on the heels of Europeans, but they will never be abreast of them. They may have new models and inventions, but they will never have quite the newest; and it is just this which will make all the difference. Acting on the defensive when the other conditions are so much in their favour, these points of inferiority will not matter; but their whole history and character seem to indicate that they will never be able to compete successfully with Europeans, if they attempt to come out of their shell and assume the offensive. The only real danger would seem to lie in the possibility of the Japanese, a far quicker and more agile-minded race, exploiting the Chinese and organising them to victory under their own leadership. But all these things lie on the knees of the gods.

As in war and politics, so with commerce and manufacture. Here again the Chinaman is hampered by his limitations. Commerce, it may be admitted, is his forte; but what sort of a commercial future can we augur for him from our present knowledge and observations? In Siam and other neighbouring countries he is gradually getting all the petit commerce into his hands, and perhaps may eventually absorb nearly all the retail trade. He also attempts higher flights. Thus out of nineteen rice mills in Bangkok, the great majority, fourteen or fifteen I believe, are owned and managed by Chinese, and in one or two cases even Chinese engineers are employed. The profits in this busi

ness have fallen off so much in recent years with the decline in the price of rice, that the field has been left largely to them by Europeans, who are not content with such low returns. Many small steamship lines too, in the Straits and neighbouring parts, are in the hands of Chinese, who, by their economy and minute supervision, are enabled to run at a small profit what to a European would mean loss. In some cases even individual Chinamen amass considerable wealth; and the visitor to Penang or Singapore is sure often to remark the luxury and splendour of the equipages in which they turn out for their evening drive. But allowing for individual exceptions, there can be little doubt that the Chinese, taken as a whole, are lacking in the qualities both of imagination and enterprise, which, next to integrity, form the most important elements in commercial success on a large scale. Herein they are totally unlike the Jews, with whom, as I mentioned, they have been compared; nor does there seem to be any cause for fear that a house of Chinese Rothschilds may one day dominate the financial world. The enterprise to make great ventures, to lose all or to gain all, a quality which has done so much to place the British at the head of commercial nations, and the imagination to see new openings, and conceive new situations-these are characteristics which are pre-eminently wanting in the Chinese. They are too slow and cautious. To such an extent is their economy carried that they are penny-wise

and pound-foolish. Thus a Chinese shipowner will go on with old and worn-out machinery, till some day there is a breakdown, involving a heavy bill to pay, rather than incur the expense of replacing it by new before it is too late. The Chinese will invariably be behind their Western competitors in matters involving enterprise and expenditure on a large scale. On their own soil, where conditions are so favourable to them, where they understand the demands of the market, and have an unlimited supply of the cheapest and not the least efficient labour in the world, they may prove serious rivals. Much doubtless of the local trade, and, though probably to a less extent, of the local manufactures will pass into their hands. At the same time all evidence seems to point to the conclusion, that neither in politics nor in commerce are they likely to take the position of a world power. There remains, however, still the possible danger of their being exploited not only politically but also economically by their Japanese neighbours.

NOTE. This chapter was written before the publication of the Anglo-Japanese Agreement of 1902.

CHAPTER XI

INTERNATIONAL QUESTIONS

THOUGH Siam, as we have seen, has been known to the European trader and missionary for three centuries and more, the real period of European influence practically commences with the ratification of the Treaty of Friendship and Commerce with Great Britain in 1855, which was followed by treaties with France, the United States, Germany and other countries. Since then the bulk of European commerce, and the number of European residents, have steadily grown, and in the last decade the rate of increase has been more than proportionately great. Siam is a rich country. It is one of the best rice-producing lands in the world. There is great wealth in its teak forests in the north, and though its other products are overshadowed in importance by these two, yet they are by no means to be regarded with contempt. In his search for new markets the European merchant has naturally cast his eye on Siam, and the competition for Siamese trade is every year keener and keener. It is a prize

well worth struggling for in itself. But additional importance has been lent to the Siamese question by the fact that it is not only Siamese trade that is at stake, but that the country which controls Siam may, it is thought, command one of the most important routes to the provinces of Southern China.

For many years after the signing of the treaties with the chief Western Powers, Siam was suffered to pursue the even tenour of her way, and wealth and commerce grew steadily if slowly. Nearly all the trade fell into British hands. British merchants established themselves and invested capital in the country, whilst almost all the exports were carried in British vessels to the neighbouring British colonies of Singapore and Hongkong. Meanwhile, France, who had very little material interest in Siam, had been pushing her way steadily in the eastern part of the Indo-China peninsula. In 1862 the French established themselves in Lower Cochin China, and in the following year assumed the protectorate of Cambodia. In 1866 they despatched the scientific expedition already referred to,1 the result of which was to dissipate their hopes of gaining access to the trade of Southern China by the Mekong, and to force them to turn their attention elsewhere. In 1874, accordingly, they made a treaty of commerce with the Government of Annam, which led to their forming within the year a protectorate over the whole of Annam, embracing 1 Ch. II., p. 22.