American manufacturers and bankers are not seeking to exploit any foreign markets for ulterior motives, but merely to assure to our people a reasonable share of the development of those markets and a reasonable proportion of the orders arising from that development.

If the European war has no other effect on the destinies of the world, it will have awakened the American people to a sense of their world power and responsibility; it will have impelled them to discontinue harassing their business men with all the trivial trials of inquisition into big business; the shackles that have fettered business men may be unloosened to the extent which will permit American manufacturers, bankers, shippers and laborers to realize their manifest destiny in the trade. of the world. Our public press, which has been devoting more attention to the problems of foreign commerce, can accomplish a great change in the mental attitude of those who are not students of affairs abroad, or who have been indifferent to foreign commerce and the necessity of foreign investments. If it is realized that a definite policy of diplomatic support will obtain when loans have been approved by the ruling administration, there being no question of coercion or territorial aggression, but merely insistence on the proper administration of loan funds, the proper audit of expenditures for materials and labor, investors of this country will appreciate that the financial stability of these countries is assured because of the honest and proper application of funds supplied for revenueproducing purposes. Under a regime of capable management there can be no likelihood of default or impairment of the investment, as self-interest will dictate co-operation with the representatives of the bondholders to assure recurring supplies of capital.

The necessity of meeting future world competition requires the mobilization of the trade resources of the nation, the cooperation of its manufacturers, bankers, shippers and laboring elements on the basis of preparedness for all eventualities. American manufacturers have always given an honest dollar's worth of goods for a dollar. Our export trade has been built up, not on the ephemeral basis of war requirements, but on

solid ground-work through years of ingenious workmanship, honest salesmanship, superior quality and capable service. In the quest of foreign trade the country can rely on its merchants and manufacturers measuring up to the highest standard of probity and demonstrating by the superiority of their products and methods that they can overcome the initial difficulties of a late start in competition with the older nations. This can be done to a certain degree independent of foreign investment and government aid, but the ideal of a permanent and constantly expanding export trade is founded on practical and liberal support at home with intelligent and alert diplomacy abroad, supplementing good quality, fair prices, and reasonable credits based on judicious financing.

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OUR TRADE WITH SOUTH AMERICA AND CHINA1

A

WILLIAM R. SHEPHERD

Professor of History, Columbia University

S I listened to the papers this afternoon and noted the topic for discussion, I couldn't help feeling that after

all the paramount interest of an economic character with us seems to be, not so much the development of the American merchant marine as the development of American foreign trade.

It has often been asked why the United States no longer commands the position on the ocean that it had in the fifties of the last century. Of this circumstance various explanations have been offered. At the time of the construction of iron ships our own iron industries were not sufficiently advanced to enable us to build ships in anything like satisfactory competition with certain of the nations of Europe. Furthermore, it has been pointed out that the American rate of wages and the conditions under which the American sailors wish to live are of such a nature as to render it impossible for us satisfactorily to compete again with European shipping activities, unless some sort of aid is received from the government.

Democracies are regularly suspicious about the giving out of public funds for a particular interest. We know the strong 'disinclination that has been manifested in the halls of Congress to grant a shipping subsidy. Attention has been called on many occasions to the fact that, as our population has moved westward, it has lost correspondingly its interest on the seas. It has been ascertained, further, that if we have any capital to invest, it had better be placed where it will bring surer and easier returns than would be the case were we to put that money into ships. Better is it, therefore, cry those who favor this policy, to have our goods carried under foreign flags and

1 Discussion at the meeting of the Academy of Political Science, November 12, 1915.

to devote whatever financial energies and abilities we possess rather to the development of industries at home.

In the world today there are just two great fallow areas that apparently call for exploitation. Whether the people who inhabit them are altogether pleased at the thought of being exploited for the benefit of the foreigner is quite another matter. I am afraid that, in questions of business, it isn't always possible to consult the wishes of those who are actually on the soil. The world at large has progressed to its present material position mainly through the utilization of regions held by people who were unable of themselves to develop their resources. Unconsciously, perhaps, we are following the dictum laid down by the founder of Christianity himself when he left to posterity the story of the man and the talents. The two areas to which I refer are South America and China. In the one respect of possessing immense natural resources which have not been developed in any commensurate degree, they are quite alike. In many other respects they are very different.

Concerning the relationship of the United States to these areas, it must be borne in mind that we have established in the New World a species of hegemony or headship or political tutelage, or anything else you want to call it, over the sister republics of this country. Its expression we term the "Monroe Doctrine." In point of fact, what we have done is to assert the primacy of this nation over its twenty fellows.

The situation of China is quite dissimilar. Here you have, not an instance of one foreign state holding others in a condition of quasi-tutelage, but a number of foreign states endeavoring to assure their control and to ascertain what parts of it must be shared. Up to the outbreak of the war there were several European nations working for the alleged welfare of China. Perhaps they were so concerned. My own feeling, however, is that they were interested very much more in their own welfare, and that the advantage of China itself was a more or less negligible quantity. It would seem that the only country that did possess a sincere interest in Chinese progress was the United States. It was our land that first developed educational and intellectual relations with the Chinese. In

deed, it seemed a harbinger of the closest friendship when the thirty young Chinese students came to us in 1871. From that day onward it would appear that the Chinese have looked rather to the United States than to Europe or to Japan for guidance and suggestion and help.

But whereas the history of the United States in connection with the South American countries has been one of constantly growing influence, the record of the Americans in China since 1905 at least has been one of constantly diminishing prestige. The Chinese is a canny person. He knows perfectly well why the European powers and Japan profess to be so much concerned in his welfare, and why the United States showed so much interest. He appreciated the fact, that however much we sought commercial opportunities, we were not there for the purpose of partitioning his territory or of sharing it with others, that our real designs were of a friendly and altruistic sort. Within the last ten years, and notably since the beginning of the war, there has been arising in Asia a condition analogous to that which prevails in the New World. Another kind of headship is being established, a new "Monroe Doctrine" is being formulated, and it isn't the United States that is about to make that "pronunciamento" effective. It is the nation which lies nearest to China, and which, in the nature of things, seems best equipped to exercise a predominant influence over that country.

Up to the outbreak of the war it looked as if China were to suffer the fate of partition into areas of concession. The first effective halt that was called to the process was made by Japan. The United States, meanwhile, had been endeavoring to obtain, as we have heard today, from the European powers and from Japan an assurance that henceforth all of the foreign nations concerned in the development of the Chinese Empire, and later Republic, should agree to recognize an equality of commercial rights and privileges that is to say, an equality of opportunity. But it is a significant fact that, for the last ten years, the assurances which have been received by the United States on this point have not brought with them anything like a commensurate development of American influence, financial, commercial or otherwise.