h e f i n a n c i n g o f t h e i r p o s t w a r c a m p a i g n t o

l i q u i d a t e t h e Communist menace a n d t h e r e f o r e e n c o u r a g e d

c l o s e r e c o n o m i c t i e s t h a t would s t r e n g t h e n t h e Amer ican

p o l i t i c a l commitment t o t h e m a i n t e n a n c e o f t h e s t a t u s quo,

A s e r i e s o f a r t i c l e s on t h e C h i n a m a r k e t i n C o n t e m p o r a r y

C h i n a a p p e a r e d e a r l y i n 1 9 4 4 . A y e a r l a t e r , t h e IPR h e l d i t s

N i n t h C o n f e r e n c e a t Hot S p r i n g s , V i r g i n i a , w h i c h f o c u s s e d on

p o s t w a r p o l i t i c a l a n d e c o n o m i c p r o b l e m s i n t h e F a r E a s t .

S p e c i f i c d i s c u s s i o n t o p i c s t h a t a p p e a r e d o n t h e a g e n d a

i n c l u d e d p r o g r a m s f o r e c o n o m i c r e c o n s t r u c t i o n a n d d e v e l o p -

men t w i t h some comments on t h e p r i n c i p a l o b j e c t i v e s , t h e

a v a i l a b i l i t y o f c a p i t a l , a n d t h e n e e d f o r i n t e r n a t i o n a l

m a c h i n e r y f o r c o o r d i n a t i o n t o a v o i d o v e r l a p p i n g . A n o t h e r

s e c t i o n e x a m i n e d t h e " f o r m , d i r e c t i o n , a n d terms o f f o r e i g n

i n v e s t m e n t . " F i n a l l y , t h e m e r i t s o f p r i v a t e a n d g o v e r n m e n t

c o n t r o l o v e r c a p i t a l i n v e s t m e n t a s wel l a s t h e n a t u r e o f t h e

r e l a t i o n s h i p b e t w e e n i n v e s t m e n t a n d t r a d e w i t h s p e c i a l

r e f e r e n c e t o t h e b a l a n c e o f payment a n d t h e p r o b l e m o f

r e p a y m e n t w e r e d i s c u s s e d . 'O N e e d l e s s t o s a y , b u s i n e s s m e n

w e r e v i t a l l y i n t e r e s t e d i n t h e a n s w e r s t o t h e s e q u e s t i o n s

a n d it was a p p r o p r i a t e t h a t t h e IPR s h o u l d d i s c u s s them a t

i t s a n n u a l c o n f e r e n c e .

The IPR, c r e a t e d i n 1 9 2 5 w i t h a s s i s t a n c e f r o m t h e

R o c k e f e l l e r F o u n d a t i o n , h a d o f t e n d o n s r e s e a r c h t h a t was

o f i n t e r e s t t o b u s i n e s s m e n . A l o n g w i t h t h e r e s e a r c h

m o n o g r a p h s p r o d u c e d f o r t h e Hot S p r i n g s C o n f e r e n c e i n 1 9 4 5 ,

t h e I P R a l s o c o n d u c t e d a s e m i n a r i n S a n F r a n c i s c o f o r

j u n i o r e x e c u t i v e s on t h e West Coast t o f a m i l i a r i z e them

w i t h t h e "Background f o r A m e r i c a n B u s i n e s s A c r o s s t h e

P a c i f i c . " S e m i n a r s were a l s o g i v e n f o r t h e g e n e r a l p u b l i c

a n d h i g h s c h o o l t e a c h e r s t o i n f o r m West C o a s t r e s i d e n t s o f

p o s t w a r d e v e l o p m e n t s i n t h e F a r E a s t . I n f o r m i n g t h e p u b l i c

a n d t h e b u s i n e s s communi ty was n e c e s s a r y b e c a u s e t h e F a r

East was " v i t a l - t o t h e f u t u r e e c o n o m i c g r o w t h o f t h e

area" . 32 The v a l u a b l e s e r v i c e t h e IPR p r o v i d e d t o t h e b u s i -

n e s s communi ty a n d t h e p u b l i c a t l a r g e i s i n d i c a t e d by t h e

I n s t i t u t e ' s s p e c t a c u l a r g r o w t h i n t h e West C o a s t r e g i o n .

I n S a n F r a n c i s c o w h e r e t h e c e n t r a l West Coast o f f i c e was

l o c a t e d , m e m b e r s h i p i n c r e a s e d f r o m 2 0 9 i n 1 9 4 3 t o m o r e t h a n

'400 i n 1 9 4 6 , w h i l e i t s b u d g e t i n 1 9 4 5 was $ 2 9 8 , 0 0 0 , o v e r

t h r e e t imes t h a t o f 1 9 4 2 , 33

E v i d e n c e t h a t some b u s i n e s s m e n were e s p e c i a l l y

a p p r e c i a t i v e o f t h e work d o n e by t h e I n s t i t u t e o n t h e

p r o b l e m s o f p o s t w a r r e c o n s t r u c t i o n i n East Asia is f o u n d

i n t h e i r r e a c t i o n t o t h e a t t a c k s o n t h a t o r g a n i z a t i o n

d u r i n g t h e m c C a r t h y e r a . I n d e f e n s e o f t h e IPR, W.R.

H e r o d , P r e s i d e n t o f I n t e r n a t i o n a l G e n e r a l E l ec t r i c Company,

w r o t e t h e f o l l o w i n g on b e h a l f o f h i s company t h a t p r o b a b l y

e x p r e s s e d t h e v i e w s o f many o t h e r c o r p o r a t e l i b e r a l s .

I p e r s o n a l l y , a n d a l s o my company , h a v e o b t a i n e d a g r e a t d e a l o f v a l u e f r o m ( a ) t h e c o n t a c t s a n d t h e i n t e r c h a n g e o f o p i n i o n s w i t h members o f t h e A m e r i c a n I n s t i t u t e o f P a c i f i c R e l a t i o n s , ( b ) t h e A I P R W s r e s e a r c h . , . i n t h e c o n s i d e r a - t i o n o f b r o a d p r o b l e m s i n t h e F a r East ,..I h a v e f o u n d t h a t a d i v e r s i t y o f c o n t a c t s a n d v i e w p o i n t s , w i t h many o f w h i c h I may n o t a g r e e , h a s n e v e r t h e l e s s b e e n o f h e l p . 34

T h e r e i s a n e l e m e n t o f i r o n y i n t h e a s s i s t a n c e g i v e n t o

t h e IPR by c o r p o r a t e l i b e r a l s l i k e W . R . Herod i f o n e

a c c e p t s t h e a r g u m e n t s p r e s e n t e d by r e c e n t r e v i s i o n i s t s o f

t h e McCar thy p e r i o d . A c c o r d i n g t o R i c h a r d F r e e l a n d a n d

A t h a n T h e o h a r i s , i t was t h e Truman A d m i n i s t r a t i o n a n d i t s

l i b e r a l s u p p o r t e r s u h o were i n i t i a l l y r e s p o n s i b l e f o r

t h e g r o w t h o f a n t i - c o m m u n i s t h y s t e r i a d u r i n g t h e e a r l y

y e a r s o f t h e C o l d War. 35 B u t , Truman a n d h i s p o l i c y

a d v i s e r s d i d n o t r e a l i z e t h e a n t i - c o m m u n i s t c l i m a t e t h a t

was c r e a t e d a t home t o g a i n s u p p o r t f o r t h e e c o n o m i c a n d

m i l i t a r y p r o g r a m f o r i n t e r n a t i o n a l e x p a n s i o n would h a v e

i t s d o m e s t i c c o n s e q u e n c e s , I n t h e 1 9 5 0 ' s t h e e l i t e

i n s p i r e d a n t i - c o m m u n i s t c r u s a d e d e v e l o p e d a d y n a m i c o f

i t s own by a t t a c k i n g l i b e r a l i n s t i t u t i o n s a s t h e C a r n e g i e

a n d R o c k e f e l l e r F o u n d a t i o n s a n d was d i r e c t l y r e s p o n s i b l e 1

f o r t h e d e m i s e o f t h e IPR i n 1 9 5 7 .

Many o f t h e r e s e a r c h s t u d i e s r e f e r r e d t o b y H e r o d

w e r e d o n e by t h e IPR i n t h e 1 9 3 0 ' s a n d 1 9 4 0 ' s a n d c o v e r e d

s u c h t o p i c s a s C h i n e s e l a b o r p r o b l e m s , t h e C h i n e s e b u s i -

n e s s e l i t e , a n d t h e g r o w t h a n d i n d u s t r i a l i z a t i o n o f u r b a n

a r e a s l i k e S h a n g h a i a n d P e k i n g . A s u b j e c t t h a t p a r t i c u -

l a r l y i n t e r e s t e d b u s i n e s s m e n was t h e C h i n e s e p o s t w a r

economy a n d i t s r e l a t i o n s h i p t o A m e r i c a n p o s t w a r e c o n o m i c

e x p a n s i o n . 3 6

One IPR p u b l i c a t i o n t h a t r e c e i v e d w i d e s p r e a d a t t e n t i o n

i n t h e b u s i n e s s c o m m u n i t y was C h i h T s a n g ' s C h i n a ' s P o s t w a r

M a r k e t s . 37 T h e a u t h o r S s b a c k g r o u n d a s a f o r m e r d i r e c t o r

of t h e S h a n g h a i Commercial a n d S a v i n g s Bank a n d wartime

G e n e r a l S e c r e t a r y o f t h e C h i n e s e g o v e r n m e n t ' s p u r c h a s i n g

a g e n c y , t h e U n i v e r s a l T r a d i n g Company, q u a l i f i e d h im a s a n

a u t h o r i t y o n C h i n a ' s p o s t w a r e c o n o m i c r e q u i r e m e n t s . C h i h

T s a n g a v o i d e d t h e r h e t o r i c o f some C h i n a m a r k e t e n t h u s i a s t s

a n d p r e s e n t e d a p e r c e p t i v e a n a l y s i s of t h e wartime economy

f o l l o w e d by a p r o j e c t i o n o f t h e t r e n d s f o r t h r e e t o f o u r

y e a r s f o l l o w i n g t h e e n d o f t h e war w i t h J a p a n . H i s e s t i -

mates w e r e s o m e w h a t c o n s e r v a t i v e s i n c e h e o n l y t o o k i n t o

a c c o u n t t h e p l a n s f o r t h e r e c o n s t r u c t i o n o f t h e m o r e

i n d u s t r i a l i z e d p a r t s o f t h e c o u n t r y , o v e r l o o k i n g t h e

p o s s i b i l i t y o f t h e c o n s t r u c t i o n o f new m i n e s , f a c t o r i e s ,

r a i l r o a d s , a n d p u b l i c u t i l i t i e s i n r e g i o n s t h a t were

h i t h e r t o e c o n o m i c a l l y b a c k w a r d . 38 N e v e r t h e l e s s , h i s

30

a n a l y s i s was g e n e r a l l y a c c e p t e d as a u s e f u l i n d i c a t i o n o f

t h e economic s i t u a t i o n i n p o s t w a r Ch ina .

U J r i t i n g i n 1944, C h i h Tsang emphasized t h e g r o w i n g

i m p o r t a n c e o f Ch ina t o t h o s e i n d u s t r i a l i z e d c o u n t r i e s

i n t e r e s t e d i n p o s t w a r b u s i n e s s and t r a d i n g o p p o r t u n i t i e s ,

"Given peace and f reedom o f t r a d e , t h e r e i s good r e a s o n t o

a n t i c i p a t e a new e r a o f b u s i n e s s o p p o r t u n i t y a r i s i n g on

t h e F a r E a s t e r n h o r i z o n , o f wh ich Ch ina forms t h e most

i m p o r t a n t p a r t . " The r e a s o n f o r t h i s was t h a t "China w i l l

be exhaus ted o f m a t e r i a l s o f e v e r y d e s c r i p t i o n , b o t h c a p i t a l

and consumer 's goods, a t t h e end o f t h e war." 39

The U n i t e d

S t a t e s wou ld be i n a f a v o u r a b l e p o s i t i o n t o c a p i t a l i z e on

t h i s s i t u a t i o n because t h e f o r m e r c o m p e t i t o r s f o r t h e Ch ina

m a r k e t e i t h e r had war t o r n economies o r had been d e f e a t e d

m i l i t a r i l y . I n 1935, a y e a r b e f o r e t h e Japanese began

expand ing t h e i r war a g a i n s t China, i m p o r t s f r o m Great

B r i t a i n c o n s t i t u t e d a p p r o x i m a t e l y t w e l v e p e r c e n t o f t h e

a n n u a l t o t a l and t h o s e f rom Japan and Germany j u s t o v e r

t h i r t y - t w o p e r c e n t . 40 The p o s i t i o n i n t h e U n i t e d S t a t e s

was f u r t h e r enhanced because o f i t s c l o s e war t ime a l l i a n c e

w i t h t h e N a t i o n a l i s t government when t h e i r b u s i n e s s con-

n e c t i o n s were e s t a b l i s h e d and e x p e r i e n c e was g a i n e d as a

s u p p l i e r o f war m a t e r i a l . Chih Tsang e s t i m a t e d t h a t ,

b e g i n n i n g i n 1945, f o r t y - t h r e e p e r c e n t o f Ch ina ' s pu rchases

wou ld be made i n t h e U n i t e d S t a t e s . 41 ~ u t , a s Lawrence

R o s i n g e r n o t e d , l o n g t e r m p r o s p e r o u s t r a d e c o u l d o n l y be

r e a l i z e d t h r o u g h t h e i n d u s t r i a l i z a t i o n o f C h i n a a n d p r o -

g r e s s i v e r e f o r m o f t h e a g r i c u l t u r a l s e c t o r . T n d u s t r i a l i z a -

t i o n was a l e n g t h y p r o c e s s w h i c h m e a n t t h a t t h e b e n e f i t s

f r o m t r a d e a s wel l a s i n v e s t m e n t s would b e r e a l i z e d o v e r a

c o n s i d e r a b l e p e r i o d . 42

U h i l e a c a d e m i c s l i k e R o s i n g e r a n d C h i h T s a n g e x p l a i n e d

t h e s u c c e s s o f t h e C h i n a m a r k e t a s b e i n g d e p e n d e n t on l o n g

r a n g e f a c t o r s , b u s i n e s s m e n t e n d e d t o f o c u s on t h e i m m e d i a t e

i s s u e s . H O V J , f o r e x a m p l e , would t h e a b o l i t i o n o f

e x t r a - t e r r i t o r i a l i t y a f f e c t f o r e i g n i n v e s t m e n t s ? F u r t h e r -

m o r e , wha t would be t h e e x t e n t o f g o v e r n m e n t i n v o l v e m e n t i n

t h e p o s t w a r r e c o n s t r u c t i o n p r o g r a m ? Only o n e j o u r n a l ,

B u s i n e s s Week, d i d n o t g e t s a t i s f a c t o r y a n s w e r s t o t h e s e

q u e s t i o n s a n d c a u t i o n e d a g a i n s t e x t e n s i v e i n v e s t m e n t s u n t i l

t h e N a t i o n a l i s t - g o v e r n m e n t ' s p o s i t i o n was c l e a r . 4 3

R e p o r t s c a u t i o n i n g A m e r i c a n b u s i n e s s t o m o d e r a t e t h e i r

a s p i r a t i o n s d i d n o t a p p e a r v e r y o f t e n i n b u s i n e s s j o u r n a l s

c o v e r i n g e c o n o m i c d e v e l o p m e n t s i n E a s t A s i a . I n s t e a d , a

s u r v e y o f b u s i n e s s j o u r n a l s a n d t h e a n n u a l m e e t i n g r e p o r t s

o f l e a d i n g t r a d e o r g a n i z a t i o n s f r o m 1943 t o 1 9 4 7 r e v e a l s

t h a t t h e o p p o s i t e was t h e c a s e . T h e c o n t e n t o f t h e j o u r n a l

a r t i c l e s a n d t h e r e m a r k s made a t t r a d e c o n v e n t i o n s c o u l d b e

d e s c r i b e d w i t h o u t e x a g g e r a t i o n a s b e i n g u n d u l y e n t h u s i a s t i c

a b o u t e c o n o m i c p r o s p e c t s i n t h e F a r E a s t . One o u t s t a n d i n g

e x a m p l e was Henry L u c e ' s F o r t u n e M a g a z i n e t h a t o f t e n

r e p o r t e d on e c o n o m i c a n d p o l i t i c a l d e v e l o p m e n t s i n Asia.

L u c e , a member o f t h e B o a r d o f T r u s t e e s o f t h e I P R , was

b o r n i n C h i n a a n d h a d a l i f e l o n g i n t e r e s t i n t h e a f f a i r s

o f t h a t c o u n t r y , 4 4 W r i t i n g i n 1 9 4 3 f o r F o r t u n e N a q a z i n e , - T h e o d o r e W h i t e m a i n t a i n e d t h a t " C h i n a may a f f o r d t h e

g r e a t e s t s i n g l e o u t l e t f o r A m e r i c a n s u r p l u s p r o d u c i n g

c a p a c i t y , m a c h i n e t o o l s , a n d h e a v y g o o d s a f t e r t h e war.

A m e r i c a n b u s i n e s s firms w i t h l o n g - s t a n d i n g i n t e r e s t s i n

t h e F a r E a s t a r e well aware o f t h i s . " 4 5

P r o f i t a b l e e c o n o m i c a c t i v i t i e s w e r e n o t o n l y c o n f i n e d

t o t r a d e f o r , a c c o r d i n g t o Kuang T a i Hu i n a n a r t i c l e i n

t h e H a r v a r d B u s i n e s s R e v i e w , t h e r e mould a l s o be a demand

f o r A m e r i c a n c a p i t a l i n v e s t m e n t . Any d o u b t s c o n c e r n i n g

t h e a c c e p t i b i l i t y o f f o r e i g n c a p i t a l b y t h e K u o m i n t a n g

were d i s m i s s e d by Kuang b e c a u s e

F o r e i g n i n v e s t m e n t s i n C h i n a w i l l now i n c u r l e s s p o l i t i c a l ill f e e l i n g t h a n t h e y d i d b e f o r e . The p o l i t i c a l a n d l e g a l r e f o r m s w h i c h h a v e b e e n i n t r o d u c e d by t h e C h i n e s e Government w i l l r e s u l t i n t h e t h o r o u g h u n i f i c a t i o n a n d m o d e r n i z a - t i o n o f t h e e n t i r e l e g a l a n d p o l i t i c a l s t r u c t u r e o f t h e c o u n t r y . Once t h e s e r e f o r m s have become e f f e c t i v e , o n e c o n - s t i t u t i o n , o n e c i v i l law, o n e commerce law, a n d o n e c o r p o r a t i o n law w i l l a p p l y t o a l l ~ h i n a . 4 6

From K u a n g ' s v i e w p o i n t , t h e q u a s i - f a s c i s t N a t i o n a l i s t

g a v e r n m e n t c o u l d b e c o n s i d e r e d r e f o r m i s t w h i c h c o r p o r a t e

l i b e r a l s saw a s t h e p r e r e q u i s i t e f o r m o d e r n i z a t i o n

s p o n s o r e d by A m e r i c a n c a p i t a l . The g r i m r e a l i t y OF a

d e c a y i n g r u l i n g e l i t e c h a r a c t e r i z e d by c o r r u p t i o n , n e p o t i s m ,

a n d a m i l i t a r i s t i c o u t l o o k was c o n v e n i e n t l y f i l t e r e d o u t

b y t h e i d e o l o g i c a l p r i s m o f c o r p o r a t e l i b e r a l i s m .

Q t h e r j o u r n a l s s u c h as F o r b e s , S a l e s Management , a n d

B a n k i n q s h a r e d t h e o p t i m i s m o f The H a r v a r d B u s i n e s s Rev iew

a n d F o r t u n e m a g a z i n e . H.S. Kahm, i n a n a r t i c l e f o r F o r b e s ,

p r o p h e t i c a l l y a n n o u n c e d t h a t "a new f r o n t i e r f o r A m e r i c a n

i n d u s t r y a n d e n t e r p r i s e i s i n t h e m a k i n g t o d a y i n C h i n a ,

a n d i ts p o t e n t i a l i t i e s a r e s t a g g e r i n g t o t h e mind."

" I m a g i n e , " h e s a i d , " f o r t h e moment t h a t t h e war i s o v e r ,

t h a t you a r e now e n g a g e d i n s e l l i n g a c h e a p , e s s e n t i a l

p r o d u c t t o t h e C h i n e s e , Your p r o f i t on e a c h item i s a

s i n g l e p e n n y . One C h i n e s e i n t e n b u y s t h i s p r o d u c t m o n t h l y ,

Your p r o f i t : $450,000 a month."47 'l%e i d e a o f a v a s t

m a r k e t i n a n e w f r o n t i e r h a d w i d e s p r e a d a p p e a l e v e n a f t e r

f o r t y y e a r s s e a r c h i n g f o r t h a t e l u s i v e g o l d m i n e . I t s

p e r s i s t e n c e i n t h e c o n t e x t o f t h e l a r g e r g o a l s o f A m e r i c a n

f o r e i g n p o l i c y was s u c c i n c t l y e x p l a i n e d by N e l s o n R o c k e f e l l e r

b e f o r e a House o f R e p r e s e n t a t i v e s F o r e i g n A f f a i r s committee

i n 1 9 5 1 . "With t h e c l o s i n g o f o u r own f r o n t i e r , " h e p o i n t e d

o u t , " t h e r e i s h o p e t h a t o t h e r f r o n t i e r s s t i l l e x i s t i n t h e

w o r l d . I148

The "New F r o n t i e r , " a c a t c h y p h r a s e , n o t o n l y a p p e a r e d

i n b u s i n e s s j o u r n a l s b u t was a l s o d i s c u s s e d a t t r a d e c o n -

v e n t i o n m e e t i n g s , C o r n e l l F r a n k l i n , i n a n a d d r e s s t o t h e

F a r East S e s s i o n o f t h e NFTC, s p o k e o f a new b u s i n e s s

f r o n t i e r i n A s i a .

The F a r E a s t may r i g h t l y b e c a l l e d a new f r o n t i e r , a s f a r as Amer ican b u s i n e s s i s c o n c e r n e d . Undeve loped r e s o u r c e s , v a s t q u a n t i t i e s o f raw m a t e r i a l , ( a n d ) i m p o r t a n t i n d u s t r y , a r e t o b e f o u n d i n a l m o s t e v e r y c o u n t r y i n t h e O r i e n t . 4 9

By 1 9 4 7 , h o w e v e r , i t was s t i l l n o t c l ea r who was g o i n g t o

c o n t r o l t h e new f r o n t i e r i n C h i n a . I n t h e summer of t h a t

y e a r , Communis t t r o o p s s t a r t e d c r o s s i n g t h e Y e l l o w R i v e r

a n d i n f i l t r a t e d s o u t h w a r d s t o s e t up new b a s e a reas i n

c e n t r a l china. ' ' C h i a n g K a i - s h e k r e s p o n d e d w i t h a n 'Order

f o r G e n e r a l M o b i l i z a t i o n n b u t t h e r e s u l t s w e r e c a t a s t r o p h i c .

H i s Kuomin tang a r m y , e q u i p p e d w i t h Amer ican arms, was n o

m a t c h f o r t h e s p i r i t e d a n d h i g h l y o r g a n i z e d P e o p l e ' s L i b e r a -

t i o n Army a n d t h i s r e s u l t e d i n h e a v y c a s u a l t i e s f o r t h e

N a t i o n a l i s t s . The f u t u r e o f t h e o p e n d o o r f o r A m e r i c a n

b u s i n e s s m e n became i n c r e a s i n g l y u n c e r t a i n , b u t , a t t h e NFTC

a n n u a l c o n v e n t i o n s f r o m 1 9 4 4 t o 1 9 4 7 , n o d o u b t s a t a l l

w e r e e x p r e s s e d a b o u t t h e p r o s p e c t s f o r t r a d e a n d i n v e s t m e n t

i n C h i n a ,

Known t h r o u g h o u t t h e b u s i n e s s communi ty as o n e

o f t h e m o s t p r e s t i g i o u s t r a d e o r g a n i z a t i o n s , t h e NFTC h a d

r e p r e s e n t a t i v e s f r o m a l l s e c t o r s o f t h e economy. Some o f

t h e c o r p o r a t i o n s t h a t p a r t i c i p a t e d i n t h e o r g a n i z a t i o n ' s

35

v a r i o u s a c t i v i t i e s i n c l u d e d t h e B e t h l e h e m S t e e l E x p o r t

C o r p o r a t i o n , S t a n d a r d O i l o f N e w J e r s e y , I n t e r n a t i o n a l

T e l e p h o n e a n d T e l e g r a p h a n d t h e C h a s e N a t i o n a l Bank o f t h e

C i t y o f New York. 52 A t t h e a n n u a l c o n v e n t i o n s b e g i n n i n g i n

1 9 4 4 , c r u c i a l q u e s t i o n s c o n c e r n i n g p o s t w a r t r a d e a n d i n v e s t -

men t p o l i c i e s were d i s c u s s e d . T h e 1 9 4 4 c o n v e n t i o n a t t r a c t e d

b u s i n e s s m e n f r o m a l l s e c t o r s o f t h e economy a n d a f i n a l

d e c l a r a t i o n was d r a f t e d o u t l i n i n g t h e p o s i t i o n o f t h e

o r g a n i z a t i o n on p o s t w a r e c o n o m i c i s s u e s . C o n c e r n i n g d i r e c t

p r i v a t e f o r e i g n i n v e s t m e n t , it was s t a t e d t h a t " i n t h e

p o s t w a r p e r i o d t h e r e w i l l b e a n i n t e n s i f i e d n e e d f o r d i r e c t

p r i v a t e i n v e s t m e n t s o f c a p i t a l i n o t h e r c o u n t r i e s , a n d o f

l o a n s f o r r e c o n s t r u c t i o n a n d r e h a b i l i t a t i o n . " To p r o v i d e

" r e a s o n a b l e r e c i p r o c a l s a f e g u a r d s " f o r "Amer ican d i r e c t

f o r e i g n i n v e s t m e n t s , " t r e a t i e s o f commerce a n d a m i t y would

h a v e t o b e worked o u t . 53 T h e e x p e r i e n c e o f t h e S e c o n d

Wor ld War was a m a j o r f a c t o r i n d e t e r m i n i n g t h e NFTC's

p o s i t i o n on i n t e r n a t i o n a l t r a d e .

The war h a s t a u g h t u s t h a t we a r e a p a r t o f t h e w o r l d i n w h i c h we l i v e , a n d t h a t o u r own economy a n d t h e e c o n o m i e s o f o t h e r n a t i o n s a r e i n t e r - l o c k e d a n d i n t e r d e p e n d e n t . A g r e a t l y i n c r e a s e d vo lume o f i n t e r - n a t i o n a l t r a d e is i n d i s p e n s a b l e t o s u p p o r t t h e i n c r e a s e d p r o d u c t i o n a n d t h e c o m p l e t e r e c o n v e r s i o n t o t h e p r e c e s s e s o f p e a c e t h a t a h e a l t h y w o r l d economy demands 54

36

T h e s e p r i n c i p l e s , f o r m u l a t e d t o p r o v i d e a g u i d e l i n e

f o r g e n e r a l i n t e r n a t i o n a l e c o n o m i c a g r e e m e n t s , were

r e f l e c t e d i n t h e NFTC's p o s i t i o n on C h i n a . The o r g a n i z a -

t i o n ' s o p t i m i s t i c o u t l o o k on t h e C h i n a m a r k e t was r e v e a l e d

i n t h r e e p o i n t s . T h e s e were t h a t C h i n a would e m e r g e a s t h e

p r i m a r y p o s t v ~ a r m a r k e t i n t h e F a r Eas t , t h a t t h e C i v i l War

would b e t e r m i n a t e d , a n d t h a t t h e U n i t e d S t a t e s was t h e

m o r a l l e a d e r o f t h e w o r l d d e m o n s t r a t e d b y i t s a l t r u i s t i c

p o l i c y i n a i d i n g C h i n a t o r e c o n s t r u c t i ts war t o r n economy.

N.J. B u c k l e y , V i c e - p r e s i d e n t of A m e r i c a n P r e s i d e n t

L i n e s , L t d . , p o i n t e d o u t i n a s p e e c h b e f o r e t h e 1 9 4 4 c o n -

v e n t i o n , t h a t , i n t h e p o s t w a r p e r i o d , C h i n a would r e p l a c e

J a p a n a s t h e U n i t e d S t a t e s ' m o s t i m p o r t a n t c u s t o m e r i n t h e

F a r E a s t . A m e r i c a n r e l a t i o n s o v e r t h e l a s t 150 y e a r s h a d

b e e n c h a r a c t e r i z e d a s f r i e n d l y a n d B u c k l e y p r e d i c t e d t h a t ,

a f t e r t h e war, t h e f r i e n d s h i p would c o n t i n u e a n d t h e

i n c r e a s e i n t r a d e w i t h C h i n a would b e g r e a t e r t h a n t h a t

w i t h a n y o t h e r n a t i o n . 5 5 After a b r i e f h i s t o r y o f S i n o -

A m e r i c a n c o m m e r c i a l r e l a t i o n s b e f o r e t h e 1945 c o n v e n t i o n ,

S t a t e D e p a r t m e n t o f f i c i a l J o h n Carter V i n c e n t e x p r e s s e d a

s imi la r v i e w p o i n t , b u t was c a u t i o u s l y o p t i m i s t i c .

I n m a k i n g t h i s b r i e f s k e t c h o f c u r r e n t c o n d i t i o n s i n t h e F a r East I c a n n o t b e a c c u s e d o f o p t i m i s m ( I h a v e b e e n , many t i m e s ) . B u t T d o t h i n k t h e p o t e n t i a l i t i e s o f a n e x p a n d i n g A m e r i c a n b u s i n e s s w i t h t h e F a r E a s t e x i s t a n d c a n b e d e v e l o p e d

i f we g o a b o u t i t i n t h e r i g h t way. 56

On t h e q u e s t i o n o f C h i a n g K a i - s h e k ' s p o s t w a r p o l i c i e s

t h e same v i e w s , r a n g i n g f r o m t o t a l a c c e p t a n c e t o q u a l i f i e d

r e s e r v a t i o n , were e x p r e s s e d . I n h i s a d d r e s s b e f o r e t h e

1 9 4 4 c o n v e n t i o n , William P. H u n t , a b u s i n e s s m a n w i t h

e c o n o m i c i n t e r e s t s i n t h e F a r East , summed up h i s p o s i t i o n

on t h e p o s s i b i l i t y o f t h e c i v i l war c o n t i n u i n g a f t e r t h e

c e s s a t i o n o f h o s t i l i t i e s w i t h J a p a n . "I s t a k e my a l l t h a t

C h i n a w i l l come o u t o f t h i s war u n c h a n g e d i n i t s l e a d e r s h i p

a n d w i t h o u t t h e p a t h o s o f c i v i l war." 57 When q u e s t i o n e d

a b o u t t h e a m b i v a l e n t p o l i c i e s o f t h e N a t i o n a l i s t g o v e r n -

m e n t t o w a r d s f o r e i g n c a p i t a l , Hunt was w i l l i n g t o a c c e p t

t h e a s s u r a n c e s o f Kuomin tang o f f i c i a l s a t f a c e v a l u e .

I am w i l l i n g , a s I s a i d b e f o r e , t o a c c e p t t h e c a t e g o r i c s t a t e m e n t s o f t h e C h i n e s e G o v e r n m e n t , t h a t t h e r e is room f o r p r i v a t e e n t e r p r i s e , a n d t h a t g o v e r n m e n t w i l l t a k e up o n l y t h a t p a r t w h i c h p r i v a t e e n t e r p r i s e w i l l n o t , p l u s a n a d d i t i o n a l f a c t : Government i n C h i n a i s p r e p a r e d t o g o i n t o b u s i n e s s , w h e r e C h i n e s e w i l l n o t , i n a s s o c i a t i o n u ~ i t h A m e r i c a n , b u s i n e s s , p r o v i d e d A m e r i c a n b u s i n e s s w a n t s t o . 5 8

F o r m e r A m e r i c a n A m b a s s a d o r , C l a r e n c e G a u s s , was more

r e l u c t a n t t o a c c e p t t h e f o r m a l g u a r a n t e e o f t h e C h i a n g

K a i - s h e k g o v e r n m e n t b u t d i d n o t " d o u b t t h e s i n c e r i t y a n d

d e t e r m i n a t i o n o f t h e C h i n e s e i n t h e i r a m b i t i o n f o r

m o d e r n i z a t i o n a n d e c o n o m i c p r o g r e s s . " 59 Any m i s u n d e r s t a n d -

i n g s t h a t d i d a r i s e b e t w e e n A m e r i c a n b u s i n e s s m e n a n d

C h i n e s e o f f i c i a l s w e r e n o t v e r y s e r i o u s a n d were p r i m a r i l y

" p o o r t r a n s l a t i o n s a n d t r a n s l a t i o n s f r o m t h e C h i n e s e t o

E n g l i s h a r e i n some cases d i f f i c u l t , i n e x a c t a n d p e r p l e x -

i n g . " 60

If o n e h a d t o make a g e n e r a l i z a t i o n a b o u t b u s i n e s s

c o n v e n t i o n s s u c h as t h e o n e s s p o n s o r e d by t h e NFTC, it would

b e s a f e t o s a y t h a t m o s t o f them c o n c l u d e w i t h a comment on

t h e e s s e n t i a l g o o d n e s s o f t h e A m e r i c a n c o r p o r a t e e l i t e a n d

t h e v i r t u e s o f e x t e n d i n g t h e i r c a p i t a l a n d e x p e r t i s e t o t h e

rest o f t h e w o r l d . C h a i r m a n B u c k l e y ' s c o n c l u d i n g r e m a r k s

t o t h e T h i r t y - f i r s t N a t i o n a l F o r e i g n T r a d e C o n v e n t i o n were

n o e x c e p t i o n .

We s h o u l d h e l p C h i n a , a n d , f o r t h a t matter , a l l t h e r e s t o f Asia, t o r a i s e i t s l i v i n g s t a n d a r d s . No c o u n t r y c a n become v e r y g r e a t u n t i l it b u i l d s u p i t s p e o p l e - - t h e small p e o p l e a s wel l a s t h e g r e a t e r p e o p l e - - a n d p u t s t h e m o n a b e t t e r l i v i n g b a s i s , a b e t t e r wage b a s i s , s o t h a t t h e y c a n buy b e t t e r a n d l i v e b e t t e r - - i n o t h e r w o r d s , so t h a t t h e y c o u l d h a v e a b e t t e r s t a n d a r d o f l i v i n g . T h a t i s w h a t we h o p e f o r i n C h i n a a n d i n o t h e r c o u n t r i e s o f t h e Far E a s t . 6 1

F i v e y e a r s l a t e r , t h e C h i n e s e r e v o l u t i o n a r i e s o v e r t h r e w t h e

t r a d i t i o n a l s o c i a l s y s t e m w h i c h was a p e c u l i a r m i x t u r e o f

f e u d a l i s m a n d b u r e a u c r a t i c c a p i t a l i s m , a n d a t t e m p t e d t o

3 9

r e a c h some o f t h e g o a l s e l a b o r a t e d by C h a i r m a n B u c k l e y .

U n f o r t u n a t e l y f o r A m e r i c a n b u s i n e s s m e n , t h e w o r d s o f

i n s p i r a t i o n came f r o m a n o t h e r c h a i r m a n .

W h i l e t h e NFTC was p r i m a r i l y c o n c e r n e d w i t h t h e

g e n e r a l i s s u e s o f i n t e r n a t i o n a l t r a d e a n d i n v e s t m e n t ,

i n v o l v i n g a l l a r e a s OF t h e v ~ o r l d , CACCI, on t h e o t h e r h a n d ,

was c r e a t e d s p e c i f i c a l l y t o h e l p f a c i l i t a t e e c o n o m i c i n t e r -

c o u r s e b e t w e e n two c o u n t r i e s . The p u r p o s e o f t h e C o u n c i l ,

as s t a t e d i n i t s D i r e c t o r y , was " t o p r o m o t e p o l i c i e s a n d

c o n d i t i o n s t h a t w i l l b r i n g a b o u t a maximum i n t e r c h a n g e o f

g o o d s b e t w e e n t h e t w o c o u n t r i e s , a s wel l a s l a r g e s ca l e

i n v e s t m e n t f o r A m e r i c a n c a p i t a l i n C h i n a , " CACCI a l s o

p r o v i d e d " s p e c i a l i z e d s e r v i c e s t o i t s members t o f a c i l i t a t e

t h e i r b u s i n e s s i n C h i n a a n d t o h e l p them w i t h p l a n s f o r

e x p a n s i o n a n d new p r o j e c t s . m62 Formed i n 1 9 4 3 , C A C C I

o r i g i n a l l y h a d a m e m b e r s h i p o f o n l y t h i r t y - s i x c o m p a n i e s

b u t by 1 9 4 6 t h i s h a d i n c r e a s e d t o o v e r f o u r h u n d r e d . T h i s

r a p i d g r o w t h was o n e o f many i n d i c a t o r s o f t h e r e n e w e d

i n t e r e s t i n t h e p o s t w a r C h i n a m a r k e t . Member c o m p a n i e s

v a r i e d i n s i z e f r o m small l o c a l i n d u s t r i e s t o l a r g e i n t e r -

n a t i o n a l l y b a s e d c o r p o r a t i o n s , l e a d e r s i n t h e i r f i e l d s , 63

C A C C I ' s p r o m o t i o n a l p r o g r a m was e x t e n s i v e a n d c o v e r e d

a w i d e r a n g o o f a c t i v i t i e s . O r g a n i z e d i n t o t w o d e p a r t -

m e n t s , r e s e a r c h a n d p u b l i c r e l a t i o n s , t h e C o u n c i l was a b l e

t o p c r f o r m many d i f f e r e n t f u n c t i o n s . The m o s t i m p o r t a n t

o n e u a s l o b b y i n g t h e g o v e r n m e n t f o r f a v o r a b l e c o m m e r c i a l

l e g i s l a t i o n , w h i c h would s i m p l i f y a n d e x p e d i t e S i n o -

A m e r i c a n t r a d e . I t s l o b b y i n g p o w e r s were e x t e n s i v e , f o r

n o t o n l y was i n f l u e n c e e x e r t e d t o g e t f a v o r a b l e A m e r i c a n

l e g i s l a t i o n p a s s e d , b u t p r e s s u r e was a l s o a p p l i e d t o t h e

C h i n e s e g o v e r n m e n t e i t h e r d i r e c t l y t h r o u g h c o m m u n i c a t i o n

w i t h i t s o f f i c i a l s o r i n d i r e c t l y t h r o u g h t h e S t a t e D e p a r t -

m e n t . 64 I n 1946 when t h e p r o b l e m o f t a r i f f l e v e l s a r o s e ,

C A C C I c a l l e d f o r p r e s s u r e t o b e p u t o n C h i n e s e a u t h o r i t i e s

t o b e more c o n s i s t e n t a n d r e a s o n a b l e f r o m t h e A m e r i c a n p o i n t

o f v i e w i n t h e e v a l u a t i o n o f i m p o r t p r o d u c t s f o r t a r i f f

p u r p o s e s . F u r t h e r m o r e , t h e C h i n a s e were e n c o u r a g e d t o make

s t r o n g e r e f f o r t s t o s t a b i l i z e t h e i r c u r r e n c y w h i c h was

e s s e n t i a l t o a h e a l t h y t r a d e r e l a t i o n s h i p . 65

L i k e m o s t c o r p o r a t e l i b e r a l t r a d e o r g a n i z a t i o n s , C A C C I

h a d a c l o s e w o r k i n g r e l a t i o n s h i p w i t h t h e p o l i t i c a l e l i t e .

O f t e n members f r o m t h e S t a t e a n d Commerce D e p a r t m e n t s would

a t t e n d CACCI f u n c t i o n s a n d on o n e o c c a s i o n P r e s i d o n t Truman

a d d r e s s e d t h e a n n u a l c o n v e n t i o n . The S t a t e a n d Commerce

D e p a r t m e n t s b o t h c o o p e r a t e d i n d i s c u s s i n g w i t h C A C C I

o f f i c i a l s i n t e r n a t i o n a l e c o n o m i c p r o b l e m s of a s h o r t a n d

a l o n g term n a t u r e . Some o f t h e p r o b l e m s e x a m i n e d i n c l u d e d

p r o p o s e d I n t e r n a t i o n a l M o n e t a r y a g r e e m e n t s a n d t h e i r r e l a -

t i o n s t o S i n o - A m e r i c a n t r a d e , t h e p r o p o s e d p l a n f o r C h i n a ' s

p o s t w a r s o c o n s t r u c t i o n , a n d t h e e c o n o m i c p h i l o s o p h y u n d e r -

l y i n g s h o r t r a n g e a n d l o n g term d e v e l o p m e n t p r o g r a m s . 67

The D e p a r t m e n t o f Commerce, known as "The B u s i n e s s -

man ' s B u r e a u n , o f t e n p r o v i d e d s e r v i c e s t o f a c i l i t a t e t h e

r e s u m p t i o n o f t r a d e w i t h f o r e i g n c o u n t r i e s a f t e r t h e war. 68

F o r e x a m p l e , a C h i n a L e g a l S e c t i o n was c r e a t e d i n t h e F a r

E a s t e r n U n i t o f t h e D e p a r t m e n t o f Commerce t o " s t u d y t h e

C h i n a T r a d i n g Act a n d r e l a t e d m a t t e r s , w i t h a v i e w t o

p r o v i d i n g g u i d a n c e f o r A m e r i c a n b u s i n e s s m e n when C h i n a i s

a g a i n o p e n t o f o r e i g n t r a d e , a n d t o m a k i n g c o n s t r u c t i v e

s u g g e s t i o n s l o o k i n g t o m o d i f i c a t i o n s o r i m p r o v e m e n t s w h i c h

may seem d e s i r a b l e i n t h e common i n t e r e s t . " 69 information

u s e f u l t o c o r p o r a t e o f f i c i a l s was p u b l i s h e d by t h e D e p a r t -

m e n t ' s F i e l d O f f i c e s , t h e d a i l y p r e s s , a n d o f f i c i a l p u b l i c a -

t i o n s s u c h a s t h e F o r e i q n Commerce Weekly . The Commerce

D e p a r t m e n t o f t e n t r a n s m i t t e d i t s i n f o r m a t i o n t h r o u g h more

i n f o r m a l c h a n n e l s by p e r s o n a l l y i n f o r m i n g t h e A m e r i c a n b u s i -

n e s s m e n i m m e d i a t e l y c o n c e r n e d , The S t a t e D e p a r t m e n t s u p -

p l e m e n t e d t h e f u n c t i o n s o f t h e Commerce D e p a r t m e n t b y *

p r o v i d i n g u s e f u l p r a c t i c a l s e r v i c e s . A m e r i c a n b u s i n e s s m e n

t r a v e l l i n g t o t h e F a r East were g i v e n f o o d , a c c o m m o d a t i o n ,

a n d l o c a l t r a n s p o r t a t i o n if n e e d e d . A l s o , c o n s u l a r o f f i c i a l s

were on d u t y i n t h e l a r g e r C h i n e s e c i t i e s t o h e l p i n t h e

r e - e s t a b l i s h m e n t o f b a n k i n g s e r v i c e s . F u r t h e r m o r e , t h e

S t a t e D e p a r t m e n t t h r o u g h i t s n e g o t i a t i o n s w i t h t h e C h i n e s e

g o v e r n m e n t , made i t e a s i e r f o r b u s i n e s s m e n t o o b t a i n t r a v e l

v i s a s , 70

O f s p e c i a l i m p o r t a n c e was t h e r e s e a r c h o n t h e

C o m m e r c i a l T r e a t y o f 1 9 4 6 . C A C C I was e s p e c i a l l y i n t e r e s t e d

i n t h i s t r e a t y s i n c e t h e a b o l i t i o n o f e x t r a - t e r r i t o r i a l i t y

i n 1 9 4 3 h a d e l i m i n a t e d t h e t r a d i t i o n a l p r i v i l e g e s o f b u s i -

n e s s m e n . B e f o r e 1 9 4 3 , t h e y h a d r e c e i v e d t a n g i b l e c o n c e s -

s i o n s a n d t h e new t r e a t y would h a v e t o b e q u i t e compre -

h e n s i v e i n i ts g u i d e l i n e s f o r new t r a d i n g a n d i n v e s t m e n t

a r r a n g e m e n t s . The b a s i s o f t h e 1 9 4 6 t r e a t y was t h e "most -

f a v o u r e d - n a t i o n " c l a u s e t h a t . p r o v i d e d t h a t t r e a t m e n t n o t

l e s s f a v o u r a b l e t h a n a c c o r d e d t o a n y t h i r d c o u n t r y was t o

b e a c c o r d o d t o n a t i o n a l s a n d c o r p o r a t i o n s o f t h e U n i t e d

S t a t e s a n d c h i n a a 7 1 T h i s c l a u s e a n d o t h e r s b r o u g h t a

g e n e r a l l y f a v o u r a b l e r e s p o n s e f r o m A m e r i c a n o b s e r v e r s a n d

a n e q u a l l y v e h e m e n t r e j e c t i o n f r o m t h e C h i n e s e Communis t s .

From t h e i r v i e w p o i n t ,

The h a r s h n e s s a n d s c o p e o f t h e t r e a t y f a r s u r p a s s t h e Twenty-one Demands t h a t Yuan S h i h - k ' a i s i g n e d w i t h t h e J a p a n e s e . T h e c o u n t r y w i l l b e s u b - j u g a t e d a n d t h e n a t i o n e x t e r m i n a t e d i f t h i s t r e a t y i s c a r r i e d o u t . 7 2

A l t h o u g h t h e T r e a t y was t o b e r e n e g o t i a t e d i n 1 9 5 1 , t h e

C h i n e s e Communis t s made it c l ea r t h a t a n y e c o n o m i c a n d

p o l i t i c a l c o m m i t m e n t s made by t h e Kuomin tang would n a t b e

r e c o g n i z e d . T h u s , t h e T r e a t y became i n e f f e c t i v e a f t e r

1949 a

W h i l e t h e C h i n e s e Communis t s d i d n o t l o o k f o r w a r d t o

e n t e r i n g i n t o a n e c o n o m i c r e l a t i o n s h i p w i t h t h e U n i t e d

S t a t e s b a s e d on t h e 1 9 4 6 C o m m e r c i a l T r e a t y , t h e N a t i o n a l i s t

g o v e r n m e n t , on a number o f o c c a s i o n s , e x p r e s s e d a d e s i r e t o

s e c u r e a n a r r a n g e m e n t t h a t would b e b e n e f i c i a l t o b o t h

c o u n t r i e s . A s t h e e n d o f t h e S e c o n d World War a p p r o a c h e d ,

v i s i t i n g Kuomin tang o f f i c i a l s s o u g h t t o r e a s s u r e A m e r i c a n

b u s i n e s s m e n o f t h e s e r i o u s i n t e n t i o n s o f t h e C h i n e s e g o v e r n -

men t t o m o d e r n i z e t h e economy by u s i n g A m e r i c a n c a p i t a l a n d

i n d u s t r i a l c o m m o d i t i e s . S p e a k i n g a t a d i n n e r g i v e n i n h i s

h o n o r by CACCI, Dr. H . H . Kung, V i c e - p r e s i d e n t of t h e Execu-

t i v e Yuan a n d m i n i s t e r o f F i n a n c e , d e s c r i b e d h i s v i s i o n o f

C h i n a ' s e c o n o m i c d e v e l o p m e n t i n t h e p o s t ~ a r p e r i o d .

A s I t a l k t o y o u now, I h a v e i n my mind a v i s u a l p i c t u r e o f C h i n a ' s e c o n o m i c d e v e l o p m e n t i n t h e n e a r f u t u r e , I t i s a b e a u t i f u l p i c t u r e , I c a n see t h e smoke a r i s i n g f r o m o u r f a c t o r i e s i n many c i t i e s i n C h i n a , b e c l o u d i n g t h e s e t t i n g s u n . ( s i c ) I c a n see t h e h a r d - w o r k i n g C h i n e s e f a r m e r s t o i l i n g i n t h e f i e l d s o f t h e i r a n c e s t o r s , w i t h new a g r i c u l t u r a l t o o l s w h i c h you h a v e e m p l o y e d t o s u c h g r e a t a d v a n t a g e . I c a n see new n e t w o r k s o f r a i l r o a d s , h i g h w a y s , s t e a m s h i p s , a n d a i r w a y s s t r e t c h i n g a c r o s s t h e Asiatic c o n t i n e n t a n d l i n k i n g o u r c i t i e s w i t h o t h e r p a r t s o f t h e w o r l d . 7 3

Kung ' s u t o p i a n v i s i o n o f t h e f u t u r e was n o t t o b e r e a l i z e d

by t h e w a v i n g o f a m a g i c i a n ' s wand. I n s t e a d , t h e m a g i c o f

A m e r i c a n " e x p e r t k n o w l e d g e a n d s e a s o n e d e x p e r i e n c e , "

c o m b i n e d w i t h " s u r p l u s c a p i t a l t o f i n a n c e t h e v a r i o u s e n t e r -

p r i s e s w h i c h we a r e t o u n d e r t a k e , " would t r a n s f o r m h i s

d e s i r e f o r t h e m i l l e n i u r n i n t o r e a l i t y ,

I f A m e r i c a n b u s i n e s s r n s n h a d a n y d o u b t s a b o u t C h i a n g

K a i - s h e k ' s r e a c t i o n a r y n a t i o n a l i s m a n d i t s i m p l i c a t i o n s

f o r f o r e i g n c o r p o r a t i o n s , t h e y were p a r t i a l l y d i s p e l l e d by

t h e C h i n e s e A m b a s s a d o r , Dr. We Tao-ming, i n a n a d d r e s s a t

a C A C C I c o n v e n t i o n i n S a n F r a n c i s c o on J u l y 7 , 1 9 4 4 . The

N a t i o n a l i s t g o v e r n m e n t would " c a r r y o u t h e r p r o g r a m f o r

p o l i t i c a l d e m o c r a c y , " w h i l e a t t h e same time b a s i n g i t s

r e c o n s t r u c t i o n p r o g r a m on a "mixed s y s t e m o f g o v e r n m e n t a n d

p r i v a t e e n t e r p r i s e . "74 To g u a r a n t e e t h e r e m o v a l of' c o n f l i c t s

b e t w e e n t h e p u b l i c a n d t h e p r i v a t e s e c t o r , s p e c i a l p r o v i s i o n s

were e n a c t e d t o s a f e g u a r d f o r e i g n c a p i t a l , T h e s e g e n e r a l

p r o p o s a l s were s p e l l e d o u t i n d e t a i l i n a n a d d r e s s t o t h e

C h u n g k i n g R o t a r y C l u b o n November 30 , 1 9 4 4 by

Dr. Sun F o , E x e c u t i v e Yuan, a l o n g time a d m i r e r o f t h e

r e f o r m p o l i c i e s o f Sun Y a t - s e n , p r o p o s e d a l i b e r a l i z a t i o n

of t h e laws w i t h r e g a r d s t o f o r e i g n c a p i t a l a n d i n d u s t r y .

T h e number a n d k i n d o f s t a t e e n t e r p r i s e s would b e l i m i t e d

a n d t h e s e e n t e r p r i s e s w o u l d n o t b e g i v e n f a v o r a b l e t r e a t -

ment o v e r p r i v a t e e n t e r p r i s e s . P r i v a t e f o r e i g n e n t e r p r i s e s ,

o n t h e o t h e r h a n d , w o u l d b e e l i g i b l e f o r s t a t e a i d i n t h e

f o r m o f t e c h n o l o g i c a l a s s i s t a n c e a n d t r a n s p o r t f a c i l i t i e s .

M o r e o v e r , t h e r e w o u l d b e n o r e s t r i c t i o n o n t h e p e r c e n t a g e o f

45

f o r e i g n c a p i t a l i n v e s t e d i n j o i n t e n t e r p r i s e s a n d

f o r e i g n n a t i o n a l s , i n a c c o r d a n c e u ~ i t h C h i n e s e law, c o u l d

d i r e c t l y i n v e s t i n e n t e r p r i s e s o p e r a t e d s o l e l y by t h e m . 75

I n o t h e r ~ o r d s , e x c e p t f o r a few m o d i f i c a t i o n s , A m e r i c a n

b u s i n e s s m e n were a s s u r e d t h a t t h e t r a d i t i o n a l Open Door

p o l i c y would b e m a i n t a i n e d b y t h e C h i n e s e g o v e r n m e n t .

I n t h e e y e s o f A m e r i c a n b u s i n e s s m e n t h e p e r c e p t i o n of

t h e p o s t w a r C h i n a m a r k e t e x p a n d e d s i g n i f i c a n t l y a s t h e

f i n a l p r e p a r a t i o n s f o r t h e war a g a i n s t J a p a n b e g a n . T h e i r

v i s i o n s o f a C h i n e s e " e l d o r a d o n were s u r p r i s i n g l y s i m i l a r

t o t h o s e o f t h e i r p r e d e c e s s o r s l a t e i n t h e n i n e t e e n t h c e n -

t u r y when t h e e c o n o m i c s y s t e m o f t h e U n i t e d S t a t e s e x p e r i -

e n c e d i t s f i r s t m a j o r c r i s i s o f t h e i n d u s t r i a l e ra . U n l i k e

t h e e a r l i e r p e r i o d , h o w e v e r , t h e C h i n a m a r k e t was n o t s e e n

a s a s o l u t i o n t o a d e p r e s s i o n l i k e t h e o n e d u r i n g t h e 1 8 9 0 ' s

b u t a s a n a l t e r n a t i v e t o t h e p o s s i b i l i t y o f o n e i n t h e

f u t u r e .

I n summary, A m e r i c a n b u s i n e s s m e n , l i k e t h e a l c h e m i s t s

b e f o r e t h e m , t r i e d t o make g o l d o u t o f t h e f a r l e s s v a l u -

a b l e i r o n . U l t i m a t e l y , i t c o u l d b e a r g u e d t h e i r f u t i l e

e f f o r t a t t r a n s m u t a t i o n was a r e f l e c t i o n o f t h e n e e d s o f

t h e A m e r i c a n p o l i t i c a l economy d u r i n g a p e r i o d o f s c r i s i s . To

b e s u r e , A m e r i c a n b u s i n e s s m e n h a d n o t o n l y m i s p e r c e i v e d

t h e i n t e n t i o n s o f t h e C h i a n g K a i - s h e k r e g i m e , b u t a l s o o v e r -

e s t i m a t e d t h e a b i l i t y o f t h e U n i t e d S t a t e s g o v e r n m e n t t o

46

s t a b i l i z e t h e p o s t w a r s i t u a t i o n i n t h e F a r E a s t a n d

f a c i l i t a t e Open Door e x p a n s i o n . B u t , from t h e p o i n t o f

v i e w o f A m e r i c a n c o r p o r a t e l i b e r a l s a t t h e t i m e o f t h e

f i n a l p e a c e t r e a t y w i t h J a p a n , t h e r e w e r e good r e a s o n s

f o r b e l i e v i n g t h a t p o l i t i c a l a n d e c o n o m i c s t a b i l i t y would

p r e v a i l i n C h i n a . I t was o n l y a y e a r l a t e r t h a t s e r i o u s

d o u b t s b e g a n t o e m e r g e a n d t h e p e r c e p t i o n s o f b u s i n e s s m e n

b e g a n t o a p p r o a c h r e a l i t y .

CHAPTEA I

FOOTNOTES

I N i l l i a r n Appleman Williams, The C o n t o u r s o f A m e r i c a n H i s t o r y ( c h i c a g o , 1 9 6 6 ) , 75-117 . S e e a l s o L o u i s M . H a c k e r , The C o u r s e o f A m e r i c a n Economic Growth a n d D e v e l o p m e n t ( ~ e w Y o r k , 1 9 7 0 ) , 21-43. The b u s i n e s s m e n r e f e r r e d l 6 0 d u r i n g t h i s p e r i o d a r e t h o s e c o n n e c t e d w i t h o v e r s e a s t r a d i n g h o u s e s , i m p o r t - e x p o r t f i r m s , . . a n d s h i p p i n g c o m p a n i e s . I n o t h e r w o r d s , t h e i n f l u e n c e o f members o f t h e m e r c a n t i l e e l i t e ,

Wi th t h e a s c e n d a n c y o f i n d u s t r i a l c a p i t a l i s m , n o t o n l y d i d t h e c o m p o s i t i o n o f t h e b u s i n e s s e l i t e c h a n g e b u t s o d i d i t s a p p r o a c h t o t h e p r o b l e m s o f m o d e r n i z a t i o n t h a t c o n f r o n t c a p i t a l i s t s o c i e t i e s . B a n k e r s a n d I n d u s t r i a l i s t s were by t h e t w e n t i e t h c e n t u r y t h e l e a d i n g e n t r e p r e n e u r s b u t w i t h i n t h i s e l i t e d i f f e r e n t p o s i t i o n s emerged r e g a r d i n g t h e r e f o r m a n d r a t i o n a l i z a t i o n o f t h e p o l i t i c a l economy. On o n e s i d e were t h o s e u ~ h o w a n t e d t o a p p r o a c h s o c i a l , p o l i t i c a l , a n d e c o n o m i c p r o b l e m s u i t h i n t h e t r a d i t i o n a l l a i s s e z - f a i r e f r a m e - work w h i l e t h e i r o p p o n e n t s w i t h i n t h e r e f o r m i s t s e c t o r w i s h e d t o employ more l i b e r a l c o n c e p t s . T h e s e b u s i n e s s m e n s o m e t i m e s r e f e r r e d t o a s " c o r p o r a t e l i b e r a l s " came t o p l a y a n i n c r e a s i n g l y i m p o r t a n t r o l e a n d g r a d u a l l y u n d e r m i n e d t h e i n f l u e n c e t o t h e - m o r e c o n s e r v a t i v e l a i s s e z - f a i r e f o l l o w e r s . I n t h e m a k i n g o f d o m e s t i c p o l i c y , s p e c i f i c a l l y t h e New D e a l a n d p o s t w a r c o n v e r s i o n , t h e c o r p o r a t e l i b e r a l s h a d made a c o n s i d e r a b l e c o n t r i b u t i o n . L i k e w i s e , i n t h e f o r m u l a t i o n o f f o r e i g n p o l i c y t h e y were t h e p r i m a r y a r c h i t e c t s o f a n i n t e r - n a t i o n a l e c o n o m i c a n d m i l i t a r y s y s t e m w i t h t h e U n i t e d S t a t e s a t t h e c e n t e r . W h i l e i t i s r e c o g n i z e d t h a t l a i s s e z - f a i r e b u s i n e s s m e n a r e s c a t t e r e d a r o u n d t h e e c o n o m i c l a n d s c a p e a n d f i n d a home i n t h e R e p u b l i c a n P a r t y , i t i s t h e a t t i t u d e s of " c o r p o r a t e l i b e r a l s " i n t h e p e r i o d f r o m 1 9 4 3 t o 1 9 4 9 t h a t w i l l b e e x a m i n e d i n t h e t h e s i s .

o or a n o v e r v i e w o f e a r l y S i n o - A m e r i c a n t r a d e r e l a t i o n s see F o s t e r Rhea D u l l e s , T h e Old C h i n a T r a d e (New York , 1 9 3 0 ) ~ 1 - 6 4 , 106-138 ; R i c h a r d o ' c o n n o r , P a c i f i c D e s t i n y ( ~ o s t o n , 1 9 6 9 ) , 3 -103 ; a n d R i c h a r d Van ~ l s t ~ n e ; - - - f h X i % i n q A m e r i c a n E m p i r e ( c h i c a g o , 1 9 6 0 ) , 170-194 .

' m i l t o n P l e s u r , A m e r i c a ' s Outward T h r u s t t A p p r o a c h e s t o F o r e i q n A f f a i r s , 1865-1890 ( D e k a l b , I l l i n o i s , 1 9 7 1 ) , 213-215. I n 1 8 6 5 . . 2 % o f a l l e x o o r t s w e n t t o C h i n a a n d by 1 8 9 5 t h e f i g u r e h a d b e c l i n e d t o ' .9;4. By 1 9 0 5 h o w e v e r , t h e f i g u r e c l i m b e d t o 3.5$ o f t h e t o t a l e x p o r t t r a d e .

% a l t e r L a F e b e r , The New E m p i r e ( ~ t h a c a , N e w York , l 9 6 3 ) , 6 0 ,

6 ~ t was s t a t e d by t h e N a t i o n a l A s s o c i a t i o n o f Manu- f a c t u r e r s t h a t t r a d e w i t h C h i n a was " o n l y i n i t s e a r l y s t a g e s " a t t h e e n d o f t h e n i n e t e e n t h c e n t u r y b u t h a d " e n o r - mous p o s s i b i l i t i e s , " s i n c e i t c o u l d f u r n i s h a m a r k e t f o r m i l l i o n s u p o n m i l l i o n s o f d o l l a r s " w o r t h o f A m e r i c a n p r o - d u c t s . Q u o t e d i n C h a r l e s S . C a m p b e l l , J r . , S p e c i a l B u s i - n e s s I n t e r e s t s a n d t h e Open Door P o l i c y ( ~ e w Haven, Connec- t i c u t , 1 9 5 1 ) , 1 2 .

7 ~ a n y a u t h o r s , i n t h e i r work o n t h e e c o n o m i c a s p e c t s o f Amer ican f o r e i g n p o l i c y , h a v e o v e r l o o k e d t h e d i f f e r e n c e s b e t w e e n t h e b a n k i n g a n d m a n u f a c t u r i n g s e c t o r s . One n o t a b l e e x c e p t i o n i s W i l s o n , A m e r i c a n B u s i n e s s , 202-206.

or f u r t h e r i n f o r m a t i o n on t h e q u e s t i o n o f l o a n s sss K e i t h H u t c h i s o n , - R i v a l P a r t n e r s (New York , 1 9 4 6 ) , 227-228. A m e r i c a n l o a n s t o C h i n a were t o b e u s e d t o f i n a n c e s u c h a m b i t i o u s r e c o v e r y p r o j e c t s s u c h a s t h e d e v e l o p m e n t o f t h e Y a n g t z e R i v e r f o r i r r i g a t i o n p u r p o s e s a s w e l l a s h y d r o - e l e c t r i c power .

'New L e f t h i s t o r i a n s h a v e r e p e a t e d l y e m p h a s i z e d t h i s p o i n t i n t h e i r r e s e a r c h on p o s t w a r A m e r i c a n f o r e i g n p o l i c y , See f o r e x a m p l e , D a v i d E a k i n s , " B u s i n e s s P l a n n e r s a n d America's P o s t v ~ a r E x p a n s i o n , " H o r o w i t z , e d , , C o r p o r a t i o n s a n d t h e C o l d -- War, 1 4 3 - 7 2 ; K o l k o s , The L i m i t s o f Power , 11-28 ; a n d Thomas P a t e r s o n , "The Economic F o r e i g n P o l i c y , 11

56-112.

' O ~ a v i d S. M c L e l l a n a n d C h a r l e s E . Woodhouse, "The B u s i n e s s E l i t e a n d F o r e i g n P o l i c y , " W e s t e r n P o l i t i c a l Q u a r t e r l y , XI11 arch, 1960), 172-190 , I n t h e nomen- c l a t u r e o f N e w L e f t s c h o l a r s h i p t h e " P r o g r e s s i v e s " a r e i d e n t i f i e d a s C o r p o r a t e L i b e r a l s . S e e f o r e x a m p l e William Domhoff , The H i q h e r C i rc les : The G o v e r n i n q Class i n A m e r i c a (New York , 1970) , 111-1551 D a v i d E a k i n s , "The m m e n t o f C o r p o r a t e L i b e r a l P o l i c y R e s e a r c h " , 330-390 ,

C h r i s t o p h e r L a s c h , "The Making o f t h e War C l a s s , " - The C o l u m b i a Forum 1 4 i inter 19 '719, 2-11.

l l l o r l d llJar Two was i n s t r u m e n t a l i n b r i n g i n g a b o u t a f u n d a m e n t a l c h a n g e i n t h e a t t i t u d e o f A m e r i c a n b u s i n e s s m e n t o u ~ a r d s t h e i n t e r n a t i o n a l m a r k e t p l a c e a n d i t s r e l a t i o n s h i p t o d o m e s t i c p r o s p e r i t y , The N a t i o n a l A s s o c i a t i o n o f flanu- f a c t u r e r s r e f l e c t e d t h i s new o u t l o o k i n i t s S e c o n d R e p o r t t o t h e C o m m i t t e e s t u d y i n g p o s t w a r e c o n o m i c c o n d i t i o n s . "Our n a t i o n a l s e l f - i n t e r e s t m u s t t a k e i n t o a c c o u n t t h e i n t e r e s t s o f o t h e r p e o p l e s a s wel l as o u r s e l v e s . We c a n n o t b e p r o s p e r o u s by a t t e m p t i n g t o s t a y a l o o f f r o m t h e p r o b l e m s o f t h e res t o f t h e u ~ o r l d . . . ~ The b e s t c h a n c e f o r p o s t w a r e c o n o m i c p r o g r e s s i n t h e U n i t e d S t a t e s w i l l b e t h r o u g h a g r e e m e n t s w i t h o t h e r n a t i o n s o n p r o p e r m e t h o d s o f ma in - t a i n i n g p e a c e a n d i n c r e a s i n g w o r l d p r o s p e r i t y . " F o r t h e f u l l t e x t o f t h i s a n d t h e s t a t e m e n t s o f o t h e r b u s i n e s s o r q a n i z a t i o n s s e e J o h n W, M a s l a n d , "Group I n t e r e s t s i n p o s t - ~ a r A m e r i c a n P a c i f i c P o l i c y , " ~ m e r i c a n C o u n c i l P a p e r No. 6 p r e s e n t e d t o t h e N i n t h C o n f e r e n c e o f t h e I n s t i t u t e o f P a c i f i c R e l a t i o n s , J a n u a r y , 1 9 4 5 , 1 - 1 5 , Append ix A .

''very l i t t l e r e s e a r c h h a s b e e n d o n e on t h e p o s t w a r m a r k e t i n C h i n a b u t t h e r e h a v e b e e n t h o r o u g h l y d o c u m e n t e d s t u d i e s c o m p l e t e d e x a m i n i n g t h e e c o n o m i c p o t e n t i a l o f L a t i n America a n d E u r o p e . The d e f i n i t i v e work on L a t i n America i s D a v i d G r e e n , The C o n t a i n m e n t o f L a t i n America ( c h i c a g o , 1 9 7 1 ) , 113-136 . E u r o p e h a s b e e n e x t e n s i v e l y e x a m i n e d i n L l o y d G a r d n e r "America a n d t h e German ' P r o b l e m ' , 1 9 4 5 - 1 9 4 9 , " i n B e r n s t e i n , e d . , P o l i t i c s a n d P o l i c i e s o f t h e Truman ~ d m i n i s t r a t i o n , 1 1 3 - 1 4 8 . G a r d n e r ' s r e c e n t book a l s o h a s a c h a p t e r on e c o n o m i c r e l a t i o n s w i t h B r i t a i n . S e e L l o y d G a r d n e r , A r c h i t e c t s o f I l l u s i o n ( c h i c a g o , 1 9 7 0 ) , 113-138. A d d i t i o n a l i n f o r m a t i o n i s f o u n d i n t h e K o l k o s , ~ i m i t s o f P o u ~ e r , 1 1 1 - 2 4 5 , a n d P a t e r s o n , The Economic ~ o i d War , 255-356, -

''see F r a n c i s R . V a l a o , F a r E a s t e r n Economic D e v e l o p - m e n t a n d t h e !:Jest --- C o a s t Economy (LIJashington, 1 9 5 0 ) , 55-60: V a l e o p o i n t s o u t t h a t c o r p o r a t e o w n e r s o n t h e West C o a s t h a d 11.3$ p e r c e n t o f t h e i r f o r e i g n a s s e t s i n Asia w h i l e o n l y 5.$ p e r c e n t o f a l l American-owned a s s e t s were i n Asia, A s a m a r k e t f o r Nest c o a s t e x p o r t s , t h e F a r E a s t was o f s p e c i a l i m p o r t a n c e . F o r t h e p o s t w a r p e r i o d it was p r o j e c t e d t h a t a w i d e r a n g e o f e x p o r t c o m m o d i t i e s f r o m n a t u r a l r e s o u r c e s t o m a n u f a c t u r e d g o o d s u ~ o u l d b e s h i p p e d t o C h i n a , J a p a n , a n d t h e P h i l l i p i n e s .

14some o f t h e b e t t e r known j o u r n a l s i n c l u d e d t h e C o m m e r c i a l a n d F i n a n c i a l C h r o n i c l e , F o r b e s , F o r t u n e , t h e H a r v a r d B u s i n e s s Rev iew a n d a number o f o t h e r s . Most w e r e -- - e i t h e r c & t ~ o u ~ l ~ ~ ~ i s t i c o r t o t a l l y e n t h u s i a s t i c a b o u t t h e p r o s p e c t s f o r t r a d e i n t h e p o s t w a r p e r i o d .

ereaf after c i t e d as C A C C I a n d NFTC.

1 6 ~ e r e a f t e r c i t e d as t h e IPR. From 1 9 2 5 t o 1 9 5 2 t h e IPR had p u b l i s h e d a p p r o x i m a t e l y 220 m a j o r r e s e a r c h v o l u m e s c o v e r i n g a u ~ i d e r a n g e o f s u b j e c t s . I t s r e s e a r c h p u b l i c a - t i o n s on p o s t w a r e c o n o m i c p r o b l e m s i n t h e F a r E a s t was e x t e n s i v e e s p e c i a l l y w i t h r e g a r d t o A m e r i c a n i n t e r e s t s . F o r a p a r t i a l l is t o f t h e l i t e r a t u r e see W i l l i a m H o l l a n d , commenta ry on t h e McCarran R e p o r t on t h e 1 , P . R . ( ~ e w Y o r k , 1 9 5 3 ) p 81-94 ,

1 7 ~ e r e a f t e r c i t e d as U N R R A . U N R R R was o r g a n i z e d i n 1 9 4 3 a n d f r o m t h e b e g i n n i n g t h e U n i t e d S t a t e s h a d c o n s i d e r - a b l e i n f l u e n c e i n t h e o r g a n i z a t i o n s i n c e i t c o n t r i b u t e d o v e r 7Or{ o f t h e f u n d i n g f o r t h e p r o g r a m . A c c o r d i n g t o G a b r i e l K o l k o t h e U n i t e d S t a t e s b e n e f i t e d f r o m p a r t i c i p a t i o n i n t h e p r o g r a m i n two ways . F i r s t , i t would h e l p t o p r e v e n t war t o r n a n d h u n g r y n a t i o n s f r o m moving t o t h e l e f t p o l i t i - c a l l y . S e c o n d l y , A m e r i c a n s u r p l u s f a r m p r o d u c t i o n c o u l d b e d i s t r i b u t e d i n t e r n a t i o n a l l y a n d t h e r e b y s t r e n g t h e n i n g t h e farm s e c t o r d o m e s t i c a l l y . - s e e ~ a b r i e l - ~ o l k o , The P o l i t i c s o f War ( N ~ U J Y o r k , l 9 6 8 ) , 259-260 .

''one b u s i n e s s j o u r n a l t h a t was c o n s i s t e n t l y c r i t i c a l o f u n f o u n d e d o p t i m i s m o f A m e r i c a n b u s i n e s s m e n was t h e C h i n a Weekly Review. F o r t h e m o s t p a r t i ts c r i t i c i sms were n o t d i s c u s s e d i n b u s i n e s s c i r c l e s u n l i k e t h e w i d e l y c i r c u - l a t e d C h i n a T r a d e News, p u b l i s h e d by t h e C h i n a - A m e r i c a C o u n c i l o f Commerce a n d I n d u s t r y , I n c .

''for a s c a t h i n g c r i t i c i s m o f Kuomin tang e c o n o m i c a n d p o l i t i c a l p o l i c i e s d u r i n g t h e S e c o n d 9Jor ld War see J o h n S e r v i c e . "The E n t h r o n e m e n t o f R e a c t i o n , " i n P i c h o n Loh, ( e d . ) , he Kuomin tan D e b a c l e o f 1 9 4 9 : Con u e s t o r ----P-7T- B o s % ~ ? - 5 2 . An a c c o u n t o G e n e r a l s r e s e r v a t i o n s a b o u t t h e f u t u r e f o r A m e r i c a n s i n C h i n a i s f o u n d i n B a r b a r a Tuchman, S t i l w e l l a n d t h e A m e r i c a n E x p e r i e n c e i n C h i n a , 1 9 1 1 - 1 9 4 5 ( ~ e w York , 1 9 7 1 ) , 511-527 . ) h e c r i t i c a l r e p o r t s o f A m e r i c a n n e w s p a p e r men l i k e B r o o k s A t k i n s o n , I s r a e l E p s t e i n , a n d H a r o l d I s a a c s a r e e x a m i n e d i n H o l l i n g t o n K . T o n g , D a t e l i n e , C h i n a , The B e q i n n i n q o f

C h i n a ' s P r e s s R e l a t i o n s w i t h t h s Wor ld ( N E W York , 1 9 5 0 ) , 239-257

'Osee P h i l i Economic T h e o a o v e r a m i l l i o n c

p J a f f e , ( e d . ) , C h i n a ' s D e s t i n y & C h i n e s e (New Y o r k , 1 9 4 7 ) . I t was e s t i m a t e d t h a t o p i e s w e r e s o l d s i n c e t h e book was r e a u i r e d

r e a d i n g f o r u n i v e r s i t y s t u d e n t s , p u b l i c o f f i c i a l s , a rmy o f f i c e r s , a n d members o f t h e Kuomin tang Youth C o r p s . I n 1 9 4 7 a n E n g l i s h t r a n s l a t i o n was p u b l i s h e d i n t h e U n i t e d S t a t e s w h i c h was a " l i b e r a l i z e d " v e r s i o n o f t h e o r i g i n a l t e x t . N e v e r t h e l e s s , C h i a n g was q u i t e e x p l i c i t o n t h e i s s u e o f p o s t w a r e c o n o m i c p o l i c y . G e n e r a l l y , h e f a v o r e d a p r o - t e c t i o n i s t t a r i f f p o l i c y , e m p h a s i s on m i l i t a r y s p e n d i n g , a n d t h e d e v e l o p m e n t o f h e a v y i n d u s t r y u n d e r t h e s t r i c t c o n - t r o l o f t h e s t a t e , n o t f o r e i g n b u s i n e s s i n t e r e s t s .

" J u l e a n A r n o l d , 'Ch ina . A C h a l l e n a e n . F a r E a s t e r n S u r v e y , XIV ( ~ c t o b e r - 1 0 , 1 9 4 5 ) , 2 9 2 - 2 9 4 1 E i i o t ~ a n e w a ~ , - " A m e r i c a ' s Need o f E x p o r t s - 1 1 , " 4 4 , A s i a a n d t h e Americas ( J u n e , 1 9 4 4 ) , 2 4 3 ; J a f f e a n d M i t c h e l l , " C h i n a : A N e w Economic F r o n t i e r f o r t h e U.S.A.?" A m e r a s i a , 8 ( S e p t e m b e r 2 2 , 1 9 4 4 ) , 259-270 ; D. V . K n i b b , " C h i n a ' s C h a l l e n g i n g P o s t - War D l a r k e t s , " F o r e i q n Commerce Week ly , 2 3 ( ~ c t o b e r 7 , 1 9 4 4 ) , 9-11: F r i t z S t e r n b e r s , " A m e r i c a ' s t c o n o m v a n d Asia's T e m ~ o , " . - Asia a n d t h e ~ r n e r i c a s , 4 4 ( A u g u s t , 1 9 4 4 ) ; 369-371 .

2 2 ~ a w r e n c e K . R o s i n g e r , 'Ch ina a s a Pos t -War M a r k e t , " F o r e i q n P o l i c y R e p o r t s , 20 ( J a n u a r y 1, 1 9 4 5 ) , 250-263 .

2 5 ~ l s a G i d l o s , "Our Pos t -War T r a d e w i t h C h i n a r How B i g i s t h e P o t e n t i a l ? " S a l e s management , ( J u n e 1, 1 9 4 4 ) , 2 3 , G i d l o w c o n c l u d e d t h e a r t i c l e w i t h a q u o t e f r o m J u l e a n A r n o l d , a wel l known o b s e r v e r o f t h e e c o n o m i c s c e n e i n C h i n a . " C h i n a , " a c c o r d i n g t o A r n o l d , "would s t a r t l e t h e w o r l d w i t h t h e g i g a n t i c volume o f t r a d e a r i s i n g f r o m i t s i n d u s t r i a l i z a t i o n " . . . a n d "u~ho l e a r n s t o work ~ u i t h C h i n a i n a s p h e r e o f i n t e l - l i g e n t c o o p e r a t i o n w i l l h a v e t h e key t o t h e g r e a t e s t t r e a s u r e - h o u s e o f t r a d e t h e w o r l d h a s e v e r known."

2 6 ~ "en w i t h l i m i t s d i n d u s t r i a l i z a t i o n , G i d l o w ' s es t imates were e x t r e m e l y c o n s e r v a t i v e . S e e P . K . Mok, r e v i e w o f " C h i n a ' s P o s t w a r M a r k e t s , " P a c i f i c H i s t o r i c a l R e v i e w , -

1 5 ( M a r c h , 1 9 4 6 ) , 1 2 0 . Mok b e l i e v e d t h a t a f i g u r e f o r t r a d e o f f!489 m i l l i o n was n o t u n r e a l i s t i c .

2 7 ~ i t e d i n a n e d i t o r i a l "The P r o s p e c t o f F o r e i g n I n v e s t m e n t i n C h i n a , " C o n t e m p o r a r y C h i n a I 1 1 ( ~ e b r u a r y 7 , l 9 4 4 ) , 1.

2 8 ~ b i d e - On December 2 8 , 1 9 4 4 , t h e Supreme N a t i o n a l D e f e n s e C o u n c i l o f C h i n a a d o p t e d a r e s o l u t i o n which e s t a b l i s h e d t h e f o l l o w i n g p r i n c i p l e s f o r C h i n a ' s e c o n o m i c p o l i c y w i t h r e g a r d t o t h e p a r t i c i p a t i o n o f f o r e i g n c a p i t a l : F i r s t , t h e r e would b e no r e s t r i c t i o n p l a c e d on t h e p e r c e n - t a g e o f f o r e i g n s h a r e s o f c a p i t a l i n a n y S i n o - F o r e i g n e n t e r - p r i s e . S e c o n d , S t a t e e n t e r p r i s e s w o u l d b e a b l e t o c o n t r a c t f o r e i g n l o a n s o r s e e k f o r e i g n i n v e s t m e n t s . T h i r d , a l l e n t e r p r i s e s i n C h i n a w h i c h were d i r e c t l y F i n a n c e d a n d o p e r a t e d by f o r e i g n n a t i o n a l s mould h a v e t o o b s e r v e C h i n e s e lams a n d r e g u l a t i o n s , F o r a d d i t i o n a l i n f o r m a t i o n on t h e r e c o m m e n d a t i o n s o f t h e Supreme N a t i o n a l D e f e n s e Counc i l . o f C h i n a , see "Deve lopment P r o g r a m s i n C h i n a a n d I n d i a , " P a c i f i c A f f a i r s , 28 ( m a r c h , 1 9 4 5 ) , 92-93 ,

he P r o m i s e o f t h e C h i n a M a r k e t , ' C o n t e m p o r a r y C h i n a , I11 ( ~ a n u a r y 2 4 , 1 9 4 4 ) , 1 0 4 .

3 0 ~ h e s e a n d - o t h e r q u e s t i o n s w e r e o u t l i n e d i n W. C . J o h n s t o n e , R a p p o r t e u r ' s ' ~ e ~ o r t " , I n s t i t u t e o f P a c i f i c R e l a t i o n s ( . J a n u a r y 1 5 , l 9 4 4 ) , 1 -2 . S e e a l s o I n s t i t u t e o f p a c i f i c R e l a t i o n s , E l a b o r a t i o n of D r a f t Aqenda f o r t h e n i n t h I . P . R . C o n f e r e n c e , ( S e p t e m b e r 2 9 , 1 9 4 4 ) , 1 - 9 .

3 1 ~ o r a r e v e a l i n g a n a l y s i s o f t h e i d e o l o g i c a l o r i e n t a - t i o n o f A s i a n S t u d i e s r e s e a r c h i n s t i t u t e s s e e J u d i t h C o b u r n , " A s i a n S c h o l a r s a n d Government : The Chrysanthsrnum o n t h e S w o r d , " i n E. F r i e d m a n a n d M a S e l d e n , e d s . , A m e r i c a n ' s Asia ( ~ e w York t 1 9 6 9 ) , 67-107 ; D a v i d H o r o w i t z , " P o l i t i c s a n d Knowledge: An U n o r t h o d o x H i s t o r y o f Modern C h i n a S t u d i e s " B u l l e t i n o f C o n c e r n e d A s i a n S c h o l a r s 3 ( s u m m e r - F a l l , 1 9 7 1 1 , - 1 3 9 - 1 6 8 , H o r o w i t z n o t e s t h a t i n 1 9 5 2 a i d f r o m t h e l a r g e c o r p o r a t e f u n d e d f o u n d a t i o n s b e g a n t o d e c r e a s e d u e t o t h e i n v e s t i g a t i o n o f t h e McCar ran C o m m i t t e e . P r e v i o u s t o t h e McCarran i n v e s t i g a t i o n s some o f t h e o u t s t a n d i n g members f rom t h e c o r p o r a t e e l i t e on t h e B o a r d o f T r u s t e e s i n c l u d e d C h a r l e s K . Gamble , D i rec to r , S tandard-Vacuum O i l Company, P a u l Hoffman, P r e s i d e n t , S t u d e b a k e r C o r p o r a t i o n , Henry R e L u c e , E d i t o r a n d P u b l i s h e r , T i m e , L i f e , a n d F o r t u n e , J u a n T r i p p e , P r e s i d e n t , Pan-Amer ican A i r w a y s , a n d A . W . R o b e r t s o n ,

P r e s i d e n t , W e s t i n g h o u s e E lec t r i c C o r p o r a t i o n . A c o m p l e t e l i s t of t h e 1 9 4 6 Board o f T r u s t e e s a l o n g w i t h a f i n a n c i a l r e p o r t is f o u n d i n A m e r i c a n C o u n c i l , I n s t i t u t e of P a c i f i c R e l a t i o n s , Windows on t h e P a c i f i c ( N ~ U J Yorkr 1 9 4 6 ) .

3 4 ~ i l l i a r n H o l l a n d , T r u t h a n d F a n c y a b o u t t h e I n s t i t u t e - o f P a c i f i c R e l a t i o n s (NQUJ York , 1 9 5 3 ) , 39-40.

3 5 ~ i c h a r d M . F r e e l a n d , The Truman D o c t r i n e h t h e O r i g i n s o f McCar thy i sm ( ~ e w York , 1 9 7 0 ) , -Athan T h e o h a r i s , S e e d s o f R e p r e s s i o n ; H a r r y S. Truman a n d t h e O r i g i n s o f M c C a r t h w l c h i c a g o , 1 9 7 1 ) .

3 6 ~ e n e r a l e c o n o m i c s t u d i e s by t h e IPR d o n e on C h i n a i n c l u d e t h e f o l l o w i n a r f i l a r ion J . Levv. The R i s e o f t h e modern C h i n e s e ~ u s i n G s s C l a s s ( ~ e w ~ o i k , lY49), D.K. L i e u , The ~ r o w t h ' a n d I n d u s t r i a l i z a t i o n o f S h a n q h a i ( ~ e w Y o r k , 1 9 3 6 ) . F r a n k M. Tamaona. B a n k i n a a n d F i n a n c e i n C h i n a ( ~ e w ,. - - Y O ; ~ , 1 9 4 2 ) . More &Gecia ' l . ized A o n o q r a p h s w e r e d o n e a t ' t h e Hot s p r i n g s , v i r g i n i a C o n f e r e n c e o f - t h e IPR i n J a n u a r y 1 9 4 5 . S e e f o r e x a m p l e , Ching-Chao Mu, " P l a n s f o r C h i n a ' s I n d u s t r i a l i z a t i o n , " D . K . L i e u , " N o t e s on C h i n a ' s F o r e i g n T r a d e a n d T r a d e P o l i c y , " a n d Uang T i e h - Y a i , "The S t a t u s o f A l i e n s a n d F o r e i g n E n t e r p r i s e i n C h i n a . "

3 7 ~ h i h T s a n g , c h i n a ' s P o s t w a r M a r k e t s - ( ~ e w Y o r k , 1 9 4 5 ) . I n t h e F o r w a r d Milliam H o l l a n d n o t e d t h a t t h e book d i d n o t r e p r e s e n t t h e v i e w s o f t h e I . P . R . , b u t was n e v e r t h e l e s s i m p o r t a n t , n o t o n l y f o r g o v e r n m e n t o f f i c i a l s b u t f o r p r i v a t e b u s i n e s s m e n b e c a u s e it a n a l y s e d " t h e e c o n o m i c n e e d s o f p o s t - war C h i n a a n d t h e f i n a n c i a l a n d t e c h n i c a l means by w h i c h t h e s e n e e d s c a n b e s u p p l i e d . "

3 8 ~ h i s p o i n t is made i n t w o r e v i e w s o f h i s b o o k . S e e A r n o l d , " C h i n a a C h a l l e n g e " 2 9 2 , a n d Mok, R e v i e w , 1 2 0 .

3 9 ~ s a n g , C . , C h i n a ' s P o s t w a r M a r k e t s , 4.

4 0 ~ n 1 9 3 6 t h e U n i t e d S t a t e s consumed 25% o f C h i n a ' s e x p o r t s a n d t h e amount C h i n a i m p o r t e d f rom t h e U n i t e d S t a t e s came t o 1 9 3 o f t h e t o t a l . S e e C o n t e m p o r a r y C h i n a , "The - P r o m i s e o f t h e China M a r k e t , " 2 .

4 1 ~ s a n g , C e B 120. I n 1945 Chinese i m p o r t s f rom t h e U n i t e d S t a t e s c l i m b e d t o 57$ of t h e t o t a l wh ich was t h e h i g h e s t f o r t h e p o s t w a r p e r i o d . F o r a breakdown o f t r a d e b y c o u n t r y see U n i t e d S t a t e s Depar tment o f Commerce, "Economic Review o f China, 1947", I n t e r n a t i o n a l Re fe rence V , ( ~ o v e m b e r , 1948) , 5.

4 2 ~ o s i n g e r , L. "China a s a Pos twar Marke t , " 252-253. T h i s o b s e r v a t i o n i s a l s o f o u n d i n a B r o o k i n q s I n s t i t u t i o n s t u d y v ~ h i c h s t a t e d t h a t "The U n i t e d S t a t e s has c u s t o m a r i l c o u n t e d n o t so much upon t h e i r c u r r e n t v a l u e ( i n v e s t m e n t s a s on t h e i r v a l u e i n t h e l i g h t o f C h i n a ' s f u t u r e po ten - t i a l i t i e s . " See Leo Ps tovsky , M a j o r Problems o f U n i t e d S t a t e s F o r e i q n P o l i c y 1947 ( ~ a s h i n ~ t o n , 1947) , 209-210.

4 3 1 ' ~ h e Mar and Bus iness Abroad," Bus iness Yeek ( ~ e c e m b e r 9, 1944) , 112.

4 4 ~ n t h e c o n f l i c t t h a t e r u p t e d i n t h e l a t e 1940 ' s ove r Amer ican Ch ina p o l i c y , Luce s u p p o r t e d t h e Ch ina l o b b y and became v e r y c r i t i c a l o f Truman's d e c i s i o n t o ~ u i t h d r a w . Truman's r e l u c t a n c e t o become e m b r o i l e d i n t h e Ch inese C i v i l War meant t o Luce an a b n e g a t i o n o f "The Amer ican Century . " E c o n o m i c a l l y A s i a was v i t a l t o t h e f u l f i l l m e n t o f h i s c h e r i s h e d dream because " i t w i l l be w o r t h t o us e x a c t l y z e r o o r e l s e i t w i l l be wor th- t o u s f o u r , f i v e , t e n b i l l i o n s o f d o l l a r s a yea r . " Quoted i n J e r r I s r a e l , P r o g r e s s i v i s m and t h e Open Door ( P i t t s b u r g h , 1971r , 195. -

4 5 ~ h i t e , Theodore, "Ch ina ' s Postwar P l a n s , " F o r t u n e X X V I I I (Oc tobe r , 1943), 1956. Wh i te r e a l i z e d t h a t t h e r e wou ld be p o l i t i c a l p rob lems i n Ch ina a f t e r t h e war, b u t was on t h e whole o p t i m i s t i c a b o u t t h e f u t u r e .

4 6 ~ u a n o T a i Hu. " I n v e s t m e n t i n Ch ina ' s Pos twar Indus - t r y , " ~ a r v a r d ~ u s i n e s s Review X X I ( s p r i n g , l 9 4 3 ) , 309. See a l s o W i l l i a m Lockvrood. "Postr r~ar Trade R e l a t i o n s i n t h e F a r Eas t , " Amer ican ~ c o n o m i c Review, 33 (march, l 9 4 3 ) , 429.

47~ahm, H.S., " O p p o r t u n i t i e s i n Post-War China, " Fo rbes ( ~ o v e m b e r 15, 1943) , 12. A c c o r d i n g t o Kahm t h e U n i t e d S t a t e s wou ld s u p p l y Ch ina w i t h e v e r y t h i n g f r a m "can- openers t o l o c o m o t i v e s . " The m a r k e t i n g s t r a t e g y was q u i t e s i m p l e . China wou ld e x p o r t cheap commod i t i es t o t h e o r i e n t and raw m a t e r i a l s t o i n d u s t r i a l c o u n t r i e s and w i t h t h e f o r e i g n exchange i m p o r t Amer ican p r o d u c t s such as r e f r i g e r a - t o r s , a u t o m o b i l e s , a i r p l a n e s and r a d i o s . S i n c e t h i s

s i t u a t i o n wou ld l a s t f o r a number o f y e a r s , Kahm P e l t t h a t "Amer ican b u s i n e s s men w i l l have b e f o r e them some o f t h e most l u c r a t i v e o p p o r t u n i t i e s s i n c e t h e s e t t l e m e n t o f o u r own F a r West." F u r t h e r i n f o r m a t i o n on t h e o ~ o o r t u n i t i e s f o r American businessmen a r e d i s c u s s e d i n The ~ a i ' E a s t e r n Economic Review 1 ( ~ o v e m b e r 13, 1946) , 2; and S h i r l e y J e n k i n s , T r a d i n g ! ! l i t h A s i a (New York t Amer ican C o u n c i l , I n s t i t u t e o f ~ a c i f i c - i o n s , 1946) , 4-5,

4 8 ~ o c k e f e l l e r quo ted i n W i l l i a m Appleman W i l l i a m s , "The F r o n t i e r T h e s i s and Amer ican F o r e i g n P o l i c y , " P a c i f i c H i s t o r i c a l Review, 24 ( ~ u n e , 1955) , 394. A l t h o u g h n o t an o r i g i n a l concep t c o n c e i v e d by W i l l i a m s t h e " F r o n t i e r T h e s i s " appears i n much o f h i s w r i t i n g on Amer ican h i s t o r y . See, f o r example, The Con tou rs o f Amer ican H i s t o x ( c h i c a g o ,

, and ~ h e ~ r a ~ e d ~ o f Amer ican D ip lomacy ( ~ e w York,

4 9 ~ o r n e l l S . F r a n k l i n , " P r e s e n t a t i o n t o C h a r l e s K. Moser," P roceed inqs , T h i r t ~ - T ; ; r ~ ~ ~ N a t i o n a l -- F o r e i q n Trade -- Conven t ion , (Oc tober 22, 1947 C o r n e l l F r a n k l i n was Chairman o f t h e Shanaha i M u n i c i a a l C o u n c i l b e f o r e t h e war and i n 1945 became cha i rman o f t h e Ch ina Committee o f t h e NFTC i n Shanghai,

5 0 ~ i o n e l Na-x Chassin, The Communist Conquest o f Ch ina (Cambridge, Massachuset ts , 1965) , 111-156, See a l s o , John G i t t i n g s , The Ro le o f t h e Ch inese Army ( ~ e w York, 1967). 1-23,

5 1 ~ i a o Kai-Lung, From Yenan t o P e k i n q ( p a k i n g , 1954) , 64, A c c o r d i n q t o Communist s o u r c e s t h e N a t i o n a l i s t army s u f f e r e d overd700,000 c a s u a l t i e s between J u l y and ~ e c e m b e r o f 1947. T h i s p e r i o d was a t u r n i n g p o i n t i n t h e c i v i l war war and a f t e r December t h e Communist a r m i e s were c o n t i n u - o u s l y on t h e o f f e n s i v e .

5 2 ~ r o c e e d i n g s , T h i r t y - F i r s t N a t i o n a l --. F o r e i g n Trade Conven t ion (Oc tober 9, 1944) , x - x i . A c c o r d i n g t o t h e NFTC's o f f i c i a l s t a t e m e n t o f pu rpose "Membership is r e g a r d e d as a p u b l i c s e r v i c e on b e h a l f o f t h e n a t i o n ' s ove rseas t r a d e as a whole, p l a c i n g a t t h e d i s p o s a l o f t h e C o u n c i l t h e ma tu re e x p e r i e n c e , t e c h n i c a l knowledge and a d v i c e o f e x e c u t i v e s o f a l l b ranches o f i n d u s t r y and commerce t h a t r e l a t e t o i n t e r n a t i o n a l t r a d e . "

5 3 ~ a s l a n d , "Group i n t e r e s t s . . ." 14.

5 5 ~ r o c e e d i n g s , 1 9 4 4 N F T C , 1 8 9 . B u c k l e y ' s a n a l y s i s o f t h e p o t e n t i a l C h i n a t r a d e was q u i t e s t r a i g h t f o r w a r d . I n 1 9 3 7 t h e U n i t e d S t a t e s s o l d n i n e m i l l i o n t o n s o f com- m o d i t i e s t o J a p a n b u t a f t e r t h e war t h i s f i g u r e would b e s u b s t a n t i a l l y r e d u c e d . T h e r e f o r e , B u c k l e y c o n c l u d e d t h a t t o r e s t o r e t h e b a l a n c e o f A m e r i c a n commerce i n Asia "We s h a l l l o o k , t o my m i n d , t o o u r o l d f r i e n d C h i n a , t o a m a j o r e x t e n t . "

5 6 ~ o h n C a r t e r V i n c e n t , "Amer ican B u s i n e s s w i t h t h e F a r Eas t , " P r o c e e d i n ~ s , T h i r t y - T h i r d N a t i o n a l F o r e i q n T r a d e C o n v e n t i o n , (November 1 2 , 1 9 4 6 ) , 1 5 9 . C a r t e r was t h e Direc- t o r o f t h e o f f i c e o f F a r E a s t e r n A f f a i r s i n t h e S t a t e D e p a r t m e n t f rom 1 9 4 5 t o 1 9 4 7 w h i c h t o d a y i s known as t h e A s s i s t a n t S e c r e t a r y o f S t a t e f o r F a r E a s t e r n A f f a i r s , A f t e r 1 9 4 7 V i n c e n t was d e m o t e d t o a s e r i e s o f l e s se r p o s i t i o n s a n d f i n a l l y i n 1 9 5 3 was f o r c e d t o r e t i r e by S e c r e t a r y o f S t a t e , J o h n F o s t e r D u l l e s . F o r a n a c c o u n t o f h i s t e n u r e i n t h e S t a t e D e p a r t m e n t d u r i n g t h e C h i n e s e c i v i l war s e e R o s s T e r r i l l , " J o h n C a r t e r V i n c e n t a n d t h e A m e r i c a n ' l o s s ' o f C h i n a , " i n B r u c e D o u g l a s s a n d R o s s T e r r i l l , e d s . , C h i n a a n d O u r s e l v e s ( ~ o s t o n , 1 9 6 9 ) , 122-154 .

5 7 ~ r o c e e d i n q s , 1 9 4 4 NFTC, 1 9 2 .

5 9 ~ r o c e e d i n q s , 1 9 4 6 NFTC, 1 7 2 . C l a r e n c e G a u s s , t h e Ambassador t o C h i n a f rom 1 9 4 1 - 4 4 , was d e s c r i b e d by C h a i r m a n , W i l l i a m Hunt a s a s t a t e s m a n "who c h a m p i o n e d A m e r i c a n f o r e i g n t r a d e l i k e i t n e v e r had a c h a m p i o n b e f o r e , a n d l i k e i t n e v e r c a n h a v e a c h a m p i o n a g a i n . "

b ' ~ r o c e e d i n g s , 1 9 4 4 NFTC, 1 9 6 . B u s i n e s s m e n i n t h e p a s t h a v e o f t e n r a t i o n a l i z e d t h e i r c o m m e r c i a l a c t i v i t i e s , s t r e s s i n g - t h e s u p p o s e d b e n e f i t s b e s t o w e d on t h e h o s t c o u n t r y . I n t h e c a s e o f C h i n a , t h e " p r o g r e s s i v e " a s p e c t o f t h e e c o n o m i c r e l a t i o n s h i p was e s p o u s e d by b u s i n e s s m e n as e a r l y a s 1 9 0 0 . S e e , f o r e x a m p l e , I s r ae l , 3-30, a d G e r a l d M a r k o w i t z , " P r o g r e s s i v e I m p e r i a l i s r n r Conser i $ u s a n d C o n f l i c t i n t h e P r o g r e s s i v e Movement o n F o r e i g n P o l i c y , 1898-1917" (unpub- l i s h e d Ph.D. d i s s e r t a t i o n , U n i v e r s i t y o f W i s c o n s i n , 1971) ;

1 9 5 - 2 3 0 , I t seems, h o w e v e r , t h a t t h e e f f e c t s o f f o r e i g n b u s i n e s s m e n h a v e b e e n somewhat d e t r i m e n t a l t o t h e g r o w t h a n d p r o s p e r i t y o f t h e C h i n e s e n a t i o n - s t a t e i n t h e t w e n t i e t h c e n t u r y , a s t h e f o l l o w i n g s t u d i e s p o i n t o u t ; J o s e p h E s h e r i c k , " H a r v a r d on C h i n a ; The A p o l o g e t i c s o f I m p e r i a l - i s m , " B u l l e t i n o f C o n c e r n e d A s i a n S c h o l a r s , -- 4 ( ~ e c e m b e r , 1 9 7 2 ) , 9 -15 ; Hu S h e n g , I m p e r i a l i s m a n d C h i n e s e -- P o l i t i c s ( P e k i n g : F o r e i g n L a n g u a g e s P r e s s , 1 9 5 5 ) e

6 2 ~ a s l a n d , "Group i n t e r e s t s . . . " 6 3 .

6 3 ~ b i d . , - 13. Members o f t h e Board o f D i r e c t o r s i n c l u d e d r e p r e s e n t a t i v e s f r o m B r i s t o l - M y e r s , S t a n d a r d O i l o f C a l i f o r n i a , A m e r i c a n L o c o m o t i v e , I n t e r n a t i o n a l H a r v e s t o r , I n t e r n a t i o n a l G e n e r a l E l e c t r i c , t h e C h a s e Bank, a n d o t h e r s ,

6 4 ~ h e C h i n a Weekly R e v i e w , December 7 , 1 9 4 6 , 9 .

6 5 ~ e w York T i m e s , December 2 7 , 1 9 4 6 , 25 .

6 6 ~ e w York T i m e s , A p r i l 17 , 1 9 4 6 , 39.

67Plas land , .Group i n t e r e s t s . . ." 1 2 .

" u n i t e d s t a t e s D e p a r t m e n t o f Commerce, - The B u s i n e s s - m a n ' s B u r e a u by C o r r i e C l o y e s , Economic S e r i e s No, 4 9 I ~ a s h i n g t o n , D . C . r Government P r i n t i n g O f f i c e , 1 9 4 4 ) 29-44.

6 9 ~ e l v i l l e H. W a l k e r , " F a r E a s t e r n U n i t , " A m e r i c a n -

I m p o r t & E x p o r t B u l l e t i n (Play, 1 9 4 5 ) , 2 3 9 .

7 0 ~ m e r i c a n I m p o r t h E x p o r t B u l l e t i n , ( ~ e c e m b e r , l 9 4 5 ) , 7 7 4 .

7 1 ~ ~ r e l i m i n a r y d r a f t o f t h e Commerce t r e a t y is f o u n d i n ~ o r e i ~ n ~ e l a t i o n k o f t h e U n i t e d S t a t e s r D i p l o m a t i c P a p e r s , 1 9 4 5 . The F a r E a s t a n d C h i n a ( W a s h i n g t o n , D . C . ; Government P r i n t i n g O f f i c e , 1969),1258-1289.

7 2 ~ u o t e d i n M.E. O r l e a n , "The S i n o - A m e r i c a n C o m m e r c i a l T r e a t y o f 1 9 4 6 , " The F a r E a s t e r n Q u a r t e r l y , 7 ( ~ u g u s t , 1 9 4 8 ) , 3 5 4 , F o r t h e A m e r i c a n r e s p o n s e see C h a r l e s J. F o x , "The S i n o - A m e r i c a n T r e a t - I , " F a r E a s t e r n Surv9 ,y 1 6 ( ~ u n e 1 8 , 1 9 4 g e r n t c o n o m i c R e v i e w - 1 , (NOV- ember 18, 1 9 4 6 ) .

7 3 ~ ~ n F o , " C h i n a ' s P o s t w a r Economic P o l i c y .I1 Contern- p o r a r y C h i n a 4 ( ~ e c e m b e r 25 , 1 9 4 4 ) , 2 .

CHAPTER I1

N E W PERCEPTIONS A N D OLD REALITIES: THE RECONSIDERATION OF T H E CHINA M A R K E T A N D

POSSIBLE ALTERNATIVES, 1946-1949

Betmeen 1 9 4 3 a n d 1 9 4 5 A m e r i c a n b u s i n e s s m e n were c o l -

l e c t i v e l y o p t i m i s t i c a b o u t t h e p o t e n t i a l m a r k e t i n C h i n a

b u t by 1 9 4 6 , h o w e v e r , some d o u b t s w e r e e x p r e s s e d i n v a r i o u s

b u s i n e s s j o u r n a l s ; a n d , w i t h t h e t e r m i n a t i o n o f t h e M a r s h a l l

m i s s i o n i n J a n u a r y o f 1 9 4 7 , a mood o f d e s p a i r a n d d i s i l -

l u s i o n m e n t p r e v a i l e d . To e x p l a i n t h e s e new d e v e l o p m e n t s ,

t h r e e q u e s t i o n s c o n c e r n i n g t h e e v o l u t i o n o f S i n o - A m e r i c a n

e c o n o m i c r e l a t i o n s f r o m 1 9 4 7 t o 1 9 4 9 m u s t b e a n s w e r e d .

F i r s t , u h a t f a c t o r s c a n a c c o u n t f o r t h e c h a n g e i n a t t i t u d e

o f A m e r i c a n b u s i n e s s m e n t o w a r d s t h e C h i n a m a r k e t ? S e c o n d ,

w h a t were t h e a l t e r n a t i v e s o p e n t o b u s i n e s s m e n a n d t h i r d ,

w h i c h o n e s w e r e e v e n t u a l l y t a k e n ?

The p o s t w a r i n t e r l u d e f r o m t h e f a l l o f 1 9 4 5 t o e a r l y

1 9 4 7 c o u l d b e d e s c r i b e d a s a p e r i o d o f t r a n s i t i o n . A m e r i c a n

b u s i n e s s m e n i n c r e a s i n g l y d o u b t e d t h e f u t u r e o f C h i n a , a l -

t h o u g h t h e r e was some e v i d e n c e t h a t C h i n a ' s d o m e s t i c a n d

i n t e r n a t i o n a l p o s i t i o n was i m p r o v i n g . T h e s e g e n e r a l a n d

somewhat d e c e p t i v e i n d i c a t o r s k e p t A m e r i c a n b u s i n e s s m e n

i n t e r e s t e d i n C h i n a , b u t t h e i r u s e f u l n e s s was l i m i t e d .

60

I n t e r n a t i o n a l l y , C h i n a ' s s t a t u s i n c r e a s e d c o n s i d e r a b l y

when s h e became a member o f t h e U n i t e d N a t i o n s a n d o n e o f

t h e f i v e p e r m a n e n t members o f t h e S e c u r i t y C o u n c i l , I n

t h e o r y a t l e a s t , C h i n a was t o b e t r e a t e d a s a g r e a t power

i n t h e i n t e r n a t i o n a l p o l i t i c a l a r e n a , e v e n t h o u g h i n

r e a l i t y it was a t b e s t a weak m i d d l e power . D o m e s t i c a l l y ,

C h i a n g K a i - s h e k ' s p o s i t i o n was s t r e n g t h e n e d by t h e r e l a -

t i v e e c o n o m i c s t a b i l i t y , r e f l e c t e d i n t h e l e v e l l i n g o f t h e

i n f l a t i o n a r y c u r v e i n t h e summer o f 1 9 4 5 . l P r o s p e c t s f o r

t h e f u t u r e seemed h o p e f u l w i t h t h e r e t u r n o f t h e w e a l t h y

p r o v i n c e s a l o n g t h e c o a s t a n d t h e e s t a b l i s h m e n t o f i n t e r -

n a t i o n a l l i n e s o f c o m m u n i c a t i o n , F u r t h e r m o r e , J a p a n e s e

r e p a r a t i o n s would p r o v i d e t h e f o r e i g n e x c h a n g e n e e d e d t o

buy e q u i p m e n t f o r C h i n a ' s p o s t w a r r e c o n s t r u c t i o n . * On a

number o f o c c a s i o n s , Kuomin tang o f f i c i a l s a n n o u n c e d t h a t

t h e g o v e r n m e n t was c o m m i t t e d t o i m p l e m e n t i n g a p r o g r a m o f

r e f o r m a n d m o d e r n i z a t i o n w h i c h p r e s u m a b l y would u n d e r m i n e

t h e p r o g r a m o f t h e C o m m u n i s t s . Af ter r e t u r n i n g From a n

e c o n o m i c m i s s i o n on b e h a l f o f t h e A m e r i c a n g o v e r n m e n t ,

Edwin L o c k e , t h e f o r m e r V i c e - P r e s i d e n t o f t h e C h a s e -

M a n h a t t a n Bank , n o t e d t h a t t h e G e n e r a l i s s i m o h a d " i n d i c a t e d

h i s d e t e r m i n a t i o n t o b r i n g a b o u t t h e n e e d e d p o l i t i c a l r e f o r m s

i n C h i n a . n3 C h i a n g K a i - s h e k e v e n s e e m e d w i l l i n g t o d i s c u s s

t h e b a s i c i s s u e s o f c o n t e n t i o n . w i t h t h e Communis t s a n d

i n v i t e d Mao T s e - t u n g t o C h u n g k i n g i n t h e summer o f 1945.

On t h e s u r f a c e a t l e a s t , t hese p o l i t i c a l and economic

developments seemed t o i n d i c a t e t h a t i n t e r n a l s t a b i l i t y

was a d i s t i n c t p o s s i b i l i t y i n t h e immediate f u t u r e .

The r a p i d g rowth i n t h e volume o f American t r a d e w i t h

Ch ina f rom 1945 t o 1946 was a d d i t i o n a l ev idence t h a t t h e

e x p e c t a t i o n s o f businessmen were b e i n g p a r t l y r ea l 9zed .

I n 1946 American commerc ia l e x p o r t s t o China amounted t o

$297 m i l l i o n , t h a t sompared t o t h e average f o r t h e decade

b e f o r e t h e war o f $43.7 m i l l i o n was an i n c r e a s e o f 580

pe rcen t . There were s u b s t a n t i a l i n c r e a s e s i n a lmos t eve ry

c a t e g o r y o f s x p o r t s , t h e most i m p o r t a n t b e i n g c o t t o n , g r a i n ,

f a rm machinery and f o r e s t p roduc t s . 4

For t h e Chinese, on t h e o t h e r hand, t h e f o r e i g n t r a d e

p i c t u r e was n o t as b r i g h t . I n 1946, American i m p o r t s f r om

China came t o 892.7 m i l l i o n a g a i n s t a t e n year prewar

average o f $17 m i l l i o n , wh ich was an i n c r e a s e o f o n l y 32

pe rcen t . I n o t h e r words, t h e U n i t e d S t a t e s had a f a v o u r -

a b l e ba lance o f t r a d e w i t h Ch ina amount ing t o $204.3

m i l l i o n , t h e r e v e r s e o f t h e prewar s i t u e t i ~ n . ~ The reason

f o r t h e l a r g e pos twar d e f i c i t was an abno rma l l y h i g h demand

f o r f o r e i g n commodi t ies because o f t h e d e s t r u c t i o n o f i ndus -

t r y d u r i n g t h e war and t h e i m p o r t o f m i l i t a r y s u p p l i e s

t o f i g h t t h e Communists. I n 1947, much t o t h e d i s a p p o i n t -

ment o f American businessmen, t h e Kuomintang government

imposed r e s t r i c t i o n s t h a t l e d t o a more f a v o r a b l e ba lance

6 2

o f t r a d e .

T r a d e f i g u r e s a r e s o m e t i m e s d e c e p t i v e a n d C h i n a was a

g o o d e x a m p l e o f t h i s . Compared t o t r a d e w i t h o t h e r a r e a s o f

t h e w o r l d , E u r o p e , C a n a d a , a n d L a t i n A m e r i c a , t h e C h i n a

t r a d e was r e l a t i v e l y i n s i g n i f i c a n t . C o m m e r c i a l e x p o r t s t o

t h a t c o u n t r y f r o m t h e U n i t e d S t a t e s i n t h e i m m e d i a t e p o s t -

war p e r i o d n e v e r a m o u n t e d t o more t h a n f i v e p e r c e n t o f t h e

t o t a l , Of t h i s s m a l l vo lume o f t r a d e , o n l y 3.7 p e r c e n t o f

t h e t o t a l was i n c a s h s a l e s , t h e res t b e i n g o n c r e d i t . 6

I f a t r a n s a c t i o n was made i n cash i t was f r o m t h e C h i n e s e

f o r e i g n e x c h a n g e r e s e r v e s t h a t w e r e b u i l t u p by a s e r i e s of

l o a n s f r o m t h e A m e r i c a n g o v e r n m e n t . The U n i t e d S t a t e s a l s o

g r a n t e d c r e d i t f o r p u r c h a s e s n o t made i n c a s h , a p o l i c y some-

wha t s imilar t o l e n d - l e a s e d u r i n g t h e war. I n o t h e r w o r d s ,

t h e U n i t e d s t a t e s g o v e r n m e n t was a c t u a l l y s t i m u l a t i n g t h e

e x p o r t m a r k e t f o r b u s i n e s s m e n by f i n a n c i n g C h i n a ' s i m p o r t s ,

an a r r a n g e m e n t n o t u n l i k e t h e o n e w i t h E u r o p e a n c o u n t r i e s ,

B u t , unknown t o e c o n o m i c p l a n n e r s a t t h e time, E u r o p e a n

r e c o v e r y was t o a d v a n c e i n a f a v o u r a b l e d i r e c t i o n , w h e r e a s ,

t h e e c o n o m i c s i t u a t i o n i n C h i n a was s t e a d i l y d e t e r i o r a t i n g .

Most o f t h e t r a d e w i t h C h i n a came u n d e r t h e c a t e g o r y

o f c o m m e r c i a l i m p o r t s , b u t , a s u b s t a n t i a l p e r c e n t a g e a l s o

d e r i v e d f r o m U n i t e d N a t i o n s r e l i e f . I n 1 9 4 6 a n d 1 9 4 7 ,

C h i n a ' s t o t a l c o m m e r c i a l i m p o r t s a m o u n t e d t o $ 1 , 0 1 1 . 6

m i l l i o n , w h i l e a g g r e g a t e U N R R A s u p p l i e s came t o n e a r l y

o n e - t h i r d o f t h i s a m o u n t , t h e a c t u a l v a l u e b e i n g 9313.1

m i l l i o n . A l a r g e p r o p o r t i o n o f U & R A r e l i e f c o n s i s t i n g

o f d a i l y n e c e s s i t i e s s u c h a s r i c e , w h e a t , f l o u r , t e x t i l e

p r o d u c t s , m e d i c a l p r o v i s i o n s , came f r o m t h e U n i t e d S t a t e s . 7

B u s i n e s s m e n , o f c o u r s e , d i d n o t t a k e i s s u e w i t h t h e A m e r i c a n

g o v e r n m e n t ' s a i d p o l i c i e s , s i n c e t h e y w e r e u l t i m a t e l y r e s -

p o n s i b l e f o r p r o d u c i n g r e l i e f c o m m o d i t i e s , b u t , if a s u c -

c e s s f u l e c o n o m i c r e l a t i o n s h i p w i t h C h i n a was t o b e d e v e l o p e d

o v e r a l o n g p e r i o d , g r o w t h w i t h i n t h e C h i n e s e economy was

t h e n e c e s s a r y p r e r e q u i s i t e . A s o n e b u s i n e s s j o u r n a l p u t i t ,

" w i t h o u t an economy c r e a t i n g w e a l t h a n d p u r c h a s i n g p o w e r ,

t h e g r e a t C h i n a m a r k e t i s a ~ e r n i - r n ~ t h . " ~ As t h e h i s t o r y o f

t h e p o s t w a r d e v e l o p m e n t o f J a p a n , Germany , a n d C a n a d a h a s

d e m o n s t r a t e d , e c o n o m i c g r o w t h i s t h e s i n e q u a n o n o f a

s u c c e s s f u l l o n g - t e r m m a r k e t . R e l y i n g o n l o a n s a n d f o r e i g n

a i d i s n o t a l w a y s t h e m o s t r e w a r d i n g a p p r o a c h t o s t i m u l a t i n g

f o r e i g n e x p o r t s a n d i t was u n f o r t u n a t e f o r A m e r i c a n corn-

m e r c i a l m a g n a t e s t h a t t h e y c o u l d n o t f o r e s e e t h e t e r m i n a -

t i o n o f t h e U N R R A p r o g r a m i n 1 9 4 7 . 9

To some b u s i n e s s m e n , e s p e c i a l l y t h o s e a s s o c i a t e d w i t h C A C C T

a n d t h e NFTC, t h e f i g u r e s f o r p o s t w a r t r a d e i n d i c a t e d t h a t

t h e C h i n a m a r k e t was e x p a n d i n g i n 1 9 4 6 a n d t h e y were q u i t e

p l e a s e d w i t h t h e t r e n d . T r a d e h a d m o r e t h a n d o u b l e d a n d

o v e r o n e h u n d r e d c o r p o r a t i o n s h a d e s t a b l i s h e d b r a n c h e s o r

r e p r e s e n t a t i v e s i n C h i n a . I n a n a d d r e s s t o a 1 9 4 6 C A C C I

c o n v e n t i o n , A r t h u r F o y e r e p o r t e d t h a t t h e v o l u m e o f b u s i -

n e s s was b e y o n d a l l e x p e c t a t i o n s a n d t h a t p r o s p e c t s f o r

t h e f u t u r e w e r e g o o d , 10 F o y e r e c o g n i z e d t h a t t h e r e w e r e

p o l i t i c a l d i f f i c u l t i e s b u t t h e i m p r o v e m e n t o f t r a d e r e g u l a -

t i o n s was n o t c o n t i n g e n t o n t h e e s t a b l i s h m e n t o f c o m p l e t e

p o l i t i c a l u n i t y . I n f a c t , o n e b u s i n e s s j o u r n a l e m p h a s i z e d

i n a n e d i t o r i a l , t h e p o s s i b i l i t y o f a s u c c e s s f u l u n i f i c a -

t i o n o f t h e c o u n t r y by m i l i t a r y f o r c e s , T h r o u g h o u t t h e

f a l l o f 1 9 4 6 , C h i a n g K a i - s h e k l a u n c h e d a s e r i e s o f cam-

p a i g n s a g a i n s t t h e C o m m u n i s t s t h a t s e e m e d t o b e s u c c e s s f u l

a t t h e time b u t l a t e r p r o v e d t o b e a t r a g i c b l u n d e r , As t h e

p r o s p e c t s f o r c o n t i n u e d c i v i l war i n c r e a s e d , it b e c a m e c l e a r

t h a t m i l i t a r i l y a n d e c o n o m i c a l l y , t h e C h i a n g K a i - s h e k r e g i m e

w a s i n c a p a b l e o f p r o v i d i n g a s o l u t i o n t o t h e p r o b l e m s c o n -

f r o n t i n g t h e c o u n t r y .

I n 1946, t h e c o n s e n s u s i n t h e c o r p o r a t e l i b e r a l s e c t o r o f

t h e b u s i n e s s c o m m u n i t y o n t h e i s s u e o f p o s t w a r e c o n o m i c r e l a -

t i o n s w i t h C h i n a b e g a n t o d i s s o l v e . Some b u s i n e s s j o u r n a l s were

b e c o m i n g i n c r e a s i n g l y p e s s i m i s t i c a b o u t p o s t w a r d e v e l o p m e n t s i n

C h i n a a n d o f t e n t o o k i s s u e w i t h t h e u n r e s t r a i n e d e n t h u s i a s m o f

o f f i c i a l s l i k e A r t h u r F o y e . T h e C h i n a N e e k l y R e v i e w was o n e e c o -

n o m i c n e w s l e t t e r t h a t Mas c r i t i c a l o f t h o s e b u s i n e s s m e n who d i d

n o t k e e p i n t o u c h w i t h p o l i t i c a l a n d e c o n o m i c d e v e l o p m e n t s ,

p a r t i c u l a r l y i n t h e c i v i l war. One e d i t o r i a l was u n u s u a l l y

c r i t i c a l o f t h e t r a d e p r o m o t i o n a l a c t i v i t i e s o f C A C C I , "So

f a r t h e C o u n c i l has s t u b b o r n l y and s t u p i d l y r e f u s e d t o

r ecogn i ze t h e e s s e n t i a l f a c t t h a t China i s today comp le te l y

i ncapab le o f b e i n g e i t h e r a market f o r , o r a s u p p l i e r o f

a n y t h i n g i n wo r thwh i l e q u a n t i t i e s . " Other j o u r n a l s such

as Business Week were a l s o l e s s t han o p t i m i s t i c . The

j o u r n a l was conv inced t h a t bus iness t r a n s a c t i o n s c o u l d n o t

be c a r r i e d o u t i n an env i ronment o f u n c o n t r o l l e d i n f l a t i o n ,

c o r r u p t i o n , and extreme n a t i o n a l i s m . l3 Given these con-

d i t i o n s t h e o b s e r v a t i o n of R a n d a l l Gould i n t h e j o u r n a l

Bank ing i s n o t s u r p r i s i n g . Gould asked "American banks

i n Shanghai a r e open f o r bus iness , b u t j u s t where i s t h e

bus iness? That q u e s t i o n f i n d s no easy answer e i t h e r i n

t h e immediate s i t u a t i o n o r f u t u r e p rospec t s . B u t l i k e

every o t h e r f o r e i g n i n t e r e s t he re , t h e bankers a r e keep ing

s t i f f upper l i p s and hop ing f o r t h e bes t . *,I4

Up t o 1946, many businessmen assumed t h a t t h e cessa-

t i o n o f h o s t i l i t i e s i n t h e P a c i f i c would a l l o w China t o

proceed w i t h Chiang Ka i -shek 's p l a n s f o r i n d u s t r i a l i z a t i o n .

But i n 1946, those j o u r n a l s t h a t were unsympathet ic t o

Kuomintang p o l i c i e s came t o t h e c o n c l u s i o n t h a t t h e f a i l u r e

t o r e s o l v e t h e c e n t r a l i s s u e s of c o n t e n t i o n between t h e

Communists and t h e Kuomintang was t h e major reason f o r t h e

s t a g n a t i n g economy. One bus iness j o u r n a l p o i n t e d o u t t h a t

i f t h e g o v e r n m e n t p r o c e e d e d t o m o b i l i z e f o r c i v i l war a n d

c o n t i n u e d w i t h t h e p o l i c y o f d e f i c i t s p e n d i n g , t h e r e would

be n o h o p e f o r t h e f u t u r e o f c h i n a . 1 5 A n o t h e r j o u r n a l

r e p o r t e d t h a t , by t h e f a l l o f 1 9 4 6 , t h e c i v i l war was

more w i d e s p r e a d t h a n b e f o r e t h e J a p a n e s e i n v a s i o n a n d was

s e r i o u s l y i m p e d i n g t h e r e c o v e r y o f t h e c o u n t r y ' s d o m e s t i c

economy a n d f o r e i g n t r a d e . l6 I n December o f 1 9 4 6 , t h e - F a r

E a s t e r n Economic Rev iew p e r c e p t i v e l y s u m m a r i z e d t h e c o n -

s e q u e n c e s f o r C h i n e s e e c o n o m i c d e v e l o p m e n t i f t h e c i v i l

war c o n t i n u e d u n a b a t e d ,

I f t h e c i v i l war i s c o n t i n u e d , t h e r e i s n o p r o s p e c t f o r d e v e l o p m e n t i n C h i n a . Government e x p e n d i t u r e s w i l l r i s e , i n f l a t i o n w i l l i n c r e a s e , s p e c u l a t i o n w i l l c o n t i n u e a n d p o l i t i c a l s t r i f e w i l l w i d e n a s e c o n o m i c s t a g n a t i o n g r i p s more a n d more o f t h e c o u n t r y . O r d e r u n d e r t h e s e ' c i r c u m s t a n c e s c a n b e m a i n t a i n e d o n l y by k e e p i n g C h i n a a n a r m e d camp w i t h Kuomin tang t r o o p s s p r e a d t h r o u g h o u t t h e l a n d , p a r a s i t i c a l l y c o n s u m i n g more a n d more o f C h i n a ' s w e a l t h . 1 7

The C h i n e s e c i v i l war h a d b e e n f o u g h t a l m o s t c o n t i n u -

o u s l y s i n c e t h e a t t e m p t b y C h i a n g K a i - s h e k t o l i q u i d a t e

t h e Communist f a c t i o n i n t h e Kuomin tang i n 1 9 2 7 . When

J a p a n i n c o r p o r a t e d C h i n a i n t o i t s Greater E a s t Asia Co-

P r o s p e r i t y S p h e r e , t h e Communis t s a n d t h e Kuomin tang

b r i e f l y s u s p e n d e d t h e c i v i l war a n d f o r m e d a U n i t e d

F r o n t , R e l a t i o n s b e t w e e n t h e KMT a n d t h e CCP r e m a i n e d

c o o l b e c a u s e t h e a l l i a n c e was l i t t l e more t h a n a n a r m e d ,

t r u c e a n d t h e p o l i t i c a l d i f f e r e n c e s b e t w e e n t h e two g r o u p s

r e m a i n e d u n r e s o l v e d a t t h e e n d o f t h e war w i t h J a p a n i n

1 9 4 5 . la D u r i n g t h e war t h e Communis t s h a d g r e a t l y e x p a n d e d

t h e i r m i l i t a r y a n d p o l i t i c a l b a s e a n d r e f u s e d t o d e m o b i l i z e

u n t i l a p o l i t i c a l s e t t l e m e n t c o u l d b e r e a c h e d w i t h t h e

Kuomin tang . A m e r i c a n b u s i n e s s m e n l o o k e d f o r w a r d t o t h e

s e t t l e m e n t of t h e p o l i t i c a l d i s p u t e s i n C h i n a a n d when Mao

went t o C h u n g k i n g i n A u g u s t 1 9 4 5 t h e p r o s p e c t s f o r p o l i t i c a l

u n i t y seemed p r o m i s i n g , Vhen t h e n e g o t i a t i o n s were s u s p e n d e d

i n O c t o b e r , t h e E c o n o m i s t c o n c l u d e d t h a t v e r y l i t t l e h a d

b e e n a c c o m p l i s h e d , l9 No a g r e e m e n t b e t w e e n t h e two s i d e s

h a d b e e n r e a c h e d on t h e c r u c i a l i s s u e s o f c o n t r o l o f t h e

army a n d a d m i n i s t r a t i o n o f l i b e r a t e d a r e a s . I t was h o p e d

t h a t t h e i n t e r v e n t i o n o f a t h i r d p a r t y , t h e U n i t e d S t a t e s ,

wou ld h e l p t o b r i n g a b o u t a p e a c e f u l s e t t l e m e n t o f t h e

l e n g t h y c i v i l war.

On December 25, 1 9 4 5 P r e s i d e n t Truman s e n t G e o r g e

M a r s h a l l t o C h i n a t o n e g o t i a t e a p e a c e f u l s e t t l e m e n t t o

t h e c i v i l war. A c c o r d i n g t o J o h n C a r t e r V i n c e n t , t h e

D i r e c t o r o f t h e Office o f F a r E a s t e r n A f f a i r s i n t h e

D e p a r t m e n t o f S t a t e , t h e p u r p o s e o f t h e m i s s i o n was t o s e e k

"a p o l i t i c a l s e t t l e m e n t t h a t would r e s u l t i n a c e s s a t i o n o f

c i v i l s t r i f e a n d make p o s s i b l e a r e v i v a l of e c o n o m i c

a c t i v i t y . "'O I t was t h e v i e w o f A m e r i c a n S t a t e D e p a r t m e n t

o f f i c i a l s t h a t p o l i t i c a l s t a b i l i t y was a p r e r e q u i s i t 6 ) f o r a

p r o f i t a b l e e c o n o m i c r e l a t i o n s h i p b e t w e e n t h e U n i t e d S t a t e s

a n d C h i n a . T h i s p o s i t i o n was , o f c o u r s e , a r d e n t l y s u p p o r t e d

by b u s i n e s s m e n a s w e l l . F o r e x a m p l e , o n e B u s i n e s s Week

e d i t o r i a l c o m ~ e n d e d M a r s h a l l f o r h i s e f f o r t s a n d r e a f f i r m e d

t h e i m p o r t a n c e o f t h e b u s i n e s s m e n i n t e r e s t e d i n t r a d e w i t h

t h e F a r E a s t . 21 A l t h o u g h t h e N a r s h a l l m i s s i o n a c h i e v e d

some i n i t i a l s u c c e s s e s , i t was t e r m i n a t e d i n J a n u a r y o f

1 9 4 7 , S e c a v s e b o t h p a r t i e s r e f u s e d t o c o m p r o m i s e a n d s e t t l e

t h e i r d i s p u t e s a t t h e n e g o t i a t i n g t a b l e . I n s t e a d , by t h e

f a l l o f 1 9 4 6 , i t a p p e a r e d t h a t t h e d i f f e r e n c e s b e t w e e n t h e

Communis t s a n d t h e K u o m i n t a n g would b e s e t t l e d o n t h e

b a t t l e f i e l d . 22

G e n e r a l l y , t h e C i v i l \!Jar f u r t h e r w e a k e n e d t h e d o m e s t i c

econamy, t h u s r e t a r d i n g t h e g r o w t h o f a p r o f i t a b l e C h i n a

m a r k e t . C h i a n g K a i - s h e k , t h r o u g h h i s f u t i l e a t t e m p t s t o

e x e c u t e a m a s s i v e c o u n t e r - r e v o l u t i o n a r y m i l i t a r y o f f e n s i v e ,

a c c e l e r a t e d t h e e x i s t i n g r a m p a n t i n f l a t i o n a n d d i v e r t e d

money f r o m p r o g r a m s e s s e n t i a l t o i n d u s t r i a l i z a t i o n . The

f a i l u r e t o i m p l e m e n t h i s p l a n f o r i n d u s t r i a l i z a t i o n a d d e d

t o t h e s o c i a l d i s l o c a t i o n a n d d i s i l l u s i o n m e n t o f t h e C h i n e s e

p o p u l a t i o n a t l a r g e . T h i s a p p l i e d p a r t i c u l a r l y t o t h e

p e a s a n t s , f o r whom a n i m p r o v e m e n t i n t h e s t a n d a r d of l i v i n g

was e s s e n t i a l f o r them t o become c o n s u m e r s of A m e r i c a n com-

m o d i t i e s . I t was i r o n i c a l f o r b u s i n e s s m e n t h a t t h i s s i t u a - 6

t i o n was r e a l i z e d when t h e u n r e s t r i c t e d Open Door p o l i c y was

removed by t h e Communis t s . A m e r i c a n b u s i n e s s m e n f a i l e d t o

u n d e r s t a n d t h a t a p p r o x i m a t e l y 80% o f C h i n a ' s p o p u l a t i o n

were p e a s a n t s who had l i t t l e o r no s a v i n g s t o buy Amer ican

p r o d u c t s . O t h e r s e c t o r s o f t h e s o c i e t y s u c h a s t h e i n t e l -

l e c t u a l s , c i v i l s e r v a n t s , a n d s m a l l s h o p k e e p e r s f o u n d them-

s e l v e s i n a s i m i l a r p o s i t i o n a s t h e p e a s a n t s , b e c a u s e of

t h e h i g h r a t e o f t a x a t i o n . 2 3 The small p e r c e n t a g e o f t h e

p o p u l a t i o n t h a t c o u l d a f f o r d t o buy A m e r i c a n i m p o r t s w e r e

Kuomin tang o f f i c i a l s a n d w e a l t h y b u s i n e s s m e n . T h e i r demands

w e r e l i m i t e d t o l u x u r y g o o d s r a t h e r t h a n t h e m a s s consumer

c o m m o d i t i e s f o r ~ h i c h A m e r i c a n b u s i n e s s m e n h o p e d t o f i n d

a m a r k e t ,

Wi th t h e i n c r e a s e i n Communist c o n t r o l l e d t e r r i t o r y ,

t h e r e was a c o r r e s p o n d i n g d e c r e a s e i n t h e s i z e o f t h e C h i n a

m a r k e t , Of c o u r s e , t h e Communis t s h a d e n g a g e d i n l i m i t e d t r a d e

w i t h Amer ican b u s i n e s s m e n b u t t h e r e a l p r o b l e m l a y i n t h e d i s -

r u p t i o n o f n o r m a l t r a d i n g p a t t e r n s w i t h i n C h i n a . T r a d i t i o n a l l y ,

t h e f u n c t i o n i n g o f t h e C h i n e s e e c o n o m i c s y s t e m d e p e n d e d on t h e

m a i n t e n a n c e o f a v i a b l e c o m m u n i c a t i o n s y s t e m b e t w e e n t h e a g r i -

c u l t u r a l h i n t e r l a n d a n d t h e c o m m e r c i a l c e n t e r s on t h e c o a s t .

When t h e f l o w o f c o m m o d i t i e s was i n t e r r u p t e d , t w o u n d e s i r a b l e

e f f e c t s were p r o d u c e d . F i r s t t h e m a n u f a c t u r i n g c e n t e r s w e r e

f o r c e d t o i m p o r t f o o d s t u f f s a n d c o a l w h i c h s e r i o u s l y d r a i n e d t h e

a l r e a d y m e a g e r f o r e i g n e x c h a n g e r e s e r v e s a n d i n c r e a s e d t h e

e n o r m o u s b a l a n c e o f t r a d e d e f i c i t . S e c o n d , v i t a l r a w

m a t e r i a l s s u c h a s t u n g s t e n a n d a n t i m o n y l o c a t e d i n Communist

c o n t r o l l e d t e r r i t o r y w e r e n o t a v a i l a b l e f o r e x p o r t a n d t h i s

f u r t h e r c o m p l i c a t e d t h e b a l a n c e o f t r a d e p r o b l e m , The h i n t e r -

l a n d became i n c r e a s i n g l y s e l f s u f f i c i e n t a n d i t s m a r k e t

p o t e n t i a l t o t h e p r i m a r y i n d u s t r i a l c e n t e r s , a s w e l l a s t o

f o r e i g n m a n u f a c t u r e r s , d e c r e a s e d a c c o r d i n g l y .

Not o n l y d i d t h e C i v i l War r e s t r i c t t h e g e o g r a p h i c s i z e

o f t h e C h i n a m a r k e t , i t a l s o r e d u c e d t h e volume o f t r a d e ,

p a r t l y b e c a u s e o f t h e r a m p a n t i n f l a t i o n . The i n f l a t i o n i n

C h i n a , t h e l o n g e s t o f a n y c o u n t r y i n t h e t w e n t i e t h c e n t u r y ,

o c c u r r e d o v e r a p e r i o d o f t w e l v e y e a r s , f r o m 1 9 3 7 t o 1 9 4 9 .

D u r i n g t h e w a r , t h e g o v e r n m e n t a t t e m p t e d m o n e t a r y c o n t r o l s

b u t p r i c e s d i d n o t r e m a i n s t a b l e , T a k i n g w h o l e s a l e p r i c e s

i n 1 9 3 7 a s b e i n g t h e e q u i v a l e n t of 1 0 0 , t h e y h a d m u l t i p l i e d

t o 1 5 8 , 3 6 2 by 1 9 4 5 . The i n a b i l i t y t o c o n t r o l i n f l a t i o n

d u r i n g t h e war was t h e r e s u l t o f J a p a n e s e e c o n o m i c b l o c k a d e ,

t h e c o l l a p s e o f i n e f f i c i e n t m a r k e t o r g a n i z a t i o n s , a n d t h e

i n e p t i t u d e o f t h e C h i a n g K a i - s h e k g o v e r n m e n t . Government

o u t l a y s i n c r e a s e d a s t r o n o m i c a l l y d u r i n g t h e war b u t n o

a t t e m p t was made t o o f f s e t t h e c o n s e q u e n c e s o f t h e s e h i g h

e x p e n d i t u r e s by h i g h e r t a x a t i o n . The U n i t e d S t a t e s

a t t e m p t e d a p a r t i a l s o l u t i o n by i n f u s i n g m a s s i v e q u a n t i t i e s

o f f o r e i g n e x c h a n g e i n t o t h e C h i n e s e economy; b u t t h i s was

l e s s t h a n s u c c e s s f u l . 2 4

I n t h e p o s t w a r p e r i o d m o s t e c o n o m i c o b s e r v e r s a g r e e d

7 1

t h a t i t was t h e c o n t i n u a t i o n o f t h e C i v i l !l!ar which a c c e l e r a t e d

t h e a l r e a d y h i g h r a t e o f i n f l a t i o n . 25 T h i s i n f l a t i o n i n t u r n

p r o d u c e d a number o f u n d e s i r a b l e e f f e c t s , o n e o f them b e i n g

t h e restriction o f t r a d e w i t h t h e U n i t e d S t a t e s . One r e a s o n

f o r t h i s was t h e c o n s t a n t d e v a l u a t i o n o f t h e C h i n e s e d o l l a r

i n r e l a t i o n t o t h e A m e r i c a n . A s a r e s u l t , i t was d i f f i c u l t

t o m a r k e t A m e r i c a n c o m m o d i t i e s b e c a u s e o f t h e i r h i g h r e t a i l

c o s t s . S e c o n d , t h e p r o d u c t i v e c a p a c i t y o f C h i n e s e p r i m a r y

a n d s e c o n d a r y i n d u s t r i e s was s e r i o u s l y c u r t a i l e d s o t h a t

t h e r e were n o s u r p l u s e s a v a i l a b l e f o r e x p o r t . E x p o r t s o f

C h i n e s e raw mater ia ls a n d l o w p r i c e d m a n u f a c t u r e d c o m m o d i t i e s

were e s s e n t i a l t o a c c u m u l a t e t h e f o r e i g n e x c h a n g e n e c e s s a r y

f o r t r a d e . F i n a l l y , t h e u n c o n t r o l l e d i n f l a t i o n w i p e d o u t

t h e s a v i n g s of t h e C h i n e s e m i d d l e c l a s s b e c a u s e m o s t o f t h e

p e o p l e i n t h a t c a t e g o r y , s u c h as t e a c h e r s a n d c i v i l s e r v a n t s ,

were o n f i x e d i n c o m e s . The U n i t e d S t a t e s h a s managed t o

d e v e l o p a l u c r a t i v e f o r e i g n t r a d e w i t h o t h e r c o u n t r i e s

h a v i n g g o v e r n m e n t s a s c o n s e r v a t i v e as C h i n a ' s b e c a u s e t h e

m i d d l e c l a s s , s m a l l as i t may b e , h a s r e m a i n e d e c o n o m i c a l l y

v i a b l e , S p a i n a n d B r a z i l a r e two o f many e x a m p l e s o f w h e r e

t h e m i d d l e c l a s s h a s b e e n a n o u t l e t f o r A m e r i c a n s u r p l u s

p r o d u c t i o n i n t h e p o s t w a r p e r i o d .

T h r o u g h o u t 1 9 4 7 a n d 1 9 4 8 , t h e i n f l a t i o n f u r t h e r

a c c e l e r a t e d a n d t h e p r o s p e c t s f o r e c o n o m i c s t a b i l i t y i n t h e

f u t u r e were dim. The i n f l a t i o n became s o s e r i o u s t h a t t h e

7 2

Kuomin tang r e s o r t e d t o d r a s t i c m e a s u r e s t o c o n t r o l i t .

S t r i n g e n t c u r r e n c y c o n t r o l s were e n a c t e d a l o n g w i t h a s h a r p

r e d u c t i o n i n i m p o r t s . i n 1 9 4 7 a n d 1 9 4 8 , T h e r e were s u b -

s t a n t i a l c u t b a c k s i n a l l a r e a s f r o m m a n u f a c t u r e d g o o d s t o

r a w m a t e r i a l s , a n d t h e s e c u t b a c k s w e r e m o s t l y t h o s e i t e m s

i m p o r t e d f r o m t h e U n i t e d S t a t e s . I n 1 9 4 8 i m p o r t s o f c r u d e

o i l d e c r e a s e d 38% o v e r t h e p r e v i o u s yea r , p u l p a n d p a p e r

i m p o r t s were r e d u c e d 7 . 7 % , a n d raw c o t t o n i m p o r t e d were down

~ 6 % ~ ' ~ The c o n t r o l s were l a r g e l y f u t i l e b e c a u s e t h e r a t e

of i n f l a t i o n c o n t i n u e d t o i n c r e a s e d u r i n g t h e p e r i o d i n

w h i c h t h e y w e r e s u p p o s e d t o t a k e e f f e c t . G i v e n 1 9 3 7 as

b e i n g t h e e q u i v a l e n t t o o n e , w h o l e s a l e p r i c e s i n S h a n g h a i

c l i m b e d t o 3 , 7 2 4 i n 1 9 4 6 . More t h a n two y e a t e r s l a t e r i n

A u g u s t o f 1 9 4 8 , w h o l e s a l e p r i c e s r e a c h e d 4 , 7 2 1 , 0 0 0 . 2 7

The u n s t a b l e e c o n o m i c c o n d i t i o n s o f t e n p r o d u c e d l a b o r

u n r e s t s u c h as o c c u r r e d i n S h a n g h a i i n 1 9 4 7 a n d 1 9 4 8 . T h i s

c i t y , t h e m o s t w e s t e r n i z e d i n C h i n a , uJas t h e c e n t e r f o r

commerce w h e r e a p p r o x i m a t e l y 70 p e r c e n t o f t h e c o u n t r y ' s

e x p o r t s a n d 80 p e r c e n t o f t h e i m p o r t t r a d e was c o n d u c t e d .

S h a n g h a i was a l s o t h e c e n t e r f o r A m e r i c a n e c o n o m i c a c t i v i t i e s

s u c h a s b a n k i n g a n d o f f e r e d a t t r a c t i v e i n v e s t m e n t o p p o r -

t u n i t i e s , ~ ~ it was i m p o r t a n t t h a t l a b o r r e l a t i o n s r e m a i n e d 0

s t a b l e , Compared t o t h o s e i n o t h e r u r b a n a reas , w o r k e r s i n

S h a n g h a i h a d a r e l a t i v e l y h i g h s t a n d a r d o f l i v i n g , b u t t h e

p e r i o d o f r a p i d i n f l a t i o n a f t e r t h e S e c o n d World War p r o d u c e d

a n a t m o s p h e r e o f a p p r e h e n s i o n a n d u n c e r t a i n t y . S h a n g h a i

was o n e u r b a n m e t r o p o l i s w h e r e t h e i n d u s t r i a l p r o l e t a r i a t

was wel l o r g a n i z e d i n t o u n i o n s a n d was c o m m i t t e d t o k e e p i n g

wage l e v e l s i n l i n e w i t h i n f l a t i o n . S t r i k e s would

f r e q u e n t l y p a r a l y s e t h e c o m m e r c i a l a c t i v i t y a t t h e water-

f r o n t , r e s u l t i n g i n e n o r m o u s t i e u p s f o r A m e r i c a n e x p o r t e r s .

One b u s i n e s s j o u r n a l i n 1 9 4 6 p r o p h e t i c a l l y u a r n e d o f impend-

i n g l a b o r s t r i f e if c o n d i t i o n s w e r e n o t c h a n g e d .

U n l e s s f u n d a m e n t a l c o n d i t i o n s c h a n g e i n S h a n g h a i t h e l a t e n t c i v i l war mood w i l l o n e day b r e a k o u t i n t o r e a l f i g h t i n g a n d c a u s e a n e c o n o m i c b r e a k d o w n . T h e s i g n s a r e o m i n o u s i n d e e d . L a b o u r i n S h a n g h a i is wel l o r g a n i z e d a n d c l a s s c o n s c i o u s . The p r o l e t a r i a t may, i f t h e r i g h t moment a r r i v e s , s w e e p t h e l a r g e r p a r t o f t h e p e o p l e w i t h i n t o a r e v o l u t i o n a r y b i d f o r power .28

Some C h i n e s e b u s i n e s s m e n f o r e s a w w h a t t h e d e t e r i o r a t i n g

p o l i t i c a l a n d e c o n o m i c s i t u a t i o n would l e a d t o a n d b e g a n

moving t o Hong Kong a n d s a f e r p l a c e s o v e r s e a s . A m e r i c a n

b u s i n e s s m e n were s o o n t o f o l l o w .

By 1 9 4 7 , it was b e c o m i n g i n c r e a s i n g l y c l e a r t o A m e r i c a n

b u s i n e s s m e n t h a t t h e C h i n a m a r k e t was e i t h e r a myth o r

t h a t w i d e s p r e a d r e f o r m s were n e e d e d i n t h e Kuomin tang a l o n g

w i t h t h e t e r m i n a t i o n o f t h e c i v i l war. I n F e b r u a r y o f 1 9 4 7 ,

The C h i n a Weekly Rev iew r e p o r t e d :

F o r t h e p a s t few w e e k s t h e p r o b l e m s o f C h i n a ' s c o m m e r c i a l i n t e r c o u r s e w i t h f o r e i g n n a t i o n s , n o t t o m e n t i o n t h e p r o b l e m s r e g a r d i n g h e r i n t e r n a l

e c e n o m i c s i t u a t i o n , h a v e b e e n p r e s s i n g upon a l l o f u s . R e p o r t s o f o f f i c i a l c o r r u p t i o n a n d i n e f f i c i e n c y , r e p o r t s o f d i s c r i m i n a t i o n a g a i n s t f o r e i g n b u s i n e s s - men a n d r e p o r t s o f f o r e i g n e c o n o m i c i m p e r i a l i s m h a v e b e e n r a m p a n t . 2 9

A l s o i n F e b r u a r y o f t h e F a r E a s t e r n Economic Rev iew

o b s e r v e d t h a t

A m e r i c a n t r a d e r s c r y o u t a g a i n s t t h e i n e f f i c i e n c i e s a n d c o r r u p t i o n s s o p r e v a l e n t t o - d a y i n C h i n a , t h e y p r o t e s t a g a i n s t a n d t h e y r e s e n t t h e s t e a d y d e t e r i o r a t i o n o f t r a d i n g o p p o r t u n i t i e s w i t h Ch inaS3O

A t t h e e n d o f 1 9 4 7 , B e r n a r d D a v i d s i n a n a r t i c l e f o r B a n k i n q

g a v e a n e q u a l l y p e s s i m i s t i c a c c o u n t o f d e v e l o p m e n t s i n C h i n a .

The o p e n d o o r i n C h i n a is c l o s i n g . T o d a y , a f t e r d o i n g b u s i n e s s f o r a l m o s t a c e n t u r y i n one. o f t h e w o r l d ' s b e s t m a r k e t s , t$e A m e r i c a n b u s i n e s s m a n f i n d s h i m s e l f d i - c r i m i n a t e d a g a i n s t , h a n d i c a p p e d a n d h a r a s s e d . He m i g h t j u s t a s wel l f a l l i n b e h i n d h i s army a n d j o i n i n t h e w i t h - d r a w a l f r o m ~ h i n a . 3 1

D a v i d s f o u n d it d i f f i c u l t t o u n d e r s t a n d why A m e r i c a n b u s i -

n e s s m e n s h o u l d b e t r e a t e d s o u n f a v o r a b l y s i n c e

A m e r i c a n e c o n o m i c p e n e t r a t i o n i n t o t h e P a c i f i c h a s l i t t l e p o l i t i c a l i m p l i c a t i o n c o n n e c t e d w i t h it a n d i s o f s o b e n e v o l e n t a n a t u r e t h a t i t may b e c r i t i c i z e d f o r b e i n g more s y m p a t h e t i c t o t h e i n t e r e s t s of t h e n a t i v e s t h a n t o ~ m e r i c a n s . 3 2

Tn a s t u d y p r e p a r e d f o r t h e IPR, G u n t h e r S t e i n , a

s p e c i a l i s t on e c o n o m i c p r o b l e m s i n t h e F a r E a s t , c o n f i r m e d

t h e w i d e s p r e a d d i s i l l u s i o n m e n t a n d d i s s a t i s f a c t i o n among

A m e r i c a n b u s i n e s s m e n who h a d a n t i c i p a t e d a l u c r a t i v e t r a d e

w i t h I n h i s r e s e a r c h o n A m e r i c a n e c o n o m i c r e l a -

t i o n s w i t h t h e F a r East f r o m 1 9 4 6 t o 1 9 4 7 , S t e i n i n t e r -

v i e w e d a r e p r e s e n t a t i v e c r o s s s e c t i o n o f A m e r i c a n t r a d e r s ,

m a n u f a c t u r e r s , b a n k e r s , i n s u r a n c e a n d s h i p p i n g e x e c u t i v e s

f r o m t h r e e m a i n a reas , N e w York , t h e M i d d l e West a n d t h e

West c o a s t . From h i s i n t e r v i e w s , S t e i n c o n c l u d e d t h a t two

p o i n t s o f v i e w were p r e v a l e n t among b u s i n e s s m e n . I n t h e

m i n o r i t y were t h o s e who were o p t i m i s t i c a b o u t t h e C h i n a

m a r k e t w h i l e i n t h e m a j o r i t y were t h o s e who were s k e p t i c a l

a b o u t t h e K u o m i n t a n g t s a b i l i t y t o r e f o r m t h e economy a n d

i n c r e a s e p r o d u c t i v i t y a l o n g w i t h p u r c h a s i n g p o w e r . S t e i n

a l s o f o u n d t h a t m o s t b u s i n e s s m e n h a d many s e r i o u s c o m p l a i n t s

a b o u t a w i d e v a r i e t y o f i s s u e s . B u s i n e s s m e n were g e n e r a l l y

a p p a l l e d a t t h e c o r r u p t i o n o f t h e p o l i c e a n d o t h e r a d m i n i s -

t r a t i v e o r g a n i z a t i o n s . They w e r e f u r t h e r a n n o g e d by t h e

r e l u c t a n c e o f t h e C h i n e s e g o v e r n m e n t t o s e t t l e p r e w a r d o l l a r

o b l i g a t i o n s t o A m e r i c a n firms, 34

High o n t h e P i s t o f g r i e v a n c e s was t h e r o l e g o v e r n m e n t

s p o n s o r e d c o r p o r a t i o n s w o u l d h a v e i n t h e p o s t w a r economy. 35

The e x i s t e n c e o f c o r p o r a t i o n s c o n t r o l l e d by t h e C h i n e s e

g o v e r n m e n t i m m e a s u r a b l y o b s t r u c t e d t h e o p e r a t i o n s o f p r i v a t e

A m e r i c a n c o r p o r a t i o n s . A m e r i c a n b u s i n e s s m e n s o o n b e g a n t o

r e a l i z e t h a t t h e a b o l i t i o n o f e x t r a - t e r r i t o r i a l i t y i n 1 9 4 3

d i d n o t h a v e a p o s i t i v e e f f e c t o n C h i a n g K a i - s h e k ' s a t t i -

t u d e t o w a r d s e c o n o m i c p o l i c y . I n s t e a d , t h e G e n e r a l i s s i m o

f a v o r e d t h e e x i s t i n g " p r i v i l e g e d f a m i l y m o n o p o l i e s " o v e r

C h i n e s e m e r c h a n t s a s wel l a s A m e r i c a n . 36 Up t o 1 9 4 7 ,

A m e r i c a n b u s i n e s s m e n i n g e n e r a l d e f e n d e d t h e K u o m i n t a n g t s

f a i l u r e t o b r i n g a b o u t e c o n o m i c a n d p o l i t i c a l r e f o r m s

b e c a u s e o f t h e d e s t r u c t i o n by t h e J a p a n e s e a n d t h e c i v i l

a Many now b e l i e v e d t h a t C h i a n g f a v o r e d t h o s e g r o u p s i n

t h e Kuomin tang t h a t w a n t e d t o e s t a b l i s h " f e u d a l c o n t r o l o f

C h i n a . n37 Even t h o s e b u s i n e s s m e n who were o p t i m i s t i c now

p u t t h e i r h o p e i n a " t r u l y r e f o r m e d a n d r e v i v e d C h i n a . . . .

v e r y f a r i n t o a n i n d e f i n i t e f u t u r e . " 38

Amer ican b u s i n e s s m e n w e r e n o t o n l y u p s e t a b o u t t h e way

t h e c i v i l war was g o i n g , t h e y were e q u a l l y a n n o y e d w i t h t h e

e m e r g i n g C h i n e s e n a t i o n a l i s m a n d g o v e r n m e n t c o n t r o l o f t h e

economy, a s t h e S t e i n a r t i c l e a n d o t h e r s s u g g e s t . D u r i n g

t h e S e c o n d World War t h e y h a d r e c o g n i z e d t h a t w i t h t h e \

a b o l i t i o n o f e x t r a - t e r r i t o r i a l i t y i n C h i n a , new a r r a n g e m e n t s

would h a v e t o b e made r e g a r d i n g t h e r i g h t s a n d p r i v i l e g e s

o f e c o n o m i c e n t e r p r i s e s . A new f o r m u l a was t o b e worked

o u t i n a C o m m e r c i a l T r e a t y w h i c h was e v e n t u a l l y s i g n e d i n

1 9 4 6 . F o r t h e m o s t p a r t , t h e new g u i d e l i n e s e s t a b l i s h e d

f o r t h e o p e r a t i o n o f f o r e i g n b u s i n e s s e s i n C h i n a w e r e

a c c e p t e d a n d many c o r p o r a t e o f f i c i a l s were l o o k i n g f o r w a r d

t o a p r o s p e r o u s e c o n o m i c r e l a t i o n s h i p w i t h C h i n a . What was

o v e r l o o k e d , h o w e v e r , was t h e n a t u r e o f t h e r i s i n g n a t i o n a l -

i s t s e n t i m e n t a n d t h e d i r e c t i o n t h a t i t u ~ o u l d t a k e , C h i a n g

s o u g h t t o p r o t e c t t h e p r i v i l e g e d p o s i t i o n o f C h i n e s e

i n d u s t r i a l i s t s a n d f i n a n c i e r s c o n n e c t e d w i t h t h e Kuomin tang

a n d p r a c t i c e d w h a t f o r e i g n b u s i n e s s m e n c o n s i d e r e d u n e t h i c a l

a n d i m p r a c t i c a l e c o n o m i c p o l i c i e s . I n s h o r t , c o r r u p t i o n , s e v e r e

r e g u l a t i o n , p o l i t i c a l f a v o r i t i s m a n d b u r e a u c r a t i c i n f i g h t i n g

c h a r a c t e r i z e d C h i a n g ' s p e c u l i a r a p p r o a c h t o m o d e r n i z a t i o n .

Two A m e r i c a n h i s t o r i a n s h a v e d e s c r i b e d C h i a n g K a i - s h e k ' s

a t t e m p t t o s y n t h e s i z e C h i n e s e f e u d a l i s m w i t h modern c a p i t a l -

is t i n s t i t u t i o n s as a f o r m o f " g a n g s t a r i s m " . 39 The c o n c e p t

o f g a n g s t e r i s m i s a p p r o p r i a t e t o t h e e x t e n t t h a t i t a p p l i e s

t o a s i t u a t i o n w h e r e o r g a n i z a t i o n s e x i s t b u t d o n o t o p e r a t e

w i t h a n y r e f e r e n c e t o e s t a b l i s h e d l a w o r c o n s t i t u t i o n a l

a u t h o r i t y . I n t h e C h i n e s e c o n t e x t , a c l i q u e w i t h i n t h e

Kuomin tang c o n t r o l l e d t h e s t a t e a p p a r a t u s , b u t d i d n o t

l e g i t i m i z e t h e i r p o l i c i e s w i t h i n a c o n s t i t u t i o n a l f r a m e w o r k .

They d i d n o t make p o l i c y w i t h r e g a r d s t o t h e i n t e r e s t s o f t h e

C h i n e s e s t a t e a n d t h e y d i d n o t e v e n r u l e i n t h e i n t e r e s t s o f

t h e b u s i n e s s c l a s s , F u r t h e r m o r e , t h e i n t e r e s t s o f A m e r i c a n + iJ

b u s i n e s s m e n were e i t h e r i g n o r e d o r c o n s c i o u s l y u n d e r m i n e d .

P r o f e s s o r Chen Han-seng , a f o r m e r p r o f e s s o r o f H i s t o r y a t t h e

N a t i o n a l U n i v e r s i t y o f P e k i n g , e x p l a i n e d t h e o p e r a t i o n o f

t h e C h i n e s e g o v e r n m e n t i n t h e f o l l o w i n g p a s s a g e :

Government monopo ly i n C h i n a , h o w e v e r , i s q u i t e d i f f e r e n t . I t b e n e f i t s o n l y t h o s e b u r e a u c r a t s who manage t h e s t a t e b u s i n e s s , a n d o n l y p r e s e r v e s p r i v a t e o w n e r s h i p t o t h e e x t e n t t h a t t h e p r i v a t e f o r t u n e s o f g o v e r n m e n t o f f i c i a l s a n d t h e i r f a m i l i e s a r e i n v o l v e d . The c o n t r o l rests e x c l u s i v e l y w i t h a f e w i n f l u e n t i a l g o v e r n m e n t f u n c t i o n a r i e s . R a t h e r t h a n a g r e a t e r s o c i a l i z a t i o n o f p r o d u c t i o n , g o v e r n m e n t monopoly h e r e i n e v i t a b l y i n t e n s i f i e s t h e b u r e a u c r a t i z a t i o n o f s o - c a l l e d s t a t e owned b u s i n e s s e s , s ca t t e r - i n g a n d i m p a i r i n g t h e f o r c e s o f r e p r o d u c - t i o n . 4 0

W i t h i n t h e Kuomin tang r u l i n g c l i q u e , t h e r e were f i v e

g r o u p s , e a c h c o n t r o l l i n g a k e y s e c t o r o f t h e economy,

The f i r s t g r o u p , h e a d e d by Chen L i - f u a n d Chen Kuo-fu,

c o n t r o l l e d t h e n e w l y c r e a t e d C h i n a S i l k C o r p o r a t i o n a n d

h a d i n t e r e s t s i n t h e F a r m e r ' s a a n k a n d t h e I n d u s t r i a l a n d

M i n i n g Bank. Chen Y i , t h e g o v e r n o r o f Ta iwan a f t e r t h e

S e c o n d World War, was a p r o m i n e n t o f f i c i a l i n w h a t was

known a s t h e " P o l i t i c a l S c i e n c e C l i q u e , " I t s a c t i v i t i e s

were c o n n e c t e d m i t h b a n k i n g a n d t h e m e d i a . A t h i r d g r o u p ,

u n d e r t h e l e a d e r s h i p o f H.H. Kung, m i n i s t e r o f f i n a n c e

d u r i n g t h e war w i t h J a p a n , was i n v o l v e d w i t h bond a n d g o l d

s p e c u l a t i o n s , f o r a i g n e x c h a n g e m a n i p u l a t i o n s , a n d s m u g g l i n g ,

T.V. S o o n g , P r e s i d e n t of t h e E x e c u t i v e y u a n u n t i l 1947,

h e a d e d a f o u r t h g r o u p w h i c h c o n t r o l l e d t h e C h i n a T e x t i l e

R e c o n s t r u c t i o n C o r p o r a t i o n , Nanyang T o b a c c o C o r p o r a t i o n ,

a n d t h e Kumsan T r a d i n g C o r p o r a t i o n . The f i f t h g r o u p , u n d e r

t h e l e a d e r s h i p o f C h i a n g Kab-shek , c o n t r o l l e d t h e n a t i o n a l

7 9

r a i l w a y n e t w o r k , t h e C h i n a S t e a m s h i p N a v i g a t i o n Company,

a n d t h e N a t i o n a l R e s o u r c e s Commiss ion . T o g e t h e r , t h e s e

f ami l i e s c o n t r o l l e d a s i z e a b l e p e r c e n t a g e o f C h i n a ' s

e c o n o m i c a c t i v i t y , and, a f t e r t h e S e c o n d Wor ld War, t h e i r

i n f l u e n c e was c o n t i n u o u s l y e x p a n d i n g , much t o t h e d i s m a y

o f Amer ican c o r p o r a t e o f f i c i a l s ,

Amer ican b u s i n e s s m e n were e x p r e s s l y c o n c e r n e d w i t h t h e

e n c r o a c h m e n t o f C h i n a ' s "Holy F a m i l y " i n t h e e x p o r t - i m p o r t

f i e l d a n d i n t h e c r e a t i o n o f n a t i o n a l c o r p o r a t i o n s w h i c h

were c o m p e t i n g a g a i n s t A m e r i c a n b u s i n e s s e s . I n t h e i m p o r t -

e x p o r t b u s i n e s s ? t h e d i f f i c u l t i e s e n c o u n t e r e d were s o g r e a t

t h a t t h e F a r E a s t A m e r i c a n C o u n c i l a n d t h e N a t i o n a l F o r e i g n

T r a d e C o u n c i l c o m p l a i n e d t o t h e S t a t e D e p a r t m e n t t h a t t h e

"Holy F a m i l y " was r e c e i v i n g p r e f e r e n t i a l t r e a t m e n t on

i m p o r t s , 42 F o r e x a m p l e , t h e C h i n e s e g o v e r n m e n t made i t

t r o u b l e s o m e f o r A m e r i c a n c o m p a n i e s t o o b t a i n i m p o r t l i c e n s e s

w h i l e C h i n e s e c o m p a n i e s had n o d i f f i c u l t y . Under t h e s e

p r e s s u r e s , h s t i n g h o u s e I n t e r n a t i o n a l t r a n s f e r r e d i ts C h i n a

d i s t r i b u t o r a g e n c y f r o m William Hunt & Company t o T . V .

S o o n g ' s Fu Chung C o r p o r a t i o n . S i m i l a r l y , t h e W i l l y s Motor \

Company t r a n s f e r r e d i t s j e e p d e a l e r s h i p t o t h e same C h i n e s e

company? u s e d by W e s t i n g h o u s e . T h e s e C h i n e s e c o m p a n i e s

were a l s o i m p o r t i n g l a r g e q u a n t i t i e s o f f o r 6 i g n g o o d s

u n h a m p e r e d by f o r e i g n e x c h a n g e r e g u l a t i o n s , q u o t a i m p o r t

l i c e n c e r e q u i r e m e n t s a n d o t h e r r e s t r i c t i o n s . I m p o r t s

s u c h a s a u t o m o b i l e s , r a d i o s a n d r e f r i g e r a t o r s , w h i c h w e r e

c l a s s i f i e d as l u x u r i e s , w e r e s t r i c t l y b a n n e d u n d e r i m p o r t

c o n t r o l s w h i l e t h e o f f i c i a l t r a d i n g c o r p o r a t i o n s c o n t i n u e d

t o i m p o r t t h e m . O f t e n s u b s t a n t i a l p r o f i t s were r e a l i z e d

by i m p o r t a g e n t s s e l l i n g l u x u r y g o o d s on t h e b l a c k m a r k e t .

Most b u s i n e s s m e n a g r e e d t h a t s t a t e c o n t r o l l e d t r a d i n g com-

p a n i e s o f f e r e d u n f a i r c o m p e t i t i o n t o p r i v a t e e n t e r p r i s e s

a n d c o m p l a i n e d b i t t e r l y t o t h e S t a t e D e p a r t m e n t a b o u t t h e s e

p r a c t i c e s . 43

A n o t h e r c o m p l a i n t r e c e i v e d by t h e S t a t e D e p a r t m e n t f r o m

b u s i n e s s m e n c o n c e r n e d t h e C h i n a P e t r o l e u m Company c r e a t e d

by t h e N a t i o n a l i s t g o v s r n m e n t t o p r o d u c e , r e f i n e , t r a n s p o r t ,

i m p o r t , a n d s e l l p e t r o l e u m p r o d u c t s i n G i v e n t h i s

w i d e r a n g e o f e c o n o m i c a c t i v i t i e s , t h e C h i n e s e company would

h a v e a v i r t u a l monopo ly a t t h e e x p e n s e of f o r e i g n firms s u c h

a s S t a n d a r d Vacuum O i l , S h e l l , a n d C a l t e x . I n a c o n f e r e n c e

h e l d w i t h S t a t e D e p a r t m e n t o f f i c i a l s , r e p r e s e n t a t i v e s from

t h e S t a n d a r d Vacuum O i l Company e x p l a i n e d t h a t t h e A m e r i c a n

g o v e r n m e n t s h o u l d c o n v i n c e t h e Kuomin tang t o r e v e r s e i t s

p o l i c y o f N a t i o n a l i z a t i o n b e c a u s e " p r i v a t e U.S. e n t e r p r i s e

c o u l d u n d e r n o c i r c u m s t a n c e s c o m p e t e w i t h a C h i n e s e g o v e r n -

m e n t p e t r o l e u m company. lt4' Ekcause A m e r i c a n o i l c o m p a n i e s

were p l a n n i n g t o s p e n d a p p r o x i m a t e l y 1 0 0 m i l l i o n d o l l a r s

t o r e h a b i l i t a t e p r e w a r d i s t r i b u t i o n f a c i l i t i e s , t h e y h a d

t o be a s s u r e d o f two c o n d i t i o n s . I t waq i r n p e r a t i ~ e ~ f i r s t ,

t h a t t h e r e be no c o m p e t i t i o n f rom t h e C h i n e s e government

a n d , s e c o n d , t h a t American o i l compan ie s be a l l o w e d 51%

o w n e r s h i p . I n a memorandum t o L e i g h t o n S t u a r t , S e c r e t a r y

of S t a t e B y r n e s i n s t r u c t e d t h e American ambassado r t o make

it e x p l i c i t t o t h e Kuomintang t h a t t h e " U n i t e d S t a t e s

r e g r e t s a n y C h i n e s e economic p o l i c i e s which d i s c o u r a g e

sound i n f l o u o f p r i v a t e c a p i t a l on r e a s o n a b l e terms... ,146

The S t a t e D e p a r t m e n t , however , f o u n d i t s e l f i n a d i f f i c u l t

p o s i t i o n because it uas s u s p e c t e d t h a t a i d g i v e n by t h e U n i t e d

S t a t e s government was b e i n g u s e d by t h e C h i n e s e t o f i n a n c e

s t a t e owned c o r p o r a t i o n s .

I n t h e summer of 1946, o f f i c i a l s f rom S t a n v a c , C a l t e x ,

and S h e l l C h i n a , met w i t h Mong Wen-hao, v i c e - p r e s i d e n t o f

t h e E x e c u t i v e Yuan a n d Chai rman of t h e Board of t h e C h i n e s e

P e t r o l e u m C o r p o r a t i o n . 47

American o i l r e p r e s e n t a t i v e s were

p a r t i c u l a r l y i n t e r e s t e d i n t h e p o s i t i o n o f t h e C h i n e s e

government on t h e f o r m a t i o n o f a j o i n t company w i t h t h e

C.P.C. t o d e v e l o p t h e o i l f i e l d s on Ta iwan . A f t e r d i s c u s s i n g

t h e i s s u e of f o r e i g n i n f l u e n c e i n t h e C.P.C. w i t h T .V. Soong,

Wong Wen-hao i n f o r m e d American b u s i n e s s m e n t h a t "it was

n o t c o n t e m p l a t e d t h a t t h e r e would b e a n y o c c a s i o n t o form a

j o i n t company w i t h f o r e i g n i n t e r e s t s . " Dr. Wong e x p l a i n e d

t h a t , f o r p o l i t i c a l r e a s o n s , t h e C h i n e s e government would

n o t p e r m i t t h e p a r t i c i p a t i o n o f f o r e i g n compan ie s i n t h e

82

d e v e l o p m e n t o f t h e Ta iwan o i l f i e l d s . I t was a l s o e m p h a s i z e d

t o t h e o i l company o f f i c i a l s t h a t " t h e C h i n e s e Government i s

i n t h e o i l b u s i n e s s t o s t a y n o t o n l y i n e x p l o r a t i o n , p r o d u c -

t i o n a n d r e f i n i n g , b u t i n m a r k e t i n g a s w e l l , " A f t e r h e a r i n g

t h e p o s i t i o n o f t h e C h i n e s e g o v e r n m e n t o n p o s t u ~ a r e c o n o m i c

d e v e l o p m e n t , A m e r i c a n b u s i n e s s m e n c o n c l u d e d t h a t i t was o n l y

i n t h e r e m o t e a r e a s o f C h i n a , w h e r e t h e r i s k s were h i g h ,

t h a t t h e i r c a p i t a l a n d s e r v i c e s w e r e d e s i r e d . Under t h e s e

c o n d i t i o n s , t h e e c o n o m i c p r o s p e c t s f o r A m e r i c a n o i l c o m p a n i e s

a n d o t h e r c o m m e r c i a l e n t e r p r i s e s a f f e c t e d by n a t i o n a l i z e d

C h i n e s e c o m p a n i e s were s e v e r e l y l i m i t e d .

W h i l e t h e c o n t i n u a t i o n o f t h e c i v i l war a n d t h e e c o n o m i c

p o l i c i e s o f t h e C h i a n g K a i - s h e k r e g i m e were t h e mos t i m p o r -

t a n t f a c t o r s i n t h e d e m i s e o f t h e C h i n a m a r k e t , t h e t r a d i n g

p r a c t i c e s o f A m e r i c a n b u s i n e s s m e n i n C h i n a s h o u l d n o t b e

o v e r l o o k e d . A t t h e e n d o f t h e war w i t h J a p a n , t h e e c o n o m i c

i n f l u e n c e of o t h e r g r e a t p o w e r s i n E a s t Asia was c o n s i d e r -

a b l y r e d u c e d a n d t h e U n i t e d S t a t e s e m e r g e d a s t h e d o m i n a n t

e c o n o m i c i n f l u e n c e . A m e r i c a n b u s i n e s s m e n h a d a v i r t u a l

monopoly o f C h i n a ' s i m p o r t t r a d e , w h i c h r o s e t o a h i g h o f

57% i n 1946. 49 T h i s k i n d o f s i t u a t i o n c o u l d h a v e b e e n

e n o r m o u s l y p r o f i t a b l e f o r A m e r i c a n commerce if p r o p e r

t r a d i n g p r a c t i c e s h a d b e e n e m p l o y e d . However , b e c a u s e o f

t h e d i f f i c u l t i e s i n f i n d i n g m a r k e t s f o r l a r g e s u r p l u s e s

d u r i n g t h e r e c o n v e r s i o n p e r i o d , some b u s i n e s s m e n u s e d C h i n a

a s a dumping g r o u n d f o r c h e a p a n d s o m e t i m e s u s e l e s s com-

m o d i t i e s . A m e r i c a n G I s , who h a d s t a y e d b e h i n d i n C h i n a t o

make some e a s y money, would o f t e n s e t u p " f l y - b y - n i g h t "

i m p o r t c o m p a n i e s a n d make p r o f i t s a s h i g h as t w o a n d t h r e e

h u n d r e d p e r c e n t . T h e s e s h a r p b u s i n e s s p r a c t i c e s s o o n

b r o u g h t a h o s t i l e r e a c t i o n f r o m t h e C h i n e s e p r e s s a n d

d o m e s t i c b u s i n e s s m e n whose m a r k e t s were d r a s t i c a l l y c u r t a i l e d ,

Two o u t l e t s were u s e d t o dump s u r p l u s c o m m o d i t i e s on

t h e C h i n a m a r k e t . Cheap items l i k e w a t c h e s , p e r f u m e s , a n d

h o u s e h o l d g o o d s were u n l o a d e d d i r e c t l y w h i l e s u r p l u s a g r i -

c u l t u r a l e q u i p m e n t was d i s t r i b u t e d i n d i r e c t l y t h r o u g h t h e

U N R R A . A g r i c u l t u r a l s u r p l u s e s i n p a r t i c u l a r c o u l d n o t b e

a d a p t e d t o t h e s e m i - f e u d a l a g r i c u l t u r a l s y s t e m o f C h i n a .

One n o t a b l e e x a m p l e of t h e i m p r a c t i c a l i t y of some o f t h e

g o o d s d e l i v e r e d t o C h i n a was c i t e d b y a U N R R A o f f i c i a l on a

t o u r o f m a c h i n e r y d e p o t s a c r o s s t h e c o u n t r y . After o b s e r v -

i n g "huge p i l e s o f r u s t i n g , r o t t i n g , e q u i p m e n t " h e t h e n

n o t i c e d "a m o n s t r o u s m a c h i n e w i t h w h e e l s a s b i g a s a room"

a n d was a s k e d by a C h i n e s e o f f i c i a l w h a t i t was. B e i n g

somewhat a n n o y e d t h a t t h e A m e r i c a n c o u l d n ' t a n s w e r t h e

q u e s t i o n , h e t h e n a s k e d , "How c a n a n y o n e i n C h i n a b e e x p e c t e d

t o p u t s u c h a t h i n g t o g o o d u s e . " T h i s p a r t i c u l a r p i e c e

of m a c h i n e r y a s wel l a s a v a r i e t y o f c o n s t r u c t i o n e q u i p m e n t

r e q u i r i n g h i g h l y s k i l l e d A m e r i c a n t e c h n i c a l o p e r a t o r s were

i n d i s c r i m i n a t e l y dumped i n t o C h i n a . A l t h o u g h t h e r e a c t i o n

f r o m t h e C h i n e s e was n o t o n e o f g r a t i t u d e , t h i s p o l i c y was

n o t as s e r i o u s a s t h e dumping p r a c t i c e s o f Amer ican b u s i -

n e s s m e n .

Not a l l b u s i n e s s m e n p r a c t i c e d dumping , a n d t h o s e i n

o f f i c i a l o r g a n i z a t i o n s s u c h as C A C C I t r i e d t o c u r t a i l t h e

e x c e s s e s o f a few. N e v e r t h e l e s s , t h e p r o b l e m c o n t i n u e d t o

grow w o r s e . C A C C I o f f i c i a l s w e r e a w a r e t h a t t h e dumping

o f Amer ican g o o d s was r u i n i n g C h i n e s e d o m e s t i c i n d u s t r i e s

a n d t h i s , i n t u r n , c o n t r i b u t e d t o t h e g r o w i n g a n t i - f o r e i g n

s e n t i m e n t , e s p e c i a l l y i n t h e u r b a n areas. F u r t h e r m o r e ,

t h e u n l o a d i n g o f s u r p l u s c o m m o d i t i e s . was p a r t l y r e s p o n s i b l e

f o r t h e new i m p o r t q u o t a s i m p l e m e n t e d by t h e Kuomintang i n

1 9 4 7 a n d 1 9 4 8 . T h e s e new r e g u l a t i o n s r e s u l t e d i n a d e c l i n e

o f A m e r i c a n c o m m e r c i a l i m p o r t s f r o m a h i g h o f $297 m i l l i o n

i n 1 9 4 6 t o $ 1 0 1 - m i l l i o n i n 1 9 4 8 . J.R. Kaim, a c l o s e

o b s e r v e r o f t h e e c o n o m i c c o n d i t i o n s o f t h e F a r East, c o n -

c i s e l y e x p l a i n e d t h e d e m i s e o f t h e C h i n a m a r k e t i n terms

h i g h l y c r i t i c a l o f A m e r i c a n b u s i n e s s m e n .

F l o o d e d w i t h A m e r i c a n p r o d u c t s o f t e n n o t o f t h e h i g h e s t q u a l i t y - t h e m a r k e t was r u i n e d , s t e p by s t e p . S p e c u l a t i o n i n A m e r i c a n g o o d s became p r e v a l e n t . Amer ican e x p o r t e r s m u s t s h o u l d e r much o f t h e b l a m e f o r s p o i l i n g t h e i r own m a r k e t s i n C h i n a by t h e i n d i s c r i m i n a t e dumping o f i n f e r i o r p r o d u c t s , w h i c h i n e v i t a b l y f e l l i n t o t h e h a n d s o f s p e c u l a t o r s a n d h o a r d e r s . 5 2

- He went on t o p o i n t o u t t h a t , i f A m e r i c a n t r a d e r s h a d n o t

85

b e e n s o a n x i o u s t o r e a l i z e q u i c k p r o f i t s , " t h e o p p o r t u n i t i e s

f o r A m e r i c a n t r a d e were b r i l l i a n t i n d e s d , " 53

I n 1 9 4 8 t h e Kuomin tang e n d e a v o r e d t o c a r r y o u t l i m i t e d

p o l i t i c a l a n d e c o n o m i c r e f o r m i n r e s p o n s e t o t h e r e n e w e d

Communist o f f e n s i v e a n d p r e s s u r e f r o m t h e U n i t e d S t a t e s ,

The Kuomin tang w i s h e d t o m o l l i f y t h e U n i t e d S t a t e s b e c a u s e

a new C h i n a a i d b i l l was b e f o r e C o n g r e s s w h e r e a mood o f

s k e p t i c i s m p r e v a i l e d a b o u t t h e a b i l i t y o f t h e C h i a n g r e g i m e

t o u s e f i n a n c i a l a s s i s t a n c e c o n s t r u c t i v e l y . 54 Token

p o l i t i c a l r e f o r m was c a r r i e d o u t w i t h t h e p r o m o t i o n of t h e

l i b e r a l m i n d e d Sun Fo t o t h e p o s i t i o n of P r e m i e r o f t h e

E x e c u t i v e Yuan, Hoping t h a t t h e A m e r i c a n C o n g r e s s would

q u i c k l y p a s s t h e a i d b i l l : Sun F o , p r o m i s e d a r e l a x a t i o n o f

g o v e r n m e n t c o n t r o l s a n d b e t t e r t r e a t m e n t o f A m e r i c a n b u s i -

n e s s m e n a n d i n v e s t o r s . W i t h r e g a r d s t o e c o n o m i c p o l i c y ,

c u r r e n c y r e f o r m was i n i t i a t e d , w h i c h Kuomin tang f i n a n c i a l

w i z a r d s t h o u g h t would s l o w down t h e r u n away i n f l a t i o n a n d

b r i n g a b o u t s t a b i l i t y , B u t , a s t h e F a r E a s t e r n T r a d e r

r e p o r t e d , b u s i n e s s m e n r e m a i n e d p e s s i m i s t i c a n d v i e w e d S u n ' s

o f f e r a s b e i n g n o t h i n g b u t a n o p p o r t u n i s t i c p o l i t i c a l g e s -

t u r e . 55 C h i n e s e as well as A m e r i c a n b u s i n e s s m e n b e l i e v e d

r e f o r m s were f o r l o n g r a n g e p r o g r a m s , a n d t h a t , u t h a t e v e r t h e

r e f o r m s d e a l t w i t h , t h e e x i s t i n g r u l e s , c o n t r o l s , a n d

r e s t r i c t i o n s would p r e v a i l . 5 6 , I t was n o t s u r p r i s i n g ,

t h e r e f o r e , t h a t a number o f A m e r i c a n c o m p a n i e s moved t h e i r

F a r E a s t h e a d q u a r t e r s f r o m S h a n g h a i t o Hong Kong a n d , a s

t h e Communist a r m i e s a p p r o a c h e d , t h e e x o d u s a c c e l e r a t e d ,

T h r o u g h o u t 1 9 4 8 , m i l i t a r y a n d e c o n o m i c d e v e l o p m e n t s

r e a f f i r m e d t h e mood o f d e s p a i r a n d h o p e l e s s n e s s o f Amer ican

b u s i n e s s m e n . m i l i t a r i l y , 1 9 4 8 was t h e d e c i s i v e y e a r which

marked t h e t u r n i n g p o i n t i n t h e c i v i l war, C h i a n g ' s armies

l o s t a se r i e s o f k e y b a t t l e s , c u l m i n a t i n g i n t h e d e f e a t a t

Soocho~u . After t h e f a l l o f t h e K u o m i n t a n g l s m a i n b a s e i n

c e n t r a l C h i n a , t h e Communis t s c o n t r o l l e d a l a r g e r p e r c e n -

t a g e o f C h i n a t h a n t h e N a t i o n a l i s t s , i n terms o f area a n d

p o p u l a t i o n . 5 7 Along w i t h t h e m i l i t a r y d e f e a t s came a

number o f e c o n o m i c s e t b a c k s . The c u r r e n c y r e f o r m s d i d n o t

s t a b i l i z e t h e i n f l a t i o n a n d , by December 1948, w h o l e s a l e

p r i c e s i n N a n k i n g , t h e n t h e c a p i t a l , h a d r i s e n t o 8 , 7 4 0 , 6 0 0

f r o m a b a s e o f -1 i n 1 9 3 7 . 58 F o r e i g n e x c h a n g e r e s e r v e s mere

n o n - e x i s t e n t a n d m o s t o f t h e g o v e r n m e n t b u d g e t was f i n a n c e d

by d e f i c i t s p e n d i n g . I n a r e v i e w o f t h e e c o n o m i c s i t u a t i o n

i n C h i n a i n 1 9 4 8 , t h e U n i t e d S t a t e s Commerce D e p a r t m e n t

c o n c l u d e d t h a t

Economic c o n d i t i o n s a t t h e e n d o f 1 9 4 8 g a v e v e r y l i t t l e r e a s o n f o r o p t i m i s m r e g a r d i n g p r i v a t e f o r e i g n t r a d e i n 1 9 4 9 . As i n 1 9 4 7 , t h e N a t i o n a l Government was f o r c e d t o e x e r c i s e a g r e a t amount o f c o n t r o l o v e r f o r e i g n t r a d e i n a n a t t e m p t t o b a l a n c e i t s i n t e r n a t i o n a l p a y m e n t s p o s i t i o n by s e d u c i n g i m p o r t s a n d e n c o u r a g - i n g e x p o r t s , By t h e e n d o f t h e y e a r , f i n a n c i a l a n d m o n e t a r y r e f o r m s o f A u g u s t 1 9 4 8 h a d begun t o g i v e way u n d e r t h e

i m p a c t o f a n u n b a l a n c e d b u d g e t made n e c e s s a r y by t h e c i v i l war, a n d i n f l a t i o n was i n f u l l s w i n g . . . . 5 9

W i t h t h e d e c l i n i n g p r o s p e c t s f o r t r a d e a n d i n v e s t m e n t

i n C h i n a , A m e r i c a n b u s i n e s s m e n e x a m i n e d t h e a l t e r n a t i v e s .

T h e o r e t i c a l l y t h e r e were t h r e e p o s s i b i l i t i e s o p e n t o

c o r p o r a t e o f f i c i a l s . F i r s t , t h e y c o u l d e x p a n d d o m e s t i c

m a r k e t s , e s p e c i a l l y t h o s e on t h e West C o a s t , where many

b u s i n e s s e s t h a t f o r m e r l y t r a d e d w i t h C h i n a were l o c a t e d .

T h e s e c o n d o p t i o n was t o r e d i r e c t t h e i r s e a r c h f o r p r o f i t a b l e

e c o n o m i c o p p o r t u n i t i e s a n d e s t a b l i s h new m a r k e t s i n o t h e r

A s i a n c o u n t r i e s . T h e t h i r d a l t e r n a t i v e was t o e x p l o r e t h e

p o t e n t i a l f o r t r a d e w i t h t h e Communis t s s i n c e , b y 1 9 4 8 , it

was c l ea r t h a t K u o m i n t a n g ' s d a y s i n power were n u m b e r e d *

O f c o u r s e , b u s i n e s s m e n h a d c o n s i d e r e d t h e s e a l t e r n a t i v e s

b e f o r e t h e i m p e n d i n g c o l l a p s e o f t h e Kuomin tang was r e a l i z e d ,

b u t a f t e r 1 9 4 7 , t h e s e a r c h f o r new e c o n o m i c o p p o r t u n i t i e s

a s s u m e d a n e v e n h i g h e r p r i o r i t y .

O f t h e t h r e e p o s s i b i l i t i e s , t h e e x p a n s i o n o f d o m e s t i c

m a r k e t s was t h e m o s t u n l i k e l y . F o r a s h o r t time a f t e r t h e

S e c o n d World War, t h e A m e r i c a n economy was e x p a n d i n g b e c a u s e

of t h e h i g h demand f o r c o n s u m e r g o o d s , t h e r a p i d t e c h n o -

l o g i c a l g r o w t h d u r i n g t h e war, a n d t h e h e a v y e x p o r t o f

g o o d s a n d s e r v i c e s a t a n a n n u a l - r e c o r d r a t e o f $20 b i l l i o n

c o m p a r e d w i t h i m p o r t s o f o n l y $8 b i l l i o n . 6 0 Even t h o u g h

t h e U n i t e d S t a t e s p r e s e r v e d a f a v o r a b l e b a l a n c e o f t r a d e ,

88

t h e i n i t i a l s t i m u l a t i n g e f f e c t s o f t h e e x p a n d e d d o m e s t i c

m a r k e t s u b s i d e d , s o t h a t , by t h e e n d OF t h e d e c a d e , t h e

c o u n t r y was e x p e r i e n c i n g a m i l d r e c e s s i o n . B e c a u s e o f a

h i g h l e v e l o f unemployment a n d a d e c l i n e i n c o n s u m e r demand,

t h e d o m e s t i c m a r k e t d e c r e a s e d s u b s t a n t i a l l y ; a n d i t was

o n l y a f t e r t h e o u t b r e a k o f t h e K o r e a n War t h a t t h e p e r -

f o r m a n c e o f t h e A m e r i c a n economy i m p r o v e d b e c a u s e o f t h e

e n o r m o u s o u t l a y s f o r d e f e n s e by t h e Truman A d m i n i s t r a t i o n .

D e f e n s e s p e n d i n g h a s u n d o u b t e d l y b e e n a n i m p o r t a n t

f a c t o r i n e x p l a i n i n g t h e s t a b i l i t y a n d p e r i o d s of e c o n o m i c

g r o w t h c h a r a c t e r i s t i c o f t h e A m e r i c a n economy s i n c e t h e

S e c o n d World War. F o r e x a m p l e , i n 1949 , a f t e r a y e a r o f

r e c e s s i o n , t h e GNP was $256.5 b i l l i o n : m i l i t a r y e x p e n d i t u r e s

were $ 1 3 . 3 b i l l i o n ! a n d u n e m p l o y m e n t was 5.9 m i l l i o n .

When t h e K o r e a n War e n d e d i n 1 9 5 3 , t h e GNP h a d r i s e n t o

$ 3 6 4 . 6 b i l l i o n ; t h e m i l i t a r y b u d g e t c l i m b e d t o $48.7 b i l l i o n ;

a n d unemployment f e l l t o 2.9 m i l l i o n . 6 2 T h e r e is c e r t a i n l y

n o e v i d e n c e t o s u g g e s t t h a t , a f t e r l o s i n g t h e C h i n a m a r k e t

i n 1 9 4 9 , b u s i n e s s m e n p r e s s u r e d t h e g o v e r n m e n t t o e x p a n d t h e

m i l i t a r y s e c t o r i n o r d e r t o e x p a n d d o m e s t i c m a r k e t s . Nor

f o r t h a t matter d i d t h e Truman A d m i n i s t r a t i o n w a n t t o i n c r e a s e

t h e m i l i t a r y b u d g e t b e f o r e t h e K o r e a n War b r o k e o u t , i n p a r t

d u e t o t h e a c c e l e r a t i n g p o s t w a r i n f l a t i o n . 63 What i s o f

significant% h o w e v e r , i s t h a t d e f e n s e s p e n d i n g s u p p l e m e n t e d

b y a g r o w i n g f o r e i g n t r a d e w i t h non-communis t P a c i f i c R i m

89

c o u n t r i e s b r o u g h t u n p r e c e d e n t e d g r o w t h i n terms o f p o p u l a -

t i o n a n d i n d u s t r y t o t h e U n i t e d S t a t e s , p a r t i c u l a r l y t h e

u ~ e s t , a n d t h e l o s s o f t h e C h i n a m a r k e t was b u t a d i s t a n t

64 memory.

S i n c e A m e r i c a n b u s i n e s s m e n a f f e c t e d by t h e l o s s o f t h e

C h i n a m a r k e t d i d n o t f o r e s e e t h e g r o w t h o f t h e M i l i t a r y - {

I n d u s t r i a l - C o m p l e x a n d i t s c o n s e q u e n t s t i m u l a t i o n o f t h e

economy, t h e y b e g a n t o d e v e l o p f u r t h e r m a r k e t s i n o t h e r

East A s i a n c o u n t r i e s . The F a r East T r a d e r , a w i d e l y

c i r c u l a t e d n e w s l e t t e r p u b l i s h e d i n S a n F r a n c i s c o , n o t i c e d a

d r a m a t i c c h a n g e i n t h e a t t i t u d e o f t h e b u s i n e s s communi ty

t o w a r d t h e C h i n a m a r k e t i n 1 9 4 8 . R e f l e c t i n g t h e v i e w s o f

b u s i n e s s m e n , t h e n e w s l e t t e r n o t e d i n a n e d i t o r i a l t h a t t h e r e

would b e l e s s c o v e r a g e o f C h i n a a n d more o f J a p a n ,

P h i l i p p i n e s , Hong Kong, S i a m , S i n g a p o r e a n d 1 n d i a . 65 T h e r e

was good r e a s o n f o r b u s i n e s s m e n t o s h i f t t h e i r a t t e n t i o n t o

o t h e r P a c i f i c R i m c o u n t r i e s b e c a u s e of t h e i r e x p a n d i n g

m a r k e t s a n d f a v o r a b l e p o l i t i c a l c l i m a t e . I n 1 9 5 2 A m e r i c a n

t r a d e w i t h t h e F a r East a m o u n t e d t o $ 2 . 1 b i l l i o n , i n 1 9 6 2

it r o s e t o $4 b i l l i o n , a n d by 1 9 7 2 was o v e r $ 6 b i l l i o n . 66

T h r o u g h o u t t h e 1 9 6 0 ' s t h e P a c i f i c R i m was t h e f a s t e s t g r o w i n g

t r a d i n g area p r i m a r i l y d u e t o m i l i t a r y s p e n d i n g i n S o u t h -

East Asia.

After t h e i r e x p e r i e n c e i n C h i n a , A m e r i c a n b u s i n e s s m e n Q

became i n c r e a s i n g l y s e n s i t i v e t o t h e i m p o r t a n c e o f p o l i t i c a l

s t a b i l i t y a s a p r e r e q u i s i t e f o r a p r o f i t a b l e e c o n o m i c

r e l a t i o n s h i p . I m m e d i a t e l y a f t e r t h e war w i t h J a p a n , mos t

o f Asia was e n g u l f e d i n p o l i t i c a l t u r m o i l w h i c h was a

m a n i f e s t a t i o n o f t h e e m e r g i n g n a t i o n a l c o n s c i o u s n e s s

d e v e l o p i n g i n r e a c t i o n t o E u r o p e a n a n d J a p a n e s e i m p e r i a l i s m .

A m e r i c a n b u s i n e s s m e n w e r e r e 1 , u c t a n t t o i n v e s t o r t o

e s t a b l i s h l o n g term t r a d i n g r e l a t i o n s w i t h c o u n t r i e s i n

t h e m i d s t o f s o c i a l r e v o l u t i o n s u c h as e x i s t e d i n L a o s ,

V i e t n a m , C h i n a a n d , t o a l e s s e r e x t e n t , t h e P h i l i p p i n e s a n d

M a l a y s i a . N e v e r t h e l e s s , by t h e e a r l y 1 9 7 0 s , c o u n t r i e s s u c h

a s T h a i l a n d , Burma, a n d t h e P h i l i p p i n e s h a d i m p l e m e n t e d

e f f e c t i v e c o u n t e r - i n s u r g e n c y p r o g r a m s a n d p o l i t i c a l

s t a b i l i t y became t h e o r d e r o f t h e day. B u s i n e s s m e n were

q u i c k t o t a k e a d v a n t a g e of t h i s s i t u a t i o n , f o r e x a m p l e , i n

t h e P h i l i p p i n e s , w h e r e A m e r i c a n i n v e s t m e n t r o s e f r o m $ 1 8 8

m i l l i o n i n 1 9 5 3 t o o v e r $700 m i l l i o n i n 1 9 7 0 . Under t h e

L a u r e l - L a n g l e y T r a d e T r e a t y s i g n e d i n 1 9 5 5 , A m e r i c a n

e x p o r t e r s h a v e r e a l i z e d a s i g n i f i c a n t m a r k e t w i t h t r a d e

b e t w e e n t h e c o u n t r i e s t o t a l l i n g $ 8 3 5 m i l l i o n .

P r o b a b l y t h e m o s t s u c c e s s f u l m a r k e t f o r A m e r i c a n

c a p i t a l a n d s u r p l u s p r o d u c t i o n i n East Asia was J a p a n o

Only t w o y e a r s h a d p a s s e d s i n c e t h e e n d o f t h e war i n t h e

P a c i f i c b e f o r e it became e v i d e n t t h a t J a p a n ' s i n d u s t r i a l

economy would b e r e s t o r e d i n o r d e r t o e s t a b l i s h a n a n t i -

c o m m u n i s t o u t p o s t i n t h e F a r E a s t f o r s t r a t e g i c as wel l as i -i

p o l i t i c a l r e a s o n s . N o t i n g t h i s new d e v e l o p m e n t a l o n g w i t h

t h e i r e x p e r i 3 n c e s i n C h i n a , A m e r i c a n b u s i n e s s m e n by 1947

came t o see J a p a n a s a c o u n t r y o f f e r i n g u n l i m i t e d e c o n o m i c

o p p o r t u n i t y . '* T h e J a p a n e s e h a d a l w a y s i n t e r e s t e d A m e r i c a n

b u s i n e s s m e n a n d , b e f o r e t h e S e c o n d World Mar, t h e c o u n t r y o f

t h e r i s i n g s u n l e d t h e o t h e r ,East A s i a n n a t i o n s i n terms

o f i n v e s t m e n t s a n d t r a d e w i t h t h e U n i t e d S t a t e s . 69 A m e r i c a n

i n d u s t r i a l p r o d u c t s f rom m a n u f a c t u r e d g o o d s t o s c r a p i r o n

were i n h i g h demand a n d t h e c a p i t a l r e q u i r e m e n t s o f a r a p i d l y

e x p a n d i n g economy were c o n s i d e r a b l e . Low wages a n d a h i g h l y

d i s c i p l i n e d i n d u s t r i a l w o r k i n g c l a s s m e a n t r e d u c e d p r o d u c -

t i o n c o s t s a n d o f f e r e d p r o f i t a b l e i n v e s t m e n t o p p o r t u n i t i e s

f o r b a n k e r s a n d f i n a n c i e r s i n J a p a n e s e i n d u s t r y .

I n t h e p o s t w a r p e r i o d u n d e r t h e a u t h o r i t a r i a n o c c u p a -

t i o n a d m i n i s t r a t i o n o f G e n e r a l M a c A r t h u r , J a p a n p r o v e d t o b e

e c o n o m i c a l l y a n d p o l i t i c a l l y s u p e r i o r t o C h i n a a s a n a rea

f o r t r a d e a n d i n v e s t m e n t . I n 1 9 4 7 , t r a d e r e s t r i c t i o n s were

removed a n d A m e r i c a n i m p o r t s came t o $ 4 2 9 m i l l i o n o r a l m o s t

twice t h a t f o r C h i n a i n t h a t same y e a r . 70 I n t h e f o l l o w i n g

y e a r , p r o d u c t i o n c o n t r o l s o n war r e l a t e d i n d u s t r i e s a n d

a n t i - t r u s t p r o g r a m s w e r e r e m o v e d , w h i l e u n i o n a c t i v i t y was

d i s c o u r a g e d by t h e o c c u p a t i o n a u t h o r i t i e s . W i t h t h e re-

i n s t a t e m e n t o f f o r m e r b u s i n e s s m e n a n d o f f i c i a l s who were

a s s o c i a t e d w i t h t h e wartime J a p a n e s e f a s c i s t r u l i n g e l i t e ,

i t became a p p a r e n t t h a t J a p a n p r o v i d e d b x c e l l e n t o p p o r -

t u n i t i e s f o r A m e r i c a n b u s i n e s s m e n , 71 A m e r i c a n b u s i n e s s m e n

r e c e i v e d p r i v i l e g e d t r e a t m e n t f r o m t h e o c c u p a t i o n a u t h o r -

i t i e s a n d s o came t o d o m i n a t e t h e f o r e i g n t r a d e o f J a p a n .

Of t h e 1 , 0 2 7 f o r e i g n t r a d e r s i n J a p a n i n 1 9 4 9 , 495 were

A m e r i c a n s w h i l e t h e B r i t i s h came s e c o n d w i t h 1 7 6 . 72 F o r

m o s t of t h e p o s t w a r p e r i o d , J a p m c a m e t o b e l a r g e s t m a r k e t i n

t h e F a r E a s t f o r A m e r i c a n i r o n o r e , c o k i n g c o a l , s c r a p

i r o n , raw c o t t o n a n d w h e a t . 73 Only r e c e n t l y , w i t h t h e i n c r e a s -

i n g c o m p e t i t i o n f r o m J a p a n f o r w o r l d m a r k e t s a n d t h e un-

f a v o r a b l e b a l a n c e o f t r a d e w i t h t h e U n i t e d S t a t e s , h a v e

c o m m e r c i a l r e l a t i o n s b e t w e e n t h e t w o c o u n t r i e s become

s t r a i n e d . 7 4

A m e r i c a n b u s i n e s s m e n were q u i t e f l e x i b l e a n d p r a g m a t i c

i n t h e i r searca f o r m a r k e t s a n d e v e n c o n s i d e r e d t h e t h i r d

a l t e r n a t i v e o f t r a d i n g w i t h t h e Communis t s . As e a r l y as

1 9 4 7 , A m e r i c a n t r a d e r s w e r e e n g a g i n g i n commercial t r a n s -

a c t i o n s w i t h t h e Communis t s i n N o r t h C h i n a t h r o u g h t h e p o r t

o f C h e e f o o . C h i n e s e b r i s t l e s , c a m e l w o o l , a n d e m b r o i d e r i e s

were e x c h a n g e d f o r a v a r i e t y o f A m e r i c a n m a n u f a c t u r e d

g o o d s I 75 T r a d e w i t h t h e Communis t s c o n t i n u e d u n t i l t h e

e n d o f t h e c i v i l war i n 1 9 4 9 a n d a c t u a l l y e x p a n d e d d u r i n g

t h a t p e r i o d w h i l e t h e y r e a l i z e d t h a t e c o n o m i c r e l a t i o n s

w i t h t h e Kuomin tang were b e c o m i n g i n c r e a s i n g l y d i f f i c u l t ,

b u s i n e s s m e n r e m a i n e d a m b i v a l e n t a b o u t t h e f u t u r e i n t e n t i o n s

o f t h e Communis t s . G u n t h e r S t e i n , i n h i s s t u d y o f c o r p o r a t e

a t t i t u d e s a c r o s t h e U n i t e d S t a t e s , n o t e d t h a t m o s t b u s i n e s s m e n

were i m p r e s s e d w i t h t h e s o u n d e c o n o m i c r e f o r m s c a r r i e d o u t

b y t h e C h i n e s e Communis t s b u t were s k e p t i c a l a b o u t t h e l o n g

r a n g e g o a l s . Many c o r p o r a t e o f f i c i a l s b e l i e v e d t h a t t h e

Communis t s would g o f u r t h e r t h a n p r i m i t i v e d e m o c r a t i c

e c o n o m i c r e f o r m a n d would e v e n t u a l l y a l i g n t h e m s e l v e s w i t h

t h e S o v i e t Union . 76 The a p p r e h e n s i o n o f b u s i n e s s m e n l a t e r

p r o v e d t o b e u n f o u n d e d f o r t h e a l l i a n c e w i t h t h e S o v i e t

Union was o n e o f n e c e s s i t y r a t h e r t h a n o n e b a s e d o n i d e o -

l o g i c a l a f f i n i t y .

P a r t o f t h e m i s t r u s t of t h e Communis t s s temmed f r o m

t h e v i r u l e n t a n t i - A m e r i c a n p r o p a g a n d a e m a n a t i n g f r o m t h e

r a d i c a l p r e s s a n d p a m p h l e t s d i s t r i b u t e d a t a n t i - f o r e i g n

p r o t e s t d e m o n s t r a t i o n s . T h e r e was more t h a n a g r a i n o f

t r u t h i n t h e C h i n e s e p r o p a g a n d a s i n c e t h e U n i t e d S t a t e s

a l l o c a t e d o v e r t h r e e b i l l i o n d o l l a r s i n a i d t o t h e

Kuomin tang w h i c h was u s e d f o r m i l i t a r y a s wel l a s c i v i l

p u r p o s e s . 77

I t s h o u l d b e p o i n t e d o u t , h o w e v e r , t h a t Communist

criticism was n o t a n a b s o l u t e c o n d e m n a t i o n o f t h e U n i t e d

S t a t e s , b u t , a s o n e s e a s o n e d o b s e r v e r o f t h e C h i n e s e p o f i -

t i c a l economy n o t e d , i t was d i r e c t e d a t " t h e U . S . Govern-

men t a n d i t s C h i n a p o l i c y , n o t a t i n d i v i d u a l s . " 78 A S f a r

a s t h e a n t i - c a p i t a l i s t c o n t e n t o f t h e C h i n e s e p r o p a g a n d a

was c o n c e r n e d , it was more r h e t o r i c t h a a a s t a t e m e n t o f

p o l i c y . The term " a g r a r i a n r e f o r m e r s " u s e d by some o f t h e

more i n f o r m e d S t a t e D e p a r t m e n t o f f i c i a l s was a n - a c c u r a t e

d e s c r i p t i o n o f t h e C h i n e s e Communis t s a t t h a t p a r t i c u l a r

s t a g e i n t h e i r d e v e l o p m e n t . 79 The mos t r a d i c a l a s p e c t o f

t h e Communist p r o g r a m was t h e e l i m i n a t i o n o f t h e l a n d l o r d

s y s t e m i n t h e r u r a l a r e a s . I n t h e u r b a n a r e a s , Kuomin tang

b u r e a u c r a t s were removed f rom power a n d b u s i n e s s m o n o p o l i e s

were d i s s o l v e d b u t p r i v a t e i n v e s t m e n t s i n i n d u s t r y , f o r t h e

t ime b e i n g a t Peast , were t o l e r a t e d . A c c o r d i n g t o mao, t h e

Communist P a r t y ' s i n d u s t r i a l p o l i c y was d i r e c t e d Ha t t h e

d e v e l o p m e n t o f p r o d u c t i o n , p r o s p e r i t y t o t h e economy, e q u a l

t r e a t m e n t t o t h e p u b l i c , a n d p r o f i t t o l a b o r a n d c a p i t a l . " 80

Mao's comments on t h e i m p o r t a n c e of i n d u s t r i a l i z a t i o n

a n d t h e r o l e o f p r i v a t e c a p i t a l were c o n s i s t e n t w i t h h i s

e a r l i e r r e m a r k s made t o J o h n S e r v i c e , t h e S t a t e D e p a r t m e n t

o f f i c i a l , d u r i n g h i s v i s i t t o Yenan i n 1 9 4 4 , A t t h a t h i s -

t o r i c m e e t i n g , Mao e m p h a s i z e d t o S e r v i c e t h a t

C h i n a ' s g r e a t e s t p o s t - w a r n e e d i s e c o n o m i c d e v e l o p m e n t , S h e l a c k s t h e c a p i t a l i s t i c f o u n d a t i o n n e c e s s a r y t o c a r r y t h i s o u t a l o n e , Her own l i v i n g s t a n d a r d s a r e s o l o w t h a t t h e y c a n n o t b e f u r t h e r d e p r e s s e d t o p r o v i d e t h e n e e d e d c a p i t a l ,

America a n d C h i n a c o m p l e m e n t e a c h o t h e r e c o n o m i c a l l y r t h e y w i l l n o t c o m p e t e . C h i n a d o e s n o t h a v e t h e r e q u i r e m e n t s of a h e a v y i n d u s t r y o f m a j o r s i z e , S h e c a n n o t h o p e t o meet t h e U n i t e d S t a t e s i n i t s h i g h l y s p e c i a l i z e d m a n u f a c t u r e s . A m e r i c a n e e d s a n e x p o r t m a r k e t f o r h e r h e a v y i n d u s t r y a n d t h e s e s p e c i a l i z e d m a n u f a c t u r e s , She a l s o n e e d s a n o u t l e t f o r c a p i t a l i n v e s t - m e n t , 13

C h i n a n e e d s t o b u i l d up l i g h t i n d u s t r i e s t o s u p p l y h e r own m a r k e t a n d r a i s e t h e l i v i n g

s t a n d a r d s o f h e r own p e o p l e . . . . America i s n o t o n l y t h e m o s t s u i t a b l e c o u n t r y t o a s s i s t t h i s e c o n o m i c d e v e l o p m e n t o f C h i n a t s h e is a l s o t h e o n l y c o u n t r y f u l l y a b l e t o p a r - t i c i p a t e . 81

Mao was, o f c o u r s e , t r y i n g t o e n c o u r a g e t h e U n i t e d S t a t e s

t o s e n d m i l i t a r y a i d t o t h e b q l e a g u e r e d Communis t s a n d h i s

g e n e r o u s o f f e r m u s t b e s e e n i n t h a t c o n t e x t . N e v e r t h e l e s s ,

on a number o f o c c a s i o n s b e t w e e n 1 9 4 4 a n d 1 9 4 9 , t h e Com-

m u n i s t s r e a f f i r m e d t h e i r t o l e r a n c e o f f o r e i g n b u s i n e s s m e n

who c o m p l i e d w i t h g o v e r n m e n t r e g u l a t i o n s . The Communis t s

a l s o l e t i t b e k n o w n t h e i r d e s i r e t o p a r t i c i p a t e i n m u t u a l l y

b e n e f i c i a l t r a d e r e l a t i o n s h i p s a n d p r o m i s e d s i z e a b l e mar-

k e t s f o r f o r e i g n i n d u s t r i a l p r o d u c t s .

T h e r e i s n o e v i d e n c e t o s u g g e s t t h a t b u s i n e s s m e n were

a w a r e o f Mao's p o s i t i o n o n f o r e i g n t r a d e a n d c a p i t a l i n v e s t -

m e n t s a s i n d i c a t e d t o J o h n S e r v i c e i n 1 9 4 4 ; b u t t h e r e w e r e

s e v e r a l r e p o r t s i n 1 9 4 8 a n d 1 9 4 9 t h a t l e d t h e m t o b e l i e v e

t h a t c o m m e r c i a l i n t e r c o u r s e w i t h t h e Communis t s was c o n -

c e i v a b l e . I n J a n u a r y o f 1 9 4 8 , t h e F a r E a s t e r n Economic

Economic Rev iew p u b l i s h e d a summary o f f l a o ' s s t a t e m e n t o f

t h e C h i n e s e Communist P a r t y ' s p o s i t i o n on e c o n o m i c i s s u e s ,

Mao r e i t e r a t e d t h a t

The N e w D e m o c r a t i c R e v o l u t i o n i s o n l y t o e l i m i n a t e f e u d a l i s m a n d monopoly c a p i t a l - ism, t h e l a n d l o r d c l a s s a n d t h e b u r e a u - c r a t i c b o u r g e o i s i e ( b i g b o u r g e o i s i e ) , n o t c a p i t a l i s m i n g e n e r a l a n d n o t t h e p e t t y

T?

b o u r g e o i s i e and t h e m i d d l e b o u r g e o i s i e . Owing t o t h e backwardness of Ch ina 's economy, i t w i l l s t i l l be necessary t o p e r m i t t h e e x i s t e n c e f o r a l o n g p e r i o d of t h e c a p i t a l i s t economy r e p r e s e n t e d by t h e b road p e t t y and m i d d l e bour - g e o i s i e even a f t e r t h e n a t i o n - w i d e v i c t o r y o f t h e r e v o l u t i o n . 8 2

Nao a l s o underscored t h e n e c e s s i t y o f f o r e i g n c a p i t a l and

t e c h n i c a l e x p e r t i s e t o f a c i l i t a t e Ch ina 's mode rn i za t i on . 83

On March 15, 1949 t h e Chinese Communists i n t r o d u c e d new

r e g u l a t i o n s gove rn i ng t r a d e w i t h f o r e i g n n a t i o n s . S p e c i f i c

r e g u l a t i o n s covered i m p o r t d u t i e s , p rocedures f o r o b t a i n i n g

t r a d e p e r m i t s , and p e n a l t i e s imposed f o r smuggl ing. 84

J.H. Keswick, D i r e c t o r of J a r d i n e , Matheson Company, an

American t r a d i n g Company w i t h an o f f i c e i n Shanghai, even

welcomed t h e new commerc ia l l e g i s l a t i o n w i t h c o n s i d e r a b l e

enthusiasm. Keswick f e l t t h a t t h e Communists were q u i t e

r e a l i s t i c i n t h e i r approach t o t r a d e r e f o r m and t h a t

economic r e l a t i o n s w i th China would be s t i m u l a t e d , 85

The a n x i e t y o f businessmen conce rn i ng Chinese Com-

m u n i s t i d e o l o g y ment ioned in t h e S t e i n su rvey had subs ided

by 1949. To be sure, businessmen ue re s t i l l somewhat wary

o f l o n g term p o l i t i c a l developments i n t h e Chinese Peop le ' s

Repub l i c b u t b e l i e v e d bus i ness c o n d i t i o n s c o u l d n o t be any

worse under t h e Communists t h a n wi th t h e Kuornintang, The

Chinese r e v o l u t i o n a r i e s d i d n o t p u t American t r a d e r s on a

b l a c k l i s t , even a f t e r t h e many yea rs o f American p o l i t i c a l

and economic s u p p o r t f o r t h e Kuomintang. I n s t e a d , whoever

wanted t o t r a d e was welcome, p r o v i d e d t h e y agreed t o t h e

r a t h e r d i f f i c u l t c o n d i t i o n s o f sh ipmen t and payment b e f o r e -

hand. 87 The Communists were n o t p r e p a r e d t o o f f e r American

businessmen t h e f a v o r a b l e t e r m s o f t r a d e t h a t t h e l i b e r a l

r e f o r m f a c t i o n of t h e Kuomintang was r e a d y t o g i v e b u t

u n f o r t u n a t e l y t h e a l t e r n a t i v e s t h a t remained open were

q u i t e l i m i t e d . R i g h t up t o 1949, t h e Kuomintang remained

f i r m l y e n t r e n c h e d i n i t s f e u d a l p a s t and i t was o n l y a f t e r

c o n s i d e r a b l e p r e s s u r e f r o m t h e Amer ican government and a f t e r

t h e r e t r e a t t o Taiwan t h a t economic r e l a t i o n s improved. As

f a r a s r e l a t i o n s between Amer ican businessmen and t h e Chinese

Communists were concerned, b o t h s i d e s rema ined open and

f l e x i b l e u n t i l 1949, A t t h a t t i m e t o r e p h r a s e a p o p u l a r flao

q u o t a t i o n , " P o l i t i c s t o o k Command,"

I n 1949 S e c r e t a r y o f S t a t e Dean Acheson o f f i c i a l l y

announced t h e b e g i n n i n g o f t h e U n i t e d S t a t e s F a r E a s t e r n

program f o r c o u n t e r - r e v o l u t i o n i n h i s w e l l known l e t t e r o f

t r a n s m i t t a l . A c c o r d i n g t o Acheson, t h e Chinese R e v o l u t i o n

was connec ted w i t h t h e i m p e r a t i v e s o f " S o v i e t Russ ian

i m p e r i a l i s m " b u t he was c o n f i d e n t t h a t " u l t i m a t e l y t h e

p r o f o u n d c i v i l i z a t i o n and t h e d e m o c r a t i c i n d i v i d u a l i s m i n

Ch ina w i l l r e a s s e r t t hemse lves and s h e w i l l t h r o w o f f t h e

f o r e i g n yoke." To f a c i l i t a t e t h e r e s t o r a t i o n o f a c o u n t e r -

r e v o l u t i o n a r y p o l i t i c a l economy Acheson sugges ted t h a t t h e

U n i t e d S t a t e s "encourage a l l developments i n China wh ich now

and i n t h e f u t u r e work toward t h i s end." 8B P o l i t i c a l l y

t h e U n i t e d S t a t e s a t t emp ted t o i s o l a t e China by n o t g r a n t i n g

d i p l o m a t i c r e c o g n i t i o n and by r e s t r i c t i n g i t s e n t r y i n t o

t h e U n i t e d Na t i ons . The con ta inment p o l i c y a l s o a f f e c t e d

economic r e l a t i o n s , and what t h i s meant t o American b u s i -

nessmen was t h a t commerc ia l i n t e r c o u r s e w i t h t h e Chinese

Peop le ' s Repub l i c would be suspended w i t h t h e i m p o s i t i o n

o f an economic b lockade,

The t r a d e embargo l e v i e d a g a i n s t t h e Peop le ' s Repub l i c

of China was a p p l i e d g r a d u a l l y , commencing e a r l y i n 1949.

A t t h a t t i m e American s a l e s were " l i c e n s e d w i t h g r e a t c a r e "

so as " t o deny those goods which wou ld i n c r e a s e t h e s t r e n g t h

o f t h e Communist armed f o r c e s , L a t e r i n * 1949, a f t e r Rao' s

announcement p r o c l a i m i n g t h e c r e a t i o n o f t h e Chinese Peop le ' s

Repub l i c , t h e American government ex tended t r a d e c o n t r o l s t o

abou t 100 a d d i t i o n a l s t r a t e g i c i t ems . When t h e c o n n e c t i o n

betmeen t h e r e v o l u t i o n i n Ch ina and t h e Mecca o f w o r l d

Communism i n Moscow was e s t a b l i s h e d i n t h e minds o f American

S t a t e Department b f f i c i a l s , i t d i d n o t t a k e l o n g b e f o r e

c o n t r o l s on e x p o r t s t o Ch ina t o become co -ex tens i ve w i t h

c o n t r o l s on sh ipments t o t h e S o v i e t Un ion and E a s t e r n Europe,

New r e s t r i c t i o n s were imposed i n March 1950 and t h r e e weeks

a f t e r t h e ou tb reak o f t h e Korean,War, a l l sh ipments o f what

were cons ide red s t r a t e g i c i t e m s were t e rm ina ted , I n December

99

o f 1 9 5 0 a l l t r a d e b e t w e e n t h e t w o c o u n t r i e s was c u t o f f

a f t e r t h e C h i n e s e o f f i c i a l l y e n t e r e d t h e c o n f l i c t ." Any

A m e r i c a n c i t i z e n o r company d o i n g b u s i n e s s w i t h C h i n a a f t e r

1 9 5 0 was l i a b l e t o b e p r o s e c u t e d u n d e r t h e T r a d i n g w i t h t h e

Enemy Act o f 1 9 1 7 , a d e t e r r e n t w h i c h p r o v e d t o b e e f f e c t i v e

f o r t w e n t y y e a r s .

F o r t h e m o s t p a r t , A m e r i c a n b u s i n e s s m e n c o m p l i e d w i t h

t h e new t r a d e r e g u l a t i o n s a n d d i d n o t c o m p l a i n a b o u t t h e

l o s s o f t h e C h i n a m a r k e t a s t h e y d i d when t h e C h i a n g K a i - s h e k

r e g i m e h a s t e n e d i t s d e m i s e . Not o n e b u s i n e s s j o u r n a l o r

t r a d e o r g a n i z a t i o n d i s c u s s e d t h e e f f e c t o f t h e " l o s s o f

C h i n a " on t h e A m e r i c a n economy o r t h e p r o s p e c t s f o r t r a d e

i n t h e f u t u r e . T h i s was n o t s u r p r i s i n g b c a u s e t h e F o r e i g n

Commerce Weekly r e p o r t e d t h a t A m e r i c a n f o r e i g n t r a d e was a t

a n a l l time h i g h i n 1 9 5 1 , t h e f i r s t y e a r t h e t o t a l b l o c k a d e

o f C h i n a became e f f e c t i v e . g 2 On t h e o t h e r h a n d , t o t a l

A m e r i c a n t r a d e a n d i n v e s t m e n t s i n C h i n a a m o u n t e d t o c o n -

s i d e r a b l y l e s s t h a n 5% of t h e t o t a l a n d was r a p i d l y d e c l i n i n g ,

a s i t u a t i o n t h a t was c o m p a r a b l e t o t h e S o v i e t - A m e r i c a n

e c o n o m i c r e l a t i o n s h i p i n 1 9 1 7 . 93 G e n e r a l l y , b u s i n e s s j o u r n a l s

a c c e p t e d t h e Truman A d m i n i s t r a t i o n ' s p o s i t i o n t h a t t r a d e

r e s t r i c t i o n s were e s s e n t i a l t o n a t i o n a l s e c u r i t y . To b e

s u r e , t h i s was a somewhat u n u s u a l a t t i t u d e f o r A m e r i c a n

b u s i n e s s m e n t o t a k e , g i v e n t h e h i s t o r y o f r e l a t i o n s b e t w e e n

t h e c o r p o r a t e e l i t e a n d p o l i t i c a l e l i t e on f o r e i g n p o l i c y

i s s u e s . Bu t t a k i n g i n t o c o n s i d e r a t i o n t h e f a c t t h a t t h e

C h i n a m a r k e t would b e r e s t r i c t e d , a n d t h a t o t h e r m a r k e t s

were f o u n d , i t becomes e a s y t o s e e how e x i g e n c i e s o f t h e

C o l d IaJar t o o k p r e c e d e n c e o v e r a n y s h o r t term f i n a n c i a l g a i n .

I n s h o r t , f o r e i g n t r a d e s i n s t e a d o f b e i n g a n e n d o f p o l i c y ,

now became a n i n s t r u m e n t o f p o l i c y , a t l e a s t a s f a r a s

A m e r i c a n r e l a t i o n s w i t h C h i n a were c o n c e r n e d .

I n summary, t h e t r a n s f o r m a t i o n o f b u s i n e s s m e n ' s p e r -

c e p t i o n s o f C h i n a b a s e d o n m y t h i c a l a s s u m p t i o n s t o a more

r e a l i s t i c a n d b a l a n c e d a n a l y s i s was q u i t e d r a m a t i c . F o r

t h e m o s t p a r t , t h e c h a n g e i n o u t l o o k was e s s e n t i a l l y a

r e a c t i o n t o t h e p o l i t i c a l a n d e c o n o m i c p o l i c i e s o f t h e

Kuomin tang . P o l i t i c a l l y , t h e C h i a n g K a i - s h e k r e g i m e r e f u s e d

t o r e c o g n i z e t h e Communis t s as a l e g i t i m a t e p a r t y a n d c o n -

s i d e r e d a n e g o t i a t e d s e t t l e m e n t w i t h them o u t of t h e q u e s -

t i o n , I n s t e a d o f c o m p r o m i s e , C h i a n g f a v o r e d a m i l i t a r y

s o l u t i o n t o h i s i n t e r n a l p r o b l e m s , a n d t h i s l e d t o t h e s u t -

b r e a k o f h o s t i l i t i e s i n t h e l a t t e r h a l f o f 1946. C h i a n g e s

c o n d u c t i n t h e e c o n o m i c s p h e r e was a l s o a s i g n i f i c a n t fac-

t o r . O f f i c i a l l y , h e e s p o u s e d a p r o g r a m o f r e f o r m a n d

i n d u s t r i a l i z a t i o n i n w h i c h A m e r i c a n c o m m e r c i a l a n d f i n a n c i a l

i n t e r e s t s c o u l d p a r t i c i p a t e . I n f a c t t h e o p p o s i t e p r o v e d

t o be t h e c a s e , s i n c e A m e r i c a n b u s i n e s s m e n were e x c l u d e d f r o m

a n y m e a n i n g f u l r o l e i n C h i n a ' s d e v e l o p m e n t by t h e p a s s i n g

of s t r i n g e n t i m p o r t q u o t a s a n d u n f a i r d u t i e s a s well a s

s t r i c t r e g u l a t i o n s c o n c e r n i n g t h e o w n e r s h i p o f d o m e s t i c

c o r p o r a t i o n s . 94

A f l d i t i o n a l f a c t o r s r e l a t e d t o t h e c r i s i s i n t h e C h i n e s e

p o l i t i c a l economy w e r e a s p i r a l l i n g i n f l a t i o n , d i s r u p t i o n

o f commerce b e t w e e n u r b a n a n d r u r a l a r e a s , a n d t h e f l i g h t

of d o m e s t i c c a p i t a l t o more s e c u r e l o c a t i o n s , 95 TO com-

p o u n d t h e d i f f i c u l t i e s f o r A m e r i c a n b u s i n e s s m e n , U N R R A

f u n d s t o C h i n a were t e r m i n a t e d w h i c h r e d u c e d A m e r i c a n e x p o r t s

t o t h a t c o u n t r y by o n e - t h i r d . R e l a t i o n s w i t h t h e C h i n e s e

d e t e r i o r a t e d w i t h t h e r i s e of a n t i - f o r e i g n s e n t i m e n t s i n

t h e u r b a n a reas a n d o n e r e a s o n f o r t h i s a s p o i n t e d o u t e a r l i e r

was t h e p r a c t i c e o f dumping c h e a p A m e r i c a n c o m m o d i t i e s w h i c h

d r a s t i c a l l y c u r t a i l e d t h e g r o w t h a n d p r o d u c t i o n o f d o m e s t i c

i n d u s t r i e s , The c o m b i n e d i m p l i c a t i o n s o f t h e s e f a c t o r s ,

g e n e r a l l y w e n t u n n o t i c e d by b u s i n e s s m e n u n t i l 1 9 4 7 .

U l t i m a t e l y t h e p o l i t i c a l a n d e c o n o m i c u p h e a v a l w h i c h

was p r i m a r i l y r e s p o n s i b l e f o r t h e f a i l u r e o f t h e C h i n a mar-

k e t t o become a r e a l i t y , m u s t b e v i e w e d i n t h e h i s t o r i c a l

c o n t e x t o f t h e t w e n t i e t h c e n t u r y . C o n t r a d i c t i o n s w i t h i n

t h e C h i n e s e p o l i t i c a l economy h a d b e e n s h a r p e n i n g f o r o v e r

f i v e d e c a d e s a n d t h e a b o v e m e n t i o n e d f a c t o r s a d d e d f u e l t o

a n a l r e a d y r a g i n g r e v o l u t i o n a r y f i r e . U n f o r t u n a t e l y b u s i n e s s -

men w e r e c a u g h t i n t h e f i n a l s t a g e s o f t h e C h i n e s e h o l o c a u s t

o n l y o n e y e a r a f t e r t h e d e f e a t o f J a p a n . On a more pos i t ive note b u s i -

n e s s m e n h a d o t h e r o p t i o n s o p e n b u t more i m p o r t a n t l y t h e y

102

d i d n ' t have t h a t much t o l o s e except perhaps t h e h i s t o r i c

myth o f t h e China market.

CHAPTER P I

FOOTNOTES

ang Kia-Ngau, The I n f l a t i o n a r y S p i r a l : The Exper ence in China, 1939-1950 (New York, 1958), 69.

c.

'D .K. L i e u , Ch ina 's Economic S t a b i l i z a t i o n and Recon- s t r u c t i o n (New Brunswick, 1948)-, 90-91.

3 ~ . ~ . Department o f S ta te , F o r e i qn R e l a t i o n s o f t h e U n i t e d S t a t e s , The Fa r Eas t : China, 1945 (wash ington, 172) , 1372.

4 ~ a r E a s t e r n Economic Review, A p r i l 30, 1946, 206.

7 y u - ~ w e i Chenq, F o r e i s n Trade and I n d u s t r i a l ~ e v e l o a - ment o f China r ~ n - ~ i s t o r i c a l and I n t e g r a t e d A n a l y s i s

r

Through 1948 (Washington, D.C., 1956), -174.

he China Weekly Review, December 18, 1946, 42.

an^ Tsou, Amer ica 's F a i l u r e i n China, 1941-1950 (ch icago , 1963), 441-493. Tang Tsou p o i n t s o u t t h a t American dec is ion-makers gave t o p p r i o r i t y t o European recove ry . Budget c u t s were b e i n g made in t h e l a t e 1940's wh ich prompted a r e v i e w of t h e China a i d program. For a summary o f t h e c r i t i c i s m i n t h e U n i t e d S t a t e s a g a i n s t any f u r t h e r economic a i d see George Roche, " P u b l i c Op in i on and t h e China P o l i c y o f t h e U n i t e d S t a t e s , 1941-1951," (Un- p u b l i s h e d Ph.D. d i s s e r t a t i o n , U n i v e r s i t y o f Co lorado, l 9 6 5 ) , 243-251.

1 • ‹ ~ e w York Times, J u l y 2, 1946, 40.

stio ions Bus iness, January, 1947, 35.

10 3

''The Ch ina Weekly Review, December 7, 1946, 8.

1 3 ~ u s i n e s s l e e k , December 28, 1946, 39.

148ankinq, march 1946, 17.

1 5 ~ u s i n e s s Week, December 28, 1946, 78.

16Far E a s t e r n Economic Review, F e b r u a r y 12, 1947, 91.

17Far E a s t e r n Economic Review, December 25, 1946, 3.

1 8 w e ~ , Sqvmel l , "KmT-CCP R e l a t i o n s 1911-1941 ," i n J .M. Gibson and D.M. Johns ton , ed., A C e n t u r y o f 5 t r u q q l e gu or onto, 1971), 38-44.

1 9 ~ c a n a m i s t , October 20, 1945, 547.

''John C a r t e r V i n c e n t i n an address d e l i v e r e d t o t h e t h i r t y - t h i r d c o n v e n t i o n o f t h e N a t i o n a l F o r e i g n Trade C o u n c i l i n New York. The t e x t o f t h e speech i s f o u n d i n t h e U n i t e d S t a t e s Depar tment o f S t a t e g u l l e t i n , November 24, 1947, 959-963. F o r a d d i t i o n a l i n f o r m a t i o n on t h e economic a s p e c t s o f t h e M a r s h a l l M i s s i o n see L l o y d Gardners A r c h i t e c t s o f I X l u s i o n ( c h i c a g o , 1970) , 139-170.

2 1 ~ u s i n e s s Week, January 5, 1946, 105-106.

2 2 ~ o r a d e t a i l e d a c c o u n t o f t h e p r o b l e m s m a r s h a l 1 encoun te red w h i l e n e g o t i a t i n g see t h e U.S. Depar tment o f S t a t e , F o r e i g n R e l a t i o n s o f t h e U n i t e d S t a t e s , 19461 The F a r Eas t , Ch ina (Washington, 19721, 1-131. .

" ' ~ u c i e n B ianco , O r i q i n s o f t h e Ch inese R e v o l u t i o n , 1915-1949 ( s t a n f o r d , C a l i f o r n i a , 1971) , 82-107.

2 4 ~ e e Chang Kia-Ngau, The I n f l a t i o n a r y S p i r a l t The E x p e r i e n c e i n China, 121-1501 Andrew Huang, "The I n f l a t i o n i n China," The Q u a r t e r l y J o u r n a l o f Economics 62 ( ~ u g u s t 1 9 4 8 ) ~ 562-568; A r t h u r N. Young, C h i n a ' s Wart ime F i n a n c e and I n f l a t i o n , 1937-1945 (Cambridge, Massachuse t t s , l 9 m ) passim.

2 5 ~ o l o n D. Campbel l and Gordon C. T u l l o c k , " H y ~ e r - i n f l a t i o n i n China, 1937-49," The J o u r n a l o f p o l i t i c a l Econom 62 ( ~ u n e 1954) 238; Yu-Kwei Cheng, F o r e i q n Trade d u s t r i a l Development o f China, 159. E s t i m a t e s on m i l i t a r y e x p e n d i t u r e s v a r y between t w o - t h i r d s and t h r e e - q u a r t e r s o f . t h e t o t a l budge t wh ich p a r t l y a c c o u n t s f o r t h e h i g h r a t e o f i n f l a t i o n . The enormous e x p e n d i t u r e s on t h e m i l i t a r y s h o u l d n o t be i s o l a t e d as an i ndependen t f a c t o r e x p l a i n i n g C h i n a ' s s o c i a l and economic m a l a i s e b u t s h o u l d be seen as a response t o a t h r e a t (ccP) t o p r e v i o u s s o c i a l and economic d i s l o c a t i o n .

2 6 ~ . S. Depar tment of Commerce, I n t e r n a t i o n a l Re fe rence S e r v i c e , ~ c o n o m i c Review o f China, 1948 (wash ing ton , D.C., 1949). 8.

2 7 ~ u - ~ w e l Cheng, F o r e i g n Trade on I n d u s t r i a l Deve lop- ment o f Ch ina , 160.

2 8 ~ a r E a s t e r n Economic Review, December 4, 1946, 1.

he China Neek ly Review, F e b r u a r y 10, 1947, 82.

3 0 ~ a r E a s t e r n Economic Review, F e b r u a r y 19, 1947, 94.

3 1 ~ e r n a r d C. Dav ids , " A s i a ' s n o t so open door , " Bankinq, November 1947, 35.

3 3 ~ u n t h e r S t e i n , "Amer ican B u s i n e s s w i t h E a s t A s i a , " paper p r e s e n t e d t o t h e T e n t h Conference o f t h e IPR, 1947, 1-22.

3 5 ~ h e s e c o m p l a i n t s were passed on t o t h e S t a t e Depar t - ment, See U.S. Depar tment o f S t a t e , F o r e i g n R e l a t i o n s o f t h e U n i t e d S t a t e s , 1946, The F a r E a s t : Ch ina , 1342-1403.

3 9 ~ a b r i e l K o l k o , The P o l i t i c s o f lrlarr The UJorld and n P o l i c y , 1943-1945 ( ~ e w York, 1968), Moore, S o c i a l O r i g i n s o f D i c t a t o r s h i p

and Democracyc L o r d and Peasant i n t h e Mak inq OF t h e modern Wor ld (Bos ton , 1967) , 193-197,

4 0 ~ a r E a s t e r n Economic Review, December 25, 1946, 4. See a l s o Carson Chang, "Ch iang Ka i -shek and t h e Kuomintang D i c t a t o r s h i p , " i n P i c h o n P . Y . Loh, The Kuomintang Debac le of 19498 Conquest o r C o l l a p s e ? ( g o s t o n , 19651, 35-41.

4 1 ~ a r E a s t e r n Economic Rev iew, December 25, 1946, 5.

"waiter Gordon, "A New Ch inese Wal l , " C o l l i e r s (Oc tober 11, 1947) , 52,

4 3 ~ . ~ . Depar tment o f S t a t e , F a r a i n R e l a t i o n s o f t h e U n i t e d S t a t e s , The f a r E a s t , Chinn9-399.-

4 4 ~ b i d . , - 1374-1394. Sea a l s o H a r l e y Stevens, "Bus i - ness and P o l i t i c s , " F a r E a s t e r n Survey 1 5 ( ~ e ~ t e m b e r 25, 1946)s 295-2980 -

4 5 ~ ~ ~ , F a r E a s t : Ch ina , 1946, 1375.

4 7 ~ h e Ch inese P e t r o l e u m C o r p o r a t i o n was managed b y t h e N a t i o n a l Resources Commission, an agency c o n t r o l l e d by t h e Ch iang Ka i -shek group.

4 8 ~ . ~ , Depar tment o f S t a t e , F o r e i q n R e l a t i o n s o f t h e U n i t e d S t a t e s , The F a r E a s t t Ch ina , 1945, 1378-1379.

4 g ~ , ~ . Depar tment of Commerce, I n t e r n a t i o n a l Re fe rence S e r v i c e , ~ c o n o m i c Review o f China, 1947 (Washington, D.C., 1948) , 5. -

5 0 ~ o r o t h y Borg, "The Ch ina Marke t , " F a r E a s t e r n Survey 1 6 ( J U ~ ~ 2, 1947), 12-21.

' l ~ h i n a Weekly Review, February 22, 1946, 29.

5 2 ~ .R. Kainf, **U.S. Trade P rospec t s Here S e r i o u s l y Impared by I l l - a d v i s e d Marke t ing , " The China Meekly Review, November 2, 1946, 257.

Tang Tsou, Amer ica 's F a i l u r e ,

5 5 ~ a r E a s t e r n Trader , December 8, 1948, 280.

5 6 ~ . ~ . Kaim, "Can Economic Reform Succeed?'* The China Weekly Review, August 21, 1948, 332.

5 7 ~ i o n e l flax Chassin, The Communist Conquest o f Ch ina (Cambridge, Massachuset ts , 1965), 157-253,

5 8 ~ o y c e and G a b r i e l Ko lko , The L i m i t s o f Power, 272.

5 9 ~ m S, Department o f Commerce, I n t e r n a t i o n a l Reference Se rv i ce , Economic Review o f China, 1948 (wash ington, D.C., 1949), 8-9.

' O ~ a r o l d U, Fau l kne r , American Economic H i s t o r y ( ~ e w York, 1960), 712-14; and L o u i s Hacker, The Course o f American Economic Growth and Development ( ~ e w York, 19701, 325-328.

61~ee f o r example James L. C lay ton , The Economic Impact o f t h e Co ld Yar ( ~ e w York, 1970) , 7-106; Seymour Melman, ed., The Oar Economy o f t h e U n i t e d S t a t e s ( ~ e w York, 1971), 11- 200; Joseph D m P h i l l i p s , "Economic E f f e c t s o f t h e Co ld War," i n Dav id H o r o w i t r , ed., C o r p o r a t i o n s and t h e Co ld War, 173- 204,

6 2 ~ h i 1 1 i p s , "Economic E f f e c t s o f t h e Co ld War," 176.

6 3 ~ e e B a r t o n B e r n s t e i n , nEconornic P o l i c i e s , " i n R i c h a r d S. K i r k e n d a l l , ed., The Truman P e r i o d as a Research F i e l d ( ~ o l u m b i a , M i s s o u r i , 1967) , 87-148.

V

6 4 ~ i s t o r i c a l l y , China had been an i m p o r t a n t marke t f o r West c o a s t p e t r o l e u m p r o d u c t s , d r i e d f r u i t s , canned f r u i t s ,

pulp and paper , and a v a r i e t y of f o r e s t p roduc ts . For f u r t h e r i n fo rma t ion r e g a r d i n g t r a d e p a t t e r n s between China and t h e American West c o a s t s e e Cha r l e s M i l l e r , " P a c i f i c Northwest Trade wi th Far Eas t P a c i f i c Nat ions , " .. -

~ n s t i t u t e of P a c i f i c R e l a t i o n s Papers , ( ~ a n u a r y 1 9 4 ~ ) ~ - 45-46; Vanya Oakes, '"The West Coast Dreams," Asia and t h e Americas 12 ( ~ u ~ u s t , 1945) , 374-76; F r a n c i s R . Valeo, "Far Eas t e rn Economic Development and t h e West Coast fconomy," P u b l i c A f f a i r s n u l i e t i n 84 (1950, 55-83.

6 5 ~ a r Eas t Trader , November 17 , 1948, 257.

6 6 ~ 1 f r e d K . Ho, The Far Eas t i n World Trade ( ~ e w York, 1967) , 117. See a l s o Donald R. Sherk, The United S t a t e s and P a c i f i c Trade Basin an ~ r a n c i s c o , m 2 ) , 1-80.

6 7 ~ e e Gabr i e l Kolko, "The United S t a t e s and t h e P h i l i p p i n e s t The Beginning of Another Vietnam," J o u r n a l of Contemporary Asia 3 ( s p r i n g 1973) , 70-84. ~ i l m Pomeroy, American Neo-Colonialism: I t s Emerqence i n t h e P h i l i p p i n e s and Asia (New York, 1970), 223-26; Guy Whitehead, " I Jh i l i pp ine -~mer i can Economic R e l a t i o n s , " P a c i f i c Research & World Empire Teleqram 4 ( ~ a n u a r y - F e b r u a r y , 1973) , 1-8.

%ee John Powell , "U.S. F inds A l t e r n a t i v e Market i n Japan ," The China Weekly Review, October 12 , 1946, 163-64; Far Eas t Trader-, December 15, 1948, 294; Far Eas t e rn Economic Review, December 17 , 1947, 694.

6 9 ~ e e Noam Chornsky, American Power and t h e New mandarins ( ~ e w York, 1967) , 170-208, Llo d Gardner, Economic A 1 s o e c t g of New Di~ lomacv ( ~ o s t o n . 1964 , 64-84; Joan Hoff Wilson, American Busine&s '& ~ o r e i ~ n p o l i c y , 1920-1933 ( ~ e x i n g t o n - Kentucky, 1971) , 211-239.

7 0 f a r E a s t e r n Economic Review, flay 12, 1948, 470.

? l ~ o h n Dower, w O ~ ~ ~ p i e d Japan and t h e American Lake, 1945-1950." i n Edward f r iedman & Mark Se lden , ( e d s . ) A m e r i c a ' s - ~ s i a ( ~ e w York, 1969) , 173-89; ~ o ~ c e - a n d Gabr i e l Kolko, The L i m i t s of Power, 510-18.

7 2 ~ a r Eas t Trader , June 15, 1949, 85.

?'Ho, The Far Eas t i n World Trade, $92-94.

7 4 ~ e e M a r t i n B r o n f e n b r e n n e r , "A J a p a n e s e A m e r i c a n Economic War?" Q u a r t e r l y Rev iew o f ~ c o n o m i c s a n d B u s i n e s s ( ~ u t u m n l . g ? l ) , T-16; J o n H a l l i d a y a n d G a v i n McCormick, " J a p a n a n d A m e r i c a t A n t a g o n i s t i c A l l i e s , " Neu L e f t Rev iew ( J a n u a r y - ~ e b r u a r y 1 9 7 3 ) , 59-74.

7 5 ~ a r E a s t e r n Economic R e v i e w , A u g u s t 2 8 , 1 9 4 7 , 321 .

7 6 ~ t e i n , "Amer ican B u s i n e s s w i t h East Asia," 7.

7 7 ~ e e J o h n G i t t i n g s , *The O r i g i n s o f C h i n a ' s F o r e i g n P o l i c y , * i n D a v i d H o r o w i t z , e d . , C o n t a i n m e n t a n d R e v o l u t i o n - ( ~ o s t o n , 1 9 6 7 ) , 1 9 5 . G i t t i n g s n o t e s t h a t f r o m 1 9 3 7 t o V-J d a y e c o n o m i c a n d m i l i t a r y a i d t o t a l e d U . S . $ 1 5 1 5 . 7 m i l l i o n w h i l e a i d g i v e n f r o m V-J day t o March 2 1 , 1 9 4 9 a m o u n t t o 8 3 0 8 7 m i l l i o n .

7 8 ~ a n d a l l G o u l d , " C h i n a O u t l o o k : A B u s i n e s s V i e w , " F a r E a s t e r n S u r v e y 18 ( ~ p r i l 2 0 , 1 9 4 9 ) , 9 0 .

7 9 f l a o t s c o n c e p t i o n o f a g r a r i a n r e f o r m i s d i s c u s s e d i n S t u a r t S c h r a m , Nao T s e - t u n q ( m i d d l e s e x , E n g l a n d , 1 9 6 6 ) , 249-276. The v i e w s of A m e r i c a n S t a t e D e p a r t m e n t o f f i c i a l s who were l a t e r c r i t i c i z e d f o r t h e i r a l l e g e d Communist s y m p a t h i s s a r e f o u n d i n U n i t e d S t a t e s S e n a t e , The A m e r a s i a P a p e r s : A C l u e - t o t h e C a t a s t r o p h e o f C h i n a , ( ~ a s h i n g t o n , 1 9 7 0 , passim. Of p a r t i c u l a r i n t e r e s t a r e t h e comments bv J o h n - 5 ' . S e r v i c e , 501-503. S e e a l s o Ross erri ill, J o h n ' Carter V i n c e n t a n d t h e A m e r i c a n * L o s s 1 of C h i n a , " i n B r u c e D o u b l a s s a n d R o s s T e r r i l l , ( e d s , ) , C h i n a a n d O u r s e l v e s t E x p l o r a t i o n s a n d R e v i s i o n s by a N e w G e n e r a t i o n ( B o s t o n , 1 9 6 9 ) , 122-154 .

8 0 ~ u o t e d i n The C h i n a w e e k l y R e v i e w , J u l y 1 7 , 1948, 21 . See a l s o K e n n e t h L i e b e r t h a l , "Mao v e r s u s L i u ? P o l i c v T o w a r d s I n d u s t r y Commerce, i 9 4 6 - 1 9 4 9 , T h e C h i n a ~ u a k t e r l ~ 4 7 ( ~ u l y - ~ e p b m b e r 1 9 7 1 ) , 494-520.

"John S e r v i c e , *V?emorandurnr C o n v e r s a t i o n w i t h flao T s e - t u n g , " The Amerasia P a p e r s , 1 4 0 1 .

f i

8 2 ~ a r E a s t e r n Economic R e v i e w , ' J anuary 2 1 , 1 9 4 8 , 69 .

B 3 ~ b i d e - Mao T s e - t u n g p o i n t e d o u t t h a t l * F a v o u r a b l e terms s h o u l d b e o f f e r e d t o i n d u c e f o r e i g n c a p i t a l a n d

t e c h n i c a l h e l p t o Ch ina f o r t h e purpose of a c h i e v i n g n a t i o n a l i n d u s t r i a l i z a t i o n . "

8 4 ~ a r E a s t e r n Economic Revisw, May 11, 1949, 594.

8 5 ~ a r E a s t T rader , J u l y 29, 1949, 98.

8 6 ~ e e R a n d a l l Gould, "China O u t l o o k r A Bus iness View,' F a r E a s t e r n Survey ( ~ p r i l 20, 1949), 90. Gould was t h e l o n g t i m e e d i t o r o f t h e Shanghai E v e n i n g P o s t and Mercury , an American ou~ned newspaper-which p u b l i s h e d i n Shanghai.

8 7 ~ e e J.R. Kaim "Trade P r o s o e c t s i n China. F a r - E a s t e r n Survey ( ~ u n e 1, 1949) , i i 3 T A l s o F a r E a s t e r n Economic Review. March 23. 1949. 501. Hono Kona b u s i n e s s - men r e a l i z e d t h e r e were d i f f i c u i t i e s w i t h ;h ipp ing and c u r r e n c y exchange b u t f e l t t h a t enormous p r o f i t s c o u l d b e made. Moreover , i t was b e l i e v e d t h a t t h e r e wou ld be s i z e a b l e i n c r e a s e i n t h e volume o f t r a d e .

8 8 ~ e a n Acheson, " L e t t e r o f T r a n s m i t t a l , J u l y 30, 1949, " U n i t e d S t a t e s R e l a t i o n s w i t h Ch ina (wash ing ton , D.C., 1949) x v i .

8 9 B a t t l e A c t R e p o r t s , Minth R e p o r t , June 1957 c i t e d i n O l i v e r R. Lee, "U.S. Trade P o l i c y Toward China; From Economic War fare t o S u m m i t ~ i ~ l o m a c ~ , " i n A r t h u r Stankhe, ed., C h i n a ' s Trade w i t h t h e West: A P o l i t i c a l and Economic A n a l y s i s (New Yorkr 1973) , 43.

'Osee John R . Garson, 'The Amer ican Trade Embargo A g a i n s t China," i n Jerome Cohen, ed., Ch ina Trade ~ r o s ~ e c t s and U.S. P o l i c y ( ~ e w York, 1972) . I t i s o f i n t e r e s t t o n o t e t h a t a l l ~ r o ~ e r t y ( ~ h i n e s e ) i n t h e U n i t e d was impounded and a l l i m p o r t s b r o h i b i t e d . F u r t h e r d i s c u s s i o n o f t h e p r o b l e m i s f o u n d i n John Norman, "The Development o f E x p o r t C o n t r o l s A g a i n s t t h e S i n o - S o v i e t B l o c , " Tho New F r o n t i e r s 7 ( s p r i n g 1962), 16-28 and Cunnar Ka r l -Adde lson , Western Economic Warfare, 1947-1967 (Stockho lm, 1968) 22-35, 201-8.

'l~ll t h e m a j o r b u s i n e s s j o u r n a l s examined ware l i s t e d i n t h e P u b l i c A f f a i r s I n d e x and t h e S o c i a l Sc ience Index . The a n n u a l c o n v e n t i o n o f t h e N a t i o n a l F o r e i g n Trade C o u n c i l were c o n s u l t e d from 1949 t h r o u g h 1950 w h i c h p r o d u c e d n o r e f e r e n c e t o t h e m a r k e t p o t e n t i a l o f t h e Peop le ' s R e p u b l i c

o f Ch ina . Only one a r t i c l e on t h e Ch ina m a r k e t was found i n a s m a l l Communist p u b l i c a t i o n . See V i c t o r P e r l o , "Can we do b u s i n e s s w i t h C h i n a , " New World Review V I I I (Septem- b e r , 1 9 5 1 ) , 37-41.

9 2 ~ o r e i g n Commerce Weekly, A p r i l 2 8 , 1952 , 3-7.

9 3 ~ e e Wi l l i am A . W i l l i a m s , "American I n t e r v e n t i o n i n R u s s i a : 1917-20 ," i n David H o r o w i t z , ed . , Con ta inmen t and ,

R e v o l u t i o n ( B o s t o n , 1 9 6 7 ) , 26-75; J o a n Hoff W i l s o n , "American B u s i n e s s a n d t h e R e c o q n i t i o n o f t h e S o v i e t Union ," S o c i a l S c i e n c e Q u a r t e r l y 52 ( ~ e p t e m b e r 1 9 7 1 ) ' 349-368.

9 4 ~ e e Tang Tsou , Arnarfca 's F a i l u r e , 122-23, A c c o r d i n g t o f a n g T s o u , c o n t r a d i c t i o n s be tween program a n d p r a c t i c e had p l a g u e d t h e Kuomintang s i n c e 1 9 2 7 ,

9 5 ~ e e D . K . L i e u , C h i n a ' s Economic S t a b i l i z a t i o n , 38-59; Yu-Kwai Cheng, F o r e i q n T r a d e a n d I n d u s t r i a l Develop- ment , 156-85: Ch iang Kia-Ngau, The I n f l a t i o n a r y S p i r a c - 59-85. ment , - 59-85

P L 2 -- ' s Economic S t a b i l i z a t i o n , 7 T r a d e a n d I n d u s t r i a l Develop-

Kia-Ngau, The I n f l a t i o n a r y S p i r a c

CONCLUSION

One c a n l o o k b a c k o v e r a h a l f o f a c e n t u r y f r o m 1 8 9 9

t o 1 9 4 9 a n d d e s c r i b e t h e C h i n a m a r k e t a s b e i n g l i t t l e more

t h a n a myth o r a n i l l u s i o n , g i v e n t h e r e a l i t y o f t h e

p o l i t i c a l economy o f t h a t c o u n t r y . A l t h o u g h some C h i n a

w a t c h e r s , p a r t i c u l a r l y t h o s e o f f i c i a l s i n t h e S t a t e D e p a r t -

m e n t w i t h f i r s t h a n d e x p e r i e n c e i n t h e F a r Eas t , h a d a l w a y s

m a i n t a i n e d r e s e r v a t i o n s a b o u t t h e e c o n o m i c p o t e n t i a l o f

C h i n a , m o s t b u s i n e s s m e n d i d n o t . They d i d n o t a t l e a s t

f r o m 1 9 4 3 t o 1 9 4 6 , a p e r i o d when w i l d s p e c u l a t i o n a b o u t t h e

l u c r a t i v e p r o f i t s t o b e f o u n d i n t h e O r i e n t was r a m p a n t .

Two c o n c l u s i o n s c a n t h e r e f o r e b e drawn a b o u t t h e

b e h a v i o r o f b u s i n e s s m e n a t t h i s t i m e , B u s i n e s s m e n e i t h e r

d i d n o t c o n s u l t - a n y c r i t i c a l r e p o r t s a b o u t t h e Kuomin tang

o r t h e y s i m p l y d i s m i s s e d i n f o r m a t i o n t h a t would h a v e l e d t o

a more r e a l i s t i c a s s e s s m e n t o f t h e C h i n a m a r k e t . C e r t a i n l y

f u r t h e r r e s e a r c h i s n e e d e d t o e s t a b l i s h more c l e a r l y how

much i n f o r m a t i o n b u s i n e s s m e n h a d a b o u t t h e n e g a t i v e a s p e c t s

o f K u o m i n t a n q ' s f o r e i g n e c o n o m i c p o l i c i e s a n d t h e g e n e r a l

e c o n o m i c a n d p o l i t i c a l s i t u a t i o n i n C h i n a , On t h e o t h e r

h a n d , h o w e v e r , i t c a n b e d e m o n s t r a t e d t h a t t h e r e were a

number o f good r e a s o n s why A m e r i c a n b u s i n e s s m e n d i d w a n t

..

112

i n c r e a s e d t r a d e and c a p i t a l i n v e s t m e n t s i n Ch ina u n t i l a t

l e a s t 1946,

B r i e f l y , t h e reasons f o r t h e i n i t i a l o p t i m i s m o f b u s i -

nessmen are as f o l l o w s . F i r s t , bus inessmen had r e c e i v e d

assurances f r o m Amer ican p o l i t i c a l o f f i c i a l s t h a t t h e U n i t e d

S t a t e s government was commi t ted t o t h e s t a b i l i z a t i o n o f t h e

Chinese government. The R o o s e v e l t A d m i n i s t r a t i o n had

demons t ra ted i t s i n t e r e s t i n t h e economic f u t u r e o f Ch ina

b y s e n d i n g t h e Ne lson m i s s i o n i n 1944 t o e v a l u a t e Kuomintang

economic p o l i c i e s d u r i n g t h e war and t o make recommendat ions

f o r t h e f u t u r e . L a t e r i n 1945, P r e s i d e n t Truman s e n t Edwin

Locke, t h e n o t e d New York Banker , o n a s i m i l a r f a c t - f i n d i n g

t o u r , F u r t h e r c o n f i d e n c e was i n s t i l l e d i n businessmen when

Genera l M a r s h a l l d e p a r t e d f o r Ch ina i n t h e w i n t e r o f 1945 t o

a v e r t c i v i l wa r ' by o p e n i n g n e g o t i a t i o n s be tween t h e Kuomintang

and t h e ~ o m m u n i s t s . ~ The Amer ican government*^ s u p p o r t t o r

t h e Kuomintang rema ined r e l a t i v e l y c o n s t a n t u n t i l 1948 when

t h e d e c i s i o n t o abandon Ch iang Ka i - shek was made. It had

been demons t ra ted by t h a t t i m e , however, t h a t t h e i n t e r e s t

o f businessmen i n t h e Ch ina marke t had waned c o n s i d e r a b l y .

Another r e a s o n f o r t h e o p t i m i s m o f bus inessmen can be

found i n t h e i n i t i a t i v e s t a k e n b y t h e Ch inese government

t o c o n v i n c e Amer icans t h a t economic and p o l i t i c a l r e f o r m s

were b e i n g made. P o l i t i c a l l y , Amer icans had a f a v o r a b l e

i m p r e s s i o n o f t h e Kuomintang i n p a r t due t o t h e s k i l l f u l

p u b l i c r e l a t i o n s p r o g r a m l a u n c h e d by Madame C h i a n g K a i - s h e k

d u r i n g h e r v i s i t t o t h e U n i t e d S t a t e s i n 1 9 4 3 . G e n e r a l l y ,

Madame C h i a n g p r e s e n t e d t h e K u o m i n t a n g a s b e i n g t h e d e f e n d e r

o f f r e e d o m , d e m o c r a c y , a n d c o n s t i t u t i o n a l g o v e r n m e n t h o p i n g

t h a t a f t e r t h e war b o t h c o u n t r i e s would work c l o s e l y t o

m a i n t a i n t h e s e i d e a 1 s e 2 Not o n l y would t h e r e b e c l o s e

c o o p e r a t i o n b e t w e e n t h e t w o c o u n t r i e s on p o l i t i c a l i s s u e s

b u t t h e r e would b e a m u t u a l l y b e n e f i c i a l e c o n o m i c a s s o c i a -

t i o n a s wel l . C h i a n g K a i - s h e k ' s r e p e a t e d p r o m i s e s t o

i m p l e m e n t a n a t i o n a l p r o g r a m o f r e c o n s t r u c t i o n a f t e r t h e

w a r , u s i n g A m e r i c a n s u r p l u s c a p i t a l a n d c o m m o d i t i e s w e r e ,

n e e d l e s s t o s a y , somewhat d e c e p t i v e , Ik!ith r e g a r d t o C h i n e s e

f o r e i g n e c o n o m i c p o l i c y , i n t e r n a t i o n a l i s m a n d c o o p e r a t i o n

w e r e e m p h a s i z e d which w e r e a m a r k e d c o n t r a s t t o t h e j i n g o i s m

a n d x e n o p h o b i a f o u n d i n C h i a n g ' s b o o k , C h i n a ' s D e s t i n y . 3

A s t o t h e d o m e s t i c p o l i t i c a l s i t u a t i o n , s t a b i l i t y a n d demo-

c r a t i c g o v e r n m e n t were p r e s e n t e d a s t h e norm r a t h e r t h a n t h e

p e r v a s i v e c o r r u p t i o n , n e p o t i s m , a n d b u r e a u c r a t i s m . I n s h o r t ,

a n i l l u s i o n was c r e a t e d b y Kuomin tang o f f i c i a l s t h a t d i d

n o t c o r r e s p o n d t o r e a l i t y .

F i n a l l y , t h e i n t e r e s t a n d e n t h u s i a s m o f b u s i n e s s m e n

f o r t h e C h i n a m a r k e t c a n b e p a r t l y e x p l a i n e d a s a f u n c t i o n

o f t h e A m e r i c a n p o s t ~ a r p o l i t i c a l economy. A f t e r 1 9 4 3 , when

i t became c l e a r i n w h i c h d i r e c t i o n t h e war was g o i n g ,

A m e r i c a n c o r p o r a t e o f f i c i a l s saw f o r e i g n e c o n o m i c e x p a n s i o n

1 1 5

as t h e s o l u t i o n t o t h e p r o b l e m s a r i s i n g f r o m t h e c h a n g e s

i n t h e e c o n o m i c l a n d s c a p e .

F i r s t , t h e r e was a t r e m e n d o u s e x p a n s i o n o f t h e economy

a n d t h i s i s r e f l e c t e d i n t h e i n c r e a s e o f t h e n a t i o n a l

income w h i c h r o s e t o a p e a k o f $ 1 6 1 b i l l i o n i n 1 9 4 5 , a s

a g a i n s t $ 7 1 b i l l i o n i n 1 9 3 9 , G r o s s n a t i o n a l p r o d u c t i o n r o s e

f r o m 490 b i l l i o n i n 1 9 3 9 t o $ 1 8 7 b i l l i o n i n 1 9 4 3 a n d c l i m b e d

t o *200 b i l l i o n i n 1 9 4 5 . S e c o n d , t h e r e was a s i z e a b l e i n c r e a s e

i n t h e e x p o r t m a r k e t . D u r i n g t h e d e c a d e 1 9 2 9 - 1 9 3 9 , A m e r i c a n

e x p o r t s r a n g e d b e t w e e n $ 1 . 6 b i l l i o n a n d $ 3 . 8 b i l l i o n a n n u a l l y

b u t i n 1 9 4 5 e x p o r t s jumped t o $ 1 4 . 3 b i l l i o n . Out o f t h i s

f i g u r e , $2.9 b i l l i o n r e p r e s e n t e d t h e r e g u l a r e x p o r t t r a d e

a n d $ 1 1 . 5 b i l l i o n t h e a m o u n t o f l e n d - l e a s e t o t h e a l l i e s .

I t was r e c o g n i s e d t h a t , a f t e r t h e p h a s i n g o u t o f t h e l e n d - l e a s e

p r o g r a m , new m a r k e t s would h a v e t o b e f o u n d o r t h e r e would

b e a s e r i o u s unemployment p r o b l e m , T h i r d , t h e r e was an

i n c r e a s e i n t h e l a b o r fo rce d u e t o d e m o b i l i z a t i o n a n d a n

i n c r e a s e i n p r o d u c t i v i t y f r o m a u t o m a t i o n . If n o m a r k e t s

were f o u n d f o r t h e s u r p l u s p r o d u c t i o n , o f f i c i a l e s t i m a t e s

i n d i c a t e d t h a t t h e n a t i o n a l i n c o m e would d r o p by 15% o r

more a f t e r t h e war a n d t h a t t h e unemployment f i g u r e s i n t h e

S p r i n g o f 1 9 4 6 were p r o j e c t e d a s b e i n g a s h i g h a s f i v e t o

t e n m i l l i o n p e o p l e t 4 K e e p i n g i n mind t h e s e c h a n g e s i n t h e

A m e r i c a n e c o n o m i c s i t u a t i o n a n d - t h e e n o r m o u s p r o b l e m s

c o n f r o n t i n g b u s i n e s s m e n as a r e s u l t o f t h e s e c h a n g e s , t h e i r

m i s p e r c e p t i o n o f t h e C h i n a m a r k e t c e r t a i n l y becomes more

u n d e r s t a n d a b l e .

A l t h o u g h t h i s t h e s i s d i d n o t f o c u s on t h e r e l a t i o n s h i p

between t h e c o r p o r a t e e l i t e and t h e ~ o l i t i c a l e l i t e , some

comments on t h i s p o i n t s h o u l d be made i n c o n c l u s i o n . Those

New L e f t h i s t o r i a n s who emphasized t h e economic f a c t o r f n

t h e d e t e r m i n a t i o n o f p o l i c y s h o u l d be aware t h a t t h e r e a r e

l i m i t a t i o n s when a p p l i e d t o S ino-Amer ican r e l a t i o n s a f t e r

Wor ld War Two. As has been demonst ra ted , t h e chang ing

a t t i t u d e o f bus inessmen f r o m 1943 t o 1949 was i n response

t o t h e demands o f t h e p o s t w a r domest ic p o l i t i c a l economy,

t h e e s c a l a t i n g c i v i l c o n f l i c t w i t h i n China, and t h e

a v a i l a b i l i t y o f genu ine m a r k e t a l t e r n a t i v e s . Yet , a f t e r

t h e R e v o l u t i o n i n 1949, t h e d e c i s i o n t o t r a d e and i n v e s t i n

Ch ina was n o t based on a " r a t i o n a l " a n a l y s i s of t h e economic

p o t e n t i a l o f Ch ina b u t seemed t o be based on i d e o l o g i c a l

and b a l a n c e o f power c o n s i d e r a t i o n s . Moreover , t h e d e c i s i o n

t o b r e a k o f f economic r e l a t i o n s was n o t d i s c u s s e d by b u s i -

nessmen n o r was i t made b y businessmen. Not s u r p r i s i n g l y ,

t h e t e r m i n a t i o n o f t r a d e r e l a t i o n s was n o t i n t h e i n t e r e s t

o f businessmen. I t c o u l d be a r g u e d t h a t , b y 1949, t h e China

marke t was h o p e l e s s and businessmen d i d n o t have t h a t much

t o l o s e , bu t , f ro rn a p o s i t i o n o f h i n d s i g h t , one can see t h a t

t h e Ch ina marke t f o r S o v i e t e x p o r t s d u r i n g t h e 1950 's was

q u i t e s u b s t a n t i a l , as i t was f o r Japan i n t h e 1960's . In

o t h e r words, i f a d e c i s i o n had been based on a " r a t i o n a l m

e c o n o m i c c a l c u l a t i o n , b u s i n e s s m e n would h a v e b e e n e n c o u r a g e d

t o t r a d e w i t h t h e C h i n e s e Communis t s a f t e r 1 9 4 9 .

T u r n i n g t o t h e s e c o n d q u e s t i o n p o s e d i n t h e i n t r o d u c -

t i o n , i t is c l e a r t h a t n o s i n g l e f a c t o r c a n b e i s o l a t e d t o

e x p l a i n t h e d e m i s e o f t h e C h i n a m a r k e t , U n c o n t r o l l e d i n f l a -

t i o n , l a b o r p r o b l e m s , g r a f t a n d c o r r u p t i o n w i t h i n t h e

Kuomin tang , a s h o r t a g e of f o r e i g n c u r r e n c y r e s e r v e s b e c a u s e

o f i n s u f f i c i e n t s u p p l y o f c o m m o d i t i e s f o r e x p o r t , a n d t h e

r e s u m p t i o n o f d o m e s t i c c o n f l i c t b e t w e e n t h e Kuomin tang a n d

t h e Communis t s a r e o n l y a f e w o f t h e r e a s o n s why e c o n o m i c

r e l a t i o n s b e t w e e n C h i n a a n d t h e U n i t e d S t a t e s r e m a i n e d i n

l i m b o ,

I t i s m i s l e a d i n g , h o w e v e r , t o f o c u s e n t i r e l y on t h e

p o l i t i c a l a n d e c o n o m i c d i s i n t e g r a t i o n w i t h i n C h i n a a s t h e

o n l y c a u s e . I n a way, A m e r i c a n b u s i n e s s m e n h a d t h e m s e l v e s t o

b l a m e f o r t h e f a i l u r e o f t h e e l d o r a d o i n t h e Far E a s t t o

mater ia l ize . No a t t e m p t was made t o a n a l y s e wha t com-

m o d i t i e s would b e s u i t a b l e f o r t h e C h i n e s e m a r k e t . A l s o ,

t h e dumping p r a c t i c e s e m p l o y e d by some A m e r i c a n b u s i n e s s m e n

i n c r e a s i n g l y weakened t h e e c o n o m i c s i t u a t i o n a s wel l a s

c o n t r i b u t i n g t o t h e g r o w i n g a n t i - A m e r i c a n s e n t i m e n t .

F i n a l l y , when t h e C h i n e s e g o v e r n m e n t i n 1 9 4 8 s o u g h t t o o b t a i n

f u r t h e r a s s i s t a n c e t h r o u g h t h e C h i n a Aid Act, t h e U.S.

Chamber o f Commerce i n C h i n a s t a t e d p u b l i c l y t h a t

T h i s c h a m b e r w i s h e s t o p l a c e i t s e l f on r e c o r d a s b e i n g o p p o s e d t o g r a n t i n g f u r t h e r A m e r i c a n e c o n o m i c a i d t o t h e N a t i o n a l i s t g o v e r n m e n t e x c e p t on a q u i d p r o b a s i s a n d o n s u c h terms as w i l l g u a r a n t e e ' t h e e f f e c t i v e u s e o f s u c h a i d i n t h e i n t e r e s t s o f S i n o - A m e r i c a n r e l a - t i o n s , o r a t l e a s t i n t h e i n t e r e s t s o f C h i n a a s a w h o l e , r a t h e r t h a n f o r t h e b e n e f i t o f " s e l f - i n t e r e s t " g r o u p s i n t h e

\

Two y e a r s l a t e r A m e r i c a n S t a t e D e p a r t m e n t o f f i c i a l s c o n -

n e c t e d w i t h t h e " s e l l o u t o f C h i n a " came u n d e r f i r e f r o m

S e n a t o r PlcCar thy, b u t it i s e v i d e n t t h a t t h e y were n o t t h e

o n l y o n e s who were r e l u c t a n t t o s u p p o r t t h e N a t i o n a l i s t

r e g i m e ,

A s t o t h e t h i r d q u e s t i o n c o n c e r n i n g a l t e r n a t i v e s , t h e r e

a r e two r e a s o n s why b u s i n e s s m e n h a d l i t t l e d i f f i c u l t y m a k i n g

a d j u s t m e n t s . F i r s t , a s u b s t i t u t e f o r t h e C h i n a m a r k e t was

n o t t h a t d i f f i c u l t t o f i n d b e c a u s e A m e r i c a n e x p o r t s of

c a p i t a l a n d c o m m o d i t i e s n e v e r a m o u n t e d t o more t h a n f i v e

p e r c e n t o f t h e t o t a l . Even t h o u g h C h i n a was p e r c e i v e d a s

b e i n g a more s i g n i f i c a n t m a r k e t t h a n i t r e a l l y was, i t s

f a i l u r e t o ma te r i a l i ze d i d n o t a d v e r s e l y a f f e c t b u s i n e s s m e n

b e c a u s e m a r k e t s e l s e w h e r e t h r o u g h o u t t h e w o r l d p r o v e d t o

b e u n e x p e c t e d l y successful^ S e c o n d l y , b u s i n e s s m e n were n o t

i d e o l o g i c a l l y c o m m i t t e d t o t h e C h i a n g K a i - s h e k r e g i m e a n d

t h e r e f o r e t o b r e a k t h e somewhat p r e c a r i o u s r e l a t i o n s h i p

a n d p u r s u e o t h e r o p t i o n s , was n o t v e r y d i f f i c u l t , I f

b u s i n e s s m e n i n t e r e s t e d i n t h e C h i n a m a r k e t h a d a n y r e d e e m i n g

v i r t u e s , i t was t h a t t h e y were q u i t e f l e x i b l e a n d p r a g m a t i c

when i t came t o s e a r c h i n g f o r a l t e r n a t i v e s b e c a u s e t h e y

were w i l l i n g t o t r a d e w i t h t h e C h i n e s e Communis t s ,

U n l i k e l y a s i t may seem, t h e p o s s i b i l i t y o f e s t a b l i s h i n g

a p a r t i a l l y Open Door i n t h e P e o p l e ' s R e p u b l i c o f C h i n a i n

1 9 4 9 was r e a s o n a b l y good . A c t e r t h e i r e n c o u n t e r w i t h t h e

u n c o o p e r a t i v e N a t i o n a l i s t s A m e r i c a n b u s i n e s s m e n were w i l l i n g

t o s e l l e v e r y t h i n g b u t t h e i r s o u l s t o t h e r e d b a n d i t s o f

Yenan.

CONCLUSION

FOOTNOTES

or a summary o f Amer ican C h i n a p o l i c y a t t h e e n d o f t h e S e c o n d w o r l d War, see G a b r i e l K o l k o , The P o l i t i c s

*see G e o r g e C . R o c h e , " P u b l i c O p i n i o n a n d C h i n a P o l i c y o f t h e U n i t e d S t a t e s , 1941-1951 ," ( u n p u b l i s h e d Ph.D. d i s s e r t a t i o n , U n i v e r s i t y o f C o l o r a d o , 1 9 6 5 ) , 63-5.

' p h i l i p J a f f e , T r a n s . a n d e d . , C h i a n g K a i - s h e k , C h i n a ' s D e s t i n y & C h i n e s e Economic T h e o r y ( ~ e w Y o r k , 1 9 4 7 ) , 149-240

4 ~ r v i n g S. F r i e d m a n a n d M a r g a r e t PI. G a r r i t s e n , " F o r e i g n Economic P r o b l e m s o f P o s t w a r U n i t e d S t a t e s , " a p a p e r s u b - m i t t e d t o t h e T e n t h C o n f e r e n c e o f t h e I n s t i t u t e o f P a c i f i c R e l a t i o n s , ( ~ e p t e m b e r 1 9 4 7 ) , 2 .

' ~ u o t e d i n William A . Williams, e d . , The S h a p i n g o f o f Amer ican Dip lomacy ( c h i c a g o , 1 9 7 0 ) , Vol. 2 , 4 8 7 .

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m a l l o r y , W a l t e r H . "The Open Door i n C h i n a : A Re- a p p r a i s a l , " F o r e i g n A f f a i r s , 2 6 ( ~ c t o b e r 1 9 4 7 ) s 155-168 .

f l eng , C . Y . V . " F o r e i g n E n t e r p r i s e i n P o s t w a r C h i n a , " F a r E a s t e r n S u r v e y , X I 1 ( ~ o v e m b e r 3, 1 9 4 3 ) , 212- 2 1 9 .

O a k e s , Vanya. "The West C o a s t D r e a m s , " 4 5 A s i a a n d t h e Americas, ( ~ u ~ u s t 1 9 4 5 ) , 373-376.

Oppenheim, S t u a r t Ramsey. "What are t h e Post -War M a r k e t i n g O p p o r t u n i t i e s f o r t h e P a c i f i c C o a s t ? " W e s t e r n A d v e r t i s i n q , ( ~ o v e m b e r 1 9 4 3 ) , 37-38 , 1 0 2 0

O r l e a n , M.E. "The S i n c - A m e r i c a n C o m m e r c i a l T r e a t y of 1 9 4 6 , " The F a r E a s t e r n Q u a r t e r l y , V I I ( A u g u s t l 9 4 8 ) ,

P o w e l l , J o h n S . " U . S . F i n d s A l t e r n a t i v e M a r k e t i n J a p a n , " The C h i n a Weekly R e v i e w , ( O c t o b e r 1 2 , l 9 4 6 ) , 1 m - 1 6 4 .

R o s f n g e r , L a w r e n c e K . "Ch ina a s a P o s t w a r f l a r k e t , " F o r e i g n P o l i c y R e p o r t s , No. 2 0 ( ~ a n u a r ~ 1, 1 9 4 5 ) 9

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Sun Fo. " C h i n a ' s P o s t w a r Economic P o l i c ," Contem- p o r a r y C h i n a , IV ( ~ e c e m b e r 25 , 1 9 4 4 3 , 1-4 .

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Walker , M e l v i l l w H. "Far E a s t e r n U n i t e , " Amer ican I m p o r t & E x p o r t B u l l e t i n 2 1 (May, 194- 329 .

Wei, Tao-ming. "The F u t u r e o f Chinese-Amer ican Economic ~ e l a t i o n s , " Contemporary Ch ina I V ( ~ u g u s t 7, 1946), 11-12.

Whi te, Theodore, " C h i n a ' s Postwar P lans , " F o r t u n e , X X V I I I (Oc tobe r , l 9 4 3 ) , 151-164.

W o l c o t t , S idney 0. "Postwar Ch ina W i l l Becken t o T o u r i s t s , " F o r e i q n Commerce Weekly, No. 20 ( ~ u l y 14 , 1945) , 6-7.

" C h i n a ' s T a r i f f System," F o r e i q n Commerce week ly , No. 20 ( ~ u l ~ 14, 1945) , 8.

Belden, Jack. Ch ina Shakes t h e Wor ld, New York , 1949.

B i s s o n , T.A. Amer i ca ' s F a r E a s t e r n P o l i c y , New York, 1945 n

Chiang Kai -shek, C h i n a ' s D e s t i n y and Chinese Economic Theory , Ed. P h i l i p J, Jaf fe , New York, 1947,

Chih Tsang, C h i n a ' s Postwar Marke ts , New York, 1945.

Ching-kun, Yung. A N o r t h Ch ina L o c a l marke t Econom)~, New York, 1944.

D i e t r i c h , E t h e l 8 . , F a r E a s t e r n Trade o f t h e U n i t e d .- S t a t e s , yew York, 1960.

D u l l e s , F o s t e r Rhea, & h i n d t h e Open Door , New York, 1964.

Fr iedman, I r v i n g S. and M a r g a r e t Pl. G a r r i t s e n . F o r e i q n Economic Problems o f t h e Postwar U n i t e d S t a t e s , New Yark, 1947,

H o l l a n d , W i l l i a m L . T r u t h a n d F a n c y About t h e I n s t i t u t e o f P a c i f i c R e l a t i o n s , N e w York , 1 9 5 3 .

H u t c h i s o n , K e i t h . R i v a l P a r t n e r s , New Y o r k , 1 9 4 6 .

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L e v y , M a r i o n a n d S h i h Kuo-heng. The Rise o f t h e Modern C h i n e s e B u s i n e s s C l a s s , N e w Y o r k , 1 9 4 9 .

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M e a r s , E l i o t G r i n e l l . ivfaritirne T r a d e o f t h e W e s t e r n U n i t e d S t a t e s , New Y o r k , 1935.

N e l b y , J o h n , The M a n d a t e o f H e a v e n t R e c o r d o f a C i v i l War, C h i n a , 1 9 4 5 - 4 9 , London, 1 9 6 8 .

P e c k , Graham, Two K i n d s of T ime , B o s t o n , 1 9 5 0 .

R a d i u s , W a l t e r S , U n i t e d S t a t e s S h i p p i n q i n T r a n s - P a c i f i c T r a d e , New Y o r k , 1944.

R o s i n g e r , L a w r e n c e K. C h i n a ' s ! iJart ime P o l i t i c s 1937-1944 , New York , 1 9 4 4 ,

Tong , H o l l i n q t o n K. D a t e l i n e - - C h i n a : The B e q i n n i n q o f C h i n a t - s P r e s s R e l a t i o n s w i t h t h e Wor ld . New York , '1950 ,

V a l e o , F r a n c i s , F a r E a s t e r n Economic D e v e l o p m e n t a n d t h e West C o a s t Economy, U j a s h i n g t o n , 1 9 5 0 ,

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GOVERNMENT DOCUMENTS 41

U.S. D e p a r t m e n t o f Commerce, I n t e r n a t i o n a l R e f e r e n c e S e r v i c e . Economic Rev iew of C h i n a , 1 9 4 7 . W a s h i n g t o n , D . C . , 1 9 4 8 .

. I n t e r n a t i o n a l R e f e r e n c e S e r v i c e , Economic Rev iew of C h i n a , 1 9 4 8 . W a s h i n g t o n , D . C , , 1 9 4 9 .

U.S. D e p a r t m e n t o f S t a t e . ~ o r e i ~ n R e l a t i o n s of t h e U n i t e d S t a t e s ; D i p l o m a t i c P a p e r s , 1 9 4 3 , C h i n a . W a s h i n g t o n , D a c e , 1 9 5 6 .

. F o r e i q n R e l a t i o n s o f t h e U n i t e d S t a t e s r D i p l o m a t i c Papers, 1944, ... China. - Washington, D.C., 1967.

. F o r e i q n ' R e l a t i o n s o f t h e U n i t e d S t a t e s : D i p l o m a t i c Papers, 1945. The F a r ~ a s t - a n d China. Washington, D.C., 1969.

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O f f i c e o f S t r a t e a i c S e r v i c e s , Research and A n a l y s i s Branch. N o r t h ~ i e r i c a n t r a d e w i t h China and ~ a p a n , Washington, D.C., 1945.

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Committee on t h e J u d i c i a r y , Subcommittee t o I n v e s t i q a t e t h e A d m i n i s t r a t i o n o f t h e I n t e r n a l S e c u r i t y A c t a n d - o t h e r I n t e r n a l S e c u r i t y Laws. The Amerasia Papers ! A C l u e t o t h e C a t a s t r o p h e o f China. 9 1 s t Cong., 1 s t Sess. 2 v o l s . , Washington, D.c., 1970.

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INSTITUTE OF PACIFIC RELATIONS PUBLICATIONSz ARTICLES A N D PAMPHLETS

B e r n s t e i n , J o s e p h M e 1 9 4 5 ,

S p o t l i g h t on t h e F a r East. New Y o r k s

Chow, S.R. "The P r o b l e m o f t h e F a r East i n a New World O r d e r , " I . P . R . P a p e r s , I V ( ~ a n u a r ~ 1 9 4 5 ) , 1-35.

D i e t r i c h , E t h e l B a r b a r a . F a r E a s t e r n T r a d e o f t h e U n i t e d S t a t e s . N e w York , 1 9 4 0 .

F i s h e r , A . G . B . "The Post -War P o l i t i c a l Economy o f t h e F a r East a n d t h e P a c i f i c , " I .P .R. P a p e r s , No. 1 2 ( ~ a n u a r ~ 1 9 4 5 ) , 1 -17 .

K i r b y , S t u a r t E. "Some P o l i t i c a l A s p e c t s o f F a r E a s t e r n Economic D e v e l o p m e n t , " I . P . R . P a p e r s , No. 4 ( O c t o b e r 1 9 5 0 ) , 1-55.

L i e u , D . K . " N o t e s o n C h i n a ' s F o r e i g n T r a d e a n d T r a d e P o l i c y , " I . P . R . P a p e r s , No. 5 ( J a n u a r y 1 9 4 5 ) , 1 -34 .

b i n , PJ .Y. " C h i n a a n d F o r e i g n C a p i t a l , " I . P . R . P a p e r s , No, 1 ( J a n u a r y 1 9 4 5 ) , 1 2 2 9 ,

M a s l a n d , J o h n 1U. "Group I n t e r e s t s i n Pos t -War A m e r i c a n P a c i f i c P o P i c y , " I . P . R . P a p e r s , No, 6 ( J a n u a r y 1 9 4 5 ) , 1 -65 ,

Mi l l e r , C h a r l e s J . " P a c i f i c N o r t h w e s t T r a d e w i t h F a r East P a c i f i c N a t i o n s , " I . P . R . P a p e r s , No. 2 ( ~ a n u a r y 1 9 4 5 ) , 1 - 6 7 ,

T i e h - Y a i , Mang. "The S t a t u s o f A l i e n s a n d F o r e i g n E n t e r - p r i s e i n C h i n a , " I . P . R . P a p e r s , No. 4 ( J a n u a r y 1 9 4 5 ) , 1-36.

Wallace, Henry A . Our J o b i n t h e ~ a c y f i c . N e w Y o r k , 1 9 4 4 .

Wu, Ching-Chao, " P l a n s f o r C h i n a ' s I n d u s t r i a l i z a t i o n , " I . P . R . P a p e r s , ( ~ a n u a r y 1 9 4 5 ) , 1 -26 .

BUSINESS ORGANIZATIONSt

PUBLICATIONS

Chamber o f Commerce o f t h e U n i t e d S t a t e s , F o r e i q n Commerce P o l i c i e s o f t h e Chamber o f Commerce. W a s h i n g t o n : Chamber o f Commerce, 1 9 4 6 .

C h i n a - A m e r i c a C o u n c i l o f Commkrce a n d I n d u s t r y , A n n u a l R e p o r t , 1 9 4 4 - 1 9 4 5 , Neu~ Y o r k , 1 9 4 5 .

C o m m i t t e e f o r Economic D e v e l o p m e n t , S t a t e m e n t s on N a t i o n a l P o l i c y , 1 9 4 4 - 1 9 4 5 , 1 2 v o l s .

N a t i o n a l F o r e i g n T r a d e C o u n c i l , R e c o r d f o r 1 9 4 8 . - N e w Yorkr NFTC, 1 9 4 9 .

. R e p o r t o f t h e N a t i o n a l C o n v e n t i o n , 32nd ( 1 9 4 5 ) 3 6 t h ( 1 9 4 9 ) , 5 v o l s .

ARTICLES

C a m ~ b e l l , C o l o n D. a n d Gordon C . T u l l o c k . @ ~ y p e r i n f l a t i o n ' i n k h i n a , l 9 4 7 - l 9 4 9 , " The J o u r n a l o f p o l i t i c a l Economy,

LXII ( J u n e 1 9 5 4 ) ,

E s h e r i c k , J o s e p h . " H a r v a r d o n C h i n a : The A p o l o g e t i c s o f I m p e r i a l i s m , " B u l l e t i n o f C o n c e r n e d A s i a n S c h o l a r s , IV ( ~ e c e m b e r , 1 9 7 2 ) , 9 -16 .

I s r e a l . J e r r v . "For God, f o r C h i n a a n d f o r Yale- -The Open ~ 6 o r i n ' A c t i o n , " ~ h 6 A m e r i c a n H i s t o r i c a l R e v i e w , L X X V ( ~ e b r u a r y , 1 9 7 0 ) , 796-50'1.

L i e b e r t h a l , K e n n e t h , "Mao v e r s u s L i u ? P o l i c y T o w a r d s I n d u s t r y a n d Commerce 1 9 4 6 - 1 9 4 9 , " C h i n a Q u a r t e r l y , XLVII ( ~ u 1 ~ - ~ e p t e m b e r 1 9 7 1 ) , 494-520.

m c L e l l a n , D a v i d S. a n d C h a r l e s E. Woodhouse, "The B u s i n e s s ~ l i t e a n d F o r e i g n P o l i c y , " l e s t e r n P o l i t i c a l Q u a r t e r l y , - XI11 (Il larch, 196091, 172-190 .

W h i t e h e a d , Guy. " P h i l i p p i n e - A m e r i c a n Economic R e l a t i o n s , " P a c i f i c R e s e a r c h & World E m p i r e T e l e q r a m , IV ( ~ a n u a r y - F e b r u a r y , 1 9 ' ? 3 ) , 1 -8 .

WilLiams, Ni l l i am A . "The F r o n t i e r Thes i s and American Foreign P o l i c y , " P a c i f i c H i s t o r i c a l Review - XXIV (June , 19551, 379-395.

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Bianco, Lucien. Or iq in s of t h e Chinese Revolut ion 1915-1949, S t a n f o r d , C a l i f o r n i a , 1971.

Royle, John. China and Japan a t IUar 1937-1945, S t a n f o r d , 1972.

Campbell, Cha r l e s . S p e c i a l Bus iness I n t e r e s t s and t h e Open Door Po l i cy . New Haven, Connec t i cu t , 1951,

Chang Kai-Ngau. The I n f l a t i o n a r y S p i r a l : The Experi- ence i n China, 1939-1950. New York, 1958.

Chass in , L ione l Max. The Communist Conquest of China, Cambridge, Massachuse t t s , 1965.

Cheng Yu-Kwei. Foreiqn Trade and I n d u s t r i a l Develop- ment of China. Washington, 1956,

Chi-ming Hou. Foreiqn Investment and Economic Develop- ment i n China 1840-1937. Cambridge, Massachuse t t s , 1965.

Chomsky, Noam. American Power and t h e New Mandarinsr H i s t o r i c a l and P o l i t i c a l Essays , New York, 1969.

Clay ton , James. Economic Impact o f t h e Cold War. New York, 1970.

Cohen, Warren I , America's Response t o China: An I n t e r p r e t a t i v e H i s to ry of Sino-American R e l a t i o n s . New York, 1971.

Domhoff, William G. The Hiqher C i r c l e s . New York, 1971.

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Fa i rbank , John K . The United S t a t e s and China. - Rev, ad. New York, 1958 .

Fa lkne r , Harold U. American Economic H i s to ry . New York, 1960,

F e i s , Herber t . The China Tanqler The American E f f o r t i n China from P e a r l Harbor t o t h e Marshal l Mission. P r i n c e t o n , 1953.

Fo rge t , Claude E . China 's E x t e r n a l Trade. A Canadian P e r s p e c t i v e . Ottawa, 1971.

Friedman, Edward and Mark Seldon. America's Asia .

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G i t t i n g s , John. The Role of t h e Chinese Army. New York, 1967.

Hacker, Louis . The Course of American Economic Grou~th and Development. New York, 1970.

Ho, Al f red K , The Far Eas t i n World Trade8 DevePo~- ments and Growth S ince 1945. New York, 1967.

Horoui tz , David. Corpo ra t i ons and t h e Cold War. New York, 1969.

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Ko lko , Joyce and G a b r i e l . The L i m i t s o f Powert The Wor ld and U n i t e d S t a t e s F o r e i q n P o l i c y . New York, 1972.

Kubek, Anthony. How t h e Par E a s t Ldas L o s t : Amer ican P o l i c and t h e C r e a t i o n o f Communist Ch ina , 1941- ~ h o ( 1 9 6 3 .

L a f e b e r , W a l t e r . The New Empi re ; An I n t e r p r e t a t i o n o f Amer ican Expans ion 1860-1898. I t h a c a , 1967,

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Mah, Feng-lwa, The F o r e i q n Trade o f M a i n l a n d China. Chicago, I 9 r

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McCormick, Thomas J., Ch ina Marke t , Amer ica 's Quest f o r I n f o r m a l Empi re , 1393-1901. Chicago, 1967.

Moore, G a r r i n g t o n , J r . S o c i a l O r i q i n s o f D i c t a t o r s h i and Democracy r L o r d and ~ e a s a n m G Mak in t h e Modern Wor ld . Bos ton , 1967,

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Shewmaker, Kenneth E . Amer icans and Chinese Communists, 1927-1945: A P e r s u a d i n g Encoun te r . I t h a c a e 1971.

Stahnke, A r t h u r A . C h i n a ' s Trade w i t h t h e West: A P o l i t i c a l and Economic A n a l y s i s , New York, 1972.

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