Smokeless Sugar: The Death of a Provincial Bureaucrat and the Construction of China's National Economy 0774816538, 9780774816533

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Smokeless Sugar

Contemporary Chinese Studies This series, a joint initiative of UBC Press and the UBC Institute of Asian Research, Centre for Chinese Research, seeks to make available the best scholarly work on contemporary China. Volumes cover a wide range of subjects related to China, Taiwan, and the overseas Chinese world. Glen Peterson, The Power of Words: Literacy and Revolution in South China, 1949-95 Wing Chung Ng, The Chinese in Vancouver: The Pursuit of Power and Identity, 1945-80 Yijiang Ding, Chinese Democracy after Tiananmen Diana Lary and Stephen MacKinnon, eds., Scars of War: The Impact of Warfare on Modern China Eliza W.Y. Lee, ed., Gender and Change in Hong Kong: Globalization, Postcolonialism, and Chinese Patriarchy Christopher A. Reed, Gutenberg in Shanghai: Chinese Print Capitalism, 1876-1937 James A. Flath, The Cult of Happiness: Nianhua, Art, and History in Rural North China Erika E.S. Evasdottir, Obedient Autonomy: Chinese Intellectuals and the Achievement of Orderly Life Hsiao-ting Lin, Tibet and Nationalist China’s Frontier: Intrigues and Ethnopolitics, 1928-49 Xiaoping Cong, Teachers’ Schools in the Making of the Modern Chinese Nation-State, 1897-1937 Diana Lary, ed., The Chinese State at the Borders Norman Smith, Resisting Manchukuo: Chinese Women Writers and the Japanese Occupation Hasan H.Karrar, The New Silk Road Diplomacy: China’s Central Asian Foreign Policy since the Cold War Richard King, ed., Art in Turmoil: The Chinese Cultural Revolution, 1966-76 Blaine R. Chiasson, Administering the Colonizer: Manchuria’s Russians under Chinese Rule, 1918-29 Kimberley Ens Manning and Felix Wemheuer, eds., Eating Bitterness: New Perspectives on China’s Great Leap Forward and Famine

Smokeless Sugar: The Death of a Provincial Bureaucrat and the Construction of China’s National Economy Emily M. Hill

© UBC Press 2010 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, without prior written permission of the publisher, or, in Canada, in the case of photocopying or other reprographic copying, a licence from Access Copyright (Canadian Copyright Licensing Agency), www.accesscopyright.ca. 20 19 18 17 16 15 14 13 12 11 10

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Printed in Canada on FSC-certified ancient-forest-free paper (100% post-consumer recycled) that is processed chlorine- and acid-free. Library and Archives Canada Cataloguing in Publication Smokeless sugar : the death of a provincial bureaucrat and the construction of China’s national economy / Emily M. Hill. (Contemporary Chinese studies, ISSN 1206-9523) Includes bibliographical references and index. ISBN 978-0-7748-1653-3 1. Feng, Rui. 2. Sugar – Manufacture and refining – China – Guangdong Sheng – History – 20th century. 3. Guangdong Sheng (China) – Politics and government – 20th century. 4. China – Politics and government – 1928-1937. 5. China – Economic conditions – 19121949. 6. Guangdong Sheng (China) – Officials and employees – Biography. I. Title. II. Series: Contemporary Chinese studies DS793.K7H54 2010

951’.27042

C2010-903464-3

UBC Press gratefully acknowledges the financial support for our publishing program of the Government of Canada (through the Canada Book Fund), the Canada Council for the Arts, and the British Columbia Arts Council. This book has been published with the help of a grant from the Canadian Federation for the Humanities and Social Sciences, through the Aid to Scholarly Publications Programme, using funds provided by the Social Sciences and Humanities Research Council of Canada. UBC Press The University of British Columbia 2029 West Mall Vancouver, BC V6T 1Z2 www.ubcpress.ca

Contents

Figures and Tables / vii Acknowledgments / ix Abbreviations and Measurements / xi Note on Transliteration and Translations / xii Introduction / 1 1 The Formation of Agricultural Expertise: Feng Rui’s Education and Early Career / 21 2 Public Service in Guangdong, 1931-36: Economic Nationalism and Provincial Planning / 47 3 Rice and Revenue: Guangdong’s “Benefit Agriculture” Import Taxes / 71 4 White Sugar: Global Business and Provincial Enterprises / 97 5 Bitter Experiences with Sugarcane / 122 6 Brokers, Smugglers, and the Official Sugar Monopoly, 1934-36 / 148 7 National Reunification and the Punishment of Feng Rui / 179 8 Provincial Sugar Industry Programs, 1945-58 / 206 Conclusion: Shaping China’s Economic Nation on the Eve of War / 225 Notes / 243 Bibliography / 290 Index / 310

Figures and Tables

Figures 1 Map of Guangdong, 1936 / 6 2 Feng Rui at work in Ding County, Hebei, 1928 / 37 3 Map of Guangdong showing the locations of the sugar mills built, 1933-37 / 99 4 Feng Rui at the Guangdong provincial sugarcane experimental farm, 1935 / 131 5 Feng Rui with his daughters, 1935 or 1936 / 201 6 Sugarcane delivery at the Shitou provincial sugar mill, 1992 / 221 7 Chen Zhaoyu, wife of Feng Rui, circa 1933 / 241 Tables 2.1 Agricultural improvement plans in Guangdong, 1933 / 58 2.2 Budget of Guangdong’s Bureau of Agriculture and Forestry, 1931-36 / 63 3.1 Registered shipments of rice into Guangdong, 1928-33 / 73 3.2 Import taxes and tariffs on milled rice, 1933-36 / 76 3.3 Rice production per hectare during the 1930s / 81 3.4 Registered rice imports into Guangdong, 1932-37 / 86 4.1 Construction of sugar mills in Guangdong / 98 4.2 Tariffs on imports of milled and refined sugar / 101 4.3 Comparative consumption of white sugar, 1933 / 103 4.4 Projected returns on investment in sugar milling, 1934-35 / 112 5.1 Sugar-production costs and market value, 1933 / 125 5.2 Sugarcane-cultivation area required to supply four government sugar mills, 1936 / 128 5.3 Cane-crushing season in the Guangdong sugar mills, 1934-36 / 140 6.1 Sugar distribution districts and licensed merchants’ monthly sales quotas, 1935 / 150 6.2 Registered exports from Hong Kong in China’s total sugar imports, 1931-33 / 152

viii List of Illustrations

6.3 Sugar imports, 1923-34 / 152 6.4 Sugar trade between Hong Kong and Guangdong / 153 6.5 Income of the Guangdong Native Products Sales Office, 1934-35 / 163 6.6 China’s sugar imports, 1933 / 176 8.1 Land area devoted to sugarcane supplying government mills, 1951-57 / 214 8.2 Average sugarcane yields in areas supplying government mills, 1951-58 / 215 8.3 White sugar production and exports, 1952-89 / 219

Acknowledgments

While surveying Chinese-language materials on the topic of provincial industrialization during a summer visit to Sun Yat-sen University in Guangzhou, I came across a reference to Feng Rui as a “returned student” from Cornell University in the United States. The name was one I knew already, but I had not known that Feng Rui held a doctoral degree from Cornell. Continuing my reading in the Wason Collection at Cornell, I happened to discover that at an earlier stage of his education Feng Rui was a student on the campus of Sun Yat-sen University, during the era when the site belonged to Lingnan College. I then walked to the library of the New York State College of Agriculture at Cornell, located Feng’s doctoral dissertation on a shelf among others completed in 1924 and checked it out. Finding Feng Rui’s dissertation to be a work of high quality and continuing relevance, I began to feel a sense of curiosity and compassion towards a talented person who was also my schoolmate of sorts. From then on, the focus of my research gradually shifted to centre on Feng Rui. Sherman Cochran, whose work has inspired me since before I was even aware of the location of Cornell University, was my encouraging and astute graduate supervisor. I owe thanks as well to other mentors at Cornell, particularly Tom Lyons, Takashi Shiraishi, and the late David Wyatt. On the other side of the world, my affiliation with Sun Yat-sen University was enormously valuable in helping to further my research. Warm-hearted welcomes from the late Chen Shenglin and his wife Zhu Jufang, together with the friendship of Professor Chen’s student and junior colleague Wu Yixiong (Shawn) helped make my visits to Guangzhou meaningful. I am grateful to L.T. Lam and the East Asia Program at Cornell University for supporting two of my semester-long visits to Guangzhou through Lam Family South China Research Grants. During that period, I also received invaluable support in the form of a Chinese Studies Fellowship granted by the Joint Committee on Chinese Studies of the American Council of Learned Societies and the Social Sciences Research Council. I would also like to acknowledge Victoria University at the University of Toronto for awarding me an Ada Snider Heunergard Scholarship for the purpose of funding my first year of postgraduate studies. This encouragement led me to consider graduate studies seriously. As I entered the world of research on China, Victor Falkenheim and the late Jack Gerson were good-humoured and

x Acknowledgments

sympathetic guides. More recently, I have benefited from the advice of many other scholars, including Tim Brook, Jerome Chen, Parks Coble, and Diana Lary, to name just a few. In various ways and on numerous occasions, my graduate school friends Micheline Lessard and Liren Zheng have provided strong support and have proven themselves to be the best of shijie and shixiong (academic siblings). At UBC Press, Emily Andrew, Megan Brand, and others have guided the book to completion with admirable professionalism. For valuable assistance in preparation of this book, I thank Simon K.H. Li and Sherman Xiaogang Lai, former graduate students in history at Queen’s University. I am also very appreciative of how they and other students helped to build and enliven my China-centred teaching program through their enthusiasm, teaching assistance, and insights on interesting questions. Among numerous supportive faculty colleagues at Queen’s, I particularly appreciated the encouragement of Ariel Salzmann and James Miller. During the past few years, Sui-ming Lee has generously provided me with entree into the social and cultural world of the former Lingnan University of Guangzhou. Acting as a critical node in a far-flung network, he connected me quickly to Feng Rui’s two daughters, Feng Puyu and Feng Puzheng. Unfortunately, I met Puzheng just once before she died in 2004 but afterward made numerous visits to the home of Feng Puyu (Pola). Apart from the valuable assistance she provided as I sought to complete this book, I have greatly appreciated and admired Pola for her brave spirit and open mind. Thanks to her and Puzheng, I became indirectly familiar with their mother, Chen Zhaoyu, who merits special acknowledgments for providing a foundation for my research. Without the description of her husband’s career and defence of his actions that Chen Zhaoyu published privately after his death, I might not have had the courage to begin my own examination. To conclude her account, Chen Zhaoyu wrote that she believed a clear picture of what happened to Feng Rui would emerge one day. As this book goes to press, I am convinced that she was right. Since I discovered my shared academic affiliations with Feng Rui, the milieu of his life and the circumstances of his death have steadily become clear to me. As well, I am increasingly aware that it has been a privilege to examine what he and Chen Zhaoyu wrote and accomplished during their lives. In short, my thanks go to all who have personally and professionally afforded me the privilege of studying and making sense of the past.

Abbreviations and Measurements

CCP

Chinese Communist Party

GSM

Guangdong Sugar Monopoly

HIW

Honolulu Iron Works

MEM

Mass Education Movement

NSE

National Southeastern University

PLA

People’s Liberation Army

PRC

People’s Republic of China

TSR

Taikoo Sugar Refinery

dan

Unit of weight, about 133 pounds during the 1930s

G$

Guangdong dollar, worth about US$0.27 in 1936

HK$

Hong Kong dollar, worth about US$0.38 in 1936

jin

Unit of weight, about 1.3 pounds during the 1930s

mu

Locally variable unit of land measurement, about one-sixth of an acre

N$

National dollar, worth about US$0.36 in 1936

quintal

Unit of weight, equal to 100 kilograms

tael

Unit of account, equal to 37.8 grams of silver

yuan

Refers to the renminbi, China’s currency since 1949, officially valued at US$0.40 in 1955

Note on Transliteration and Translations

With three exceptions, the pinyin system of representing Chinese is used in this book. The exceptions are personal names: Chiang Kaishek (Jiang Jieshi in pinyin), Sun Yatsen (Sun Yixian), and James Yen (Yan Yangchu). Otherwise, personal names are given in pinyin. With the first use of a personal name in pinyin, an alternate spelling is provided in brackets if it has been in common use. Thus, for example, Song Ziwen, finance minister and banker, is also identified as T.V. Soong. Readers unfamiliar with Chinese spelling systems and pronunciation should note that Feng Rui may be pronounced “Fung Ray.” The meaning of Rui is “sharp.” It is also noteworthy that although some sources refer to him using the Wade-Giles spelling of Feng Jui, he never used that spelling himself. Feng Rui’s own preference conformed to pinyin, although that system had not yet been formalized during his lifetime. Quotations from works in Chinese are my own translations.

Smokeless Sugar

Introduction

The Unexplained Death of Feng Rui During a tense confrontation between China’s central government and the leaders of Guangdong province, in which both sides prepared to use military force, Feng Rui was arrested at his home near the provincial government headquarters on the afternoon of 10 August 1936. After a month of imprisonment, he was killed on government orders. While in detention, Feng was not permitted to communicate with the world outside his cell or receive visits, even from family members. He was not informed of his death sentence until military police arrived to escort him to an execution ground on the outskirts of Guangzhou. After the execution, the government of Guangdong issued a terse report, listing its charges against Feng Rui.1 As the South China Morning Post of Hong Kong reported, summarizing the government’s statement: After the execution, which was carried out in the eastern suburb outside the city at 4 pm by a party of 30 gendarmes, an official communiqué was issued stating that Feng Rui, aged 38, native of Panyu, Kwangtung [Guangdong] was found guilty of corruption and embezzlement of Government money. He was also found guilty of oppressing the farmers in the Province and purchasing foreign sugar to pass it off as produced by the Government factories. The communiqué states that complaints have been received from all over the province since Feng’s arrest. He admitted all offences during a careful trial.2

The most specific of the official charges against Feng Rui was that he was guilty of “purchasing foreign sugar to pass it off as produced by the Government factories.” The people of Guangdong referred to this imported commodity as “smokeless sugar” because no fuel was consumed in its manufacturing process.3 A form of direct import substitution in the industrial sector had indeed been practised in Guangdong. Feng Rui was the director of a well-known provincial program of investment in sugar milling, launched in 1933, which by the time of his arrest featured the sale of imported sugar in packaging marked with the “Five Rams” brand name adopted by the provincial manufacturers. Despite Feng’s association with “smokeless sugar,” however, the justice of the punishment that he received is far from clear.

2 Introduction

Considered to have reached the age of thirty-eight according to the customary Chinese measurement of age, Feng Rui was born on 5 December 1899.4 Still quite young in 1936, Feng was a prominent public figure, with friends and acquaintances in both North and South China, in academic circles, and among China’s foreign residents, particularly those from the United States, where he had been a student during the 1920s. He had served as the director of Guangdong’s Bureau of Agriculture and Forestry since November 1931. In that position, Feng Rui gained national prominence as the supervisor of Guangdong’s most important industrial-development project, a sugar-milling program through which China’s first up-to-date sugar factories were constructed. Feng was also well-known as an academic expert on agriculture and served as dean of the School of Agriculture at Lingnan University in Guangzhou concurrently with his post in the provincial government. In his intellectual role, Feng Rui was an outspoken advocate of national economic reform. Yet during the two years before his death, Feng’s prominence had increased because of his advocacy of provincial economic interests. He acted as a representative of Guangdong during visits to Shanghai and the national capital in Nanjing for meetings with central government officials. Especially since mid-1935, his statements to journalists on discussions with central government leaders had been widely reported in local and national daily newspapers.5 At the time of Feng Rui’s arrest, his wife and daughters were in Europe. Chen Zhaoyu had been receiving treatment for tuberculosis at a sanatorium in Switzerland for the past few months. Learning that her husband had been arrested, she immediately made arrangements to return to China. Determined to do her utmost to save Feng from harm, she also wrote to political leaders requesting their help to secure her husband’s release from detention. But by the time she reached Guangzhou, Feng Rui had already been killed. Her elder daughter remembers clearly Chen Zhaoyu’s grief and anger at the injustice of her husband’s death.6 To establish his innocence, Chen wrote a long, emotionally worded essay. Including a set of newspaper clippings, copies of letters Feng had written to her during the past two years, and a brief autobiography that he had recently composed, she privately published her defence as a book several months after his death. Arguing that the charges against Feng Rui were entirely unfounded, Chen countered each one by marshalling details to present an accurate account of his career. She declared that Feng had met a tragic end because he was an idealistic activist who did not understand the need for caution in political life.7 Feng Rui’s widow stated in her account that his many friends and acquaintances in Guangzhou were shocked and talked in private about his execution for days afterward.8 But few details were available. Feng Rui had been tried and sentenced by a military tribunal in a closed session, and Guangzhou lacked a

Introduction 3

free press, restricting public discussion of his case. During the four-week period of Feng Rui’s imprisonment, his captors gathered complaints about him from various quarters.9 However, Feng Rui was prevented from seeking help or defending himself publicly in any way. He had been held incommunicado and in solitary confinement.10 Only very general descriptions of Feng’s alleged misdeeds, enlivened with rumours about his personal life, were available in the news.11 Apart from Chen Zhaoyu, no one who had been personally acquainted with Feng Rui or involved with the handling of his case provided a public explanation of his death until 1963, when a brief account by Li Jiezhi (1900-94) appeared in print. Formerly Guangdong’s commissioner of police, Li had been responsible for Feng Rui’s arrest in August 1936.12 He offered a few details on the handling of the case, mentioning that Feng shouted out to passers-by that he was innocent while being taken by car to the execution ground.13 Yet, Li Jiezhi’s account raises more questions than it answers. Why, for instance, was Feng Rui not permitted to communicate with anyone following his arrest? It seems that Li Jiezhi offered a belated response to the shock and incomprehension about Feng’s death. Perhaps because his account had not satisfied readers, Li revised it many years later. He then added a few details to his earlier version, writing in a tone of greater sympathy for Feng Rui.14 Li stated that the military men who sentenced Feng Rui to death were influenced by the popular disapproval Feng had aroused by purchasing a luxurious automobile and carrying on an affair with a dance-hall girl from Hong Kong named He Lili. According to Li, even He Lili denounced Feng Rui after his arrest, placing announcements in the Hong Kong press in which she confirmed that Feng was corrupt.15 Rather than serving to explain Feng’s death, such points make it seem even more unjust. If Li Jiezhi is to be believed, Feng Rui was sentenced to death on the basis of disapproving gossip and newspaper notices that might have been planted. This book is the first account to offer a thorough examination of Feng Rui’s career and the circumstances of his death since Chen Zhaoyu’s book appeared in 1937.16 It explains that Feng’s death sentence served political purposes. His case diverted public attention from the actions of others associated with controversial activities, particularly the smuggling of commodities subject to national tariffs. This examination of the setting of Feng Rui’s career as a provincial bureaucrat also casts light on wider issues. In particular, it draws attention to the formation of China as a national economy, in both material and conceptual terms. Feng Rui’s fate was linked to the contentious impact on coastal commerce of the strong claims to sovereignty embodied in China’s first full and independent tariff regime, implemented in 1929.17 He was also an agent in the formation of China’s distinctive system of agricultural production. The remainder of this

4 Introduction

introduction elaborates on these points with reference to the context of Feng Rui’s career. Provincial Semi-Autonomy Feng was associated with a provincial leader who fell from power during the summer of 1936. In his position as director of the Bureau of Agriculture and Forestry of Guangdong province, Feng was considered to be a protege of Chen Jitang (1890-1954), the military commander who dominated Guangdong from 1931 until his departure from the province in July 1936. Feng’s arrest resulted from a confrontation between Chen Jitang and China’s central government. Known as the “Southwest Incident” (Xinan shibian) or the “Guangdong-Guangxi Revolt” (LiangGuang fanpan), the crisis erupted in June 1936, when Chen Jitang and his military allies in the neighbouring province of Guangxi made a bid for national leadership. On 2 June, they dispatched a flurry of telegrams to other regional authorities and to Nanjing, calling for an active national defence against Japanese incursions in northern China. By committing their armies to an immediate mobilization, with or without central orders, the leaders of the Southwest threatened to rebel against their military superior, Chiang Kaishek (1887-1975).18 However, support for their venture was not forthcoming from other regions. A number of Chen Jitang’s key subordinates then declared their loyalty to a united China and to Chiang Kaishek. Chen Jitang resigned from office in mid-July and left Guangzhou, travelling to Hong Kong on a British gunboat in the company of his loyal followers. A new set of provincial leaders was installed through arrangements supervised by Chiang Kaishek, and the public greeted this transfer of authority as the peaceful reintegration of Guangdong within China. Feng Rui was one of the most prominent members of the former government of Guangdong to remain in office throughout these events. As the new provincial government was settling in, however, he was arrested on the orders of Yu Hanmou (1896-1981), the general newly appointed to command Guangdong’s armed forces. Two days after Chen Jitang departed from Hong Kong on a ship bound to Europe, news agencies received the official announcement that Feng Rui had been sentenced to death by a military tribunal convened by General Yu.19 In public statements, Yu Hanmou proclaimed that a new era of military leadership and corruption-free administration in Guangdong had begun following the removal of Chen Jitang and his “clique.”20 Observers understood the conspicuous severity of Feng’s punishment as a new regime’s display of firm commitment to combatting corruption by making an example of a well-known official.21 The day after Feng’s death, an editorial in Guangzhou’s popular daily Qunsheng bao (Popular Voice) congratulated the authorities on their resolve

Introduction 5

and hoped that other offenders would also be dealt with firmly.22 But the new Guangdong government’s campaign against corruption in 1936 was of brief duration and consisted almost entirely of the attack on Feng Rui. Official sources provided no further information on his case following the press release stating that he had been killed. Police Commissioner Li Jiezhi did not mention problematic shipments of white sugar in his accounts. As seen above, however, the charge that Feng “purchas[ed] foreign sugar to pass it off as produced by the Government factories,” was conspicuous in the official report of Feng Rui’s execution. Guangdong’s smokeless sugar is the key to understanding the circumstances of Feng’s arrest and his death in disgrace. Conversely, the case of Feng Rui contributes to understanding challenges faced by China’s central government at the time of his death. Feng’s activities as an official involved him in the two most serious challenges, which were Chinese regionalism and relations with Japan. The creation of large supplies of white table sugar through a process that did not require the burning of fuel was part of a larger problem concerning national tariffs in Chen Jitang’s autonomous Guangdong. Contention over tariffs was an aspect of the challenge of Guangdong to China’s central state, represented by the Nationalist Government founded in Nanjing in 1928. Tariff questions also highlight how domestic politics were connected to the escalation of tensions between China and Japan during the years before full-scale war began in 1937. The challenge of Guangdong to China’s central government is most sharply evident in the phenomenon referred to by critical observers as “official smuggling.” For several years before the ousting of Chen Jitang, he and other top officials in the province were associated with the duty-free importation of large volumes of commodities subject to tariffs set in Nanjing.23 Authorities in Nanjing naturally opposed this activity because of the loss of significant revenue to the central government. By the time of Chen Jitang’s departure, they had received reports that half the revenue due to be collected on tariffs in Guangdong was lost to his regime.24 They were also worried about the effect on China’s creditworthiness of a decline in the revenues on which major foreign loans were secured.25 Moreover, portions of the disputed imports either originated in Japan or were carried to China’s coastal waters in Japanese ships.26 The dispute between Nanjing and Guangdong was further complicated by Japanese military encroachments in northeastern and northern China during the 1930s. In 1936, Chinese officials and the general public watched with alarm as a flood of smuggling swept into northern China in the wake of an expanded Japanese military presence and Japanese sponsorship of separatist administrations in the region.27 A sense of crisis developed during the year as the major newspapers carried frequent reports describing the smuggling activity in northern China and how it

Figure 1

Map of Guangdong, 1936. Prepared by Chen Weiqing of the Institute of Historical Geography, Fudan University, Shanghai, and

updated by Eric Leinberger.

Introduction 7

was openly protected by Japanese troops.28 Feng Rui, as an agent of southern provincial trade, came under public scrutiny, and he is a valuable guide to the border zone where the challenge of regional autonomy and the threat of conflict between China and Japan were most closely interlinked. Guangdong province possessed a long coastline studded with isles and inlets, including a section that was later transferred to the jurisdiction of Guangxi, and its land borders faced territories administered by Britain (Hong Kong), as well as France (Indochina and Guangzhouwan), and Portugal (Macau) (See Figure 1.1). For smugglers, the Japanese colony of Taiwan was also within reach. This political geography provided various actors with a broad range of opportunities to exploit differences between pricing regimes, often by evading the grasp of tariff-collecting state agencies.29 The presence of Hong Kong with its strong state presence and concentration of financial and infrastructural capital was of special significance. There was economic asymmetry between Hong Kong and China as well as a jurisdictional divide. Most of the paper currency issued in the colony circulated in southern China, providing monetary stability in a region with a profusion of local currencies and suggesting Hong Kong’s magnetic force in the region.30 Yet, despite contrasting commercial conditions and political regimes between the colony and South China, the majority of Hong Kong’s population originated in nearby regions of Guangdong. 31 For Chinese nationals, moreover, two-way travel between the jurisdictions was unrestricted.32 These geographic, political, economic, and cultural features created many opportunities for arbitrage. Brokers, middlemen, and mediators engaged in cross-border business ranging from petty commodity trade to largescale transactions between currencies.33 Smuggling was a constant part of this cross-border activity. After substantial increases in tariffs on many of China’s major import goods came into effect with the new tariff schedule of 1 February 1929, inward smuggling immediately became more profitable. The control of trade along the coast then became the most pressing preoccupation of China’s national customs agency, an institution called the Chinese Maritime Customs Administration. During the early years of the new tariff regime, Customs was largely concerned with smuggling in the vicinity of Hong Kong, more so than with problems elsewhere.34 In response to new challenges, the agency’s capacity for tariff enforcement was strengthened by the establishment of its Preventive Department, and by 1934 this unit was equipped with a fleet of about sixty ships.35 From the point of view of China’s central officials, the evasion of national tariffs along the southern coast was a threatening parallel to the circumstances of the national government’s formation during the 1920s. The Nationalist Government in Nanjing was the continuation of a government established in Guangzhou in 1920 by Sun Yatsen (1866-1925), its Extraordinary President.36

8 Introduction

Repudiating the internationally recognized government of the Republic of China in Beijing, Sun and his Nationalist party followers sought to restore the Republic of China in Guangzhou, claiming that it was the sole legitimate representative of the Chinese nation.37 Access to tax revenue streams in Guangdong was crucial in providing material support for the Nationalists’ political claims. In addition to a proliferation of taxes imposed on local trade, transportation, consumption, and entertainment, Nationalist agents collected tariff revenue claimed by the government in Beijing and established their own customs stations in Guangdong’s ports.38 With regional trade and commerce serving as a fiscal foundation for the political viability of the Guangzhou-based nation-state, Sun Yatsen’s challenge to the internationally recognized government in Beijing proved successful following his death in 1925. Chiang Kaishek assumed leadership in Sun’s mission of revolutionary national reunification and launched a military campaign from Guangdong that resulted in the re-establishment of the Nationalist government in Nanjing in 1927 and international recognition in 1928.39 Yet, their relocation northward exposed the Nationalist leaders to the danger that a southern rump would re-assert itself on the strength of access to the resources of the southern zone on which the restoration of the republic itself was based. Moreover, a remnant of the state apparatus established in Guangzhou by Sun Yatsen survived in the form of a provincial executive council after Nanjing became the national capital.40 This anomalous council gave Guangdong a special constitutional status and provided its leaders with a form of political leverage lacking in other regions that posed separatist threats to the Nationalist government in Nanjing.41 Englishlanguage reports referred to the province’s ambiguous status within a nominally unitary state as “semi-autonomy.” Guangdong from 1927 to 1936 was comparable to a “march” or “marchland” such as had existed in Europe in medieval and early modern times. Like a march, the province was an imprecisely demarcated and highly militarized region of shared jurisdiction rather than an area subject to the exclusive authority of a central government. South China during the Nanjing period was rather like Wales between the twelfth and fifteenth centuries. The marchland of eastern Wales was a buffer zone between the independent Welsh principality and the jurisdiction of the English monarchy.42 To the west of Guangdong lay the province of Guangxi, a mountainous fastness ruled by military leaders who maintained de facto independence from Nanjing’s authority throughout the Republican period. During the period of Feng’s bureaucratic career, the military leaders of Guangdong and Guangxi maintained a diplomatic alliance. 43 Like marchland lords, they shared authority over a region known as the Southwest.44 The autonomy of the highest-ranking of these lords, Guangdong’s Marshal Chen Jitang (1890-1954), is indicated in a popular sobriquet that

Introduction 9

referred to him as “The King of the South” (Nantian Wang). Overt autonomy for southern China was fleeting, however, compared to long-lasting marches in medieval Europe. Thanks to its control of a coastline at least as long as Guangdong’s and the resources of the Lower Yangzi region – a delta area larger and richer than Guangdong’s core in the Pearl River Delta – the Nationalist Government in Nanjing enjoyed a period of expanding revenues. A reliable flow of tariff revenue became the central government’s fiscal mainstay. From 1929 onward, customs revenue grew to account for half the total revenue of the Nanjing government and a large portion of its domestic and foreign debt was secured on the basis of tariff revenue.45 Yet as the reliance on customs revenue increased, so did Nanjing’s need to negotiate with the lords of the Southwest. The record of Chiang Kaishek’s notes and correspondence during the years between 1931 and 1936 reveals his intention to curb Chen Jitang’s prince-like power.46 At the same time, successful state-building in Nanjing improved Chiang’s capacity for centralizing efforts. Institutions such as the official salt monopoly and the diplomatic service of the Republic of China were significantly strengthened between 1928 and the onset of the Anti-Japanese War.47 But Chiang Kaishek’s southern rivals were not standing still. They were engaged in parallel state-building programs during the mid-1930s, directing resources into programs of institutional reform and economic development.48 During his reign in Guangdong, Chen Jitang buttressed his military defences as a militarist might be expected to do. But the resources of Guangdong were sufficient to support a program of economic construction as well. During its years of semi-autonomy, Guangdong’s provincial government succeeded in directing remarkable flows of official investment into industrial construction projects. Many of the new enterprises produced consumer goods, including a brewery and a paper mill in addition to the sugar mills directed by Feng Rui.49 Guangdong’s achievement in the building of a modern industrial sector deserves more attention than it has received. During the pre-war period, the scale of government investment in industrialization in Guangdong was possibly more significant than comparable efforts initiated by the central government or other regional governments in China, not counting the Japanese investments in northeast China during the Manchukuo period (1932-45). In 1935, a wellinformed observer calculated that Guangdong had by then invested more substantially in industrial development than the central government.50 Yet Guangdong’s investment, primarily in light industrial enterprises, has been overlooked by researchers. A recent study locates the pre-1949 origins of contemporary China’s state-owned industrial system in the central government’s significant program of investment in heavy industry before and during the war against Japan.51 During the period before full-scale war began in 1937,

10 Introduction

Guangdong’s total expenditures in industrial construction were at least comparable in scale to Nanjing’s.52 Comparing central and provincial efforts in another sector, we see that the Nanjing government played an activist role in economic affairs during the 1930s, organizing programs to support the cotton and silk industries by helping them stabilize their supplies of raw materials. This took government agents to the countryside to provide loans and technical assistance to cotton cultivators and sericulturalists. Some permanent links were established through these efforts.53 In a more radical restructuring effort, Guangdong’s sugar industry program sought to link industry, agriculture, and commerce by placing sugarcane cultivation, sugar milling, and marketing under official direction. As the official director of the Guangdong Sugar Industry Revival Plan, launched in 1933, Feng Rui managed the most important of Guangdong’s investment projects.54 Linking agriculture to industry, Guangdong’s sugar industry program was also significant as prewar China’s most ambitious government-led effort to institute a comprehensive system of planned economic production. Placed in charge, at age thirtythree, of this pioneering program of economic development and restructuring, Feng Rui was a forerunner of economic planning in China. Borders and Brokerage Feng Rui was a bureaucratic broker who linked together social spaces, economic sectors, and geographic zones. Among the various terms denoting mediation and border-crossing activity, broker seems the most suitable to describe him because of its evocation of the rewards and risks that are associated with brokerage activities. It is also helpful that the nature of a brokerage position, particularly in business affairs, has been illuminated in the disciplines of sociology and business administration. A broker is an agent whose initiative and position in a social network facilitates more numerous and productive interactions within the network and in new connections beyond the original network.55 Recent research in Chinese history, moreover, has advanced understanding of the broker’s role in constituting a national cultural space, conceived as a realm distinct from the foreign.56 Feng Rui’s case provides an opportunity to take a further step in understanding the formation of China’s economy through social interaction, particularly through the glimpses of one broker’s subjective experience that investigation of Feng’s case offers. Feng Rui exemplifies the broker’s role. According to his wife, he was committed to integrating knowledge and action in his career.57 Feng was both articulate and active. He was a recognized authority on agricultural administration, interpreting specialized knowledge for practical purposes. In the Guangdong sugar-milling program, he was an agent linking international capital to China’s

Introduction 11

agricultural hinterland. As a mediator across the boundary between government authority and private commerce, he took steps to reconstitute the relationship between bureaucratic and commercial spheres. Most controversially, Feng Rui became prominent as an agent involved in directing flows of revenue to the government that he served by tapping Guangdong’s border resources. In the end, the allegations against him cast him as a broker who served only himself. His downfall is a reminder that the rewards of brokerage are related to the risks inherent in the role. The setting of Feng Rui’s bureaucratic career illustrates vividly how a political boundary may serve as a resource to the population of a border zone.58 A border is an obstacle but not a barrier to economic exchange, resourceful for the agents who make connections across it. This is particularly true of borders between adjoining well-populated territories, and the richness of the resources of such zones is enhanced where more than two political authorities adjoin. Best seen as a maritime frontier rather than a clear border or boundary line, the southern coast of China was a zone of economic interaction where many parties were active. 59 Following anthropologists, this southern border zone may be conceptualized as a distinct economic entity.60 As Owen Lattimore observed, moreover, a frontier area tends to become a distinct social unit as the peoples on either side of a border tend to identify with one another more than with the states that have jurisdiction over them.61 Brokers take risks because the existence of a resource, benefit, or advantage leads to contestation over its possession and control. Actors positioned in a geographical border zone, for instance, compete for access to the zone’s special opportunities. The stricter the limits to access, the greater are the gains to those who hold a monopoly over border resources. Through Feng Rui, we see how inter-regional commodity flows and contested trade regimes contributed to the formation of China’s national economy. The tariff regulations instituted in Nanjing in 1929 sharpened China’s external borders and at the same time accentuated an internal division. Given the conflicting trade regimes of Nanjing and Guangdong, Guangdong may be seen as an “internal frontier” during the period of autonomy for the Southwest. In effect, the border zone shifted more definitely inward as the new national tariffs encouraged traders to profit by evading them.62 This helps to make clear how disputes related to patterns of inter-regional and international trade, linked at certain points to the menace of Japan, were significant in the formation of China’s national borders and national economy. In his role as a manager and spokesman for provincial industry, Feng Rui is a helpful guide. To follow his career near China’s territorial edge is to survey the material means, politics, and rhetoric through which China’s national

12 Introduction

economy was constructed at the southern coastal and internal frontiers. In this account, at the same time, Feng Rui re-emerges from the obscure circumstances in which he died. Just as two-way travel is the essence of brokerage, the pages that follow interpret how Feng Rui expressed himself in terms of the landscape of his life and at the same time interpret that landscape following his guidance. Construction of the National Economy Like other nations, “China” exists as a reification that has been created and maintained by thought and words. Recent work corrects a tendency to view the building of nation-consciousness in China as though it were exclusively a project of the Chinese Communist Party (CCP). According to analysis focusing on Chinese Communist leadership and the later twentieth century, the Nationalist state did not contribute significantly to nation-building during the prewar era. One scholar claims that the Nanjing government was so hobbled by territorial fragmentation and a lack of social cohesion that it was, “never able to build a coherent Chinese nation that transcended these regional and class divisions.”63 Certainly the CCP’s construction effort became dominant and, in mainland China, has lasted much longer than the efforts of the Nanjing era. However, for the sake of understanding the context and foundations of the early formation of the CCP’s nationalist ideology, the rival party’s achievements should not be ignored. Recent scholarship on China’s Republican period (1911-49) has revealed the significance to nation-building of official efforts during the period. For instance, officials made effective claims to territory considered to have been subject to Qing rule, reconstituting a patrimonial realm as the nation-state of China. Considering this record, a researcher argues that officials of the Republican era deserve credit for “stunning accomplishments” in international diplomacy.64 Rejecting federalist forms for their nation-state, furthermore, leaders associated with the Nationalist party reconstituted another legacy of monarchical rule, namely the unitary state.65 As well as examining how the territorial extent and internal structure of the Chinese state were constituted during the period, scholars have contributed important work in recent years to examine how agents both within and outside officialdom built the ideas and the institutions of national identity, particularly during the Nanjing period (1927-37).66 Recent research has demonstrated that efforts during the Nanjing era to protect and re-shape the Chinese national economy through official measures were of great significance as well. Margherita Zanasi analyzes the efforts of government bureaucrats to establish substantial programs of planned investment in state-owned industry and to institute official control (tongzhi) over economic activity during the 1930s. Both provincial and central-level officials

Introduction 13

participated in a movement to establish rational official direction over economic affairs. The phrase they all used was tongzhi jingji (“unified economy” or “monopoly economy”), usually translated into English at the time as “economic control.”67 The Anti-Japanese War (1937-45) provided the need and the opportunity for China’s national leaders to concentrate economic resources. Yet they did this on the basis of a strong strain of anti-capitalist sentiment that infused and supported Nationalist ideology during the decade preceding the war. As Zanasi points out, China’s policy direction, shared with other countries, was interpreted at the time as a shift away from free-market capitalism.68 In addition to efforts to institute economic control, technocratic aspirations were expressed in the establishment of regulatory agencies, national banks and investment programs, and scientific research to inform public policy.69 The promotion of new official policies during the Nanjing decade reflected and was supported by a significant strengthening of state capacity. An increasingly professional bureaucracy commanded more material resources, thanks not only to more efficient revenue collection but also to the gradual expansion of the Chinese economy. In this period of significant growth during the quarter century preceding the beginning of full-scale war between China and Japan in July 1937, industrial output grew most significantly among the various sectors.70 Despite the gradual growth of the industrial sector, however, anxiety about imbalances and dislocations strongly affected Nanjing’s official policies as the Great Depression made its impact in China. As falling prices in international markets contributed to an expansion of China’s imports between 1929 and 1933, the volume and value of exports slumped, arousing fears that China would soon be bankrupt. Officials instituted protectionist measures, raising tariffs in 1930 and 1932. They then faced a currency crisis. Dislocations caused by the rising value of silver and plummeting commodity prices forced further action by the mid-1930s. Through a successful program of currency reform and support for industrial enterprises, Nationalist officials made good progress in overcoming these challenges before the Anti-Japanese War began.71 As a result, China’s contemporary political economy was founded in part on the need for protective economic nationalism during the prewar period. Aspects of China’s experiences were shared in other regions. As Eric Hobsbawm declared in a study of nationalism, “The interwar economic crises reinforced the self-centred ‘national economy’ in a most spectacular manner.”72 In the case of China, the concept of a national economy, rooted in nineteenth-century awareness of the Qing state’s disadvantaged position in the international treaty system, experienced a formative spurt of growth. Zanasi dicusses how the concept of a “national economy” (minzu jingji) that should be protected from foreign exploitation was actively promoted by central-level bureaucrats during

14 Introduction

the 1930s.73 As bureaucrats promoted state control and protectionism, there was positive response from the public. Business owners who faced difficulties appealed to officials to do more to help them survive the troubled times.74 According to Wen-hsin Yeh, “economic sentiments” were fostered and took root among Shanghai’s urbanites during the Republican period. By 1937, literate urbanites tended to believe that state protection of the economic sphere was a requirement of nationhood.75 At the same time, the belief developed that every ordinary consumer should take part in protecting the nation. As Carl Gerth has shown, the distinction between “national goods” and imports became socially and culturally significant, serving as a primary mode of analysis in personal and political life. Depression conditions and escalating tensions in relations with Japan sharpened the distinction during the 1930s. Campaigns to buy Chinesemade goods were led by private entrepreneurs, sponsored by officials, and mobilized students and housewives. Even though many continued to purchase imported goods, the concurrent development of Chinese forms of nationalism and consumerism had lasting significance.76 Meanwhile, as official and popular responses to Japanese encroachments and manoeuvres in northeastern and northern China increased in intensity, nationalism rooted itself in the form of anti-Japanese salvationism.77 During the few years before full-scale war began, Japanese-backed smuggling into China aroused growing indignation. Whereas military and diplomatic affairs were conducted offstage, the daily news and nationalist consumer campaigns provided constant reminders of the dangers that invading commodities posed to the national economy. And then a long war ensued, embedding the anxieties of the 1930s in lasting structures. The nation had been constructed as an economic space, coextensive with territorial space and equally in need of protection. The story of Feng Rui is valuable as a concrete case of how interactions across divisions constituted China during a period of assertive boundary formation. A state’s material power, as well as its imagined existence, may be seen as the outcome of a process of social interaction, occurring both internally among groups and externally among collectives such as states.78 At the time of Feng Rui’s death, Nationalist officials were asserting central authority over an internal frontier in Guangdong. At the same time, they pursued urgent multilateral negotiations in defense against Japanese military encroachments and Japanesebacked economic incursions in the form of coastal smuggling. All along, their actions were constrained by and responsive to actors outside officialdom. Feng Rui is a guide to understanding how an economic nation formed with distinctive characteristics in the Chinese setting. The setting of his career helps to explain why the nation-builders strove for unity and centralization. Their concern is related to domestic divisions, particularly the separatism emanating from the

Introduction 15

marchland of the Southwest. In 1936, during a critical phase of concern about Japanese smuggling in North China, the separatism of the Southwest and Feng’s brokerage activity became fatefully linked to the threat of Japanese invasion. Guangdong’s interests had already been difficult to reconcile with national goals. For instance, in the name of national economic protectionism, Guangdong’s independent tariff regime discriminated against goods produced in other parts of China as well as against foreign imports.79 In fact the economic nation was constructed regionally as well as centrally. In his role as a spokesman for Guangdong’s sugar industry program, Feng Rui illustrates this well. In Guangdong he promoted provincial prosperity, and, for audiences beyond the province, he promoted the sugar program as a national economic development effort implemented at the provincial level.80 As a nationally known intellectual and the director of a provincial Bureau of Agriculture and Forestry, Feng Rui also helped to structure China as an agricultural economy. Formed both regionally and in inter-regional interaction during the interwar period, the economic nation was at the same time being constructed at an agricultural frontier. In a sense, agrarian China was invented by Feng Rui and his fellow experts. After separating agriculture from the modern economy in conceptual terms, they made steps to re-integrate agriculture and industry in institutional efforts. As Feng claimed in a lecture at his alma mater in Guangzhou in 1933, Guangdong’s economic development plan sought to avoid the separation between villagers’ agricultural pursuits and their employment in industries that were characteristic of modern capitalism as it had developed overseas. He envisioned that it would be possible to avoid the “confrontations” between agriculture and industry that characterized capitalism by fusing together the three sectors of agriculture, industry, and commerce in the activity of a single household.81 In the lecture he expanded on a point made to conclude his doctoral dissertation of 1924, that “the prosperity of agriculture can be assured only in conjunction with the prosperity of industry.”82 In fact, perhaps more than any other government official of the era, Feng Rui had the opportunity to put this idea into practice both in fine detail and on a large scale. He took the lead in implementing and directing a remarkable set of measures intended to fuse agriculture, industry, and trade in a coordinated and planned program. On the rhetorical plane and on a practical level as well, he contributed to the construction of China’s economy during the 1930s in a manner that emphasized the interdependent development of agriculture and industry behind a protective tariff barrier and under official guidance. Feng Rui was an unusually articulate member of China’s bureaucratic corps. Thanks largely to his intellectual ability, he rose to a prominent position that was rare among mid-level provincial officials. A prolific writer and engaging

16 Introduction

speaker, Feng played the role of a broker between the academic and policymaking worlds. His publications during the 1920s helped readers make sense of China’s economic conditions in a comparative context. At a later stage, he authored many articles and reports to outline and defend provincial policies and programs. From 1932 to 1936, Feng Rui was an active agent representing his province in Shanghai and Nanjing in efforts to reconcile inter-regional conflicts of interest. The centre asserted its terms with his death. Nonetheless, Guangdong’s sugar-milling program was a significant investment that eventually yielded returns. Remaining under official control, it later provided significant streams of revenue to a successor regime. Feng’s work proved to be a lasting component in the local construction of China’s national and nationalistic economic system. Outline of the Book Reaching into the past largely through Feng Rui’s own writing, the first chapter of this work places Feng Rui in his social setting and recounts his education and early career. It then outlines how his ideas about China’s economy and the need for protectionism in international trade took shape. Feng Rui was born in the Huangpu district southeast of Guangzhou. Educated locally until age fifteen, he then travelled north for further studies in Nanjing and later won a scholarship that enabled him to attend graduate school in the United States. In 1925, he returned from his studies overseas with a doctoral degree. After a brief period of teaching and research in Guangzhou, Feng worked in North China for several years before returning to his native province to take up an official appointment as an agriculture specialist. During these years, he wrote numerous essays that were accepted for publication in academic journals. Before becoming a government official, Feng Rui developed a reputation as an academic expert on agriculture, policy analysis, and social reform. Feng’s experience and his many published articles made his name familiar in intellectual circles.83 He discussed an impressive range of topics in his publications. For village householders, Feng provided practical advice on matters such as how to select seeds, protect crops against pests, and improve farm tools. To an academic audience at the national level, meanwhile, he directed proposals for reforming agriculture so as to restructure the entire Chinese economy. Feng Rui stressed the backwardness both of agriculture and of official agricultural administration in China, calling for far-reaching reforms to strengthen the two together. He authoritatively compared China’s experience with the agricultural achievements of the advanced nations, especially the United States. The United States was an inspiring source of ideas thanks to dramatic increases in farm

Introduction 17

output since the mid-nineteenth century and also to the development of professional agricultural-training programs. Feng Rui did not propose simple emulation of advanced practices, however, but policies adapted for China. He did not accept capitalism as the only development model. Thanks to his credentials as an expert on agricultural affairs and his contributions to the formation of ideas about overall national economic reform through reorganization at the grassroots level, Feng Rui was an agent in the articulation of an alternative national development path for China. Chapter 2 discusses Feng Rui’s early career in Guangdong. After returning to his native province in 1931, he participated in a remarkable program of statebuilding at the provincial level. Feng’s tenure as director of the Guangdong Bureau of Agriculture and Forestry from November 1931 to August 1936 was almost exactly congruent with a period of formally recognized autonomy for the province of Guangdong. Feng Rui joined the Guangdong provincial government during the same month that the military leader Chen Jitang (1890-1954), the Commander-in-Chief of the First National Army stationed in Guangdong, consolidated power as the province’s de facto ruler. Chen ruled with the support of the military leaders of Guangxi and of a southern wing of the Nationalist party that was openly critical of colleagues in Nanjing. Despite General Chen’s formal position in the hierarchy of the National Revolutionary Army, where he was a subordinate of Chiang Kaishek, he did not follow orders, and the autonomy of Guangdong before 1936 was well-known.84 Charged with responsibility for directing agricultural affairs for the province, Feng stated that his goals were to apply agricultural science and formulate macro-level policies to revive Guangdong’s rural economy. Over time, as his efforts became a comprehensive provincial three-year development plan, Feng Rui focused increasingly on efforts to revive agriculture through industrial development. Chapter 2 also examines the financial basis of Feng Rui’s program of agricultural development for Guangdong. Financing was evidently closely connected to the provincial government’s reliance on the taxation of manufactured imports and to the establishment of import substitution industries. Chen Jitang allocated tax revenues collected in the commercial sector to programs of investment in the modernization of production in agriculture and modern industry. Provincial spokesmen justified the taxes on imported commodities during the 1930s in terms of economic protectionism. Referring to provincial import taxes during an interview with a journalist in May 1936, for instance, Feng Rui declared that the provincial sugar program required protection because it was an “infant industry.”85 For a regional government to foster industrialization by means of protectionist measures in support of a program of import substitution is unusual in economic history. Yet it was even more remarkable that several new factories

18 Introduction

in Guangdong were import-substituting enterprises in a literal sense. Substituting imported goods for their own manufactures, these enterprises repacked imported fertilizers, cement, and medicines in addition to imported white sugar. From the beginning, Feng Rui’s work in Guangdong was linked financially to an entire set of “smokeless” manufacturing enterprises. Guangdong’s independent taxation of grain imports became a controversial issue in 1933. Chapter 3 discusses the provincial implementation of a national program aimed at self-sufficiency in grain supplies. China’s imports of foodstuffs, primarily rice, had risen in recent years and were viewed as draining of national wealth and damaging to the agricultural sector. Guangdong’s consumption of imported rice accounted for between one-third and one-half of China’s total grain imports by value. In 1933, Feng Rui helped to draft and confidently promoted a plan to completely eliminate the importation of rice into Guangdong within three years. Feng also played the role of Chen Jitang’s emissary to the central government, travelling to the capital in Nanjing as Chen’s representative in discussions on the regulation of rice imports. He therefore became associated with a provincial commitment that proved difficult to uphold to the satisfaction of the central government and unpopular in Guangdong as well. As three years went by, the real goal of the provincial tax on imported grain came to be seen as increasing provincial revenues through the official control of the valuable trade in rice between Southeast Asia and southern China. Thanks to the remarkable spending spree in industrial construction that occurred in Guangdong under Chen Jitang, Feng Rui became prominent and nationally known as the active leader of the program that received the largest share of the province’s investments in economic development programs. The sugar factory construction program is described in Chapter 4. Feng Rui played a key role in negotiations between foreign businessmen and government authorities. Furthermore, the construction and operation of enormous sugar mills required an extension of official control over other parts of the provincial economy. Chapter 5 outlines the sugarcane cultivation program, analyzing the results of Feng Rui’s planning of agricultural production to meet goals dictated by the newly built capacity to process sugarcane. Chapter 6 discusses Feng’s efforts to mediate between state and merchant interests as a director of trade control measures designed to support the provincial sugar-milling program. In each of the three parts of Guangdong’s “Sugar Industry Revival Program,” Feng Rui faced enormous challenges. The charges laid against him in 1936 arose in all three. The scale of imports of “smokeless sugar” appeared to increase sharply in connection to Guangdong’s investment in sugar mills. Thus the link between sugar milling and Guangdong’s practices of “official smuggling” contributed most significantly to his disgrace in 1936.

Introduction 19

The arrest of Feng Rui as part of the reintegration of Guangdong within a unified nation governed from Nanjing is examined in Chapter 7. The situation was also international, and Feng’s death is examined as one of the events of the Nanjing era that cannot be fully explained without reference to the escalation of tensions between China and Japan during the years before full-scale war broke out in 1937. To resolve a critical regional-central standoff in 1936, Chiang Kaishek travelled south and made Guangzhou his base for several weeks. He was in Guangzhou on the day of Feng Rui’s death and referred to Feng obliquely in a major speech that day. Guangdong’s leaders played a pivotal role as they contended with rivals in regional and national politics during the 1930s. As Feng Rui’s case reveals, propaganda also linked them to a dispute over smuggling that occupied the diplomatic representatives of China and Japan and other nations as well. The autonomous power of China’s Southwest shaped the response of China’s national leaders to the looming threat of invasion by Japan. As Chapter 8 describes, the sugar-milling program established in Guangdong during the 1930s was the basis for tremendous expansion in the same direction in the province after 1949. In this case, a rural reform program of the Nanjing era laid important foundations for the agricultural policy of the Mao period (1949-76). Official efforts to control supplies and monopolize markets in support of Guangdong’s sugar-milling program were resumed after 1949. Thus Feng Rui’s career is significant for understanding continuities in China’s official agricultural policy from the prewar period into the 1950s. Chapter 8 also discusses the significance of provincial investment in industry for China’s later path of economic reconstruction. Guangdong’s sugar industry is a significant example of how many of the state-owned factories built in China before 1949, mainly in separate construction booms occurring in various parts of the country during the period 1927 to 1937, were built by municipal and provincial governments rather than by agents of the central government in Nanjng.86 The various factories that were built by the autonomous government of Guangdong and survived the war became the property of the new Communistled government of Guangdong in the name of “the people” in 1949. Among these, the sugar mills built under Feng Rui’s direction were the most important. They are an example of how the industrial sector of the People’s Republic of China (PRC) was first built on a foundation of inherited state-owned investment rather than nationalized private property and how this state-owned sector existed in regional pieces. Whereas the continuity of industrial development has been demonstrated in recent scholarship, the regional foundations of China’s state-owned industrial sector have not received close attention. Chapter 9 reviews the context of Feng Rui’s career and the circumstances of his death, summarizing his contributions to economic nation-building. It then

20 Introduction

offers concluding remarks on his role as a broker before turning once again to his personal life. The harsh punishment that he received is the most singular aspect of Feng Rui’s story. His violent death was a tragic rupture on the eve of a disastrous return to world war. Illuminated through an examination of Feng’s case, the context of mobilization for war also sheds light on his death.

1 The Formation of Agricultural Expertise: Feng Rui’s Education and Early Career

An Agronomist Oppressing the People? The official statement announcing and explaining the execution of Feng Rui emphasized that he had oppressed the farmers of Guangdong, arousing universal resentment and anger. Feng’s shadowy official accusers attacked him on the basis of a principle upheld by China’s professional agriculturalists, namely that the nation’s rural population should be governments’ primary concern. The accusation linked Feng’s alleged misdeeds to his official duties as director of Guangdong’s Bureau of Agriculture and Forestry, the post he held from 1931 until he was imprisoned in August 1936. It also evoked the image of a virtuous ruler protecting the people from the depredations of a “corrupt official.” Thus the claim that the resentful indignation of the agrarian population justified a severe punishment for Feng Rui was an effective condemnation despite the absence of detail about how Feng had acted oppressively. In part, this was because rhetoric about the need to protect villagers and restore village society had become familiar to China’s news-reading public during the 1920s and 1930s. Yet in his role as a cultural broker between the academic and policy-making worlds, Feng Rui was himself an active participant in the development of an influential set of ideas about reforming agrarian China. Feng Rui expressed ideas about agriculture that had become widely accepted by Chinese academics, journalists, and public administrators. Intellectuals and activists alike had come to believe that China’s basic nature was agricultural, that the Chinese people were predominantly agricultural, and that modernizing Chinese agriculture would modernize China. Contrary to the admiring view of an earlier academic generation that Chinese farming methods had been perfected over many centuries to squeeze maximum returns from available resources,1 Feng’s mentors and peers believed that Chinese agricultural production was falling far short of its potential. They argued that reforms directed by agricultural experts were necessary to promote progress for China. After 1929, Chinese intellectuals generally believed that reforms were urgently needed to rescue their nation from a crisis sparked by international financial conditions and based in the weakness of China’s agricultural sector.2 During his early career, Feng contributed to the development of a set of principles that formed the

22 The Formation of Agricultural Expertise

foundation of official policies aimed at modifying the free-market system so as to protect and strengthen the national economy. Given Feng Rui’s credentials as an agriculture expert and his writings that contributed to the formation of ideas about overall national economic reform through reorganization at the grassroots level, a review of his early career sheds light on the formation of China’s antimarket economic policies. Like other Chinese agriculture experts of the era, Feng was an advocate of cooperativism and also a spokesman for rationalization through the application of scientific methods. Above all, he became a leading proponent of an activist role for government in the implementation of progressive policies. As Feng argued in his doctoral dissertation, the more enlightened a government became, the more advanced its system of agricultural administration would be.3 Agriculture as a Vocation: Feng Rui’s Education It seems apt to turn now to Feng Rui’s own description of his goals as a professional agriculturalist, as stated in a draft “Autobiography” composed six months before his death.4 Feng Rui began his autobiographical account with a description of his early education and his reasons for choosing agriculture as a vocation: Born and raised in a village, I have been familiar since childhood with village life through personal observation of the village environment and people. From the time I first entered primary school through my secondary school days, I was distinctly aware that all of China was like a single village. Cities had begun to flourish only during recent years. I came to understand that a certain degree of reform and progress was needed in the production, customs, society, and every other form of organization in this village that was China. Without reform at the village level, progress for the nation as a whole would not be possible.5

Other sources confirm Feng’s declaration that he understood China as one big village from the time he began elementary school. He was indeed born in a village.6 But he was not a typical rustic child. His father, who died when Feng Rui was very young, had been a village-level postmaster. It is possible that the elder Feng represented an agency of the Qing imperial government.7 The institution that Feng Rui attended for elementary and secondary school was Lingnan College, located a few miles away from his home village on the large island of Henan south of the city of Guangzhou. As a sugar industry specialist named Xian Zi’en later wrote, Feng Rui thus had the privilege of attending Guangdong’s “most elite school” for his early education.8 On his graduate school registration form, Feng recorded that he had graduated from the University of Nanjing in

Feng Rui’s Education and Early Career 23

1920, indicating that he was probably sixteen years old when he completed his studies at Lingnan. According to catalogues of the college, students were admitted to grammar school at age eight and could continue studies through a collegefreshman year for a total of ten years of study. If Feng Rui can be assumed to have proceeded through the usual course of studies at Lingnan College, he entered in 1907 and lived there for nine years. During the period from 1907 to 1916, totals of between 130 and 300 students at all levels were registered at the college.9 As Xian suggested, access to Lingnan College was expensive. According to one of its administrators from the United States, high tuition fees had long put Lingnan “out of reach of most of the families of Guangdong.”10 Nonetheless, Feng Rui’s attendance at an elite school is not at odds with his claim to an early familiarity with agriculture. The most thorough scientific training in a science field that Lingnan College provided to its students happened to be in subjects related to agriculture. Lingnan was the first missionary-founded school in China to provide systematic instruction in agricultural science. Later, Feng was qualified to enter the new program in agriculture at the University of Nanjing thanks both to the proficiency in English that he attained in nine years of partly Englishmedium instruction at Lingnan and to his basic education in agriculture-related subjects.11 Although hardly a typical Chinese community, Lingnan College was a village in its way. Lingnan was a Christian college in the sense that its teachers and administrators sought to promote progress in China. Unlike the other missionaryfounded schools in China, however, it was not affiliated with any particular church or denomination. Like most of his fellow students at the school, Feng Rui did not become a Christian. Because the Lingnan educational mission was not direct evangelism but the promotion of Christianity and general social progress in China through practical activities, instruction in “science” was upheld as a means of promoting improvements in Chinese living standards and moral values as well.12 Lingnan College was unusually advanced among schools anywhere at that time because of the inclusion of students’ cultivation of individual garden plots as a compulsory part of the curriculum.13 The emphasis on horticulture at Lingnan College reflects the influence of the longest-serving faculty member in the history of the school, George Weidman Groff (1884-1954). Groff was one of the first instructors in China to teach agriculture as an academic subject. A Pennsylvania native and an alumnus of the program in agriculture studies at Pennsylvania State University, he decided to work in China so as to combine missionary activities with teaching courses on agricultural sciences. Throughout the period of Feng’s education, Groff was systematically at work applying his knowledge by planting trees, including the palms and banyans that still grace the campus, and establishing experimental

24 The Formation of Agricultural Expertise

plots, flower gardens, and herbarium.14 As an instructor, Groff taught practical subjects such as biology, botany, garden and field crops, orchard management, and landscape gardening.15 His conspicuous material work on the Lingnan campus perhaps had an especially strong influence on students’ attitudes. Declaring in his autobiography that he recognized the importance of agriculture while still a child, Feng Rui recited a lesson learned early in life. Groff frequently expressed the idea that China was characteristically a village society. For instance, in a pamphlet publicizing the agricultural work at Lingnan College, published when Feng was halfway through his studies there, Groff declared: China is a country chiefly of farmers and villagers, whose lack of contact with the outside world and with human progress has kept them from enjoying all the possibilities and blessings of life that await them. In China village life is probably more important and influential than in any other country in the world. The rural population is therefore the best point of contact for a lasting influence upon the people.16

Although Feng Rui chose the occupation of agriculturalist just as it was becoming established as a profession in China and elsewhere, its roots were deep enough that practitioners recognized outstanding centres in their field of expertise.17 Feng was trained in well-known programs in agricultural studies. Feng Rui’s education at the high school level thus prepared him for further studies at the University of Nanjing’s new School of Agriculture, which had been established by another set of teachers and administrators from the United States, opening in 1914 with a class of eight students. It was just a few years later that Feng Rui had the chance to learn from the best-known specialist on Chinese agriculture of the era, John Lossing Buck (1890-1975). Buck began teaching as head of a new Department of Agricultural Economics and Farm Management in February 1920, when Feng Rui was beginning the final semester of his program. Feng recorded on his Cornell University registration card that he graduated from Nanjing in 1920 with a bachelor of science degree in genetics and agricultural economics. Buck later described how students chose majors at Nanjing’s College of Agriculture in the departments in which the most recently arrived professors were teaching. After a new teacher arrived from the United States, the agriculture students would “flock” to his classes to learn something new.18 Feng Rui apparently joined the rush to hear Buck lecture. Because no other instructor was teaching agricultural economics at the time, Feng must have studied avidly with Professor Buck between February and July 1920 in order to minor in the newly offered subject.

Feng Rui’s Education and Early Career 25

Feng Rui worked for a year after graduation as an assistant to J.B. Griffing, an agronomist from the United States who had joined the faculty of the University of Nanjing in 1919. Rather than teaching in the classroom, Griffing directed a large project in cotton-crop improvement funded by an association of British and American owners of cotton mills in China.19 Feng Rui was one of dozens of young men hired by Griffing over the eight-year duration of the project to perform the monotonous tasks of “roguing” cotton and recording data.20 Feng described the work in his autobiography: “This open-air training was extremely demanding. We worked in hot and cold weather. I not only spent many long days exposed to the wind and sunshine but also travelled with the American expert to many other places to select cotton varieties.”21 Chinese cotton varieties were not suitable for machine-loom weaving because Chinese cotton lacked density, elasticity, and length compared to varieties commonly grown in the other major cotton-producing nations. Imported strains of superior seeds quickly deteriorated, providing only two or three years of good crops.22 To “rogue” cotton plants was to walk up and down rows in cotton fields plucking degenerate plants. This and the selection of “thousands of plants” in preparation for the detailed study of their seeds and lint in laboratories are the outdoor work in all weather that Feng described. Griffing reported that the availability of many student assistants to do the lab work and low-cost labour for “simpler operations” made possible an intensive, accelerated cottonimprovement project involving a larger accumulation of technical details than had been handled in any previous study of cotton breeds.23 This was not standard experience among Chinese agricultural college students. According to Buck, Chinese agriculture students typically lacked practical experience and held attitudes of condescension mixed with timidity when they encountered actual farmers: Later I had an advantage over my students at the University because I was a farm boy and knew how to talk to farmers, whereas the students were mostly not the sons of farmers, had little experience with farmers, and actually looked down on them. In a way they were afraid of the farmers because they did not know what to say.24

Buck’s emphasis on the importance of personal experience close to the soil explains why Feng Rui claimed to be a village native. Feng’s emphasis of the all-weather field work he performed suggests how unusual it was for a university graduate. Yet despite the physical efforts required, cotton-improvement workers distinguished themselves from full-time farmers. According to photographs from the period, educated agriculturalists worked in fields on crop-improvement

26 The Formation of Agricultural Expertise

tasks wearing clothing that was considered urban and modern. Buttoned white shirts were the norm, tucked into belted trousers; straw hats of Western style were preferred.25 Moreover, although Feng conveyed the impression that work in the cotton fields occupied him ten hours a day all year, the roguing was actually done only at a certain point in the growth of the plant. Griffing’s report confirmed, however, that this was during the hottest weather of the year and that his team worked especially hard in 1920 and 1921.26 In his autobiographical account, Feng Rui also mentioned another unusual experience for a young student who was about to leave China for study abroad. He had the opportunity to visit some unfamiliar parts of his country during extensive travel with Griffing. The visits to several distant cotton-improvement stations (in Anhui, Jiangsu, and Shandong provinces)27 took Feng to villages much poorer than those of his native district south of Guangzhou. Actually, stays with missionaries were the norm during the cotton researchers’ travels.28 Yet there was an immense gap between the Chinese village of Pearl S. Buck’s The Good Earth, a book inspired by the author’s childhood in a remote mission station, and the suburban campus of Lingnan College in semitropical southern China.29 Feng’s participation in the cotton study also provided him with basic experience as a social surveyor as well as a plant breeder, apparently contributing to a shift of his interests toward rural social organization and agricultural administration. A few years later, he recorded his impressions of the poverty of the cotton farmers encountered while travelling with Griffing. However, as he explained, the main cause of their poverty was not degenerate cotton seed but poor social organization: The writer has seen the suffering of the cotton farmers and the dishonesty of the local buyers. The cotton farmers have no cooperation of any sort, and on account of their financial difficulties, they are forced to consign their crops to the traveling agents and local buyers several months before the crop is harvested ... The writer worked out the wages of a number of cotton farmers, and he found that if we suppose them paying themselves fixed wages, all of them had operated their farms at a loss which ranged from $1.00 to $5.00 per mow.30

Thus we see Feng applying agricultural economic analysis to his own experiences to conclude that agents cause farmers to suffer losses, prompting him to suggest that they establish a cooperative marketing organization. His early held conviction that Chinese farmers were prey to middlemen was later an important component of his explanations of the aims of government programs in Guangdong.

Feng Rui’s Education and Early Career 27

The next major event in Feng Rui’s life was his successful competition in the Tsinghua Examinations for Fellowships for Advanced Study: Hoping to win one of the scholarships, I spent my evenings that year reviewing all texts relevant to the exam, while continuing to work in the cotton-improvement program during the day. I would usually stay up half the night, catching only four or five hours of sleep before getting up to start another ten-hour day of work in the fields. Since then, I have maintained a similar routine of work.31

The fellowships were part of a fund retained for educational purposes after being paid by China to the United States as part of the Boxer Indemnity imposed in 1901.32 Selection criteria for the fellowship included consideration of the candidate’s experience and schools attended, and they were quite rigorous on concepts, although not on quantitative skills, judging from a set of questions on farm crops and soil fertility composed for the fellowship-selection examinations by Professor Harry H. Love (1880-1966) at Cornell University’s College of Agriculture. The examination also asked candidates to describe their educational and other experiences.33 Tsinghua University records confirm that in 1921 Feng Rui was selected to receive a scholarship for three years of study in the United States.34 As noted above, Feng Rui joined an eager group of agriculture college students to hear Dr. John Lossing Buck lecture on agricultural economics at the University of Nanjing. The idea of reforming farm management and rural social organization also echoes the instruction he received from George Weidman Groff. Having established a direction, he chose agricultural economics rather than plant genetics as his main field of graduate study. But first he submitted a master’s thesis on sericulture, which he illustrated with a set of photographs of sericulture processes.35 The photos were provided by Professor T.H. Chien, one of Feng’s former teachers at the University of Nanjing, who was engaged in a long-term project aimed at perfecting the process of producing disease-free silkworm eggs. The thesis comprehensively outlines the processes and problems of sericulture, including the pathology of silkworms and the identification of species. Despite the interest in agricultural economics that Feng later professed to have developed, the thesis makes no mention of the silk trade, industry economics, or village socio-economic organization.36 Rather than working on doctoral-level research with Harry Love, who was a leading member of the Plant Breeding Department and the faculty member at Cornell’s College of Agriculture most interested in research in China, Feng Rui then departed from the crop-improvement path. Between his graduation from the University of Nanjing in 1920 and completion of his doctoral dissertation, Feng’s attention shifted from the technical to the

28 The Formation of Agricultural Expertise

economic aspects of agriculture. In a letter to a colleague, Love later described how he selected graduate assistants; they were postgraduates who shared his interests closely and were experienced in plant-breeding research. Under his supervision, these assistants were occupied in the collection and analysis of statistical data.37 Perhaps Feng Rui was not well trained in quantitative analysis; as he acknowledged in his autobiography in 1936, the training in Nanjing had been incomplete.38 By the time Feng enrolled in Cornell’s College of Agriculture, however, five students from China had already graduated with advanced degrees from the Plant Breeding Department and were employed at institutes in China.39 It is evident that data analysis relating to plants, requiring tedious work of the sort he had experienced as an assistant to Griffing, was simply less appealing to Feng Rui than matters related to agricultural administration and policy making. By this time, Feng was clearly becoming a social scientist with a foundation of expertise in agronomy rather than an agronomist pursuing an agenda in basic research. Feng Rui’s next major work indicates that at the age of twenty-two he was already gaining recognition in China as an academic expert with concerns related to national policy. This work was a substantial article published in 1923 in the widely read journal Dongfang zazhi (Eastern Miscellany). The main point of the article was that China should develop an activist national trade policy in response to the tariff policies and other measures of the United States. China’s economic development could proceed only in close association with comprehensive and carefully designed official policies. He stressed the need for a national program of capital investment in Chinese agriculture, one to be formulated by a national council on the basis of thorough research into agrarian conditions nationwide. This was necessary, according to Feng Rui, because international “economic warfare” had continued following the war.40 His article was a response to China’s increased vulnerability to dislocations in distant places, such as Depression in Europe following the First World War. It is revealing to compare the arguments Feng Rui presented in Chinese in 1923 with points made in his doctoral dissertation completed the following year. The contrast shows what he learned or at least provisionally accepted from his Cornell professors. There are a few indications that he wrote in accordance with his professors’ views. Feng’s dissertation advisors at Cornell were James E. Boyle (1873-1938) and E. Dwight Sanderson (1878-1944). Boyle was an agricultural economist and well known for the textbook Agricultural Economics,41 while Sanderson was both an entomologist and a pioneer in rural sociology, later well known for the survey methods that he developed during his study of Oswego County.42 When he was not studying, Feng had extracurricular pursuits. He was an active member of Cornell’s Chinese Students’ Club, serving as vice president for the 1922-23 year.43

Feng Rui’s Education and Early Career 29

By 16 June 1924, Feng had completed the requirements for a doctoral degree in agricultural sciences.44 He had also been accepted as a six-month intern in the United States Department of Agriculture in Washington, DC. Submitted in its final form during the second half of 1924, Feng’s doctoral dissertation was called “A Program of Chinese Agriculture.” Feng Rui’s doctoral dissertation is a descriptive and prescriptive statement that calls for fundamental reforms and identifies China’s agricultural problems as the nation’s greatest economic weakness. The main theme of Feng’s discussion was that a rational program of reform should be adopted to guide and coordinate national development efforts. His concerns were not limited to the agricultural sector. Feng considered that it was urgently necessary for China to industrialize rapidly and emphasized the need for a closer integration of agriculture and industry in order to overcome problems of backwardness in both sectors. The development experience of the United States features in Feng Rui’s analysis as a guide to the path China should take in promoting mutually supportive agricultural and industrial development. In his dissertation, Feng Rui diagnosed China’s agricultural problems as caused primarily by social and technological backwardness and by vulnerability to worsening terms of trade in international markets for agricultural products. Compared to his article of 1923 on the foreign trade policies of the United States, Feng’s dissertation expresses similar urgent concern but lacks the militant tone. In the conclusion to his dissertation, Feng declared that China must industrialize for the sake of world peace. Yet the work also contains references to the need to struggle for national progress in a competitive world economy. Feng Rui’s prescriptions for progress in Chinese agriculture were practical ones. He discussed methods that had been developed to improve farming in the United States and considered how to apply them in China. He concluded that to overcome the problem of low labour productivity in Chinese agriculture, various improvements could be made at the micro-economic level. Consolidation of cultivated land units, the reorganization of labour, and redesigned farm implements could increase technical efficiency. Scientific knowledge could be applied in programs to improve crops and livestock. From a broader perspective, it was clear that to raise efficiency in the allocation of resources in the rural sector, commercial, financial, and transport networks had to be improved and more closely linked to village producers. China’s agrarian nature was a conceptual touchstone for many writers during the early twentieth century. It expressed the conventional idea that China was more essentially agrarian than other countries and thus possessed a society and culture that were somehow rooted in rustic ways. The invented concept of “agrarian China” contained an explanation of China’s backwardness. However,

30 The Formation of Agricultural Expertise

not only did the notion of progress identify China’s position in the trajectory of human development from primitive stages to modernity, but it also provided a solution to the agrarian problem. Those who conceived of “agrarian China” believed that by applying scientific knowledge and specialized expertise to agricultural production, China’s progress from its essentially agricultural state could be accelerated. Feng Rui’s doctoral dissertation is an example of how the United States provided Chinese intellectuals and policy makers with a model of rapid progress toward an advanced economic condition. During this period of discussion on how to rationalize, regulate, and industrialize farming, the young discipline of agricultural economics, born in the United States in the previous century, gained in respectability. It moved from agricultural colleges to the capital in 1922 when a Bureau of Agricultural Economics was opened in the United States Department of Agriculture.45 The transformation of farming into an industrial activity was an appealing theme in the United States as well in those days. Henry Ford, for instance, was one of the most prominent advocates of the application to farming of the “business” acumen that was believed to have led the advance of industry in the United States. At a site in Northville, Michigan, Ford experimented with the newly developing notion of decentralizing industry to draw on the resources of underemployed rural labour and reported, “We have not drawn men from the farms, we have added industry to farming.”46 In those days, the future was industrialized. Across the political spectrum, people embraced visions of mechanization, speed, and expanding scale. Paradoxically, the industrial vision was of special interest to agriculture experts.47 Another new branch of social science, called rural sociology, also gained formal status in the United States during the interwar period.48 Although it did not reach the heights of separate office space in the national Department of Agriculture attained by agricultural economics, the conceptual development of rural sociology followed a similar logic. Both fields split off from their parent disciplines as agriculture became a “problem.” Sociology had been particularly pessimistic from the beginning. It had been created by efforts to make socialwork training and practice more “scientific.” Moreover, more than any other field yet systematized as a science, sociology was defined in relation to cities and industry. Industrial progress had side-effects such as the overcrowding of cities, labour agitation, clashes between immigrants and the “host culture,” and the “cultural lag” society was suffering while new urban populations were shedding their rural values. Sociologists talked about “social control,” preoccupied with disturbances to order.49 Because social workers and physicians had been

Feng Rui’s Education and Early Career 31

colleagues in the slums they had explored together during the nineteenth century, sociology borrowed language and research methods from medicine, including pathological terms, visits to households, and statistical analysis based on epidemiology.50 Whereas sociology proper was concerned with keeping up with urbanization and industrialization, rural sociology identified the problems of the other half of society, a section left behind by modern progress. Rural sociologists dealt with the effects of not enough progress rather than of dizzying change. Their concerns contrasted with those of the original urban-based sociologists, who were concerned with their subjects as groups of residents. The working lives of city dwellers, who ranged from model citizens to disturbers of the peace, were regulated in a separate sphere of concern. Rural sociologists, in contrast, hoped to shake their part of society out of its traditional rhythms and to make it more active. A greater concern with production distinguishes rural sociology from its parent. During the period of Feng’s studies in the United States, academic observers of agricultural affairs there stressed these issues related to rational management. In economic terms, they stressed technical efficiency rather than investment. Their optimism about the possibility of improving output through rational management was exaggerated. In fact, experts and the public shared a fundamental misconception about agricultural history in the United States. Academic studies tended to overestimate the influence of improved farm-management methods in explaining the growth of output in agriculture that had occurred in the United States. The remarkable expansion of farm output per capita in the United States since the mid-nineteenth century was explained as the result of reorganization in the use of resources. The more significant contribution of capital investment in the American agricultural sector, including new outputs of land, to increasing production and labour productivity during the period from 1850 to 1920 was neglected by leading authorities in the developing discipline of agricultural science.51 Since then, researchers have demonstrated that the contribution of organizational improvements to increased production was in fact slight, accounting for about 10 percent of increased output between 1910 and 1929, for instance, while the remainder was created by substantial increases in inputs.52 Attitudes about the American farm sector during the 1920s reflected a sense of urgency about market conditions. Depressed markets for farm products persisted from a slump following the First World War. Agriculture became a problem for public discussion. Rising to a crescendo with President Franklin D. Roosevelt’s New Deal in the 1930s, a chorus of discordant voices praised a

32 The Formation of Agricultural Expertise

variety of potential cures for agrarian problems in the United States, such as agricultural corporations and cooperatives, economies of scale, cost accounting and control, and market studies.53 To a large extent, the belief that rational management could promote progress in agriculture became a keystone of the body of scientific knowledge taught in the United States to Feng Rui and a whole cohort of young men from China who returned to take up positions as researchers and administrators during the interwar period. Influenced by instruction partly based on an inaccurate analysis of the economic history of the United States, Chinese agricultural reformers were overly confident in the potential of reorganization, even in the absence of new inputs, to increase production in rural China. Reflecting this emphasis, the greatest difference between Feng Rui’s article of 1923 and his doctoral dissertation was that the latter lacked discussion about the need for capital investment in agriculture. At Cornell, it seems, he imbibed confidence that agricultural production could be increased through the reorganization of farm work. Nonetheless, Feng Rui was an independent thinker and one concerned with particular Chinese problems. Accepting the need for reorganization, he stressed the improvement and expansion of government administration of agriculture. Although a strong theme of Feng Rui’s doctoral dissertation was that the government must define and implement agricultural policies in order to reform China’s economy, this theme received only general discussion for the most part. His analysis was limited by a scarcity of quantitative data. Even for grain production and consumption at the national level, only rough estimates were available. More detailed data and statistical series were available only for import and export trade flows as a result of the work of China’s Maritime Customs Administration. Reflecting this situation, the most well-focused, rigorously analyzed section of Feng Rui’s dissertation is the discussion in his sixth chapter of China’s foreign trade in farm products. He argued that China’s balance of trade in agricultural products required remediation. Yet he did not dwell on the lack of development of China’s transportation sector, as in his article in Chinese, where he pointed out that China’s international trade was physically in foreigners’ hands. Weak links in the domestic transportation network, furthermore, made China vulnerable to serious competition from low-cost imports.54 One of the most interesting parts of Feng Rui’s doctoral dissertation comes at the beginning. Introducing his subject, he wrote that it was difficult to determine precisely the size of China’s farming population. This is because many people in China, even city dwellers, were part-time, or “avocational,” farmers. Feng then discussed methods of estimating the size of China’s full-time agricultural workforce, pointing out that because part-time farming activities were

Feng Rui’s Education and Early Career 33

so widespread, standard estimates of China’s farming population as amounting to between “80 percent and 90 percent” of the population should be revised downward. Overestimation of the population specializing in agricultural production, he pointed out, failed to account for the large proportion of farmers who combined the cultivation of crops with other activities. In Feng’s estimation, about one-quarter of China’s population should be classified as “avocational” agriculturalists. Continuing his discussion, however, he noted that after raising this question with his academic mentors in the United States, he had revised his view. Deferring to the wisdom of the specialists, he accepted their estimate that China’s farmers constituted about 80 percent of the total population.55 Yet Feng Rui might not have sincerely accepted the view that such a high proportion of working Chinese were engaged in agriculture. An indication that he was cautious in expressing views that diverged from those of his teachers is that elsewhere in the dissertation, he followed quite closely his advisor James E. Boyle’s pessimistic views on the rural cooperative movement.56 After graduation, however, he wrote enthusiastically in Chinese about the potential of cooperativism. Nonetheless, in his article of 1923 and after returning to China, Feng used high estimates of the proportion of “peasants” or “farmers” in the Chinese population in many of his published articles and reports. It seems clear that for Feng Rui, as for many other writers then and now, the figure of “80 percent” had a rhetorical function. Feng’s education in agriculture-related subjects in Guangzhou, Nanjing, and the United States provided him with respectable credentials and entrée to his field and to the academic world in general. As a finishing touch to his education, Feng made a tour of agricultural research institutes in Europe with scholarship funds provided for that purpose.57 Soon after his return from the United States with a doctorate in agricultural sciences, Feng joined a well-known “rural reconstruction” project based in Ding County (Dingxian) in Hebei province. Participating in China’s Reconstruction: Feng’s Early Career At the time of his departure from Cornell University in June 1924, Feng Rui gave his address in China as the College of Agriculture at National Southeastern University (NSE) in Nanjing, providing the name of the dean of the college as a contact.58 He had been offered a position as the director of a new program in rural sociology at NSE before his graduation from Cornell. The position was held for him until the fall of 1925 for the period of his internship in Washington and his subsequent six months of travel in Europe. By the time Feng returned to China, however, political and financial problems were causing so much disruption of academic functions at NSE that he did not take up his appointment at the school. His plans to pursue a university career were stalled.

34 The Formation of Agricultural Expertise

The fortunes of NSE happened to be at a low point during the fall of 1925. The government-sponsored university had been caught up in a political crisis that caused the suspension of instruction. Classrooms were closed and faculty morale was low because of a withdrawal of government funding as well as student unrest. During the fall of 1925, the payment of salaries to many faculty members fell into arrears, and paltry payments made in December amounted to only 5 percent of the regular monthly salaries. The nationwide May Thirtieth Movement of 1925, in which patriotic students led protests against imperialism, was particularly heated on the NSE campus, and by September it had become entangled with the Guomindang’s “partification” movement (danghua yundong). Guo Bingwen (1879-1969), the popular founder and president of the university, was ordered to resign by the Ministry of Education. Soon afterward, NSE’s newly appointed president was trapped in his office by a large group of students demanding his resignation. The new appointee might have been injured by the crowd if several more moderate students from the Department of Physics had not intervened to bundle the administrator off in his horse-drawn carriage.59 There were soon other setbacks at NSE. A serious blow came when the Boxer Indemnity fund turned down the Agriculture College’s application for expanded funding. Asked to assess the soundness of NSE’s proposals, the dean of agriculture at the University of Wisconsin had warned that investment might be wasted in schools that “struggle even to keep their doors open.”60 Feng Rui returned to Guangzhou to start his teaching career. He stated in his autobiography that he first taught for a brief period at Lingnan University on his return to China. During the fall of 1925, he conducted social survey work in villages near the university campus south of Guangzhou and presented the results in seminars at the Lingnan School of Agriculture (founded in 1921), where he served as an instructor. Two articles resulted from this work.61 During Feng’s time back at Lingnan University, interestingly enough, Mao Zedong (1893-1976) was also in Guangzhou for several months to participate in the Nationalist party’s efforts to mobilize peasants to support revolution and national reunification.62 Although Mao and Feng Rui moved in different circles and are not likely to have met, they were both participants in the rural socialsurvey movement of the era. While teaching at the Guomindang government’s Rural Training Institute in Guangzhou, Mao began to classify members of rural society into distinct groups as part of his responsibility for mass mobilization in Guangdong. It was in Guangzhou that one of his most famous essays was first published, in a journal issue that also featured an article by Chiang Kaishek. The essay on “Analysis of China’s Social Classes” offered revolutionaries a guide to distinguishing between “enemies” and “friends.” In Mao’s analysis, Chinese society was under the oppressive domination of an alliance of landowners,

Feng Rui’s Education and Early Career 35

compradors, and foreign imperialist interests. These groups were holding back the development of society’s productive forces, he argued.63 In later years, both Feng Rui and his contemporary Mao Zedong continued to study and report on rural society in provinces to the north. A record survives of Mao’s 1927 survey of conditions in the county town of Xunwu in Jiangxi. Mao enumerated shops and periodic markets in the town, made lists of the varieties of goods for sale, and described religious and educational institutions. All of these matters, he felt, were relevant to his main concerns: land tenure relationships and the struggle of peasants to bring about land redistribution.64 Feng Rui also developed ideas on how to reorganize social relations while conducting rural social surveys. However, it appears that he did not find redistributionist socialism appealing, looking instead to existing government to expand its support of institutions dedicated to agricultural reform and to replace exploitative middlemen with a rational system of bureaucratic administration. Feng Rui thus tended to argue that rural problems could be solved through education, science, and the attention of enlightened officials. Although radical and mainstream observers of rural China disagreed about the interpretation of their data, they shared the conviction that policy makers should be provided with detailed information systematically collected by experts, informing them about social and economic conditions at the village level. This emphasis is evident in Feng Rui’s dissertation and in his articles published during the 1920s as well. According to Feng Rui’s elder daughter, a marriage was arranged for him during the year following his return from the United States. Believing that it was her responsibility to help him get settled in life, his mother had betrothed him to a young village woman. Feng was unenthusiastic about the marriage because the woman was uneducated, but he felt duty-bound to obey his mother. This was a rather typical attitude among the young men of his generation.65 But Feng’s method of handling it was unusual. He formally accepted the woman as his wife in a traditional ceremony but disappeared soon afterward. After spending the night in a shed, he departed for Beijing. As his younger brother reminisced, although Feng’s unfortunate bride spent many years thereafter working as a servant to his mother, and later entered a Buddhist convent, it had been better for Feng Rui not to consummate the marriage than to father children toward whom he would have felt no affection.66 With his departure from Guangzhou, Feng Rui not only avoided an arranged marriage but also escaped unsettled conditions in Guangzhou during the years from 1925 to 1927, when the city was the Nationalist party’s base for popular mobilization in support of revolutionary goals.67 He later claimed in his autobiography, however, that idealism drew him into collaboration in Ding County with James Yen (Yan Yangchu, 1893-1990). Yen was a well-known Yale University

36 The Formation of Agricultural Expertise

alumnus, educator, and social reformer from Sichuan.68 Yen later recounted that Feng was taking a holiday in Beijing when the two got together for an evening of conversation, and Feng became enthusiastic about the rural education program Yen directed. Feng Rui recounted that he urged Yen to go forward with his plan for rural-survey work with the comment that after all, “90 percent of the Chinese people are in the villages.”69 During the summer of 1925, Yen had travelled to Hawaii to help organize the Institute of Pacific Relations. In Honolulu he enlisted the help of the Chinese Chamber of Commerce to raise funds to support the work of his Mass Education Movement (MEM) in China, netting US$20,000 in donations from the Hawaiian Chinese community. When Yen offered to pay Feng Rui a salary out of this fund, Feng accepted.70 Around the same time, Sidney Gamble, a scholar of independent means, became associated with the MEM. The political unrest of 1925 had caused Gamble to suspend his rural-survey work near Beijing, and, looking for another research field, Gamble decided to direct funding to the MEM. He offered to support a three-year rural sociological survey if Yen could find a peaceful location to carry it out.71 Yen appointed Feng Rui director of the agricultural research division of the Mass Education Movement’s program in Ding County in Hebei province. According to his own account of the mission of the MEM to educate the rural population in production, Feng Rui became the director of an Agricultural Extension College established by the MEM in the spring of 1926.72 Over a year earlier, Yen had recruited Fu Baochen (Paul Fugh), who had also completed doctoral studies at Cornell University in 1924, submitting a dissertation on “Reconstruction of the Chinese Rural Elementary School: Curriculum to Meet Rural Needs in China.” Fu returned to China during the summer of 1924 and began work in the Beijing office of the MEM. In November 1927, he moved to Chaicheng, the MEM’s rural outpost. James Yen was proud of his two educated recruits and their commitment to living like ordinary villagers. In a letter to Huang Yanpei of Beijing University, he praised their dedication and austerity.73 Staff with doctoral degrees increased the prestige of his organization; scholars willing to rough it in a village were true assets. James Yen stressed how simply MEM staff lived in Ding County, declaring that except for ensuring good ventilation, the MEM built huts for Feng Rui and the other staff that were just like the primitive dwellings inhabited by the local people and cost a mere 100 yuan each.74 Another Sichuan native named Hu Guangbiao visited Chaicheng in about 1928 and was struck by the simple conditions in which Feng and Fu were living; their cement hut lacked running water and electricity. The two “scholars,” nonetheless, were continually occupied in efforts to improve the lives of their village neighbours, discussing how to build

Feng Rui’s Education and Early Career 37

Figure 2

Feng Rui at work in Ding County, Hebei, 1928. Source: Nongmin [The Farmer] 1 (1929). Photo courtesy of Mann Library of Agricultural Sciences, Cornell University

sanitation facilities, for instance, when they went without running water themselves.75 According to other observers, however, life in Ding County was quiet but not uncomfortable. MEM staff took to Ding County some of the comforts to which they were accustomed in city life, such as a supply of coffee and a bathtub in the case of James Yen and his family.76 Although he and James Yen sometimes promoted the impression that he lived like an ordinary villager in Ding County for years on end, Feng Rui in fact spent most of his first two years on the project in Beijing.77 During this period, he met and courted Chen Zhaoyu, a Beijing native who had studied in a bachelor of science program at Beijing Normal University. Born in about 1905, Chen was the child of a concubine and a wealthy man, both of whom had died when she was young. She grew up feeling shunned by all but one of her many older halfsiblings.78 Feng and Chen married, and their first child was born in Beijing in

38 The Formation of Agricultural Expertise

1927. The baby’s name was Punong, meaning “extend agriculture to the world,” which reflected his father’s idealistic enthusiasm. Unfortunately, the child died before the age of two. But he was followed by two girls, Puyu and Puzheng, born in 1928 and 1930 respectively, whose unusual names (meaning “universalize education” and “universalize government”) still remind Puyu that she had impractical intellectual parents.79 While settling down to family life in Beijing, Feng worked in close association with Sidney Gamble, making preparations for their path-breaking rural survey. Drawing up sets of questions and guidelines for analysis was Feng’s first and most important contribution to the Ding County survey project. Under Gamble’s direction, he set forth the survey method, defining categories, composing questions to be asked, and suggesting how to gather and organize the information. These plans were drawn together and prepared for printing and circulation by January 1927, when Fan Yuanlian contributed a preface. Two years later, the 800-page outline was published under Feng’s name as a reference work for the direction of rural social surveys.80 Although his main responsibilities were in other areas of the work in Ding County, Feng Rui continued to participate in the survey project as a financial manager. When the leading surveyor brought in to replace Feng fell ill in 1929, James Yen decided to recruit a new staff member to replace him, reporting to Gamble that Feng Rui was assisting on the project by keeping track of finances.81 Thus Feng was not active in the final stages of synthesis and analysis of the survey data. A comprehensive report of the results by Li Jinghan was published in 1933.82 Sidney Gamble’s English version, titled Ting Hsien: A North China Rural Community, appeared in 1954.83 In the preface to his work, Li Jinghan was effusive with thanks to Feng Rui, declaring his regret that Feng had been unable to work on the project to the end. Li stated that Feng Rui had agreed to carry out agricultural economic analysis of parts of the data collected but that he had unfortunately become ill through overwork and had retreated to a mountain resort for a period of convalescence.84 Following his recovery, Feng had been occupied with other work.85 During his years in North China, Feng Rui built up a reputation as an agricultural specialist and social reformer. His association with James Yen, who was widely respected, even praised as a “young genius” by one foreign writer, apparently helped Feng to become prominent.86 The expansion of his connections through James Yen’s social network probably contributed to Feng’s success in publishing numerous articles on China’s rural economy and society during this period of his career. He discussed a wide range of topics in these publications, indicating the broad scope of his concerns as an agronomist, administrator, and advocate of national economic reform. In 1927 two of Feng’s articles appeared

Feng Rui’s Education and Early Career 39

in journals devoted to research in education. In an issue on rural education, Jiaoyu zazhi (Education Magazine) published an article by Feng Rui and another by Fu Baochen. In his contribution, Feng outlined the work in Ding County on practical instruction for farmers that aimed at improving their production techniques and encouraging them to adopt better tools. He called for universal implementation of the programs of instruction that had been developed in Ding County and for increased government support of agricultural reform at the grassroots level.87 In his other article on education in 1927, Feng focused on the particular projects, reporting that the peanut crop of Ding County had been improved quickly thanks to the introduction of a superior strain and describing his efforts to improve fruit crops in a project for pear-tree grafting and the work of animal husbandry and poultry specialists under his direction who introduced European breeds to make the raising of pigs and chickens in Ding County more remunerative. Other specialists were working on developing a labour-saving waterwheel and redesigning plows and harrows to replace some of the inefficient tools that were in use in the county. In addition to these efforts, Feng also directed the establishment of a demonstration station that would serve to introduce advanced techniques to local farmers.88 The management of experimental wheat fields was another of Feng Rui’s varied responsibilities in Ding County, along with a cotton-improvement program. The Cotton Mill Owners’ Association, which had supported J.B. Griffing’s project, continued to provide free seeds through the University of Nanjing and Feng Rui to the MEM.89 Feng’s association with cotton-improvement efforts, continuing from his work as one of Griffing’s assistants, later led to another publication, a co-authored guide to the cultivation of American cotton varieties.90 In addition to writing for academic audiences, Feng Rui was committed to using his writing skills to spread technical knowledge to the wider public. He regularly composed short articles for inclusion in the MEM journal Nongmin (The Farmer). Published every ten days, the journal was written in clear baihua (colloquial Chinese) and contained reports on current events and amusing stories as well as useful information on farm and household management. One of Feng Rui’s contributions was a lesson on the essential elements of plant growth. Others provided instruction on seed selection, diseases affecting wheat, protection against insect pests, fruit-tree grafting, construction of a seed-warming bed, and the propagation of potatoes.91 Regarding the culture and social organization of rural China, another of Feng Rui’s publications of this period reveals that he understood some of the obstacles to rapid reform of the national agricultural economy. In an interesting discussion of “the psychology of village society” published in 1928 in a journal devoted to sociology, Feng generalized that Chinese villagers were set in their ways and

40 The Formation of Agricultural Expertise

wary of change because of their subsistence-level economy and their social isolation. He identified the isolation as an enormous barrier to progress, explaining it as the preference of self-reliant rural Chinese families as well as a reflection of undeveloped transport networks and the vastness of China’s countryside. Having stated the problem, however, Feng proceeded to present an optimistic argument that villagers’ isolation reflected important strengths as well, such as their spirit of self-reliance and independent thinking.92 According to Hu Guangbiao, Feng Rui was a very energetic and capable person (ren hen jinggan). During a visit to Chaicheng, Hu observed Feng Rui making repeated attempts to perfect the design of a basket to hold newly hatched chicks. Hu wryly recalled how impressed he was that Feng had the patience to keep working on this trivial problem until he had arrived at a solution.93 His observation supports Feng Rui’s own claims to results-oriented pragmatism. Another visitor to Ding County observed Feng’s work in 1930. An organization called the Layman’s Foreign Missions Inquiry sent two representatives to China near the end of Feng Rui’s service in the MEM.94 In observations at the headquarters of the MEM in Ding County, they were particularly struck by Feng Rui’s confidence in the potential for technological progress in the programs under his direction. As one representative reported on Feng’s project to replace farmers’ old tools with more efficient ones, It should be stated that while a considerable degree of success has unquestionably attended Dr. Feng’s efforts, it is probable that he has not counted the cost adequately, nor the elements of risk in such work as his ... It is also to be noted that as far as I could learn, there is little demand for the improved machinery because, while it is cheaper and better, the farmers will not discard what they have in order to get the new. The process will take place in time but will be very slow.95

The organizations supporting the MEM had high expectations of Feng Rui as a well-trained agriculture specialist. This was partly because his training had been shaped by their views on China’s needs. Throughout his education and the first half of his working life, Feng was exposed directly and indirectly to the opinions of Christian missionaries. His choice of the agriculturalist’s occupation was presented and shaped by an early-twentieth-century type of American expatriate, namely the agricultural missionary. Whether or not he shared their standards, the logic followed by the representatives of the Layman’s Foreign Missions Inquiry in forming a judgment of Feng Rui is evident in a statement published in the journal of an association that one of them headed, namely the World Agriculture Society. The statement summarized the aims of agricultural evangelism overseas:

Feng Rui’s Education and Early Career 41

What would be the work of an agricultural missionary? He would bring to the less progressive parts of the world where the state has not yet awakened to the need, the latest and best in the way of farming and use his training to help the people adapt newer and better methods until the governments awaken. At that time of awakening, there will be trained native recruits all ready to step in and extend the work, to the everlasting good and uplift of their country. He will use the friendships that he makes among the people to influence them to accept higher and better ways of living. In the why and wherefore of agriculture, he will teach science, the connecting link between all parts of life, and the greatness of God and his wonderful programme for men.96

These observations and statements of principles shed some light on Feng Rui’s attitudes. His advocacy of a role for enlightened government in the reform of Chinese agriculture drew on views shared by respectable supporters of efforts to promote progress in China, including those influential in directing funds into the Ding County projects and other educational and social reform endeavours.97 Idealism about the enlightened direction of educational and, eventually, administrative reform efforts in China also matched Feng Rui’s ambitions to advance from the stage of waiting “until the governments awaken,” as prescribed for agricultural missionaries. Continuing his autobiography in 1936, Feng wrote, In the course of this work in Ding County, I came to believe that reform efforts could be applied to many of China’s economic problems. So I drafted a book called, “A Plan for the Creation of a New Economic System for China,” convinced that it was necessary to work out practical solutions to address specific problems. My book discusses a new national economic system for China as a solution to the problems of the entire Chinese economy. It is a proposal that I worked out over a ten-year period.98 What I wished for was an opportunity to implement my plan for a new economic system, dealing both with the economic foundations of the Chinese nation and with the various systems making up the livelihood of the Chinese people.99

While Feng Rui was growing up, a new language was invented to translate the names and principles of the new rural social sciences in Chinese journals. As the work in Ding County illustrates, the provision of services was intended to raise both the cultural and material well-being of Chinese villagers. Associated from its inception with mass education, medicine, and the Christian Church, the study of rural society was introduced to China by educators and Christian missionaries, in association with Western medicine.

42 The Formation of Agricultural Expertise

Yet Chinese intellectuals were not passive recipients of knowledge; they shaped it to meet China’s needs as they understood them. As discussed above, there were important differences between Chinese and foreign views of China’s weaknesses. Moreover, advanced knowledge was continually being reshaped as new problems demanded expert attention. Feng Rui was part of a generational cohort of intellectuals who responded to conditions and concerns in China on a foundation of Western training in agriculture as an academic subject. That this led to breaks with approaches learned abroad may be seen in some of his writing. Perhaps Feng Rui’s most serious departure was his enthusiastic embrace of the idea of the cooperative agricultural enterprise. Advocacy of cooperatives was also the most ambitious of his projects during his years in North China. As an intellectual concerned with the reorganization of Chinese agriculture and a proponent of official administration of the agricultural sector, Feng Rui became associated with a leading rural reformer named Liang Shuming (18931988). Liang was an idiosyncratic social theorist convinced that rural reconstruction on the basis of Confucianist nationalism could solve China’s crisis of economic backwardness.100 In influential writing and lectures, Liang opposed both capitalism and socialism, hoping to design a path for China’s progress that would be spiritual as well as material. He was particularly interested in education for China’s rural population.101 During a visit to Ding County in 1929, Liang gave a public lecture in which he expressed disagreement with the approach of the MEM. In his address on that occasion, Liang endorsed the ideal of mass education but advocated limiting advanced education, for the time being, to persons whose backgrounds enabled them to make use of it.102 Despite his reservations about education for the masses, Liang seems to have been impressed by the Ding County projects and by Feng Rui. It appears that the two met during or around the time of Liang’s visit to the county and that Feng Rui became Liang’s informant on advanced agricultural knowledge. Beginning in 1930, Liang Shuming publicized his ideas by editing a journal called Cunzhi (Village Government). Feng Rui was one of the leading contributors to Cunzhi. During its first year, the journal featured his seven-part discussion of the potential of the cooperative movement to restructure the Chinese economy. Called “Using cooperativism to create a new economic system for China,” Feng’s series of articles supported Liang’s view that neither capitalism nor communism offered viable paths for China’s development. His articles on cooperativism grounded the theory of a Chinese development alternative through analysis of the Chinese economy in comparative historical perspective and summaries of capitalist and communist doctrines. He then provided details on the principles and functioning of agricultural cooperatives. Referring to cooperatives in various countries around the world, Feng drew his examples of policy and practice mainly

Feng Rui’s Education and Early Career 43

from reports of experiences in the United States. Therefore, his discussion was almost entirely devoted to marketing cooperatives rather than forms of cooperative agricultural production. As in his doctoral thesis, Feng Rui advocated and outlined a new program of action for the national economy. However, this series of articles was left incomplete; Feng began but did not complete his discussion of the concrete methods through which a cooperativist system could be instituted in China.103 Liang Shuming advocated a rural reconstruction program that would establish village “self-government” and agricultural improvement on the basis of existing Chinese culture. He was doubtful about the necessity of redistributing village land. Feng Rui, similarly, was not inclined to include the redistribution of land in his program for comprehensive reform of the Chinese economy on a collectivist basis. The surveys of landholdings and rental arrangements conducted in Ding County, he wrote, showed that 90 percent of farmers already owned their land. Moreover, the size of their landholdings was adequate.104 In his discussion of cooperatives, Feng Rui did not follow the guidance of his graduate school advisor James E. Boyle. In his textbook on agricultural economics, Professor Boyle had declared that agricultural cooperatives had become “a vague thing endorsed by all,” and he stressed the importance of distinguishing clearly between marketing and production cooperatives. He also warned against underestimating the difficulties and costs of operating a cooperative.105 Although the idea of cooperation and abundant descriptive details on agricultural cooperatives were readily available in journals, newspapers, and books published in the United States, reports on results were scanty. Feng observed from afar a sometimes contentious public discussion on whether the United States Department of Agriculture should actively promote cooperativism.106 Because most of the publicity about the issue originated with the proponents of cooperatives, Feng Rui might not have realized the extent to which views differed on the American scene.107 Moreover, in 1930 the debate had not yet become as polarized and politicized as it did later. Boyle expressed increasing skepticism over time in his writings on cooperatives.108 Nonetheless, whether or not Feng Rui was aware that he had simplified the issues, it would have been possible for readers of Liang Shuming’s journal to gain the inaccurate impression that agricultural cooperativism had taken root across the United States. James Yen and Liang Shuming were China’s best-known rural reformers during the interwar era. The expert status Feng Rui had gained by the time of his departure from Ding County and North China is indicated by his association with well-known academic experts beyond the agricultural field. The highpoint of Feng Rui’s career as an agricultural specialist in the service of a nongovernmental organization was his participation in the 1931 meeting in

44 The Formation of Agricultural Expertise

Hangzhou of the Institute of Pacific Relations. Sharing the program with Hu Shi and other prominent intellectuals, Feng contributed a paper to the published version of the proceedings. Feng’s paper on “Agriculture” was a revision of the first chapter of his doctoral dissertation. In revision, however, Feng strengthened his prescriptive emphasis. He added a detailed proposal for a governmentestablished agricultural research program and updated his original introduction with praise for cooperativism.109 In 1931 Feng Rui’s thinking diverged from conventional views in the United States and had changed since he completed his studies. A point of contrast between Feng’s analysis of China’s agricultural problems in his doctoral dissertation of 1924 and his 1931 presentation concerns his treatment of the example of Denmark as a model of government-directed agricultural reform. In the conference paper, Feng included a reference to Denmark as part of a discussion recommending thorough research and other government-supported preparations to expand China’s nascent cooperative movement.110 In his dissertation, by contrast, he had criticized other writers for overenthusiastic references to Denmark as a model of reform to be emulated by Chinese policy makers. “These writers have overlooked the difference in conditions and situations in these two countries,” Feng warned, explaining that cooperativism was only a partial cause of Denmark’s success in agriculture. More important was the fact that Denmark had been able to specialize narrowly in the production of foodstuffs such as dairy products for which large markets existed in neighbouring countries. China could not count on disposing of a large share of total national farm production in foreign markets.111 It was not a lapse on Feng Rui’s part, however, that in Hangzhou in 1931 he discussed cooperativism in more optimistic terms. As repercussions of the financial collapse of 1929 were being felt in China, many intellectuals were anxious to hear about possible alternatives to the economic systems that had led to economic depression worldwide. The potential of collectivist economic enterprise was widely appealing during the 1930s, leading in 1935 to the establishment of central government organizations to promote cooperatives.112 Feng helped to embed the idea in the mainstream. In addition to their actual achievements in rural education, participants in the programs Feng had directed in Ding County gained faith in technical progress and helped to spread belief in the value of rural reconstruction models. They were confident about creating practical knowledge that could be emulated nationwide. Part of this knowledge related to credit associations and other forms of cooperation, offered as the basis of a development path for China that would avoid both capitalist and socialist pitfalls. Feng Rui helped to promote optimism about progress for agrarian China through the replication elsewhere of the successful aspects of an experimental model county. In this phase of his career,

Feng Rui’s Education and Early Career 45

however, he also paid serious attention to improvements in the techniques of farming, adaptations of tools, and the development of higher-yielding seeds. Such basic research reflects his awareness of the need for material investment in agriculture. His contributions to the Ding County model were not limited to general discussions of forms of rural association. His interest in cooperatives was related to his efforts in Ding County to promote practical training and to establish extension programs through which new techniques and equipment would be introduced to isolated farmers. A lecture that Feng Rui delivered in Guangdong indicates his recognition of the problem of underinvestment in rural China. In 1932, soon after he joined the government of Guangdong, Feng was invited to speak at Sun Yatsen University in Guangzhou to an audience interested in the rural education program that he had directed in Ding County. According to the published version of his lecture, Feng presented a lively analysis of the causes and effects of rural poverty. Without mentioning cooperatives, he emphasized the need for government-led investment, particularly in basic healthcare, to promote poverty alleviation. Without a stronger foundation in physical well-being, he argued, rural people could not benefit from a mass education movement.113 Rural China, the Real China It is a striking characteristic of Feng Rui’s life that he was frequently involved in new projects and programs. His studies at Lingnan College began when that school was settling on recently purchased farmland, at about the same time as George Weidman Groff began to transform the site with his systematic treeplanting program. Proceeding to Nanjing to study agriculture, Feng entered the College of Agriculture at the University of Nanjing just as it was being organized. After graduation, he participated in a cotton-improvement project during the first year of what became a long-term program. Next, he was one of the first in a lasting flow of graduates from the University of Nanjing’s School of Agriculture who continued their studies at the College of Agriculture at Cornell University.114 Later, after returning to China with advanced degrees in agriculture and knowledge of government administration of agricultural sectors in Europe as well as in the United States, Feng helped to launch a large sociological survey carried out in Ding County in Hebei province. As with his high school and college, the Ding County project eventually developed into a well-known institution. Later, as will be seen below, as a government official and one of the first directors of Guangdong’s new Bureau of Agriculture and Forestry, Feng built new institutions. In his autobiography, Feng Rui described how he participated in developing a new set of ideas about China. He gave himself credit for persuading James

46 The Formation of Agricultural Expertise

Yen to extend his educational efforts to the countryside. “Where are most Chinese people?” he reported asking Yen. “They are in the villages [nongcun].”115 During his years in northern China, Feng Rui participated in the formation of a new set of ideas about the nature of China and its place in the world. The first step toward the redefinition of China was to identify Chinese villagers as a distinct group. One of many new terms that came into general use in China during the late nineteenth and twentieth centuries was nongmin, first drawn from classical Chinese obscurity to translate the terms “peasant” and “peasantry” in Meiji Japan.116 Along with China’s agricultural essence and agricultural backwardness, China’s ancient peasantry was in fact invented during the twentieth century. In this process, the nongmin were objectified and problematized. In some of his writing, Feng Rui expressed a paternalistic attitude toward the Chinese peasantry, one shared with other intellectuals of the era. Even the optimism about the improvement of villagers’ lives can be seen as inherently condescending in its emphasis on their current backwardness compared to what was possible. Like others among his contemporaries, Feng Rui tended to equate China’s “masses” (pingmin) with the “peasantry,” and to relocate sociological concern from the urban scene to villages, where society was more grounded in production problems. Certainly he contributed to the creation of a definitional divide between urban modernity and rural backwardness. But Feng Rui was more engaged than others in the application of practical knowledge. His efforts in Ding County involved concrete investments. Thus he was engaged in introducing new techniques, tools, seeds, and crops to farmers, as well as ideas about new rural associations to promote mutual assistance among farming households. Feng Rui’s career thus illustrates how the emphasis of rural reformers could shift and alternate between concrete measures and abstract proposals for new organizational forms. As will be seen in the following chapters, the emphasis of his work as a government bureaucrat in Guangdong shifted away from efforts to rectify directly what has been described as an “abysmally low” level of public investment in China’s agricultural sector during the era of his education and career.117 Instead, he adopted the Fordist approach of “add[ing] industry to farming.”118 In effect, this approach directed resources, including Feng Rui’s time, into industry rather than agricultural production. His experiences suggest why China as a whole made this shift, for the rest of the century.

2 Public Service in Guangdong, 1931-36: Economic Nationalism and Provincial Planning

Feng Rui Becomes a Government Official In his autobiography of March 1936, Feng Rui related that poor health forced him to halt his activities in Ding County for part of 1931. He explained his illness as the consequence of challenging work and the stressful circumstances in which he had struggled to meet the various wishes and expectations of multiple sponsors of the projects of the Mass Education Movement (MEM). As he was convalescing, Feng received an invitation from Lin Yungai (1881-1948), chairman of the Guangdong provincial government. Lin contacted Feng to offer him the position of director of the province’s Bureau of Agriculture and Forestry.1 According to Chen Zhaoyu, hard work and austerity in Ding County had caused Feng Rui to fall ill for three months with lung disease in 1931.2 In 1935 Feng mentioned to an acquaintance from the United States that doctors had urged him to return to the warm climate of South China for the sake of his health.3 On 1 November 1931, Feng Rui formally joined the Guangdong provincial administration in Guangzhou. In his bureaucratic position in Guangdong, Feng became a planner and manager of programs aimed to strengthen, rationalize, and industrialize the province’s agricultural sector. He spent the first part of his years in the position reorganizing the work of the Bureau of Agriculture and Forestry and supervising its research and extension programs. Beginning in 1933, he became concerned with Guangdong’s sugar production, and this area was soon the focus of his attention. Responsible for sugar milling as well as cane cultivation, Feng found opportunities to act on his conviction that China’s industry and agriculture must develop at the same time and in a mutually supportive manner.4 This chapter outlines how Guangdong province, with Feng Rui as an important agent, mobilized resources to support the economic-development programs directed by the provincial Bureau of Agriculture and Forestry. The opportunities provided to Feng Rui in his position as director of the bureau were supported by substantial funding. It is possible that Feng played a role in mobilizing resources, as the bureau’s budget expanded considerably under his leadership. At the same time, Guangdong’s Bureau of Agriculture and Forestry became a focus of the province’s remarkable dynamism in what was then called economic

48 Public Service in Guangdong, 1931-36

“reconstruction” (jianshe). An important spurt of industrial development in China’s economic history may be viewed through this window. In 1933 Feng Rui served Chairman Lin Yungai as an envoy to the national capital and was then part of a provincial delegation visiting Manila to investigate the sugar industry of the Philippine Islands. Feng began to become nationally prominent as a representative of Guangdong in negotiations with national-level officials. The frequency of his travels increased over the years. In 1935 and 1936 Feng made numerous trips from Guangzhou to Shanghai and Nanjing. In June 1935 he also made a trip to Beiping on official business. In these missions, Feng Rui came to be identified as a personal representative of Chen Jitang, Guangdong’s military leader from 1928 to 1936. As seen in Chen’s increasing reliance on him as a negotiator, Feng performed well in this go-between role. Feng Rui’s unit within the Guangdong government bureaucracy was founded in 1929. It was first named the Guangdong Bureau of Forestry and was placed under the provincial Department of Reconstruction by Chen Mingshu, military leader and provincial chairman in Guangdong until 1931. At first, the bureau was headed concurrently by the head of the provincial Department of Reconstruction.5 When Deng Yanhua became head of the department later that year, he was becoming convinced that the province’s most pressing development needs were agricultural. As Deng declared in a pamphlet, “reconstruction” should be equated with “rural reconstruction.”6 To meet the pressing needs of the rural economy, he advised provincial leaders to expand the work of the Guangdong Bureau of Forestry. On Deng Yanhua’s recommendation, the provincial Bureau of Agriculture and Forestry was founded on 1 July 1930. Feng Rui was appointed to an official position thanks to his academic credentials and the national reputation he had developed in association with the Ding County projects.7 The appointment also came about because he had already been invited by his alma mater to return to Guangdong to serve as dean of the College of Agriculture at Lingnan University. Personal connections also accounted for Feng Rui’s appointment to a high position in the Guangdong government. According to Xian Zi’en, it was because Feng had become acquainted in the United States with a son of Lin Yungai that he gained introductions to Chairman Lin and Marshal Chen Jitang, commander-in-chief of Guangdong’s armed forces.8 Lin Yungai was a well-known senior member of the Nationalist party and a former close associate of Sun Yatsen.9 The importance of Lin’s patronage and the fact that Feng was known as Lin’s protege are indicated in Lin’s later effort to protect Feng and in his protest against Feng’s arrest. A Hong Kong newspaper report on Feng’s arrest on 10 August 1936 implied that Feng Rui became vulnerable immediately after Lin’s transfer to a

Economic Nationalism and Provincial Planning 49

central government position a few days earlier.10 Feng was appointed in 1931 to a position directly under Chairman Lin, who acted concurrently as head of Guangdong’s Department of Reconstruction from May 1932 to March 1934. Feng’s rank was high, as Guangdong was virtually an autonomous state during the Nanjing decade, and thus the Department of Reconstruction was comparable to a national ministry, and the Bureau of Agriculture and Forestry was one level below. Feng Rui’s ties to his alma mater in Guangzhou seem to have played a part in his appointment. The provincial Department of Reconstruction was at that time headed by Hu Jixian (Wu Kai-yin), who was also a Lingnan graduate and a member of the university’s Board of Directors. Hu had taken a leave from his position of professor and dean in Lingnan’s School of Commerce to take up his appointment as the director of a government department.11 At the same time as he joined the Guangdong government, Feng Rui was appointed Dean of Agriculture at Lingnan University, a position he held concurrently with his post in the provincial government. The College of Agriculture had been founded in 1921 through the organization and fundraising efforts of Lingnan’s long-serving president Zhong Rongguang (Chung Wing Kwong, 1866-1944). Following the transfer of Lingnan University’s administration to a Chinese Board of Directors in 1927, the appointment of ethnic Chinese administrators to top positions had been required by Lingnan’s new statutes.12 The role of dean, therefore, was partly ceremonial. Many administrative responsibilities at the College of Agriculture continued to be handled by George Weidman Groff, Feng Rui’s former teacher. But records of the college make clear that Feng’s signature on important documents was necessary. On one occasion, Groff requested an appointment with his dean, seeking approval of his application for a reduced teaching load the following academic year. Feng Rui’s former mentor then waited three weeks for Feng to send a brief note to “okay” the reduction in teaching to which Groff was entitled given his active engagement in research.13 However, Feng did help out in fundraising efforts. For instance, he spent a great deal of time with a visiting sponsor during December 1932 and January 1933, showing him the projects of the college and explaining ways that benefactors in the United States could support its development.14 Earlier in 1932, Feng Rui hosted a visit from Professor Harry Love of Cornell University, who followed up with a letter proposing that Feng should set up a committee to facilitate research collaborations between Lingnan and Cornell. 15 As well as assisting in fundraising efforts and signing documents during his visits to the Lingnan campus, Dean Feng also occasionally delivered lectures. The transcripts of two lectures delivered to commerce students at Lingnan

50 Public Service in Guangdong, 1931-36

during the 1933-34 academic year were published in one of Lingnan’s journals.16 Over the years, however, Feng’s association with Lingnan University as an administrator and fundraiser increasingly took second place to the province in his busy schedule. Marshal Chen Jitang: “King of the South” Feng Rui joined the Guangdong provincial government during the same month that General Chen Jitang assumed a formal position as military chief of the Southwest alliance. Already commander-in-chief of the Guangdong Army, Chen became the leader of a new Southwest Military Branch Council in arrangements that came into effect formally on 1 January 1932.17 Chen Jitang was a native of Fangcheng, a county in the southwestern corner of Guangdong that is now part of Guangxi province. Rising through the ranks of local Revolutionary Army forces after 1911, Chen succeeded in gaining control of all of Guangdong’s armed forces in 1928. He entered an alliance with the military leaders of Guangxi after decisively defeating their attempt to invade and occupy Guangdong in 1929. Chen Jitang’s power thereafter was based partly on the shared control of a major opium supply route from Yunnan to Guangzhou and Hong Kong that he worked out with his allies in Guangxi.18 During his ascent, Chen Jitang received the backing of influential political figures who chose to align themselves with him, especially the members of a Cantonese faction of the Nationalist party who were influential in national politics. The faction was led by Hu Hanmin (1878-1936), a prominent former associate of Sun Yatsen. Hu directed the Cantonese wing of the party from residences in Nanjing, Shanghai, and Hong Kong. In 1931 a breakdown in relations between the Guangdong and Chiang Kaishek party factions was precipitated when Chiang placed Hu Hanmin under house arrest. During a ten-day peace conference in Shanghai from 27 October to 7 November 1931, a settlement was reached between the representatives of the rival factions for party and state leadership. They agreed on arrangements intended to reduce the power of Chiang Kaishek by changing the command structure of the National Revolutionary Army to a committee system and vesting the nation’s highest civil authority in a committee with rotating chairmen.19 Following the Shanghai settlement, the southern leaders formed two new entities as representative branches of the central government and the Nationalist party in the south, in addition to the Military Branch Council headed by Chen Jitang. These were the Southwest Political Council and the Southwest Executive Branch of the Central Executive Committee of the Nationalist party. Although they were not officially recognized by Nanjing, these bodies nonetheless assumed supervisory responsibility for party and government affairs in Guangdong and Guangxi provinces.20

Economic Nationalism and Provincial Planning 51

Lasting almost five years until its dissolution after Chen Jitang’s departure from Guangzhou in July 1936, the autonomous southern regime was dominated by the military leaders of Guangdong and Guangxi provinces, whose alliance limited the authority of the central government. In 1932 Chiang Kaishek honoured Chen with a new title, corresponding to the title “marshal” used to refer to Chen in English-language newspapers. However, Chen was disinclined to use it. He preferred his title of Southwest Military Commissioner and apparently had no objections to a nickname that became popular in 1931: “the King of the South” (Nantian Wang). An indication of Chen’s autonomy as ruler of Guangdong was his policy toward the Chinese Communist Party (CCP). During the Jiangxi Soviet period (1929-34), he had disregarded Nanjing’s anti-Communist blockade, earning profits on the sale of salt to the Communists in Jiangxi. His agents also purchased tungsten from the Communists during this period.21 Chen Jitang and his generals did not send troops to chase the CCP from Jiangxi during 1933 and 1934. According to sympathetic historians, during Chiang Kaishek’s final Anti-Bandit Encirclement Campaign of 1934, Chen Jitang instead assisted the CCP forces during their retreat from Jiangxi. He helped them to find an escape route and allowed them smooth transit through northern Guangdong territory to Hunan and eventually Guizhou.22 Nostalgia for a “golden age” comes across in some reminiscences and general discussions about the era of the Southwest Political Council in Guangdong’s history. An expanded government presence and ambitious government projects made Guangdong seem a progressive place. Law and order reportedly improved. Roads were repaired and extended.23 Industrial development was remarkable, as was Chen Jitang’s successful project to build China’s best trained and equipped air force.24 Although so much was destroyed by war soon afterward, many documentary materials evoke an atmosphere of expansive optimism in that “era of the southern empire,” and what they convey is helpful in understanding Feng Rui.25 Although he was not well educated himself, Chen Jitang aspired to cultural refinement.26 He was genuinely popular in certain circles, attracting distinguished civilian political and intellectual leaders as well as many welleducated young men to his administration.27 This was especially true after the appointment of Feng Rui, to whom one historian gives credit for creating a “Feng Rui effect” in the Guangdong government, as Feng in turn recruited other well-educated young men into public service in the province.28 During his service in the Guangdong provincial government, Feng Rui was thus one of numerous optimistic and energetic promoters of a phase of dynamic change. Chen Jitang encouraged and approved a comprehensive program of economic and social development called the Guangdong Three-Year Plan, submitted in mid-1932 to the Southwest Political Council.29 In operation from early 1933 and

52 Public Service in Guangdong, 1931-36

formally concluded in 1935, the Guangdong Three-Year Plan was similar to efforts made in other Chinese provinces during the period, when state planning was a key to progress, but was distinguished by greater success.30 In public statements, Guangdong’s leaders claimed that the provincial three-year development program had been inspired by Sun Yatsen. As Provincial Chairman Lin Yungai described it in a speech on 2 January 1933, the plan was based on the late President Sun’s visionary outline for national reconstruction.31 The industrial-development part of the plan was to build twenty-four factories costing a total of close to G$100 million.32 There were also educational and public welfare goals and the general mission to improve governance in the province. A significant aspect of the Guangdong Three-Year Plan of the 1930s was that government itself was one of the things to be reconstructed (jianshe).33 As the provincial chairman explained, the plan focused on building up four areas, namely government, economy, transportation, and education.34 According to Chen Jitang, attention to agriculture was an important part of the Guangdong Three-Year Plan. In a speech on the plan, he used a stock phrase to describe China as a “nation founded on agriculture” (yinong liguo).35 In a September 1934 speech on government measures in response to rural crisis, Chen referred to the “urgent needs of the rural population” of Guangdong.36 Chen reiterated this concern in a speech near the end of 1935, when the Guangdong Three-Year Plan officially came to an end. Acknowledging certain shortcomings in implementation of the plan, Chen called on all districts to continue to work toward the goals of the provincial plan, including the alleviation of rural problems.37 According to a biographer, Chen Jitang funded the provincial Bureau of Agriculture and Forestry because he was influenced by the traditional cultural notion of agriculture as the “foundation” of society and because he also hoped that government attention to the welfare of the poor would prevent them from being exploited by “Communist bandits.”38 Feng Rui concerned himself with the governance part of the provincial-plan program to begin with. Early in 1933, he was appointed to a provincial policyadvisory body called the Guangdong Government Research Committee. In this capacity, he was commissioned by Chen Jitang to draft a set of measures aimed at “rescuing the collapsed village economy” of the province.39 Feng was thus given the responsibility of drawing up a three-year plan of action for the improvement of provincial agriculture as part of the overall development plan for Guangdong. His detailed outline of a three-year program for agricultural improvement and forestry development was published later in the year.40 As though he had anticipated or sought a provincial public office years before his return to Guangdong in 1931, Feng Rui devoted one of the more concrete

Economic Nationalism and Provincial Planning 53

and interesting parts of his doctoral dissertation to the structure and responsibility of a provincial agriculture administration. Featuring a concentration of expertise and a division of labour among the specialized staff, this would be the ideal administrative bureaucracy to overhaul Chinese agriculture. In drawing up a plan for Guangdong in 1933, he drew on this earlier scheme.41 Feng Rui conveyed his sense of mission regarding the bureaucratic administration of agriculture in his autobiography of 1936: Next I entered the Department of Agriculture in Washington, DC, for six months of practical training. I learned about every aspect of work in the department, including agricultural economics, agricultural policy, agricultural production, government prohibitions, cooperatives, and testing. All of these areas were open to me for investigation, and I also participated in some of the department’s work. Afterward, thanks to funding from the Chinese Students’ Administrative Office, I made a trip to Europe. I visited England, France, Germany, Denmark, and Italy to investigate agricultural administration and all sorts of other economic affairs.42

The Work of Guangdong’s Bureau of Agriculture and Forestry In his reports as director of Guangdong’s Bureau of Agriculture and Forestry, Feng Rui emphasized the need for centralized agricultural leadership in Guangdong to deal with the problems he identified. In the past, work under the bureau had been too diffuse and uncoordinated, he stated. Henceforth, counties must closely follow provincial bureau leadership in a clear division of labour and demarcation of respective responsibilities. For example, he claimed, improved crops, animal breeds, tree-planting programs, and cultivation techniques should all first be developed by the bureau. The results of its research and development work would then be extended through representatives of the bureau to lower administrative levels. Agricultural development in China had become an important provincial responsibility, Feng declared. His repeated emphasis on bureau supremacy and on the responsibility of county-level representatives to follow his guidance reflects a faith in the rationality of official planning that was characteristic of the era.43 Although it might seem more logical to suggest that agricultural development for the nation as a whole would require centralization rather than an emphasis on provincial responsibility, Feng had made persuasive points about concentrating agricultural administration at the provincial level in his dissertation. In particular, climatic conditions varied so greatly across China that regions needed to develop specialized expertise.44 Feng Rui began to reorganize and expand the work of Guangdong’s Bureau of Agriculture and Forestry soon after he became director. As he remarked to

54 Public Service in Guangdong, 1931-36

an acquaintance from the United States, with its three divisions of practical research, extension, and administration, Feng’s new organization was modelled on the United States Department of Agriculture.45 From 1931 to 1933, Feng Rui’s wide-ranging reports showed continuity with his earlier work. In addition to outlining a section of the province’s comprehensive three-year plan, he composed a number of detailed reports on the department’s work and plans during his first two years in office. In his progess reports, Feng stressed the necessity of focusing efforts on practical solutions to Guangdong’s rural problems. After an initial period of expansion of the Bureau of Agriculture and Forestry, a number of staff members engaged mainly in academic research were reappointed to positions in the province’s universities.46 On the whole, however, the bureau expanded under Feng Rui’s direction. Within two years, Feng had thoroughly reorganized the work of the bureau. An organizational chart published in June 1933 shows that he commanded a sixty-six-part hierarchical structure.47 By 1935 Feng Rui had recruited a large and impressively well-qualified set of subordinates to staff the reorganized bureau. Each of the ten departments under the practical research division was headed by a “returned student” who had earned a higher degree in the United States.48 Feng Rui headed the tenth department, that of agricultural economics, himself. There, he supervised the promotion of rural extension work, cooperativization, and rural credit programs. A responsibility of the Agricultural Economics Department was to promote the establishment of rural cooperatives. The cooperativization theme linked Feng Rui’s work in Guangdong to his past educational and professional experience. Stressing financial cooperation, the new provincial Agricultural Economics Department encouraged the establishment of credit cooperatives to increase farmers’ access to irrigation and to improved seed varieties. As his bureau expanded with the recruitment of staff members with advanced degrees, Feng Rui attracted attention. An indication of his enthusiastic presence, amounting perhaps to a certain charisma, is an interesting report called “The Influence of American Education in South China,” prepared in 1935 by Donald C. Dunham. When he prepared the 162-page document, Dunham was a young deputy consul representing the United States in Hong Kong. After several visits to Guangzhou, he described the activities of “returned students” in Guangdong who had received professional training in various fields in the United States. Feng Rui was Dunham’s main inspiration and source of information. Feng was someone Dunham could identify with: an American college man. It seems that Feng Rui conveyed a remarkable sense of mission and confidence as he described his work as the director of projects aimed at thorough reforms of both agriculture and industry in Guangdong.49

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Although he could exude great optimism and win the sympathy of foreign visitors, in other situations, Feng Rui warned of grave dangers facing China in international economic competition. In his reports, Feng Rui referred often to China’s economic weakness and described his bureau’s responsibility to build a stronger national economy. When Feng began work in Guangdong, China was beginning to be affected by the worldwide economic Depression. Rural areas, particularly those such as the notable sericulture districts near Guangzhou, where commercialization and general prosperity had been stimulated by the production of goods for export, were seriously affected by the slump in international trade. Like other agriculturalists and other writers addressing economic problems during the 1930s, Feng stressed the idea that rural Guangdong was in a state of crisis. The idea that conditions in rural China were generally worsening had already been influential during the preceding decade. By 1932, following the impact of the worldwide Depression on China, it seemed to observers that drastic decline had set in. Scholars’ views on the severity of the situation in Guangdong, a region of wealth but also of exposure to conditions overseas, have differed considerably.50 Nonetheless, there was little doubt during the 1930s that government action was needed to counter the severe financial dislocations that followed on the heels of a slump in the demand for Chinese goods in foreign markets.51 The effects of the Depression were perhaps particularly painful in Guangdong, a province more dependent than others on foreign trade. Feng described the threat to China’s agricultural sector in his autobiography: In China’s present condition, the invasion of agricultural products from foreign countries is terribly serious. For many years, we have been insatiably purchasing agricultural products from abroad, to the point that our nation is in danger of gradually losing its natural vitality. It is necessary to establish the means of directing production ourselves so that we need no longer seek goods from abroad. Of course, this question is very complex. Because the foreign invasion has established such a stronghold in China, it will not be possible to resist it simply by focusing on production. It is necessary that China’s entire government, economy, society, and administration, along with other organizations, all adopt methods to assist production and promote technology in order to achieve our aims.52

In his lecture at Lingnan University in December 1933, Feng Rui made clear that by then his mindset was much more that of a public administrator than that of an academic. Declaring to the students that he was no longer an armchair expert but a man of action, he described China’s economic problems in militant tones. As well as excusing his absences from the campus, Feng’s statements in

56 Public Service in Guangdong, 1931-36

the lecture illustrate the defensive economic nationalism that Chinese academics and administrators shared during the 1930s. He opened his talk by emphasizing the urgent need for militancy in defence of China’s economy. Continuing, he stressed that action was essential to save China in its current confrontation with a set of dangerous opponents, namely the various industrialized nations. Likening the confrontation to a state of war, he warned that ruination of the national economy loomed because of the capitalist world’s dumping of cheap goods and exhorted students to resist the onslaught actively in order to save Guangdong and China.53 In a report on the policies of Guangdong’s Bureau of Agriculture and Forestry and their implementation during the 1932-33 year, Feng’s tone was similarly urgent. Declaring that the provincial economy of Guangdong was in a state of crisis, he warned that even though the cities appeared to be prospering, this prosperity was artificial and foreign-dependent. Meanwhile, the rural economy was suffering. To relieve rural distress, the main responsibility of the bureau was to restore and increase agricultural production. The most important of the bureau’s policies was protection from the capitalist commercial invasion of China – an onslaught in the form of imports of grain, flour, cotton, cloth, lumber, tinned goods, and dried and fresh fruit – in order to restore the province to a state of self-sufficiency.54 As noted, Feng Rui had been arguing since his doctoral dissertation in 1924 that government agencies must take the lead to reform China’s economy, starting with agriculture, the basic sector. Government plans were necessary to improve crop quality, introduce advanced technology to farmers, and rationalize marketing. China’s balance of trade in agricultural products also required remediation by government action. The idea that China was the capitalist world’s commodity dumping ground was widely accepted in both conservative and radical circles during the 1930s and was related to an emerging mainstream conviction overseas that national economies required protective government policies.55 In a strict sense, the term “dumping” (qingxiao) means to sell below production costs. In general usage in China, however, the term was used to refer to the sale of any commodity that had been produced overseas at low cost thanks to modern technology and then transported to China, also at low cost, on a foreign-owned steamship.56 As protectionism became a basis and a justification for provincial policies under Chen Jitang, Feng Rui played an important role in formulating, implementing, and publicly defending the province’s trade policies. From Agriculture to Industry Chen Jitang actively directed resources into industrial enterprises during his “reign” in Guangdong, and he has had a lasting reputation as a modernizing militarist.57 Guangdong’s comprehensive three-year industrial plan included a

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total of twenty-four modern factories, of which twenty were well under way by mid-1935. Several of the new enterprises were China’s most modern factories in their sectors at the time, including factories producing sodium bicarbonate, artificial fertilizers, and cement. By the time of Chen Jitang’s fall from power and departure from Guangdong in July 1936, about half the industrial investments outlined in the Guangdong Three-Year Plan had been realized. A total investment of approximately US$14 million had been invested in industrial assets.58 Sugar mills received the largest share of the investment, about two-thirds of the total, and became a key part of the provincial program. However, sugar milling was not viewed as a priority for provincial investment when the threeyear plan began.59 The prominence of sugar mills within the overall provincial development program increased dramatically during the first year of the plan period. In 1933 Feng Rui defined his work within the overall program with a long list of projects for agricultural, forestry, and fishery development that did not include sugar. However, a sugarcane-experimentation program was already underway in the Bureau of Agriculture and Forestry when Feng took office, and he pushed it forward by setting the goal of selecting superior improved strains with high sugar content for propagation across the province within two years. But sugarcane-crop improvement was just one of several applied-research programs conducted under his direction, along with research on forestry, fisheries, animal breeding, pomology, the improvement of apiaries, and the control of pests.60 In another outline published early in 1933, Feng mentioned sugar only in connection with how Guangdong’s reliance on white sugar imports might be reduced by strengthening the province’s natural advantage in honey production.61 Better bees could be bred after the establishment of an experimental apiary-demonstration program in twenty villages in Dongguan County.62 Nor did he mention sugar in a similar report describing a shorter list of projects published in June 1933.63 There were as yet few indications of the important position sugar milling would assume in the provincial reconstruction plan. After completing his assignment of early 1933, to draft a plan to rehabilitate Guangdong’s rural economy, Feng next presented a report to the Southwest Executive Committee. The published outline of his three-year program is a descriptive summary, containing only a few data on current production value in the provincial agricultural sector.64 Later in the year, a schematic draft of the report provided more information presented in terms of annual value. Remarkably, this document contains an early emphasis on the potential for increasing the value of sugarcane cultivation in Guangdong. Under the title of “Estimate of Possible Increase in Agricultural Production,” the draft listed the current projects of the Bureau of Agriculture and Forestry (see Table 2.1). According

58 Public Service in Guangdong, 1931-36

Table 2.1 Agricultural improvement plans in Guangdong, 1933 (G$) Type of production Rice crop improvement and propagation Extension of modern irrigation works Rinderpest control Improvement of chickens Improvement of ducks Improvement of hogs Improvement of fruit varieties Improvement of farm implements Dykes Improvement of local bees Combatting injurious insects Sugarcane crop improvement Forestation Cotton crop improvement Totals

Present annual value

Annual import value

Increased value projected

660,000,000

100,000,000

100,000,000

400,000,000 300,000,000 29,000,000 150,000,000 25,000,000 20,000,000 4,000,000 8,000,000

1,162,200,000

32,440,000 4,191,790

160,000,000 90,000,000 66,000,000 59,000,000 30,000,000 25,000,000 348,000,000a 20,000,000b 58,000,000 12,250,000 280,000,000 600,000,000c 1,833,950,000d

a In thirty years time, following reclamation of 1.55 million mu of uncultivated land, which will yield crops worth G$600 per mu. b After reclamation of 2 million mu of floodplains. c In thirty years time. d The figures given for “Present annual value” and “Increased value (projected)” actually total 1,392,000,000 and 1,848,250,000 respectively. No total is given for “Annual import value.” Source: Guangdong Bureau of Agriculture and Forestry, “Estimate of Possible Increase in Agricultural Production under Various projects now in progress.”(Undated typescript, circa November 1933). Guangdong Provincial Archives 38 (4): 417.11.

to the Bureau’s calculations, the value of Guangdong’s sugarcane production was only about 2.8 percent of what it could be if attention were paid to crop improvement and cultivated areas were expanded. The unnamed author also gave the figure of G$32,440,000 as the annual value of Guangdong’s sugar imports.65 This investment proposal, drawn up either by Feng Rui or under his supervision, makes clear that sugar had become a promising prospect in the course of 1933. Improved sugarcane cultivation accounted for just over 40 percent of

Economic Nationalism and Provincial Planning 59

the total projected increases to be brought about by investment in forestry and the modernization of agricultural production in Guangdong. The emphasis on prospects for expansion of the sugar industry among a large set of improvement projects is an indication of how Feng Rui’s attention gradually became absorbed by the prospects of developing sugar production in Guangdong. In his lectures and articles, he began to advocate national self-sufficiency in sugar production.66 This was not a new theme for Feng. In his doctoral dissertation, he had predicted that with the development of industry in China and consequent increases in the “living standard,” it would be reasonable to expect that China’s sugar consumption would rise from about three pounds to the industrialized world’s level of about ten pounds per capita. As he wrote in 1924, “It takes practically all of the gain of our silk trade to balance the losses from our sugar trade. If this condition is allowed to continue in China, poverty can be the only result.”67 Collapsing markets for China’s silk after 1929 made the situation even more urgent when Feng Rui entered official service in Guangdong.68 In some parts of China, sugarcane had been an important commercial crop since premodern times. In one part of Sichuan, for instance, as many as 40 percent of the peasants grew sugarcane during the twelfth century.69 Guangdong too produced cane sugar in abundance, and was a leading exporter of sugar from the seventeenth century to the twentieth century. Guangdong supplied provincial sugar needs as well as those of other parts of China and also exported large quantities of sugarcane and processed sugar, mainly to southern and southeastern Asia.70 Since about 1910, however, sugar produced by plantation workers in colonized Southeast Asia and the Caribbean had conquered Asian markets. The Philippines, Java, and Taiwan had joined Cuba as major producers when production costs had fallen dramatically thanks to technological improvements and economies of scale. China’s imports were shipped from these colonized Asian territories. Although Guangdong’s sugar exports were in decline, they had an opportunity to expand again during the period of the First World War. However, Chinese producers failed to make an impressive comeback, whereas there were great improvements in sugar-production methods during the same period under Japanese managers in Taiwan and Dutch managers in Java. In Feng Rui’s analysis, because Chinese producers were “set in their ways,” they were helpless under the onslaught of imported surpluses from 1918 through 1920.71 By 1930 only miniscule amounts of sugar were exported, and Guangdong’s “local sugar” (tutang) seemed to be falling out of favour with consumers. Consequently, Guangdong was spending about G$30 million a year on 1.5 million dan of imported sugar. According to Customs statistics for the years 1928 through 1930, Feng noted, about 98 percent of this total was white table sugar.72

60 Public Service in Guangdong, 1931-36

Feng Rui wrote that sugar was a glaring example of dependence on foreign food supplies by those who had formerly been producers of staple foods. Guangdong’s economic decline could be explained by this reversal, he claimed. As a result, not only were the substantial earnings formerly gained by exporting sugar now lost to Guangdong but so was the enormous sum being spent on imports. This wasteful expenditure, Feng declared, was “plunging villages into bankruptcy.”73 It was because China’s production capacity was limited by the lack of development in the areas of mechanization, transport, finance, and technology, that Chinese consumers turned to foreign suppliers to meet so many of their needs. On occasion, he continued, foreign firms were even colluding to dump their surplus stock in Chinese markets.74 In an English-language pamphlet issued after the provincial sugar mills were under construction, Feng wrote, “Plainly speaking, our vast nation is under the economic exploitation of other countries.” If sugar cultivation and milling were modernized, Guangdong would do “amazing” things.75 In another of his reports, Feng Rui identified the aims of the sugar industry program: to transform sugarcane planting into scientific agriculture and to transform cane crushing into industry.76 The prominence of sugar gradually increased in Guangdong’s comprehensive development program as well as in Feng Rui’s plans. It is noteworthy that in early 1932 a special issue of the provincial Department of Reconstruction’s monthly journal, on industry and commerce, reviewed Guangdong’s new industries without mention of sugar milling.77 By September 1934, however, when Chen Jitang referred to the benefits to the people of Guangdong to be expected from the sugar-milling program in a speech on a “Rescue Plan for the Villages of Guangdong,” sugar had assumed great importance. Chen declared that the funds had been appropriated to the sugar factory program as part of a general plan to rescue Guangdong’s agricultural sector. Judging by this speech, the sugar program had become Chen’s best example of what he was doing for the province’s rural sector.78 Feng Rui’s correspondence in 1932 with a specialist in the science of soils named Robert Pendleton sheds light on how Guangdong’s sugar industry program took shape. Pendleton was working in Beijing as a consultant to a National Geological Survey when Feng Rui wrote in April 1932 to invite him to carry out a scientific survey of soil conditions in Guangdong. Wearing his dean’s hat, Feng arranged accommodation and office space for Pendleton on the Lingnan University campus.79 Back in Beijing late in 1932, Pendleton replied to a letter from Feng Rui that had enquired about the progress of Pendleton’s report and specifically about conditions in Guangdong for expanded sugarcane cultivation. Pendleton said that his report was nearly complete and then took the opportunity to express

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pessimism regarding the prospects for a rapid expansion of sugar milling in Guangdong. He stressed that it would be unwise for Guangdong to invest in sugar milling on a large scale: As I have written before, I feel very strongly that the province should not at all consider the establishment of any large sugar mill. You have not the supplies of cane that such a mill must have near at hand, for the transportation of cane over long distances or in small lots is problematic in cost, as well as a deterioration of cane if there elapse more than 24 hours from the time it is cut to the time it is crushed in the mills ... there must be a consistent development of the local milling of cane by the use of both animal power mills, and the development of better varieties of cane and larger areas planted to cane in any one locality before it will be at all reasonable to even consider a larger sugar mill.80

In Robert Pendleton’s view, large-scale mills in Guangdong would not only be inappropriate given the problems of sugarcane quantity and quality but would also have a damaging environmental impact. He foresaw that deforestation and erosion would result from the expansion of sugarcane cultivation and sugar milling in the province. Guangdong’s afforestation program, also supervised by Feng Rui, was part of a national program promoted by Chiang Kaishek. However, a lack of precise information or close attention to forestry is evident in Feng Rui’s reports. Feng Rui had made points similar to Pendleton’s about the suitability of smaller rather than large sugar mills for China in his doctoral dissertation. China should build a large number of small-scale modern sugar mills, he wrote in 1924.81 Nonetheless, he did not follow Pendleton’s advice about what would be best for the province. Evidently, it was because leaders at higher levels had already set their hearts on large-scale investments that Pendleton’s warnings were not heeded. In a note to Pendleton acknowledging his concerns, one of Feng’s colleagues at the College of Agriculture, Professor Gu Guifen (Koo Kwai-fan), explained that Lin Yungai was determined to build large mills.82 A speech by Lin about the Guangdong Three-Year Plan in January 1933 confirms this; in the speech Lin emphasized Guangdong’s potential for sugar industry expansion.83 Lin Yungai has been given credit in a number of sources for Guangdong’s push to industrialize. He held the position of director of the Department of Reconstruction concurrently with the provincial chairmanship for almost two years, from May 1932 to March 1934. As one historian described his role, Lin was “in a position to coordinate the programs of the various government agencies” and thus deserves credit for building the foundations of Guangdong’s industrialization.84

62 Public Service in Guangdong, 1931-36

Outlining the sugar industry program in 1933, Feng Rui declared it had become a key component of the Guangdong Three-Year Plan because of the urgent need to assist Guangdong’s rural population. The development of sugar milling would be directly and indirectly beneficial both to the provincial government and to the villages, he claimed. Unemployment would be reduced, and a commercial revival would be promoted.85 In his lecture at Lingnan University in December 1933, Feng Rui explained the principle of import-substitution industrialization and argued that tariffs and import-substitution efforts would be much more effective than boycotts in protecting China from imperialist economic invasion. He predicted that the sugar program would weaken foreign domination of the Chinese economy and provide numerous indirect benefits to national defence, education, and training in the technology associated with industry. He exclaimed, “This is a war in which the enemy has occupied our sugar markets!”86 Feng also made the explicit point in his lecture that to promote sugarcane cultivation and the mechanization of sugar processing in Guangdong was in the interests both of the nation and of the province. The development of Guangdong’s sugar industry would help to pull China out of economic difficulties. By the time of his second lecture at Lingnan University, presented in May 1934, Feng Rui was even more clearly concerned with industrial development. He declared that the idleness of peasants was an obstacle to economic development and that they were idle because China needed to solve a serious problem of underemployment in the rural sector. He also discussed how progressive rural policies would help to raise the citizenship level of Chinese villagers and how their engagement in commerce and industry would not only bring benefits to the villagers by stirring them from idleness but also lead villagers to combine those pursuits with agriculture, fusing together once again activities that capitalism had forced asunder.87 Financing Reform: The Bureau’s Budget As outlined above, Feng greatly expanded the work of the Bureau of Agriculture and Forestry during his first three years as its director. He recruited additional personnel and drew up a number of plans for the reconstruction of rural Guangdong through crop improvement and industrialization. How were these schemes funded? How were salaries paid? Feng Rui stated to Donald Dunham that soon after taking office, he requested a budget increase for his bureau of one-third the 1931 allocation, which had been G$200,000, and that the additional funding was granted by the Department of Reconstruction.88 Feng’s statement is comparable to a provincial government source, according to which the allocated budget of the bureau rose from about G$144,000 when Feng Rui joined to more than G$400,000 two years later.89

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Table 2.2 Budget of Guangdong’s Bureau of Agriculture and Forestry, 1931-36 (G$) Year

Planned

Provisional

1931 1932 1933 1934 1935 1936

144,192 341,424 417,284 474,300 582,446 360,000

114,000 114,000 40,000 50,000 50,000 120,000

Source: Guangdongsheng zhengfu mishuchu (Guangdong Government Secretariat), Guangdong nonglinju zhi yange [Evolution of Guangdong’s Bureau of Agriculture and Forestry] (Lianxian, Guangdong: Guangdongsheng zhengfu, 1942), 3-8.

In a special issue of Guangdong jianshe yuekan (Guangdong Reconstruction Monthly) on agriculture and forestry published in 1933, Feng provided details on planned appropriations of the bureau’s funds to long lists of projects.90 Agricultural Economics was the least expensive department. Its budget consisted of salaries for a few extension workers posted to counties to distribute useful research findings and encourage the establishment of cooperatives. In 1932 and 1933, “land reclamation” projects, the modernization of fisheries (new boats and processing plants), pig and chicken breeding, and rice-crop improvement were the most generously funded programs. Where did the money come from to expand the bureau’s budget on such a generous scale? A few disparate sources provide indications of the sources of funds directed into the programs under Feng Rui’s direction. Guangdong sought financing in Nanjing in support of its reconstruction program and for the sugar-milling plan in particular. The comprehensive plans drawn up in 1933 were an early part of this effort. Newspaper reports make clear that Feng Rui’s travels to Shanghai and Nanjing were fundraising missions. Perhaps the most important of his trips north in this regard was from mid-May to early June 1935. Feng then sought financial backing among Shanghai investors for his proposed plan to offer small crop loans to sugarcane growers in Guangdong who would supply the provincial mills.91 He reported success after about two weeks of meetings in Shanghai, sending a telegram to Guangzhou stating that he had secured two loans of N$1 million each from banks in Shanghai and that agreements would be signed within a few days.92 Six months later, Feng was in Shanghai again. On 4 October, he met the minister of finance, Kong Xiangxi

64 Public Service in Guangdong, 1931-36

(H.H. Kung, 1881-1967), for the purpose of discussing a loan to support Guangdong’s rural relief and industrialization programs. Following a week of discussions with bankers, he met Kong a second time on 14 October. According to news reports, Feng had by then gained commitments from several banks to purchase N$3 million worth of Guangdong government five-year bonds, which would be secured using the Guangdong government’s cement factories as collateral.93 The reports mentioned that Feng returned to Guangzhou by airplane after the visits in May and October, indicating the importance of his missions to Guangdong’s leaders. Less than a month later, Lin Yungai sent Feng Rui on another trip to Nanjing and Shanghai to seek cooperation with Guangdong’s effort to sell the remainder of N$5 million worth of provincial reconstruction bonds before their issue date in December.94 Despite Feng Rui’s fundraising work in Shanghai, Guangdong’s industrialization program was financed mainly from local sources. Investment funds were drawn largely from provincial revenue based on the control and taxation of commerce. An anecdotal account of Chen Jitang’s support for industrial development stated that Chen “used industries to nourish other industries.”95 The most “nourishing” enterprise was a set of two provincial cement factories. One of Chen’s first important deals after assuming control of the provincial government was to secure financing for a cement factory.96 Originally built and opened in 1928, the cement works was financed by a loan from a Japanese lender, the Bank of Taiwan.97 In keeping with its foundational qualities, cement had supported the establishment of a system comprising twenty factories and plans for several more by the time of Chen Jitang’s resignation in July 1936. This was possible because the cement enterprise reportedly earned G$300,000 monthly in sales revenue while incurring modest production costs. The Guangdong cement works in the Xicun district of Guangzhou was transferred from private hands and placed under the management of a provincial committee on 16 October 1931. New office furnishings were provided promptly at government expense, but cement production remained difficult to expand because the machinery was in serious disrepair. Nonetheless, in November the factory began to produce somehow, averaging about 420 barrels a day. After a year, however, output had fallen again because of continuing problems with the equipment.98 Apparently, it was difficult for the factory to fulfill its function as an import-substitution enterprise. It struggled to compete with cement imported from Hong Kong. A notice in the Guangdong Reconstruction Monthly published in November 1932 makes clear that much of this cement was smuggled into Guangdong. The notice stated that the sale of Green Island cement from Hong Kong was prohibited in Guangdong. Moreover, the government had issued a warning that the provincial Office of Product Examination and Testing

Economic Nationalism and Provincial Planning 65

had found the quality of the Green Island product to be substandard. It was thus not safe for construction purposes. Nonetheless, “traitorous merchants” (jianshang) were importing large amounts of this substandard cement and then mixing it with various other types for sale in Guangdong. The problem had been reported by He Zhongming of the cement factory’s management office, who petitioned the Department of Reconstruction about the problem of smuggled supplies being mixed with the local product so that profits could be increased. He Zhongming explained that cement was being smuggled into Guangdong at several points, sometimes disguised as other goods. This problem was causing the further complication that customs authorities were refusing to let Guangdong’s legitimate Five Rams brand of cement travel coastwise as a duty-free good. After a new factory management office took over on 15 August 1932, improvements were made to promote sales, helping the Five Rams product to compete with illicit imports. The cement was now being packed in new gunnysacks and proving more attractive to buyers.99 At the end of June 1933, the factory reported that it had earned over G$5 million in profits since midApril 1932,100 and in September 1935, it reported G$5 million in profits for 1934.101 Sales of cement thus contributed one-third of the total annual earnings of the province’s entire set of industrial enterprises.102 A revealing investigative news article on cement published in 1935 sheds light on the fabulous profitability of the cement business in Guangdong at that time. The cement works of the Henan district south of Guangzhou had been established in 1905, using equipment from Germany. It became a privately run enterprise in 1921, while paying G$300,000 annually in taxes to the provincial government. Later, it ran into difficulties when the cost of production of one barrel rose above G$5 or more, while imports of Green Island cement from Hong Kong and Macau cost only G$0.80 or G$0.90 per barrel. Thus in 1931 the province assumed control of the enterprise, merging it with the Xicun Cement Factory. The establishment and expansion of the Xicun factory was related to the great demand for cement connected to the construction of the GuangzhouHankou Railway and other ventures. In 1933, 50.6 percent of China’s imported cement was imported into Guangdong, up from 19.5 percent in 1911. In 1935 the combined cement enterprise turned out 576,000 barrels of cement, and there were plans for expansion using new imported equipment. Yet during the previous three years, the enterprise had reportedly sold an average of 1.008 million barrels of cement annually. 103 Guangzhou’s Commissioner of Customs reported in February 1934 that with new bridges and thousands of new houses under construction in Guangzhou in 1933, the provincial cement works had “flourished to such an extent that it has been found necessary to augment its present output of 1,200 barrels to 4,000

66 Public Service in Guangdong, 1931-36

barrels a day to meet the local demand” and that the Department of Reconstruction had signed a contract to purchase a new set of equipment imported from Denmark.104 Already, or at least by the time of the change of government in Guangdong in 1936, this provincial factory was the most modern and efficient cement works in China.105 Yet Guangdong invested substantially in cement just as its price was low. Presumably, this would make it difficult to recoup the investment in new equipment. The price of Japanese cement was generally low throughout China in 1933, allowing the Japanese Black Dragon brand to increase its market share substantially.106 Guangzhou’s Customs commissioner also submitted a monthly report on provincial ships entering the Guangzhou district in January 1934. Records showed that Guangdong’s cruiser deployed in the prevention of salt smuggling, the Haizhou, had made five trips upriver toward Guangzhou that month, carrying a variety of imported cargo, none of which had been declared to Customs. Along with three automobiles, various other goods were brought in, including cement. Together with a series of similar earlier shipments, the cumulative total of undeclared cement thus entering Guangzhou during the month was 2,500 bags and 2,500 barrels.107 The cement enterprise in its two locations received these supplies and repackaged them in sacks marked with the provincial Five Rams brand.108 The quantities brought by one provincial ship in a series of shipments were insufficient to account for the rise in demand for cement produced in Hong Kong, but, according to customs correspondence later in the year, cement was brought from Hong Kong to Guangzhou in other vessels as well. The director of the Customs anti-smuggling service wrote in October 1934 that numerous vessels protected by official status carried unregistered goods from Hong Kong to Guangzhou every day. In addition to provincial naval vessels and gunboats operated by the official salt monopoly, smaller boats belonging to Guangdong’s bureau of opium control and other agencies were also active in the trade. Cement was a regular cargo.109 If independent operators also managed to bring cement into Guangdong, the total demand for cement produced in and shipped through Hong Kong was possibly substantially higher. Guangdong’s authorities, however, made strong efforts to keep independent traders out of the business. Customs officials also noted that by early 1934, a Cement Sales Office had been established to handle Five Rams cement. On 1 May 1934, a provincial National Products Sales Office (Guangdong guohuo tuixiao chu) opened under the direction of Chen Yuanying. It was a merger of existing agencies that had separately handled the sale of cement and other commodities. The new organization was authorized to handle exclusively the cement, tungsten, milled

Economic Nationalism and Provincial Planning 67

sugar, and sulphuric acid produced in Guangdong.110 Later in the year, a dispute over Guangdong’s policy of protecting its cement from the competition of other parts of China became public. The Ministry of Finance in Nanjing pronounced that Guangdong’s “import” tax on cement and other products, imposed on foreign goods and extraprovincial shipments alike, was an illegal exaction.111 This was one of several disagreements relating to a range of commodities. Guangdong’s provincial protectionism is discussed in further detail in Chapter 3. Profits of the cement factory were invested in an electricity-generating plant, a sulphuric acid factory, a bottling plant, and a paper mill.112 According to Qin Jun, a former accountant in Guangdong’s Department of Finance, although the Guangdong government announced from time to time that certain factories had turned a profit, no enterprise profits were ever turned over to the provincial treasury.113 According to Li Jiezhi, “smokeless” sugar sales earned about G$3 million annually for the government, and part of this revenue was invested in other industries.114 Although cement clearly preceded sugar as a focus of attention in the provincial program of industrialization, it is possible that the two industries were mutually supportive. According to a report in early 1935, by July 1934, the government of Guangdong had invested a total of G$15.4 million in modern industrial enterprises. The cement enterprise at Xicun in Guangzhou had received 36 percent, or over one-third of the total investments (G$5.6 million). In contrast, 19 percent of the provincial investment (G$2.9 million) was directed into sugar milling.115 A chemical fertilizer factory, also part of Guangdong’s set of new or expanded industrial enterprises during the 1930s, was located in the Xicun district as well. It began production in August 1935, boosting the capacity and technological level of the province’s existing fertilizer industry.116 The Hong Kong Chamber of Commerce reported that in 1933 the Guangdong government imposed a heavy tax on all chemical fertilizers except those produced in its own enterprises. The proceeds of the tax would support the recently established Bureau of Agriculture and Forestry.117 Guangdong’s Department of Finance also introduced a licensing system for importers of chemical fertilizers. An Agricultural Commodities Tax Bureau set up under the Department of Finance was responsible for enforcing the licensing system, monitoring imports, and supervising the collection of import taxes on fertilizers. If unlicensed shipments were discovered, the dealers would be subject to provincial antismuggling regulations.118 Later, fertilizer imports were subject to an additional surcharge of G$0.20 (20 percent of the current rate of taxation), which would be collected for one year on nine imported products, including agricultural products, paper, and

68 Public Service in Guangdong, 1931-36

dyes and pigments, effective on 15 April 1934. Announced by the Department of Finance, this tax measure was intended to serve as a guarantee for the provincial bank notes.119 Indicating that the surcharge was also used to support the work of the provincial Bureau of Agriculture and Forestry, on 7 August 1934, Feng Rui submitted a formal proposal to the provincial council, outlining a ten-part plan for rural rehabilition. He requested approval for a budget of G$50 million, to be funded by allocations from the collection of taxes on the nine imported commodities.120 Other sources confirm the allocation of import-tax revenue to development projects of Guangdong’s Bureau of Agriculture and Forestry. According to Chen Zhaoyu, during Feng’s efforts to find funds for investment in sugar mills, he requested an appropriation of G$200,000, half for up-to-date equipment and the rest for sugarcane-crop improvement. She claimed that after the provincial authorities turned down Feng’s request for funds, he devoted himself to acquiring the milling equipment and installation services on credit.121 As the government had already committed funds to investment in sugar milling as part of the provincial industrialization program, perhaps she recalled him making a request for an increased allocation. A report of January 1935 stated that the Guangdong government had designated four revenue items to be invested in its three-year program of industrial development: the earnings of the provincial cement factory, revenue from a provincial tungsten monopoly, profits earned during the first year of operation of the government sugar mills, and revenue from the provincial tax on imported rice.122 Although this report did not mention that, in addition, revenue from a tax on imported fertilizers was directed to supporting the work of Guangdong’s Bureau of Agriculture and Forestry, a Customs report from late 1936 indicates that the connection between fertilizers and the bureau continued. Despite protests from elsewhere in China about Guangdong’s protectionist taxation, allocations of funds from the continued collection of duties on chemical fertilizers continued to support the provincial Bureau of Agriculture and Forestry under Ling Daoyang (1890-1964), Feng Rui’s successor as director of the bureau. As though naive about how things worked in Guangdong, Ling attracted the attention of high-level customs officials in December 1936 with a request that the customs stations in Guangdong detain fertilizer shipments that were not covered by import permits issued by his bureau.123 The irony of this incident is that in 1936 Ling was not aware that Customs viewed Guangdong’s import taxes as illegitimate and had long refused to assist in their collection. Guangdong’s official justification for the tax on fertilizers was to protect the chemical fertilizer factory owned by the province. The tax bureau concerned

Economic Nationalism and Provincial Planning 69

with agriculture-related commodities was renamed after the change of government in mid-1936, but it later implemented a procedure that illustrated how little things changed in Guangdong after the departure of Chen Jitang and the execution of Feng Rui. According to the tax bureau’s instructions, a dealer wishing to import fertilizers would be required to buy five bags of the local factory’s fertilizer for every ninety-five bags of the competing extraprovincial product.124 As an anecdotal account of the cement factory’s “smokeless” production noted, Guangdong’s fertilizer factory was also selling repackaged imports.125 While deferring further discussion of Guangdong’s revenue streams to later chapters, it may be noted here that a pattern of funding allocations is sufficiently clear to conclude that the financing of Guangdong’s industrial-development program was not coordinated or controlled by the provincial departments of finance and reconstruction but consisted instead of a broad network of lateral links between, on the one hand, particular streams of revenue collected by agencies such as the provincial National Products Sales Office and, on the other hand, particular investment projects such as cement manufacturing, chemical fertilizer production, and sugar milling. Although the logic of directing the earnings from controlled sales of particular commodities into the expanded production of local substitutes for those commodities was upheld at times, there were numerous departures from this principle. The sugar industry, for instance, was funded through the sale of cement, fertilizers, and other commodities in addition to sugar. Explaining the charge of embezzlement made against Feng Rui at the time of his arrest, a Hong Kong newspaper reported allegations that Feng had personally pocketed G$1.20 per bag of imported white sugar, along with G$0.80 per bag of cement.126 After Feng’s death, another report stated that he had pocketed G$1 per dan as his personal share of Guangdong’s collection of fertilizer import taxes.127 These reports did not mention the official practice of earmarking specific tax revenue for particular purposes. Yet even if they had done so, this information might not have softened the allegations that Feng Rui had profited personally from the tax schemes in effect under Chen Jitang. Guangdong’s fiscal policies had fallen into disrepute. By August 1936, both domestic and international news readers viewed the province’s independent revenue systems with disapproval. Guangdong’s systems of revenue collection and the controversy associated with them are the subject of the next chapter. The “smokeless” factory method of import substitution was part of a larger phenomenon. There were precedents elsewhere for Guangdong’s unusual methods of importsubstitution industrialization. During a similar stage of industrial development,

70 Public Service in Guangdong, 1931-36

for instance, many enterprises in the United States copied and counterfeited European books and manufactured goods for sale as inexpensive substitutes for the imported commodities.128 The practices in Guangdong were more direct, however, as factories imported goods to serve as substitutes for those they were technically capable of producing but could not produce and sell profitably. Guangdong’s border zone has more recently been the site of “export platforms” in the form of three Special Economic Zones founded in 1979.129 As seen in this chapter, when production costs for many commodities were higher in China than overseas, Guangdong was the site of “import platforms” through which cement, fertilizers, sugar, and other goods entered China. In depression conditions, smokeless factories were part of the regional response to an “invasion” of surplus commodities from the industrialized world. At first, sugarcane cultivation and sugar milling were not major concerns for Feng Rui in his work as director of Guangdong’s Bureau of Agriculture and Forestry. Then, as he followed the direction set by his patron Lin Yungai, Feng’s training in agriculture led him from strictly rural concerns into industrial production. It was contradictory that the rhetoric of economic nationalism was used to promote an industrialization program even during a stage of dependence on imported industrial goods. Yet Guangdong’s access to foreign manufactured goods provided revenue for investment in industrial enterprises. An inter-regional negotiator as well as a provincial bureaucrat, Feng Rui became involved in another contradiction between economic nationalism and provincial interests. In his handling of the contentious question of rice imports, he became a key intermediary between the general public and the government as well as between Guangzhou and Nanjing.

3 Rice and Revenue: Guangdong’s “Benefit Agriculture” Import Taxes

Li Jiezhi, the police commissioner responsible for Feng Rui’s arrest in August 1936, later stated that Feng attracted the attention of Chiang Kaishek in connection with Guangdong’s policies regarding rice. According to Li, Chiang Kaishek became angry about Feng’s role in implementing a provincial tax on imported rice.1 Without providing further information, Li Jiezhi stated that this was the primary cause of Feng’s downfall in 1936. Chiang’s notes about his relations with Chen Jitang from 1933 to 1936 show that he anticipated a confrontation with Chen.2 But Chiang Kaishek did not mention Feng Rui in his diary or other surviving documents. A large-scale scheme of rice-import restriction in Guangdong, the largest importer of grain among China’s provinces, did in fact cause Feng to become known to leaders in Nanjing. When the provincial policy was implemented as a provisional measure in 1933, announcements claimed that it was based on Feng Rui’s analysis of the agricultural economy. By the time of its third year, Feng was associated too closely with a policy that had become unpopular. As his widow recalled, friends warned Feng against getting involved in a program that might prove to be controversial.3 Characteristically, however, Feng Rui plunged bravely into hazardous waters. Beginning in 1933, Guangdong imposed taxes on imported rice, both milled and unhusked. Departing from a long-standing policy of unrestricted imports of staple foodstuffs, the provincial import tax was a response to central officials’ declared intention to impose tariffs on grain imports.4 In his role as a spokesman and advocate for the provincial rice-tax policy, Feng Rui described the policy in terms that echoed central officials’ statements and defended provincial interests at the same time. Feng promoted an agricultural-development plan linked to the provincial rice-import tax, aiming to eliminate Guangdong’s dependency on imported grain by means of this two-part program. Despite his efforts as an agriculture specialist, policy advisor, and provincial negotiator, however, Feng did not succeed in resolving a central-provincial disagreement concerning grain imports. As the contention became public, it was clear that Feng Rui had indeed assumed a risk in his role as an advocate. Feng Rui’s doctoral dissertation demonstrated his commitment to improving national welfare by reducing China’s reliance on imported goods. In that work of 1924, he described the benefits that would result from a return to national

72 Rice and Revenue

self-sufficiency in agricultural goods. Nonetheless, he clearly understood the principle of comparative advantage, stating that China should not aim at selfsufficiency in agriculture and industry or grow particular crops just because they had always been grown in China. Instead, it would be wise for China to import goods, such as Canadian wheat, that were grown more cheaply elsewhere.5 As seen in Chapter 1, however, Feng Rui was capable of adapting his academic knowledge in response to Chinese concerns. Ten years later, therefore, he was an active public advocate of a policy imposing taxes on Guangdong’s imported grain supplies for the purpose of stimulating domestic production. His position then reflected the concerns of a region reliant on imported foodstuffs during a period of protectionism in international trade. As seen in Chapter 2, Feng Rui was a proponent of official efforts to “rescue the villages” of Guangdong, particularly by saving them from the “dumping” (qingxiao) of foreign commodities.6 Like other Chinese intellectuals during the 1930s, Feng was uneasy about the nation’s reliance on imported food supplies and was convinced that a strengthened tariff policy was essential to protect Chinese producers from the competition of low-priced imported commodities. To view grain imports as a symptom of economic disease was characteristic of the era. For instance, when Cornell University’s renowned agronomist Harry Love lectured in China in 1931 and 1933, he told audiences that high levels of food imports were symptomatic of an unhealthy economy and should be reduced.7 Moreover, Feng Rui advocated a plan to curtail imports and encourage domestic grain production that mirrored official measures in Nanjing. Li Jiezhi’s statement that Feng Rui initiated Guangdong’s rice-import tax policy is therefore misleading.8 Grain-Import Tariffs in 1930s China From 1929 to 1933, China’s imports of grains rose sharply. Falling commodity prices in world markets, together with the rising value of silver, China’s monetary standard, resulted in sharply reduced prices for imported goods, particularly agricultural commodities.9 Unexpectedly, China became a significant importer of foodstuffs. It was particularly noticeable that rice, milled and unhusked, became one of China’s most important imports by value. Although, at about 2 percent of total consumption, the quantity of imported rice was small in proportion to China’s total production, even a small share of the output of the world’s largest producer of rice was a significant amount.10 China’s grain markets, moreover, had become sensitive to overseas price changes as a result of nineteenth-century developments in transportation and communications.11 In 1933 customs statistics indicated that rice was China’s most important import by value. That year, rice imports peaked in value and volume in China’s prewar

Guangdong’s “Benefit Agriculture” Import Taxes 73

Table 3.1 Registered shipments of rice into Guangdong, 1928-33: quantities, value, and shares of China’s total imports (million dan, million Customs taels) Guangdong’s foreign imports

Shipments from other provinces

Year

Volume

Value

Share (%)

Volume

Value

1928 1929 1930 1931 1932 1933

9.39 7.35 5.11 5.44 13.57 16.97

46.5 40.0 31.3 32.4 74.2 75.6

74.1 67.9 25.7 50.7 60.4 79.22

2.0 1.1 0.7 1.8 0.78 3.19

10.5 6.2 4.0 9.7 2.8 11.0

Sources: Alfred H.Y. Lin, The Rural Economy of Guangdong, 1870- 1937: A Study of the Agrarian Crisis and Its Origins in Southernmost China (New York: St. Martin’s Press, 1997), 52 (quantities calculated from customs reports on imports through nine major ports); Guangdongsheng liangshi tiaojie weiyuanhui [Guangdong Grain Regulation Commission], ed., Guangdong liangshi wenti [Guangdong’s Grain Supply Problem] (Guangzhou: Guangdong liangshi tiaojie weiyuanhui, 1935), 6-8 (values and percentages of shipments).

history and also led all imports in value, accounting for 11.2 percent of the total import trade.12 China’s imports of grain, particularly of rice, became a topic of general concern. Disruptions of supplies experienced during the Japanese attacks on Shanghai during the winter of 1932 demonstrated the dangers of reliance on imports in case of war.13 Furthermore, low prices for imported grain were increasing China’s dependency on imports as depressed prices discouraged Chinese farmers from growing grain. Nanjing’s intention to impose import tariffs on rice, wheat, and flour became clear in October 1932, when the minister of finance, Song Ziwen (T.V. Soong, 1894-1971) convened a “People’s Food Supplies” meeting in Nanjing. Song’s statements at the meeting emphasized the importance of supporting domestic grain producers, and he tasked the delegates to devise appropriate measures to support prices, especially regarding tariffs on imported rice.14 Implementation of Nanjing’s decision on grain-import tariffs was delayed by more than a year after Song Ziwen made his intentions clear. Grain-trading firms and officials in grain-deficit regions opposed the policy. Guangdong’s representatives protested that the new tariff measures would impose an intolerable burden on their province. Among China’s provinces and regions, Guangdong had long been the most reliant on imported grain. Imports into Guangdong, of which only a small part was re-exported to other regions, accounted for half of China’s total rice imports during the period 1911-33. During

74 Rice and Revenue

recent years, Guangdong’s share of China’s total imports of grain had been rising, and the volume soared above 2 million metric tons (16.97 million dan) in 1933. Nonetheless, Guangdong was expected to take action precisely because of its reliance on grain imports. Guangdong’s policy research office, directed by provincial councillor Hu Jixian, conducted an investigation into the problem of deficits in grain supply and established a committee on the village economy led by Feng Rui.15 The committee determined that precise data on grain production and consumption in the province were lacking.16 Nonetheless, its members agreed that Guangdong’s farmers should be encouraged to grow more rice to help reduce the reliance on imports. Hu Jixian discussed the provincial grain deficits in an article that emphasized the importance of cash crops to explain why a large proportion of Guangdong’s population of 33 million was dependent on imports of staple grains.17 Another analyst pointed out that Guangdong’s grain imports had been steadily increasing for centuries because peasants growing cash crops such as fruit in the northeast and vegetables in the Pearl River Delta area were devoting less time to rice production. The less rice they grew, the more they were dependent on rice imported from Burma, Thailand, and Vietnam, and the more that foreign rice was available, the less attention they gave to their rice paddies. Moreover, he wrote, reports on outbound passenger traffic from Guangdong’s ports in the early Republican period indicated that emigration had increased the dependence on imports, as those who departed abandoned their paddy land.18 Since the 1880s, Guangdong had indeed sent more emigrants abroad than had other provinces. Analysts in the 1930s perhaps did not understand clearly that Guangdong’s grain imports were financed largely by emigrants’ remittances. The annual inflow of remittances from émigrés was about G$260 million, while the average annual import surplus for the province during the period 1932-36 was G$20 million.19 Many of the aged relatives and other dependents of emigrants were reliant on remittances to buy food, while in some districts, particularly in the western Pearl River Delta area, entire villages were supported by remittances. Those who returned to these districts to visit or to retire, or to live more cheaply after a contraction of employment overseas, such as the one that occurred from 1929 to 1934, also purchased imported rice.20 Disagreement between Guangdong and the central government concerning grain imports became public and acrimonious during 1933. Because Song Ziwen, as minister of finance, was the leading advocate of a national grain-tariff policy, he was criticized personally, especially after making arrangements to purchase surplus grain from the United States. Thus a commodity crisis in the United States had an impact on domestic politics in China. During a visit to the United States during the spring of 1933, Song secured a loan to buy US$50 million worth

Guangdong’s “Benefit Agriculture” Import Taxes 75

of flour, cotton, and wheat for which American producers sought buyers.21 The loan was secured on China’s unified taxes on tobacco, wheat, matches, and cotton.22 After Song’s arrangements were announced on 4 June 1933, Guangdong’s leaders were strident in their opposition. The Southwest Political Council cabled its protest to the Nanjing government and to the agency in the United States that had arranged the loan.23 Hu Hanmin, senior leader of the Southwest, criticized the Nanjing government in strong terms. Hu charged central officials with acting purely in self-interest, predicting that low-priced agricultural imports from the United States would cause further damage to markets for domestic farm produce, where prices were already low.24 Nanjing’s spokesmen argued in defence of the finance minister’s effort to gain financial and political assistance from the United States and European countries at a time of economic difficulties in China.25 Yet the Guangdong leaders continued to express distrust and unease. The arguments of provincial spokesmen focused on popular welfare and the importance of moving toward national and regional self-sufficiency in grain supplies. It appears, however, that another of Guangdong’s concerns was that central leaders would control the proceeds of sales of cheaply acquired food supplies sold in markets protected by national tariffs on grain imports. During this debate over agricultural commodity purchases from the United States, Feng Rui became the spokesman of a provincial plan that would conform in part to Nanjing’s new regulations on grain imports while protecting provincial interests. In this effort to reconcile conflicting concerns, he became the target of critics on both sides. Guangdong’s Grain-Supply Deficit and Feng Rui In September 1933, the government of Guangdong responded to a central government statement that the grain-import tariff policy would soon be implemented by ordering a provisional provincial tax on rice imports. The levy on milled rice, effective from 16 September 1933, would be G$1 per dan.26 Nanjing’s tariff measures, delayed until December, included a substantially higher tariff on imported milled rice, which was equivalent to G$2.55 per dan. (See Table 3.2) Prolonged inter-governmental discussions followed Guangdong’s decision to tax rice imports independently. Although Guangdong provisionally agreed to a revenue-sharing arrangement in November 193327 and later raised its riceimport tax above the level of Nanjing’s tariff, the retention of revenue and import-tax rates remained contentious issues. Guangdong’s leaders presented their provincial tax policy as part of a commitment to reducing China’s reliance on imported rice supplies. Committing itself to the national goal of achieving self-sufficiency in grain supplies, the province would adopt measures to develop alternative sources of supply by

76 Rice and Revenue

Table 3.2 Import taxes and tariffs on milled rice, 1933-36 (G$, dan) Effective date 16 September 1933 16 December 1933 20 March 1934 30 July 1935 1 April 1936 2 June 1936 20 June 1936

Guangdong government import tax

Nanjing government import tariff

1.00

Duty-free 2.55

1.20 4.00 1.40 0.70 0.20

Notes: Nanjing’s rice-import tariff was first set at 1 Customs Gold Unit (CGU) per dan and then expressed as 1.65 CGU per 100 kilograms when the Customs converted to metric measurements in 1934. CGU 1 was equivalent to N$1.967 at the time. The exchange rate between N$ and G$ was 1 to 1.30. Sources: China Maritime Customs Administration, The Trade of China, 1933 (Shanghai: Statistical Department of the Inspectorate General of Customs, 1934), i, 51; idem, The Trade of China, 1934, (1935) i, 50; Chinese Customs Import Tariff (Shanghai: North-China Daily News and Herald, 1934), 14; Guangdongsheng zhengfu gongbao [Guangdong Government Gazette], no. 236 (30 September 1933), 1; no. 328 (20 April 1936), 164; no. 330 (10 May 1936), 54; no. 333 (10 June 1936), 76; no. 335 (June 20, 1936), 147; Report for 1-15 June 1936, 1, China Maritime Customs Archive (MCA) 679/32416; letter from Guangzhou to Shanghai, 22 September 1936, 2, MCA 679/32396.

purchasing rice from other provinces and by increasing production within Guangdong. Describing a process of deliberations in the government of Guangdong over the question of taxes on imported grain, Guangdong’s commissioner of finance explained that the decision had been informed by research carried out under the provincial policy research office. Mentioning only one researcher by name, he referred to a report by Feng Rui that recommended measures to rescue provincial agriculture from the brink of collapse.28 A provincial press release similarly claimed that the rice-tax policy was part of a carefully researched program of protection for domestic agriculture. There too, Feng Rui’s was the only name mentioned; Feng received credit for formulating Guangdong’s plan to support agricultural revival through restrictions on grain imports.29 Feng Rui’s publications during 1933 reported his research on the issue of provincial grain supplies. Early in the year, for instance, he contributed to discussion of the possibilities of supplying Guangdong’s rice markets with grain from other provinces. Based on his observations in Guangxi the previous fall, Feng described the prospects of shipping rice from the neighbouring province to provide a substitute for imported rice. He had visited Guangxi during the

Guangdong’s “Benefit Agriculture” Import Taxes 77

fall of 1932 in the company of his Lingnan University colleague George Weidman Groff. According to Groff, they travelled “in the heart of Guangxi” for about ten weeks.30 Feng then composed a report analyzing Guangxi’s potential to supply Guangdong’s consumption needs through a program of expanded rice cultivation and road-building.31 Like senior leaders in the Southwest, Feng Rui directed criticism against the central government’s Ministry of Finance while discussing grain policies. In another article, he charged Song Ziwen personally with promoting foreign agricultural commodity sales in China, in a “large-scale official marketing effort on behalf of foreigners” and referred to rumours that Nanjing was at the same time establishing an arrangement whereby Cuba would supply large quantities of sugar to be processed in China. Feng warned that “reconstruction” of this sort was very dangerous. Nanjing’s measures would lead to national disaster by throwing 80 percent of the population off the land. The rural economy had been severely damaged by the dumping of foreign commodities, causing droves of farmers to abandon their fields. To recover the national spirit (qi), it was essential to regain national self-sufficiency in every product supplied as raw material to domestic industries. Feng Rui proposed a plan to boost agricultural output by providing improved equipment and cash to help farmers increase their productivity. He also advocated the use of “surplus labour” to open up empty lands to help restore the national economy’s productive strength in grain and other daily consumption goods: “We must have a complete program, on the one hand opposing the American loan, on the other hand ensuring full protection for agricultural rehabilitation in Guangdong.”32 Feng Rui also began in early 1933 to outline specific measures for reducing Guangdong’s reliance on imported food supplies. In another published discussion, he recommended a three-year plan of staged reductions of imports. During the first year, he proposed, Guangdong would impose a 30 percent ad valorem duty on rice imports into Guangdong, together with appropriate taxes on other imported farm products. Acknowledging that the costs of these levies would be borne by the province’s commercial interests and urban residents, Feng declared that protection from low-cost imports would be certain to give the remaining “90 percent of the population” a new opportunity to increase production. During the second year of the three-year program, the provincial duty on imported rice would be increased to 50 percent, further reducing the “dumping” of foreign-grown grains. In response to higher prices, Guangdong’s farmers would expand the production of staple grains to fill the gap. In the third year of the program, Feng predicted, grain imports into Guangdong would cease completely under a 100 percent tax as the province met its food-supply needs entirely with grain grown in China.33

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Predicting in his reports that it would be possible to eliminate Guangdong’s grain-supply deficit through taxation and attention to the needs of farmers, Feng Rui turned to crop-improvement measures after the provincial rice-import tax was instituted. His three-year plan for expanding the production of paddy rice in Guangdong through crop-improvement efforts, loans to farmers, and the development of irrigation infrastructure was formally adopted by the provincial government on 16 October 1933.34 Also in October, a provincial grain regulation commission was established to deal with the “urgent grain-supply situation,” with five members including Feng Rui.35 The commission claimed to represent Guangzhou’s thirty-odd rice-trading firms, two rice-milling enterprises, and seven hundred grain-retailing operations and described its duties as the administration of the storage, transportation, and inspection of grain supplies; disbursement of investment funds to villages; control of rice-wine distilleries; expansion of cultivated land and irrigation works; production planning, and the collection of statistics on grain supplies.36 To support provincial efforts to expand grain production, Chen Jitang approved an allocation of G$5 million from the tax on imported agricultural commodities. Feng Rui was given the responsibility of drawing up a plan of financial and technical assistance to the farmers of Guangdong for the implementation of this program. A draft proposal was prepared in the Bureau of Agriculture and Forestry and presented to the province’s policy research committee for approval in August 1934. This plan featured the establishment of two financial institutions to handle the investment in agriculture in Guangdong – an Irrigation and Reclamation Banking Corporation and an Agricultural and Industrial Bank. The commitment of provincial tax revenue would create capital of G$3 million for the first bank and $1.4 million for the second. Through an issue of G$3 million in provincial bonds, private investors would provide the second part of the planned capital of the Irrigation and Reclamation Banking Corporation.37 It became one of Feng Rui’s responsibilities to promote sales of these bonds during his visits to Shanghai and Nanjing.38 The three-year plan for the expansion of grain production in Guangdong, which Feng Rui helped to prepare, was presented at a national conference of eight major rice-trading provinces convened by Chiang Kaishek in Nanchang on 22 October 1933. It is thus possible that Chiang heard about Feng Rui for the first time in October 1933. Perhaps delegates from Guangdong referred to Feng’s expertise and his planning in defence of a provincial policy that was difficult for central leaders to accept. For the Nanjing government, it was a serious problem that Guangdong, by far the leading rice-importing province, refused to follow the national policy on rice tariffs.

Guangdong’s “Benefit Agriculture” Import Taxes 79

Zou Minbang, chairman of Guangzhou’s Chamber of Commerce, led a fiveman delegation from Guangdong to attend the conference at Nanchang.39 Newspapers reported that agenda items at the meeting included measures to encourage interprovincial grain shipments with the help of subsidies provided from allocations to provinces of part of the proceeds of the cotton and wheat loans offered by the United States.40 The timing suggests, however, that Chiang Kaishek summoned provincial delegates to Nanchang to resolve a divergence in taxation policies that posed a threat to national finances. The value of tariff duties owing but not paid to the central government on the trade of Guangdong was significant given the importance of customs revenue in the national budget. Customs collections accounted for about half of Nanjing’s total annual revenue in 1933.41 Moreover, the collection of import duties by provincial authorities might affect China’s international credit-worthiness. The problem of fiscal separatism in Guangdong was not resolved at the conference in Nanchang. Provincial leaders did not bring Guangdong’s graintaxation measures into line with national policy. For eighteen months, Guangdong’s rice-import tax rate remained substantially lower than Nanjing’s tariff, before rising to a level substantially above the national tariff in 1935. In 1936, however, the province began to institute reductions in the tax rate. Not only did Guangdong impose levies on grain imports at rates of its own choosing, but the province also refused to collect its tax on foreign rice even as a nominally national tax. A year after the provincial tax measures came into effect, the central government offered a major concession, asking the Guangdong government to abolish its special taxes on rice and other agriculture-related imports in exchange for allocation to the provincial treasury of all tariff revenue collected on imported grain by Customs offices in Guangdong. The national rice tariff would be assessed by Customs at a carefully determined rate corresponding to the taxes that had been levied in Guangdong’s provincial currency. Nonetheless, the provincial government rejected the proposal. The official reply to Nanjing’s overture provided the following justification: “The Customs rate is fixed, whereas the local rate is elastic and may be adjusted from time to time to meet local conditions.”42 Ou Fangpu, Guangdong’s commissioner of finance, was asked to travel north to discuss the issue with Kong Xiangxi, recently appointed to replace Song Ziwen as minister of finance, and with Chiang Kaishek and other central officials.43 On the eve of his visit to Nanjing in December 1934, Ou Fangpu visited the French consul general in Guangzhou, seeking to purchase a large quantity of Vietnamese rice on credit. As security, he offered Guangdong’s tax on kerosene, worth G$5 million annually.44 Evidently, the local control of rice imports was

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too important in Guangdong’s finances to relinquish to Nanjing. Access to credit depended on the local control of revenue. Moreover, Guangdong’s official position, that “the local rate is elastic and may be adjusted from time to time to meet local conditions,” suggests that the selective imposition of the tax was an important reason that Guangdong’s policy preference for an independent rice-import tax was difficult for Nanjing to accept. In announcements about the rice-tax measures, provincial spokesmen referred to rural economic problems. The province’s new levy on rice imports was imposed under the title of “special taxes to benefit agriculture” (linong zhuanshui). Although rice imported from Southeast Asia was the main target of the provincial policy, several other items were also covered by the measures, including soybean cake (widely used as a fertilizer), chemical fertilizers, tobacco and cigarettes, and vegetable oil. The full name in Chinese for the tax measures, meaning “Provisional taxation of agricultural commodities brought by ship,” indicated that the duties were imposed on extraprovincial trade as well as on foreign trade.45 Shipments from other parts of China, as well as from the Japanese-controlled northeast (Guangdong’s main supplier of soy products) and from overseas, were subject to the taxes. As noted in Chapter 2, a new Agricultural Commodities Tax Bureau was established to collect the duties, which contributed to some extent to the budget of the provincial Bureau of Agriculture and Forestry. The new bureau established branch offices in Guangdong’s major cities and in the most densely populated counties of the province.46 Feng Rui discussed the scheme for rice-import reduction in conversation with Donald Dunham in 1935. The purpose of the provincial rice-import tax, he explained, was to stabilize consumption and make clear a baseline to be used for the official regulation of grain supplies. Data on consumption in various localities and projections for the province as a whole would facilitate plans for a grain-storage system. Furthermore, Feng claimed, the construction of storage facilities would increase the incomes of rice farmers by making it possible to withhold bumper harvests from the market until prices improved. As a further justification for the rice tax, he identified provincial interior-transport costs as the main reason for Guangdong’s reliance on imported foodstuffs. Because transportation remained undeveloped, shipping costs to Guangzhou from many of the rice-producing parts of the province were greater than the costs of bringing grain all the way from Thailand and Vietnam.47 In his lecture at Lingnan University in May 1933, Feng made points about the need to expand grain production through provincial policies and also spelled out for students the justification for protection. He explained that in comparison with those of grain-exporting countries, the techniques and organizational

Guangdong’s “Benefit Agriculture” Import Taxes 81

Table 3.3 Rice production per hectare during the 1930s (100 kilograms) China

Japan

United States

18.9

34.2

23.2

Source: Kwei Chungshu, ed., The Chinese Year Book 1935-36 (Shanghai: Chinese Year Book Publishing Company and Commercial Press, 1935), 766.

forms used in agricultural production in China were undeveloped. A substantial import tariff was therefore necessary to protect rural China from the dumping of foreign agricultural commodities. The tariff rate should be carefully considered and its effects monitored. But, he predicted, it would no longer be necessary to import grain once idle resources had been mobilized for production thanks to the incentive of the price support. Rural labour was a significant underused resource, he argued. Guangdong’s peasants had become idle because the dumping of foreign agricultural products had destroyed their incentive to grow crops for sale. Another idle resource was China’s abundance of uncultivated land. These resources provided the means of achieving national self-sufficiency in foodstuffs. However, the villagers required assistance through the extension of technical knowledge and official encouragement to understand themselves as Chinese citizens.48 As seen in Chapter 2, efforts to increase grain production through basic research were already on the agenda in Guangdong’s Bureau of Agriculture and Forestry. In 1932 and 1933, Feng Rui supervised a crop-improvement program conducted on the outskirts of Guangzhou at experiment stations belonging to Lingnan College and the National Zhongshan University.49 The experimental development of improved strains of Guangdong’s finest paddy-rice varieties had been encouraging and led Feng to state in March 1933 that distribution to farmers of the superior seeds would boost Guangdong’s rice yields by 25 to 30 percent per mu.50 There was certainly significant potential for increased output of staple grains in China in 1933. Rice yields, for instance, were remarkably low compared to those of countries where crop-improvement programs had been established decades earlier (see Table 3.3). But Feng Rui’s assurance about the potential for rapid output growth in agriculture through tax measures and a program of crop improvement seems foolhardy. To call for provincial harvests larger in three years by the amount of grain annually imported into Guangdong, over 2 million metric tons in 1933, surely deserves the proverbial label of “pulling

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on sprouts to make them grow” (bamiao zhuzhang). However the accounts of Chen Zhaoyu and other contemporaries do not mention the fact that Feng Rui promoted measures that were based on the same principles as were the plans devised in Nanjing. Parallel efforts at the national level included plans to expand grain output through agricultural-research programs in conjunction with the new import tariffs. In Nanjing a centrally appointed committee for rural rehabilitation launched a program of research and extension similar to Guangdong’s rice crop-improvement program.51 Like Feng Rui’s crop-improvement program, the national-level effort also aimed at rapid results, and in Nanjing there were similar expectations about the potential for a new policy of taxation to cause market prices to shift upward. A plan for national self-sufficiency in grain was promoted by Chen Gongbo (1892-1946), who was responsible for China’s agricultural sector as Nanjing’s minister of industries.52 Like Feng Rui, Chen advocated a series of tariff increases designed to reduce and finally eliminate grain imports in stages. His plan envisaged achieving full national self-sufficiency in staple food supplies within ten years.53 Although Feng’s plan was more ambitious at first, he later deferred achievement of the goal of completely eliminating the importation of rice into Guangdong. In 1936, he stated that Guangdong’s imports of rice would have ended within three years.54 As Feng Rui expected, consumers and commercial interests opposed the provincial taxes on imported foodstuffs. Grain merchants’ urgent and organized protests during the fall of 1933 were reported frequently in the Chinese newspapers of Hong Kong, which was an entrepôt of the rice trade into China.55 Within China, only short news items announced the coming into effect of Guangdong’s separate import tax.56 Commentary in the English-language press, however, criticized Guangdong’s “benefit agriculture” taxes, skeptical of their intention to benefit Guangdong’s farmers rather than the provincial government.57 Feng Rui acknowledged to Donald Dunham that Guangdong’s policy of grain-import restriction had more than one purpose. As well as protecting the rice farmers of Guangdong, it served the provincial government’s revenue needs.58 As Chen Zhaoyu recalled, Feng was confident that the people and the government would both benefit from the provincial policy.59 Between the fall of 1934 and June 1936, Feng Rui travelled frequently to Nanjing to discuss Guangdong’s rice-import policies as well as to promote the provincial sugar industry.60 After assuming the responsibility to curtail Guangdong’s rice imports through an accelerated version of the minister of industries’ plan to achieve national self-sufficiency in a decade, Feng sought financing for the province’s programs of rural rehabilitation, including the expansion of sugarcane cultivation. As noted in Chapter 2, his trips to the capital and to Shanghai

Guangdong’s “Benefit Agriculture” Import Taxes 83

were fundraising missions in part. Another purpose was to present his province in favourable terms. Regarding rice imports into Guangdong, Feng Rui staked his reputation on efforts to reduce import volumes as a way to deflect criticism of Guangdong’s refusal to conform to national tariff policy. He represented the province’s position that the provincial import taxes were a temporary expedient. Before long, Guangdong’s separate taxation measures would lose all significance as Guangdong’s consumers turned to the domestic rice that would soon be available to replace imported supplies. According to Li Jiezhi, Chen Jitang supported Feng Rui in this role as his representative, considering Feng to have great insight in devising and presenting provincial policies.61 During the spring of 1936, Feng Rui continued to be involved in discussions of the rice-taxation issue. In April, resolution of the dispute seemed to be possible at last. Reiterating their position that Customs should be the only agency in Guangdong to collect duties on imports of rice and other agricultural commodities, Nanjing officials informed Guangdong that rice-tariff collections in Guangdong would initially be earmarked to buy up the N$5 million worth of Guangdong provincial bonds that had been placed with two national banks in Shanghai but had yet to be fully sold.62 In principle, the central government was willing to recognize Guangdong’s special needs, but the provincial government did not ratify the agreement. Newspapers announced a new agreement, but then reported a few days later that Guangdong considered collection of the rice-import tax to be a purely provincial affair. Furthermore, provincial authorities claimed that agricultural commodities other than rice were no longer being taxed in Guangdong’s major ports.63 When the dispute between Nanjing and Guangdong became an open confrontation less than six weeks later, the rice-tax issue remained unresolved. Guangdong’s Revenue Systems and National Tariffs A brief historical review will help to explain how Guangdong province was able to refuse to collect a national tariff, instead imposing taxes and collecting revenue following a separate taxation scheme. Guangdong’s characteristic methods of raising revenue were a continuation of established systems. From 1917 to 1926 Nationalist party leaders made Guangzhou their base and claimed national authority for their government, despite the fact that an internationally recognized national government continued to function in Beijing. As leader of the re-established Republic of China in Guangzhou, Sun Yatsen began to make claims on local tax revenue. After strengthening the military power of his government, Sun became a contender for the control of local tariff revenue. His declaration of intent to seize control of Customs collections at Guangzhou caused an international crisis in 1923. A show of British and American

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naval power deterred him from carrying out the plan.64 Under Sun’s leadership, the Nationalists’ anticapitalist and anti-imperialist campaigns were directed with special hostility against the Maritime Customs Administration, an agency that could be considered “imperialist” because of its origins in treaty provisions imposed on China in the 1840s and 1860s and because foreigners continued to hold many of the highest positions in the hierarchy of the Customs service. As the Nationalists argued that tariff autonomy for China was long overdue, the issue became a major platform for the party, helping to rally supporters to the national revolutionary cause.65 The anti-imperialist campaign ended with international recognition of tariff autonomy for the Republic of China in 1928, and a new tariff schedule came into effect on 1 February 1929. The re-establishment of the Republic of China in Nanjing in 1927 was the result of efforts launched on the basis of fiscal separatism in Guangdong. Especially after 1923, the Republic of China in Guangzhou appropriated local tax revenue to meet military expenses. Gambling was licensed and taxed, regional transit taxes (lijin) on trade between Hong Kong and Guangzhou were increased, and national salt revenue was appropriated.66 In addition, on the eve of the National Revolutionary Army’s Northern Expedition, heavy surtaxes on the established national tariffs were imposed in Guangdong. As stated by Eugene Chen, acting minister of foreign affairs for the government in Guangzhou in October 1926, the surtaxes would be collected “on the consumption or the production of such articles as are subject of trade between [Guangdong and Guangxi] provinces and the other provinces of China and foreign countries.” Before the end of November 1926, all international ports in the two provinces were collecting these surtaxes through a bureau with branches in the ports.67 The trade of Guangdong and Guangxi was taxed by the Nationalist government as “national revenue.” Weary of supporting the Nationalist party through onerous taxes and continuous financial “contributions,” Guangdong’s elites were eventually able to buy off the party.68 In 1926, the year after Sun Yatsen’s death, the people of Guangzhou were generally relieved to see the departure of the National Revolutionary Army as it set forth on the Northern Expedition, a campaign to reunify the nation.69 The army was led by Chiang Kaishek, Sun’s successor as military leader of the party. The success of Chiang’s reunification campaign resulted in another, more permanent, re-establishment of the Republic of China in Nanjing in 1927. An irony of Chinese history is that the reunification effort launched from Guangzhou did not effectively include Guangdong. With the Northern Expedition, the Nationalist government had departed from Guangdong, and the leaders who remained behind became provincial-level officials. Although the Guangzhou-based government was thus in effect demoted, it continued to

Guangdong’s “Benefit Agriculture” Import Taxes 85

control “national” revenue. Revenue raised in Guangdong through exactions, bond issues, and loans had footed the bill for the Northern Expedition. Guangdong leaders could claim that the retention of tax revenue was essential to their survival and stability in Guangdong. The total contribution to the Northern Expedition was over G$22 million, and the loans raised in Guangdong were never repaid by Nanjing.70 Successive authorities in Guangdong had no choice but to assume responsibility for these debts in order to stay solvent. In a sense, Guangdong’s economy had been mortgaged to creditors for the purpose of achieving national unity. Thus the Guangdong government under Chen Jitang remitted no revenue to the centre except for pro rata shares of payments to service foreign loans secured on the revenue of the national salt monopoly.71 Between 1926 and Chen Jitang’s installation in 1931 as head of the military wing of a Guangzhou-based coalition of dissident Guomindang members, the total amount of debt associated with the Northern Expedition doubled. Between 1928 and 1936 payments of interest and principal on the debt consumed about half the Guangdong government’s total annual budget.72 On one occasion in 1934, for instance, Guangdong’s Department of Finance made a payment of G$200,000 to Japanese creditors who had insisted on repayment of a loan of about G$3 million made to Sun Yatsen’s government in 1924.73 Guangdong’s leaders often referred during this period to the debt that Nanjing owed to the people of the province. They claimed that their duties in the national interest were not fully paid for by appropriations out of “national revenue” collected in the province. Despite their patriotism, they could not go on paying such a heavy price. In his speech presenting the Guangdong Three-Year Plan in 1933, for instance, Chen Jitang referred to Guangdong as a vital rearguard area for the national revolution, declaring that as a consequence of this role Guangdong had not received adequate support for the local construction required to meet national revolutionary goals.74 In August 1935, Guangdong called for immediate repayment of the outstanding Northern Expedition debt, claiming that Nanjing owed G$30 million to the province.75 A few months later, Lin Yungai reiterated the demand at a meeting of the Central Executive Committee.76 Taxation practices in Guangdong under Chen Jitang were partly a continuation of the Qing lijin system of taxes on goods in transit, established as a provisional measure during the Taiping rebellion (1850-64). Lijin collection began in Guangdong in 1857, and, as in other provinces, the Guangdong system had particular local features.77 There had long been contention between the centre and the regions and between China and its trading partners over the slow pace of China’s transition away from the regional taxation of goods shipped from place to place toward a centralized system of national tariffs. A multilateral treaty on the abolition of lijin taxes signed in 1903 had not yet come into effect.

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The idea had been to double most import duties, raising the rates from 5 percent to 10 percent.78 Japan, in particular, had been reluctant to agree to replace lijin taxes with increased import tariffs, arguing for a continuation of low limits on tariffs. Negotiating for full autonomy, China did not accept tariff limitations on principle. There was concern among other foreign traders as well that even though China was implementing a new schedule of steep import tariffs, the lijin taxation might actually linger on.79 In Guangdong, it seemed, the system was particularly tenacious, long outliving the formal use of the term “lijin.” The “benefit agriculture” taxation measures, therefore, were objectionable to outsiders because they contradicted the spirit of international agreements as well as the principle of national fiscal unity. Consequences of the Rice-Import Tax Measures At both the national and provincial levels, registered imports of rice into China declined dramatically after the tariff policies of 1933 took effect. According to provincial records, the volume of Guangdong’s registered rice imports during 1934 was half the 1933 total.80 On 30 July 1935, a revision of the provincial agricultural commodities tax schedule came into effect, raising the provincial tax on imported rice to G$4 per dan.81 This increase resulted in a precipitous fallingoff of shipments of Southeast Asian rice into Guangdong from Hong Kong.82 The 1935 increase in the provincial import tax was followed through 1936 by a decline of registered rice imports to one-third the level of 1932. The provincial import tax was not the only cause of the decline in registered grain imports. Imports of foodstuffs into China as a whole decreased at the same time. Conditions of economic depression had led to a general decline in China’s imports, connected to the slumping demand for Chinese exports, the

Table 3.4 Registered rice imports into Guangdong, 1932-37 (million dan) Year

Volume

Year

Volume

1932 1933 1934

13.57 16.97 8.32

1935 1936 1937

8.16 4.54 5.06

Source: Guangdongsheng liangshi tiaojie weiyuanhui [Guangdong Grain Regulation Commission], ed., Guangdong liangshi wenti [Guangdong’s Grain Supply Problem] (Guangzhou: Guangdong liangshi tiaojie weiyuanhui, 1935), 6-8.

Guangdong’s “Benefit Agriculture” Import Taxes 87

most important of which had been silk and tea. Adding to China’s troubles, a general price deflation had been underway as the repercussions of the rising value of silver relative to gold, greatly exacerbated by the United States Silver Purchase Act of 1934, destabilized China’s silver-based currency and drained liquidity from the economy.83 The general deflation in China caused commodity prices to fall sharply during the mid-1930s. Imported rice, therefore, became less competitive in price with home-grown grain. The effects of deflation were felt by China’s most humble farmers. By the end of 1933, rice prices on the Guangzhou market had fallen from the mid-1932 peak of G$17.2 per dan to G$12 per dan.84 In 1934 the usual market price for rice in Guangdong’s towns was G$12, having fallen from G$20 the year before. A well-known social analyst observed that the low price of rice had painful effects on tenant farmers in the areas southwest of Guangzhou. As the value of their crops fell sharply, their rents remained unchanged. Wage rates also fell with food prices, reducing incomes for hired labourers.85 Feng Rui claimed that thanks to provincial policies, rice imports into Guangdong had been halved in two years, falling from G$100 million to $50 million in value.86 As seen in Table 3.4, official statistics recorded that the volume of rice imports also fell by half between 1933 and 1935. Chen Zhaoyu repeated this information, stating that by helping to cut rice imports in half, Feng Rui had saved G$50 million for the people of Guangdong that would otherwise have drained out of China. Recent works have also accepted Feng Rui’s claims.87 Yet it seems that official records do not tell the full story about rice supplies in Guangdong after 1933. It is difficult to reconcile reports of remarkably large and rapid decreases in imports with the region’s long history of reliance on imported supplies.88 According to Customs reports, moreover, China’s rice imports declined more in value, reflecting low prices, than they did in volume as a result of tax and tariff policies.89 It is also difficult to reconcile statements that provincial rice imports were halved in both volume and value with information about the significance of the revenue collected by provincial agents through the rice tax. The province’s steady collection of substantial revenue through the rice-tax measure indicates that grain production in Guangdong did not increase substantially in response to provincial protectionism. As grain prices declined, Guangdong’s farmers were discouraged from cultivating staple crops for sale.90 When the tax policy was first announced, grain dealers in Hong Kong and Guangzhou immediately halted shipments in protest. Their opposition and the prospect of higher prices for rice from Southeast Asia caused Guangdong’s Department of Finance to announce a temporary reduction in the tax.91 Even so, the “benefit agriculture” duties promised to yield about G$10 million annually

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in revenue for Guangdong.92 Therefore, it seems that increases in the rice-import tax resulted in increased revenue rather than a contraction of imports, suggesting that the demand for rice in Guangdong was inelastic. Total annual collections of taxes on imported rice together with the other extraprovincial agricultural commodities were approximately G$8 million during those first two years and about G$6 million in 1936.93 Like their counterparts in Nanjing, Guangdong’s leaders governed through a balance of forces, and the tax-farming establishment was a significant force in Guangdong. Exigency made the provincial government dependent on its tax-collecting agents. When in need of cash, the government would ask merchants to advance large sums by soliciting bids for tax-collection contracts. In return for advancing the funds, the creditors had the right to collect a certain tax or set of taxes for a fixed period of time.94 A system of “government supervision of merchant management” characterized Guangdong’s fiscal affairs under Chen Jitang. Subcontracting was common as well, with a three-level arrangement being the norm.95 About half of Guangdong’s total revenue, both in the national and provincial accounts, was collected by licensed merchants during the 1931-36 period.96 At first, collection of the provincial levy on imported rice was farmed out to one of Guangzhou’s leading merchants, Huo Zhiting (1877-1937).97 Huo operated an opium-distribution business and numerous gambling establishments on the southern side of Guangzhou. During the spring of 1934, Huo was officially required to close his opium dens and gambling operations in and around Guangzhou. The order resulted from sustained public criticism that the provincial government was in effect encouraging addiction to opium and gambling among the people by relying on such activities as important sources of revenue. In statements on the provincial three-year plan, Guangdong’s leaders had pledged to eliminate taxes on opium and gambling. Soon afterward, however, Huo again lent money to the Guangdong government. Following unsuccessful efforts to raise G$15 million in loans from banks in Hong Kong in 1934, the Guangdong government sought a third of the sum it required from Huo Zhiting and from the Nanyang Brothers Tobacco Company. The two creditors were offered six-month contracts for collecting the taxes on imported agricultural commodities.98 The provincial government then made a public announcement that it needed to raise G$5 million to stabilize the provincial currency, and Huo provided a loan of G$3.5 million on 7 April 1934.99 His casinos on the outskirts of Guangzhou remained open thereafter.100 Following established patterns, in 1934, Guangdong also borrowed G$10 million in two instalments from a consortium of foreign oil companies, including Standard Oil and Texas Oil, on the security of repayment out of the proceeds of the provincial tax on kerosene.

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Following these arrangements, Chinese kerosene dealers protested that small operations processing imported oil for use in heating and cooking were forced out of business by taxation favouring the big foreign firms.101 A closer look at the history of Guangdong’s special rice-taxation measures reveals their potential for manipulation. Rather than being used to reduce rice imports, the provincial taxes could be adjusted to stimulate imports. While other provinces were collecting the national tariff duties, Guangdong could increase its share of the national rice trade through temporary tax reductions, benefiting from others’ obedience to national regulations. In early 1936, for instance, the import duty was reduced from G$4 to G$2.50. Announcements referred to serious shortages of grain in the province as the cause of the adjustment.102 As prices rose, rice merchants demanded a reduction or complete abolition of the provincial tariff. They also urged the province to place an embargo on grain exports from Guangdong.103 The initial import-tax reduction was followed by two periods of temporary special rates, from 1 April to 21 May and from 2 June to 19 July, authorized by Chen Jitang during the last months of his rule. The last of the periods of special reduction was extended twice while Chen was preparing for his departure from the province. He authorized the reduction of the import-tax rate on milled rice, first to G$0.70 and then to G$0.20 per dan.104 These measures suggest that Chen Jitang was raising funds in preparation for departure by allowing a special influx of grain.105 The Guangdong government also entered into large contracts for rice imports on its own account. Early in 1935, for instance, the provincial commissioner of finance, Ou Fangpu, negotiated with dealers in Saigon, arranging to import large shipments of Vietnamese rice. The desired total was 5 million dan, deliverable to Guangzhou in monthly instalments. The guarantee offered was the total monthly collection of taxes on imported agricultural products, stated to be G$1,200,000.106 China’s imports of Vietnamese rice were substantially higher than in the previous year, according to reports.107 Meanwhile, smugglers successfully evaded the rice-import tax, supplying consumers in southern and southwestern Guangdong with Thai and Vietnamese rice. There were reports of rice smuggling through Macau, French Guangzhouwan (Zhanjiang), and Shantou in response to the provincial tariff. Guangdongsheng zhengfu gongbao (Guangdong Government Gazette) printed orders from the Agricultural Commodities Tax Bureau prohibiting the repackaging of Vietnamese rice for entry at Qinlian in southwestern Guangdong.108 In November 1935 the Department of Finance sent inspectors from its Antismuggling Bureau to Guangzhouwan.109 On 14 December the department announced that fines amounting to five times the value of the goods would be imposed on the smugglers of imported agricultural commodities.110

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Small ships sailing from Taiwan, known as “puff-puff boats,” brought significant quantities of rice to southern China. The grain originated in Southeast Asia and was purchased by the “puff-puff ” operators in Hong Kong for shipment to small ports along the coast of Guangdong, Fujian, and Zhejiang. These were often second shipments for the boats during their excursions; after disposing of their original cargoes of goods from Taiwan or Japan into China they would make stops in Hong Kong to buy Southeast Asian rice on the open market.111 The threat of an expansion of this business was an impetus for the imposition of the national grain-tariff policy. In a widely reported incident in October 1933, for instance, the Ningbo Merchants’ Guild of Shanghai warned of a shipment of 25,000 dan of “Japanese” rice on its way from coastal Zhejiang for dumping in Shanghai markets. “Traitorous merchants” (jianshang) had unscrupulously entered into contracts for the sale of this rice. Reportedly, a total of 1 million dan of Japanese rice would soon be dumped in China if these dealers were not checked.112 It proved difficult to curtail such business even after the tariffs came into effect. Moreover, it seemed that Guangdong’s rice-import tax policy encouraged an expansion of the unregistered trade in rice carried to China in Japanese ships. A few reports note the significance of the trade in imported rice re-shipped from Guangdong. Not surprisingly, it appears that provincial rice markets became a source of supply for other provinces when Southeast Asian rice was less expensive in Guangdong thanks to the gap between provincial taxes and national tariffs.113 Fiscal Reform Efforts in 1936 Song Ziliang (T.L. Soong, younger brother of Song Ziwen) arrived in Guangzhou on 22 July, together with Zou Lin, who was the deputy minister of finance, and nine other officials. Song Ziliang was appointed as a special commissioner of finance for Guangdong immediately after Chen Jitang’s departure on 18 July 1936, and his delegation was dispatched by the minister of finance to discuss finances with Yu Hanmou, Lin Yungai, and other officials in Guangdong.114 In a report to the minister of finance on 29 July, Zou Lin described Guangdong’s taxes on agricultural commodities as “harsh and illegal,” noting that with the exception of Southeast Asian rice, all the “agricultural” commodities subject to import taxes in Guangdong were actually domestic products.115 On the same day, Song Ziliang declared in public that Guangdong’s taxation policies had gravely mistreated the ordinary people, stirring up grassroots resentment. He ordered Guangdong to comply with national tariff regulations beginning on 28 July 1936. Song also told journalists that he was drafting a plan to eliminate the taxes on extraprovincial agricultural commodities.116 After the change of

Guangdong’s “Benefit Agriculture” Import Taxes 91

government in July, the newly appointed director of the Agricultural Commodities Tax Bureau reported his discovery that former members of the staff had absconded with several tens of thousands of dollars.117 There had already been uncertainty among dealers in peanuts, mixed grains, imported paper products and wax, lumber, and flour about whether the taxes on agricultural commodities should still be paid. Who would be collecting them? This had made them reluctant to arrange shipments, slowing trade and disrupting processing and distribution businesses.118 Nonetheless, less than two weeks after Song’s statement to the press, it was reported that the agricultural-import taxes could not yet be abolished. This news came after the central government’s Administrative Yuan referred the matter to the ministries of industries and finance for their investigation on 6 August. Since Chen Jitang’s departure from Guangdong, merchants in “all trades” in Guangdong and Guangdong natives doing business in Shanghai had been appealing for the abolition of Guangdong’s taxes on agricultural commodities, sending petitions to Nanjing and to Guangdong’s Department of Finance. Nevertheless, central and provincial authorities determined that the objectionable taxes would continue in effect for the time being.119 Eventually, the continuation, under new names, of the system of “benefit agriculture” import taxes was sanctioned by Chen Jitang’s successors. As the Foreign Agricultural Products Special Tax Bureau, the revenuecollection system that taxed rice, fertilizers, and other goods from overseas and from other parts of China continued to function through the end of 1936. As noted in Chapter 2, Guangdong’s Bureau of Agriculture and Forestry continued to be supported by a tax on imported fertilizers after Feng Rui’s death. The self-interest of Guangdong’s rulers might seem to be the real determinant of taxation policies during the 1930s. But a closer look at the situation suggests that frequent announcements of changes in provincial taxation policies during the 1930s did not correspond to significant new departures. It appears that Guangdong’s long-established systems of tax farming were difficult to reform. Perhaps this was because provincial business elites retained their control throughout the turbulent conditions and apparent crises of the 1920s and 1930s, despite efforts to dislodge them under Chen Jitang and despite the idealistic plans of officials in Nanjing for thorough fiscal modernization. But perhaps the officials were in fact making gains. Research on taxation in northern China has revealed that tax brokers were edged out by the bureaucratization of tax collection during the Republican period.120 If something similar were happening in Guangdong, it was perhaps not the public at large that was hostile to Feng Rui but the rice-trade interests. An anecdote about how he threatened the leader of the Guangzhou Grain Dealers’ Guild suggests that merchants saw Feng as a

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nuisance backed by Chen Jitang’s authority. Feng reportedly threatened the guild leader with retaliation if he did not comply with the new regulations, following which the merchant was indeed arrested.121 As the Guangdong government took over the provincial grain-import trade, Feng Rui appears to have become a well-known administrator. The grain merchants’ reminiscences suggest that he became unpopular at the same time. After the fall of Chen Jitang, the controversy over taxation on imported food supplies in Guangdong became even more heated as shortages worsened in the province. The reorganized government of Guangdong did not prove to be more popular with Guangzhou’s grain dealers than Chen’s had been. Before departing, as noted, Chen had reduced the grain-import tax to G$0.20 per dan. When Song Ziliang attempted to enforce the national tariff regulations in Guangdong, dealers responded by suspending their grain import business. For more than two months after Chen Jitang’s departure, there were no registered rice imports at all.122 Concerned about the prospect of rising prices, the new provincial government investigated the potential for importing large volumes of grain from Hunan.123 When the central government’s schedule for rice-import tariffs officially became effective in Guangdong in July 1936, grain dealers in Hong Kong and Guangzhou joined in opposition, calling general meetings and petitioning the government at the provincial and national levels. The grain merchants’ representatives claimed that the official tariff was thirteen times greater than the former provincial rice-import tax.124 After a few shipments of imported rice were detained on 29 July and the Grain Dealers’ Guild had unsuccessfully petitioned for their release at the customs house, the importers suspended business indefinitely.125 Apparently, they were expecting that their demands would eventually be heeded. On 7 August they protested that the tax had been imposed suddenly, with additional surtaxes increasing the total further, and declared a petition on behalf of the people of Guangdong.126 As rice prices continued to rise steeply on the day of Feng Rui’s arrest, Qunsheng bao announced that Nanjing authorities were working out measures of relief for the rice situation in Guangdong, encouraging merchants to consider carefully how the rice-tariffs policy was in China’s national interest.127 But there was no response from dealers even when the national tariff was cut in half at customs stations in Guangdong for another special period from 11 to 31 August 1936.128 Anxiety about rising food prices mounted as no fresh supplies of staple grains arrived for months. Provincial food supplies were an increasingly urgent concern for the Guangdong government between the summer of 1936 and the beginning of war a year later. As the “whole province” watched carefully to see what would happen to

Guangdong’s “Benefit Agriculture” Import Taxes 93

the rice tax, Song Ziliang had announced soon after his arrival in Guangdong that there would be no further delay in collection of the national rice tariff. He added that he had recommended to the Ministry of Finance in Nanjing that funds collected through proper levying, at last, of the national grain import tariffs should be transferred to the provincial treasury for use in measures of village relief as before. Like other officials, Song used rhetoric about the necessity of increases in the production of domestic rice given that China was a “country founded on agriculture” (yinong liguo), and also claimed that interregional trade would supply Guangdong’s needs.129 Efforts to supply Guangdong with grain from Hunan resulted in a large shipment in mid-September, with optimistic reports that Hunan could supply 7 million dan annually to Guangdong.130 However, this plan proved unrealistic.131 Turning to another neighbouring province, Guangdong’s government beseeched Guangxi to lift its embargo on the flow of grain outside the province to allow rice shipments to Guangdong. Meanwhile, the provincial government announced that arrangements were being made to raise G$5 million to establish a fund for the purchase of emergency food supplies.132 A few months later, Song Ziwen, the former minister of finance, led the organization of the South China Rice Trading Corporation, a new semi-official rice dealership. The corporation was inaugurated in Shanghai in March 1937.133 On behalf of the Bank of China, Song Ziwen was a leading shareholder, as was Sun Ke, representing the Bank of Guangdong. Wu Tiecheng, the mayor of Shanghai, and Huo Zhiting, Guangdong’s leading tax farmer, also held large shares. The corporation’s major purpose, according to Song’s inaugural address, was to reduce China’s dependency on imported rice through the adjustment of supply and demand. By purchasing large volumes of rice, it would also support and stabilize prices and would ensure that a standard quality of rice was available in the markets.134 The corporation entered into a contract with the management of the newly opened Guangzhou-Hankou Railway, which would transport rice cargoes northward and also establish milling facilities in Guangdong to process rice along its route.135 Although the stated plans of the South China Rice Trading Corporation did not explicitly mention the importation of rice, purchases of rice from Southeast Asia appear to have been its main business.136 In these activities, the Song brothers in effect merged southern financial resources with their own and appropriated the profit-making opportunities of the South China maritime frontier.137 However, Huo Zhiting’s membership in the ricetrading corporation is an indication that not all of Guangdong’s merchants were dispossessed. A news journal photograph published in December 1936 showed Song Ziwen and Huo together in Hong Kong, presumably meeting to negotiate mutually beneficial arrangements.138

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Rice and the Provincial Regime Change Earlier, Chen Jitang apparently used his ability to manipulate Guangdong’s rice markets to raise money in preparation for his departure in July 1936. At the end, Chen chartered a British steamship, loaded it with possessions, and sailed downriver to Hong Kong on the evening of 18 July.139 A few days ealier, Chen Jitang’s air force officers had deserted him in his expensively acquired fleet of fighter planes. At the beginning of July, Chiang Kaishek had offered to arrange transfers to central government posts for officials wishing to renounce the Southwest separatist movement and rejoin the nation.140 Chen departed with the military officers who remained loyal to him, and was also preceded by Lin Yungai and Liu Jiwen, the mayor of Guangzhou. All were giving up their posts in Guangdong. It is significant that Feng Rui was not in Guangzhou during the final days of Chen Jitang’s preparations for departure. Feng returned to Guangzhou from his last mission to Shanghai and Nanjing on 2 July 1936. On 13 July Feng told a journalist from Qunsheng bao that he would leave that afternoon on a trip to Hainan on instructions from Chairman Lin Yungai. Feng explained that Lin had made arrangements for him to travel to Hainan together with Gu Guifen and another of his Lingnan University colleagues. The team would conduct a survey of the island’s economy, with a view to gathering detailed information about the availability of sugarcane and other agricultural and forest products that might serve as raw materials to support Guangdong’s industrial development.141 Hainan has remained an undeveloped border area until recently. In those days, it was remote and inaccessible. Beyond the port city of Haikou, Feng Rui and his colleagues would have been out of touch with provincial affairs, unable to communicate by telegraph or telephone. A trip around the island and back following Lin Yungai’s instructions would take at least two weeks and might last more than a month. Although it is not clear exactly when Feng Rui returned, he certainly missed the main events in the change of government in Guangdong. On 13 July, the day of Lin’s instructions to Feng to travel to Hainan, Chiang Kaishek had issued his final formal request for Chen Jitang’s resignation by telegram. In effect, Chen had been relieved of his command. Marshal Chen was replaced by General Yu Hanmou, appointed as the top military commander in Guangdong on 12 July 1936. Although Lin Yungai had not yet resigned his post, he was willing to consider Chiang Kaishek’s offer to Guangdong officials of new appointments in the Nanjing government. After a brief return to his position in Guangdong, Lin Yungai travelled north to discuss matters with Chiang.

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Summary and Discussion Guangdong’s “benefit agriculture” tax collections were directed to purposes that did not match the rhetoric about rural rehabilitation that Feng Rui and other spokesmen used to describe the aims of the tax policy. The collection of taxes on imported grain was an important source of revenue for the provincial government, and its intervention in grain markets disrupted private trade and put grain merchants out of business. Feng Rui’s involvement as an agriculture expert as well as an apologist for revenue-collection measures that attracted critical attention appeared contradictory. There was certainly inconsistency in Feng Rui’s role as an agriculture expert who had helped to formulate policies leading to restricted food supplies and more expensive fertilizers for the farmers of Guangdong. The controversy associated with Guangdong’s taxation policies suggests that Feng Rui’s disgrace was related to this contradiction between his professed concern for the people and his association with unpopular exactions. After his death, observers expressed suspicion that Feng’s involvement in the rice-taxation scheme had brought him a share of the proceeds.142 According to Chen Zhaoyu, critics lacked an understanding of basic economics.143 Grain supplies imported to fill Guangdong’s perennial deficit in food production came under closer government regulation during the 1930s. Guangdong also taxed an assortment of other agricultural commodities from overseas, from the Japanese-ruled northeast, and from other parts of China. Feng Rui participated in intergovernmental negotiations regarding Guangdong’s rice tax and other revenue, playing an increasingly important role as time went on. Feng was a bureaucratic broker representing Chen Jitang and Guangdong’s other top leaders in dozens of meetings in Nanjing and Shanghai over a three-year period. In this role, there was scope for initiative on his part. Without taking initiative, in fact, he could not have performed the broker’s role. At some point during the three-year period, Feng Rui possibly offended Chiang Kaishek by requesting a concession too boldly or by appearing to misrepresent a central official’s statement after returning to Guangzhou. Or perhaps the offence, if there was one, was over-confidence on Feng’s part about the benefits to agriculture of provincial taxes on agricultural imports. Certainly, Feng’s role as a spokesman defending Guangdong’s programs made him a target for criticism. He was a symbol of Nanjing’s difficulties in implementing the national policy on grain-import tariffs in the province where grain imports were most significant. Instead of conforming to national policy aimed at restricting grain imports, Guangdong imposed and maintained a lucrative tax measure. The provincial Bureau of Agriculture and Forestry was supported

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by allocations from taxes collected on imported agricultural commodities. Moreover, while claiming that rice imports had been greatly reduced since the import-restriction policies took effect in 1933, provincial authorities failed to prevent the diversion of the rice-import trade into illicit channels. Nonetheless, Guangdong’s rice-taxation practices proved difficult to change after the departure of Chen Jitang and the execution of Feng Rui. The following chapters review other aspects of Feng’s official responsibilities. In his other activities as well, Feng’s efforts to promote China’s economic construction became difficult to distinguish from provincial revenue-collection mechanisms. Moreover, the connections in his career between rice and sugar demonstrate that the revenue mechanisms tended to be interlocking.

4 White Sugar: Global Business and Provincial Enterprises

Sugar milling assumed a prominent position during the first year of Guangdong’s wide-ranging plan for provincial reconstruction and became the main focus of the provincial program of industrial construction. Despite the fact that sugar industry development was not a feature of the three-year plan as it was first launched in January 1933, provincial decision-makers became convinced that investment in sugar milling would yield good returns in a short period of time. Spokesmen stated that these profits would be used as investment funds for the construction and support of the province’s other new industries.1 Thus, in 1933 Guangdong began to build from scratch the capacity to produce high grades of white sugar. When construction of the new provincial mills was completed in 1937, their total sugarcane-crushing capacity was 6,250 tons a day.2 This chapter discusses first why it made sense to invest in sugar milling on such a large scale. It then presents an account of how the decision was implemented, with a focus on the role of Feng Rui, coordinator of the provincial Sugar Industry Revival program. As an advocate, interpreter, planner, and mediator, Feng Rui was an active participant in many aspects of the provincial sugar venture. Without someone playing his coordinating role, Guangdong’s sugar-mill construction program might have been much smaller in scale. Feng Rui’s importance in the process of transferring advanced manufacturing technology to green-field sites in southern China exemplifies the broker’s role in organizational life. Thanks to his social experience, language skills, and official status, he was in a position to create valuable opportunities by linking actors who would not otherwise have been in communication. Possessing an intrepid personality as well, he activated his position, making it a base for brokerage.3 Responsible for coordinating many parts of the provincial program of industrial construction, Feng performed a variety of roles. Some were public, adding to the public exposure he gained by participating in controversial measures, including the adjustment of taxes on agricultural commodities entering Guangdong’s ports. From 1933 to 1936, he outlined proposals, wrote reports, and spoke to journalists about Guangdong’s Sugar Industry Revival Plan. Behind the scenes, meanwhile, Feng was a point of contact between provincial officials and foreign firms seeking to sell and

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Table 4.1 Construction of sugar mills in Guangdong Location

Contracting parties

Xinzao Huizhou Shitou Jieyang Shunde Dongguan

HIW and DRb HIW and MRBc Skoda and DR HIW and DR Skoda and DR Skoda and MRB

Completion

Crushing capacity a

1934 1934 1935 1935 1936 1937

750 1,000 1,000 500 1,000 1,000

a Tons per day b Department of Reconstruction c Military Reclamation Bureau Sources: Feng Rui, “Fuxingzhong zhi Guangdong zhetang shiye” [The Guangdong sugar industry in revival], Zhongguo jianshe [China reconstruction] 13.1 (January 1936), 91; [Xian Zi’en, “Ban tangchang jingguo jiqi zhenxiang” [The real situation in the sugar mill projects], in Nantian suiyue: Chen Jitang zhu Yue shiqi jianwen shilu [Era of the Southern Empire: Eyewitness historical accounts of the period of Chen Jitang’s rule in Guangdong], ed. Guangzhoushi zhengxie wenshi ziliao yanjiu weiyuanhui [Committee for historical research materials of the Guangzhou branch of the Chinese People’s Political Consultative Conference], 248 (Guangzhou: Guangdong renmin chubanshe, 1987); Xie Yingming, “Shengying gongye gaikuang jishi” [Record of Conditions in the Provincial Industries], in Ibid, 220.

install up-to-date sugar-milling equipment in China. His efforts helped to establish and implement a number of important agreements. In the first stage of the introduction of modern sugar milling technology to Guangdong and to China, a set of six large sugar mills were built in Guangdong between 1933 and 1936. Six deals were struck in which four parties were involved. On the sellers’ side, two separate firms won contracts, each signing three agreements with provincial officials. The purchasing parties were Guangdong’s Department of Reconstruction, which entered into two agreements with each of the firms, and the Military Reclamation Bureau of the Guangdong First Army, which signed one contract with each firm. Thus Honolulu Iron Works (HIW) of the United States and Skoda Works of Czechoslovakia won contracts to supply sugar-milling equipment and arrange construction of the mills. The firms also provided advisory service on raw material supplies, management of the mills, and marketing (see Table 4.1 and Figure 3). Chinese Sugar Imports and Tariffs As the prices of major commodities in world trade hurtled downward with the onset of Depression-era conditions in 1929, white sugar suffered a particularly precipitous decline in sales. Yet Guangdong chose to invest in manufacturing a commodity at a moment when even the world’s lowest-cost producers were

Figure 3

Map of Guangdong showing the locations of the sugar mills built, 1933-37. Prepared by Chen Weiqing of the Institute of

Historical Geography, Fudan University, Shanghai, and updated by Eric Leinberger.

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experiencing difficulties selling at prices above their production costs. In order to better understand the rationale behind this newcomer’s entry into the sugar trade, a brief review of international and local conditions is required. The provincial plan made sense because of the major producers’ response to the sharp price decline, the economic protectionist trend in world trade, and the prospect of increased consumption of white sugar in China. As noted in Chapter 2, the cultivation and processing of sugarcane has a long history in China. In Guangdong, farmers who cultivated sugarcane were connected to world markets – they exported part of their crop raw and turned the rest into sugar products with the help of skillful mill operators and networks of traders in sugarcane and sugar.4 Sugar-processing expertise was particularly well developed in the sugarcane-cultivation region near Shantou in northeastern Guangdong. After about 1910, however, Shantou’s once-enormous exports of sugarcane had been reduced to a fraction of their former volume. Producers could compete outside the area only in a specialty market for fresh sugarcane.5 Once a major export commodity, sugar became China’s second most valuable import item during the 1920s. According to Feng Rui, Guangdong’s position in the sugar trade was reversed. The total value of the province’s exports of sugar in the past was approximately equal to the current expenditure on imported white sugar, about G$30 million annually.6 In Depression-era conditions, the import volume increased with even lower sugar prices. Sugar sales at discount prices were common during the 1930s in various markets around the world. Producers burdened with oversupply occasionally sold below production costs to cut their losses. “Distressed” sugar from distant Cuba, for instance, reached southern China in 1931.7 Feng Rui noted in one of his articles that during the early 1930s, foreign sugar had been sold in China at the price of HK$6 per dan.8 This price was lower than production costs anywhere in the world at the time. Such market conditions were exacerbated by traders attempting to take advantage of instability in the system of international payments. Depending on the currencies used in their transactions and whether exchange rates were in their favour, savvy dealers could sometimes profit even when selling goods below their marginal cost.9 In response to these conditions, China’s central government instituted tariff increases on sugar and other imported commodities.Before China won tariff autonomy, import tariffs on sugar were restricted to 5 percent or less, which was very low compared to the tariff barriers restricting access to other large world markets.10 In the first independent tariff schedule of 1929, modest duties were imposed on sugar imports. In a series of increases from 1930 to 1934, the tariff rates for white sugar rose steeply. The tariff on the highest grades of milled or refined sugar (polarized at 98 degrees or higher), ended up at a level ten times

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Table 4.2 Tariffs on imports of milled and refined sugar ($N per dan)1 Tariff promulgation date

1928

1930

19332

Minimum rate (lower grades) Maximum rate (higher grades, centrifugal and refined) Number of grades of sugar specified3

0.89 1.25 2

3.66 5.60 3

3.80 5.80 14

Notes: 1 Varying currencies and units of weight in the original schedules have been converted for the purpose of comparison. 2 The tariff regulations came into effect on 1 February 1929, 1 January 1931, and 22 May 1933 respectively. 3 The 1928 and 1939 tariffs distinguished between higher and lower grades of centrifugal sugar in the “Dutch standard” system. The 1933 tariff distinguished 14 levels of “polarization” (a technique for measuring sucrose content). Sources: Customs Import Tariff of the Republic of China, Promulgated by the National Government on 7 December 1928 (Shanghai, Statistical Department of the Inspectorate General of Customs, 1929), 27; Customs Import Tariff of the Republic of China, 1933 (Shanghai, Statistical Department of the Inspectorate General of Customs, 1933), 33-34; Chinese Customs Import Tariff (Shanghai: North-China Daily News and Herald, 1933), 1, 19-20; H.G.W. Woodhead, ed., The China Year Book, 1931 (Shanghai: North-China Daily News and Herald, 1931), 683.

the rate of 1929, which more than doubled the price of sugar in Chinese markets (see Table 4.2). The largest increase in the series in 1931 boosted the tariff on superior white sugar, as denoted in the currency of Guangdong, from G$2 per dan to G$5.60 per dan.11 Originally intended as a revenue-raising device, the central government’s tariff policy provided protection for Guangdong’s import-substitution sugar industry program. The program was thus partly a response to national policy, although central officials had not intended the policy to serve as protection for domestic industry. When the national sugar-tariff increases came into effect, there were as yet no mills in China producing the fine grades of sugar known as “plantation white” that were imported in increasing volumes at the time.12 An international collective action to stabilize sugar prices also encouraged Guangdong to invest in sugar milling. With the contraction of world trade following the stock market crash of 1929 in the United States, sugar producers faced a sudden slump in demand and prices for sugar and found themselves holding large supplies of unsold stocks. The onset of the worldwide economic depression in 1929 caused commodity markets to contract as consumer spending was curtailed. Sugar in particular was affected by tariff measures imposed by major importers, which resulted in a glut of supply that flooded world markets. Cuban sugar producers, for example, lost a large share of the US market,

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which led to a reduction in Cuba’s total output from 4.1 million tons in 1929 to 1.6 million tons in 1933 and strongly affected prices everywhere else.13 In response, major sugar suppliers in international markets convened and agreed to limit their production. Representatives of seven major sugar-producing nations, which together produced about half of the total world output at the time, met in Brussels to sign the Chadbourne Agreement in 1931. This agreement helped to stabilize prices and significantly reduced the quantity of sugar held in warehouses around the world. However, it also created new problems. Price stabilization, together with the growing trend of tariff protectionism, made the sugar industry attractive to new producers. Before long, the gains of the Chadbourne Agreement were offset by the response to firmer prices of nonparticipant countries, whose increased output began to fill the gap. By 1934 the seven Chadbourne signatories were producing only one-quarter of the world’s output, and total production rose sharply until 1940.14 Thus the reduced output of producers with the world’s lowest production costs made way for new entrants to the business, whose production costs were higher than those of their predecessors.15 Though many firms reduced their output, and a number of nations began to shift away from sugar production, as a whole, the world responded to a massive over-supply of sugar by producing more sugar. Guangdong was one of several new entrants to the modern sugar-milling business after 1931. Remarkably, the province began to plan and carry out an import-substitution sugar industry program just when the price of this commodity was reaching its lowest point.16 Given plummeting prices, it does not appear to have been a wise decision to shift resources into sugar production during the 1930-36 period. But the Guangdong government was not alone in its entry into sugar milling; its response was echoed in many other parts of the world. As the problem of overstocking was reduced, and tariffs were increased, sugar prices began to rise in various markets. In response, not only did governments act to protect local sugar industries, but in some countries, such as in Britain and in India, officials shifted resources to create “essentially new industries.”17 As China’s sugar markets gained the protection of a substantial import tariff along with a buffer against low-cost competitors and unsold stocks overseas thanks to the price stability won by the parties to the Chadbourne Agreement, it proved to be rational at the regional level to invest in sugar milling. In Guangdong, provincial decision-makers and the visiting representatives of international business concerns were also encouraged by another consideration, the prospect of an expanding domestic market for manufactured sugar. It was difficult to determine how much sugar the Chinese were producing and eating during the 1930s. The best data at the time measured import volumes, which were used as a basis for estimating how much sugar was milled and

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Table 4.3 Comparative consumption of white sugar, 1933 (average per capita, kilograms per year) Nation or region China United States Japan and Taiwan Europe

Volume 2.2 51.0 9.5 16.0

Source: Feng Rui, “Guangdong tangye shiye sannian jihua” [Threeyear plan for the Guangdong sugar industry], Guangdong jianshe [Reconstruction in Guangdong] 2.2 (March 1934): 84.

consumed domestically. Guesswork resulted in widely varying estimates of consumption per capita and in the aggregate. According to the estimate of an engineer associated with HIW, China as a whole was importing about 1 million tons of “plantation white” sugar annually, which accounted for about half the country’s total consumption of sugar, with muscovado sugar providing the other half.18 A more cautious estimate of the same year, however, was that China’s consumption of imported and domestically milled sugar together totalled 1 million tons.19 Thus the view that Chinese markets had been absorbing more sugar in recent years and could be expected to grow was based mainly on import data. Judging from the Customs statistics record, low prices alone did not explain why consumers were turning to imported sugar – there were indications of increase for reasons other than low prices. According to Feng Rui, the fact that 98 percent of sugar imports into Guangdong during 1928 to 1930 consisted of fine grades of white table sugar indicated that consumers were replacing “local sugar” (tutang) with imported white sugar. He believed that they were displaying a preference for the more “hygienic” white sugar.20 As noted in Chapter 2, Feng predicted in his doctoral dissertation that the per-capita consumption of sugar in China would gradually rise to levels typical in industrialized countries, and that reliance on imports to meet this demand would worsen China’s deficit in international trade.21 Referring to the rising demand for white sugar in Guangdong in 1933, he stated that domestic markets could certainly absorb the output of the province’s sugar-milling program, and, furthermore, that modern milling should be established in Guangdong so that national markets could be liberated from foreign control.22 At the same moment that Feng Rui began to promote national self-sufficiency in sugar production, established producers of low-cost sugar began eyeing the same markets. If Chinese consumers were indeed buying more white sugar and

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this trend were to continue, supplying to China was thought to be the producers’ best hope of surviving the Depression. Thus Japanese, Dutch, British, and American sugar millers, refinery owners, and equipment salesmen studied rough estimates of sugar consumption in China and considered how they could potentially increase their shares of the lucrative Chinese market. Another result of the low sugar prices and production contractions following the Chadbourne Agreement of 1931 was that inexpensive equipment was available to those who wished to expand production. The period of economic depression featured the transfer of sugar-processing technology, as production cuts by the most efficient sugar producers led to the resale of equipment in developing sugar regions. New sugar mills were built in India, for example, and equipped with used equipment from Java.23 Not only was sugar-processing equipment being sold on good terms during the 1930s, but factory construction professionals in general were making extra efforts to stay in business. As suppliers of sugar-milling equipment competed vigorously to make sales on credit to the Guangdong government, Feng Rui, with his intrepid personality, language skills, and willingness to work long hours, became an indispensable middleman, linking his superiors in the Guangdong government to the sales representatives of international equipment suppliers. When construction of the mills was underway, he continued to be closely involved as an interpreter and mediator between technical personnel from overseas and provincial agencies. It was through prolonged negotiations with Feng Rui and several other key representatives of the Guangdong government and army that Skoda and Honolulu Iron Works were awarded contracts to build and equip large up-to-date sugar factories in Guangdong. Each firm equipped and constructed three sugar mills.24 In accordance with common practice in the competitive millingequipment market, the firms also provided financing, supplying the equipment on medium-term credit.25 Sugar Milling in the Philippines: A Model for Guangdong By his own account, as well that of Xian Zi’en, it was Feng Rui who first suggested investment in sugar milling to Chen Jitang and persuaded Chen to act quickly. Xian stated that Feng proposed a three-year plan for sugar to the provincial leader in 1933 after he had made a trip to the Philippines to take part in a conference of Far Eastern agricultural scientists.26 Chen Zhaoyu’s account confirms this. Chen also stated that Feng Rui began to promote the sugar industry in Guangdong before he attended the conference, and that he had regarded the invitation to visit Manila as an opportunity to gain support and attract investment.27 As seen in Chapter 2, however, Lin Yungai was enthusiastic about sugar milling even before Feng Rui devoted his attention to sugar. Perhaps

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Lin asked Feng to help him persuade Chen Jitang. In any case, other records confirm Xian’s impression that Feng Rui’s visit to the Philippines was an important step in the development of sugar milling in Guangdong. 28 As seen in Chapter 2, in 1932 Feng Rui commissioned a survey of Guangdong’s soil from a specialist who had recommended against investment in large-scale milling operations. It seems that Feng at first intended to follow the expert’s advice but changed his position on the industry’s potential scale during his visit to the Philippines. Like other observers concerned with the decline of China’s sugar industry since 1900, Feng Rui had argued that the problem could be tackled using domestic resources.29 Originally, he had envisioned a small-scale program for Guangdong’s sugar industry. As Feng explained in a lecture to students at the Guangzhou Industrial Vocational School, On the question of sugar ... unfortunately our government has not appropriated funds for this industry ... therefore, I advocate that at present China does not need to build sugar mills on an extremely large scale. Large factories require large investments. In any case a large factory built for [G]$10 million might not be as effective as a small mill established in each sugarcane area. We are capable of constructing small cooperative sugar mills and hiring vocational school graduates as assistant managers. We will thus be able to save labour and will have no need to purchase imported equipment.30

Self-reliance and private initiative could help to restore Chinese industry, Feng argued. To return to self-sufficiency in white sugar, China needed tariff protection and dozens of medium-size, modern sugar mills.31 In an article published before his visit to the Philippines, Feng Rui wrote that a total of twenty-five medium-size sugar mills would supply Guangdong’s needs. The first mill should be centrally located near Guangzhou, in either the Dongguan or Panyu districts, while the best location for the second would be in the Chaozhou region in the northeast. The third mill should be built in southern Guangdong, at a military colonization centre in the Xuwen district – a site where production could later be greatly expanded. At this stage, Feng referred to the sugar industry of the Philippines as a model of what Guangdong could do given a similar climate and a larger land area available for sugar cultivation. As proof of Guangdong’s potential, he pointed to the impressive growth of the sugar industry in the Philippines, which he claimed had a total output valued at G$400 million annually.32 Following his visit to the Philippines, Feng Rui soon changed his position on the prospects for building small and medium-sized sugar mills in Guangdong. His published statements explained Guangdong’s decision to invest in a few

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large sugar mills in the style of the “sugar centrals” operating in the Philippines rather than dozens of medium-sized mills. His explanation was that Chinese consumers were displaying a preference for imported white sugar over the offwhite domestic product. The gap in quality between native sugar and imported sugar was largely due to the fact that China lagged behind other regions in the area of crop improvement. The sugarcane varieties under cultivation in Guangdong at the time were not suitable for processing by modern methods. Therefore, it was necessary to establish an extensive crop-improvement program in order to propagate improved varieties across the province. Moreover, it was necessary to process the sugarcane using up-to-date methods and advanced technology. The required expertise and technology could only be imported, he argued, and the large investments needed were beyond the capacity of the province’s private entrepreneurs. The Guangdong government, therefore, was making a major commitment to establish large sugar mills equipped with imported machinery.33 Taking the lead to establish and manage the mills, the government had drawn up plans for processing the sugarcane that its mills would purchase from farmers during the sugarcane-harvest season. During the off-season, the mills were to be occupied by processing raw sugar into white sugar. The presence of the mills, Feng Rui predicted, would raise the price of sugarcane for cultivators so that both farmers and the government would profit.34 We cannot be sure how convinced Feng Rui became during his visit to the Philippines that Guangdong should choose to establish large-scale mills rather than numerous small operations and that government funds rather than private investment should be mobilized to modernize sugar milling in the province. To some extent, at least, the program took the shape it did because the equipment and plans for milling on a large scale were available on attractive terms. Despite the role that he played in the negotiations, and despite the fact that he was the only trained agriculturalist involved, Feng Rui did not have a decisive say in determining the overall shape of Guangdong’s sugar industry program. Investments were directed more in accordance, on the Guangdong side, with an alliance between Lin Yungai and a group of military leaders and, on the other side, with the interests of the equipment salesmen in selling packages designed for sugar plantation economies in Hawaii, Java, and the Philippines. Reflecting the involvement of military men, there were occasional references to the need to employ demobilized soldiers in explanations of the goals of the provincial sugar program. Chen Jitang reportedly explained to sugar mill salesmen that he wished to reduce the size of his army by finding the soldiers something to do other than turning to banditry. In a letter to Jimmy Yen at the beginning of 1933, Feng Rui claimed a share in initiating Guangdong’s Military Reclamation program, describing it as successfully sending soldiers back to

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farming. He reported that many “important officers” of Guangdong and Guangxi had adopted plans to establish Soldiers’ Colonization Centres,” that would not only serve as models of agricultural progress, using tractors imported from the United States to open up uncultivated land, but would also serve as an “outlet for the disbanded soldiers,” thus reducing the size of provincial armies. Expressing optimism to the idealistic Yen, Feng declared in the letter that “since 90 percent of the soldiers come from the farm, they will feel happier.”35 One of the Soldiers’ Colonization Centres to which Feng referred was the site of the Huizhou sugar mill, where construction was begun in 1933 by Honolulu Iron Works. Representatives of the firm who negotiated the deal were taken to the Huizhou site by Feng Rui, General Weng Shiliang, who headed the Huizhou Military Reclamation Bureau, and a party of about one dozen soldiers on 29 October 1933. The sugar mill would be constructed near the village of Pingtan, about twenty-five miles farther inland from the walled town of Huizhou. To supply raw material to the mill when it was completed, the military reclamation plan was to plant 30,000 mu with sugarcane by February or March 1934. One of the visitors reported with enthusiasm that the district “contains tens of thousands of acres of possible cane land, easily railroaded and with abundant water transportation by rivers. At the present time two tractors are already plowing for the 1935 crop, machines never seen before in the inland district, adding to the existing cane areas.”36 According to records of Honolulu Iron Works, Feng Rui and four colleagues visited Manila as the first stop on a Pan-Asian tour to survey sugar industry development. Referring to the report on Guangdong’s soils by Robert Pendleton, discussed in Chapter 2, HIW’s overview of prospects in Guangdong stated, “After the report on soils ... had been submitted and the great possibilities of producing sugar cheaply became evident, a mission of five was sent by the Government to the Philippine Islands to learn the best way to undertake the modernization of the industry.”37 According to Chen Zhaoyu, her husband made his trip to the Philippines following a period of fruitless efforts to raise funds for sugar factories either from the government or from private businessmen in Guangdong. He took along an official from the Military Reclamation Bureau “so that the gentleman could see with his own eyes what sugar could do for the people’s livelihood.” It was his hope that the army man would then help to interest the Guangdong authorities.38 Although General Weng Shiliang was officially the leader of the five-man delegation to the Philippines, Chen Zhaoyu’s impression was that Feng led the delegation. In fact, General Weng spoke little English. Many of their meetings in Manila were conducted in English, and, according to Chen Zhaoyu, people there were familiar with Feng Rui’s reputation thanks to his years in Ding County.39

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Feng Rui received a warm welcome in the Philippines officially and socially because of his status as an expert from Ding County, Chen Zhaoyu continued. His achievements in the Mass Education Movement were well known both in China and abroad. Many respected scholars greeted Feng, saying that they were well acquainted with his work and pleased to meet him. Their enthusiasm was helpful in Feng’s efforts to find sponsors for Guangdong’s Sugar Industry Revival Plan. Chen Zhaoyu quoted from a speech that Feng Rui made to groups of businessmen on several occasions during his visit to the Philippines: Although prices have fallen and the Philippines is suffering from overproduction, it is just the opposite in Guangdong, where we cannot supply our own sugar, lack up-to-date milling technology, and need technical assistance. Therefore it would be beneficial to both sides if the Philippines were to provide assistance. China could use seventy-five factories of 1,000-ton daily crushing capacity to supply the current consumption of five pounds per capita to 400 million people (that is 750,000 tons a year), and domestic demand may be expected to continue to expand ... Because of current domestic and international difficulties, the people are in poverty and the public purse is depleted. Hence our long-standing ambitions have been impossible to fulfil. I have come to seek your assistance in the form of loans to purchase equipment.40

On hearing this, according to Chen Zhaoyu, audiences remained unconvinced, lacking complete faith either in the Guangdong government or in this young Dr. Feng, who had come from afar bearing neither collateral nor exchange conditions. Furthermore, how could his country repay credit without an expanded supply of the sugarcane that would be needed for the proposed mills? To this question, Feng Rui replied that land lay fallow everywhere in Guangdong because farming was not profitable. Now, because sugarcane cultivation had become more profitable, the Chinese farmers were aware of its advantages and were more than willing to grow cane. To anyone seeking to understand the situation firsthand through investigations in Guangdong, Feng extended a warm welcome.41 Shortly after his visit to the Philippines, Feng addressed his staff at an anniversary gathering of the Bureau of Agriculture and Forestry on 31 July 1933, where he presented an outline of the report on progress in the sugar industry that he had prepared for the provincial government. He mentioned that he had already reported in detail on progress made during the past few decades in the Philippines in “applying Western agricultural science to improve Eastern agriculture,” especially in sugarcane cultivation, which accounted for “70 percent of Philippine agricultural production.” (It seems that Feng referred here to the

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share of sugar exports in the total value of agricultural exports from the Philippines.)42 For more than two decades, crop improvement had been carried out, especially under the leadership of one firm from the United States, HIW, which had introduced superior Javanese sugarcane varieties and had built four out of five of the sugar factories operating in the Philippine Islands. The factories were “centrals” linked up to plantations using improved cultivation methods. Feng also told his staff that while meeting several times with members of the Philippine sugar industry, he had learned about other advances as well, such as the use of molasses to produce alcohol. The alcohol could even be used to fuel vehicles. This fuel had proved to be very economical and was already widely used in the Philippines. Feng Rui also stated that he had provided a detailed oral report on fuel alcohol to Marshal Chen Jitang, who had become so interested in the idea that on the spot he drafted an itemized memo for Chairman Lin Yungai to read. “If this venture is successful,” Feng declared, “then we will regain our economic rights in fuel oil within a year.”43 Continuing his lecture, Feng Rui also related that he had become acquainted with HIW’s vice president and general manager, G. William Hall, while in the Philippines, describing him as a senior sugar industrialist with enormous experience in carrying out projects for the expansion of sugar production. Feng had asked Hall to explain how the Philippines had been transformed from a wasteland into such a rich sugar-producing area and persuaded him to come to Guangdong to assist in the reconstruction of the provincial sugar industry. Winding up his lecture, Feng declared, I hope that he will also be able to extend credit, making revival of the sugar industry of Guangdong possible. All the large sugar mills in the Philippines were built with such advances, according to fairly long-term contracts for instalment-plan repayment. One year of operation will allow a factory to pay back the principal, so that by the third year it will already be earning substantial profits. The gentleman whom I invited has just arrived in Guangdong. If this matter is successfully negotiated, the prospects of the Guangdong sugar industry will be very bright.44

Hall provided a somewhat different account. He wrote that after visiting a Chinese-owned mill built by HIW, the delegation from Guangdong visited the HIW offices on the recommendation of the satisfied owners they had just met. Hall considered that he made such a good impression on the Chinese visitors that Feng Rui sent a telegram to Lin Yungai asking for permission to invite Hall to return with them “to discuss with the Governor [Lin] and others the modernization of their sugar industry.”45 Hall arrived in Guangzhou in August, and his presence soon resulted in the construction contract for a sugar mill at Xinzao.

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As an HIW manager in Manila reported to Honolulu, “These pleasant relations continue and have resulted in the appointment of Mr Hall by the Governor as Honorary Sugar Advisor to the Kwangtung Government, with no salary but with expenses while in Canton and vicinity paid by the Government.”46 A letter from Hall to one of his colleagues in Manila indicates that he was quite open to persuasion by Feng Rui. Commenting on business prospects in Thailand in 1934, he wrote: “Our only hope of getting orders for sugar mills in this year of grace, is surely to show the countries concerned, (or their influential bigwigs) that one way to make money is a tariff-protected sugar industry with an H.I.W. mill. Negotiations of that kind cannot be carried out by mail nor through amiable trade commissioners.”47 According to HIW records, after returning from the visit to the Philippines, Weng Shiliang’s party recommended that Guangdong follow the example of the Philippines and replace its present wasteful practices in crushing sugarcane with modern milling. Wisely, the delegation also persuaded the “Vice President and General Manager of one of the oldest, largest and most successful sugar machinery manufacturers in the world to come to Canton and advise with them.”48 Thus Hall became a technical advisor to the Guangdong government, which provided him with a house for the duration of his stay in Guangzhou. Hall reported that he received many friendly visitors in his “Sugar House,” which was located in the Dongshan district close to where Feng Rui and other provincial officials lived.49 HIW worked quickly, carrying out a feasibility study and entering into negotiations for factory-construction contracts within weeks of meeting General Weng and Feng Rui in Manila. It seems that Feng Rui’s arrival on the sugar industry scene expedited schemes that HIW and Weng, along with Lin Yungai, already had in mind. United States consular reports note that sugar-equipment salesmen had sought to interest high-level officials in Guangdong in the expansion of the province’s sugar industry since 1932 or earlier. Consul Joseph Ballantine reported that while Cheng Tiangu briefly headed the Department of Reconstruction from March to April 1932, representatives of an American firm had made repeated attempts to interest Cheng in sugar-milling equipment they had for sale. Since the appointment of Lin Yungai as the new department head and the implementation of “sweeping changes in the personnel” of the department, the salesmen had renewed their efforts.50 Judging from his public enthusiasm about the sugar industry as early as January 1933, Lin seems to have been impressed by the sales representatives’ pitches. HIW records show that it was the “American firm” referred to by Consul Ballantine. Thus we come full circle in identifying the origins of the HIW-Guangdong business partnership. Feng Rui proved to be more useful than were “amiable trade representatives” from the United States. Given indications that Lin Yungai assigned him to the

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sugar-milling project, it seems that Feng’s effectiveness in the brokerage role reflected and resulted from Lin’s trust in him and commitment to the program. On the other side of the structural gap that Feng crossed, it seems unlikely that a trade representative could have acted as a cultural bridge between HIW and provincial bureaucrats.51 The HIW representatives sought to boost the Guangdong government leader’s confidence in the prospects for profits in sugar industry development. This was not limited to calculating costs and arriving at impressive rates of profits for their mills.52 They also persuaded the Chinese side that success was assured thanks to the fact that HIW was prepared to provide all the crucial installation service and technical advice that were needed. From HIW’s point of view, this precaution was a wise one given that, as one manager commented to another, “In all of their industries they have no trained men of their own but must rely entirely on others.”53 HIW also helped Guangdong to sell the program to the domestic audience, providing information to the Guangdong negotiators who turned up later in Feng Rui’s statements and articles publicizing and explaining the program. A draft prospectus prepared by HIW in 1933, for instance, provided a “conservative picture of the results that may be expected from modernizing the industry.” Among the many specific advantages to be found in Guangdong was its latitude, close to that of Hawaii and other leading sugar-producing regions. As for labour (the biggest single cost in sugar production being the labour needed for cultivating and cutting sugarcane), HIW was enthusiastic: “That labour is cheap, efficient, and plentiful in the sugar districts will be taken for granted,” giving “South China a wonderful advantage over other countries,” while the diligence of local workers would lead them to take up with alacrity the employment opportunities created by modernizing and expanding sugar production. Conditions in Hawaii were believed to have proven that Chinese workers were diligent; better results could be expected than among the rather indolent Filipinos.54 This last point was made internally in HIW, not just to flatter the Chinese. Among others, the point about labour was echoed in Feng Rui’s December 1933 lecture at Lingnan University on the sugar industry. Although he did not mention Philippine workers, he stated that the quality of Chinese labour was not below that of labour in the Western countries.55 Perhaps the most persuasive of the arguments in favour of investment in sugar milling in Guangdong that were made by HIW and adopted by Feng Rui was that the new mills would promptly pay for themselves. It is evident that Feng was inspired by HIW’s projections that 60 percent of the cost of constructing a sugar mill of modest size would be recouped as profit from sales of the output of its first season of operation.56 In a description of the revised plan for the revival of Guangdong’s sugar industry, drawn up after his trip to the

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Table 4.4 Projected returns on investment in sugar milling, 1934-35 (three mills) (Currency: G$) Year

Construction costs

Returns

1934 1935

1,794,720 Not given

1,796,000 3,592,000

Source: Feng Rui, A Brief Report on Modern Sugar Industry Development in Kwangtung. (Guangzhou: Department of Reconstruction, November 1934), 4.

Philippines, Feng stated that three mills would be constructed within a two-year period on the basis of a single initial investment. This would be achieved by directing the earnings of the first mill into the construction of the two succeeding mills, with profits to spare in the end.57 According to figures provided by HIW, the initial cost of a mill producing 50 tons of centrifugal sugar daily would be about G$400,000, and profits of $300,000 could be earned by selling 5,000 tons at the price of G$80 per ton. If the sugar was sold locally, an additional G$50,000 in profits could be realized thanks to lower transportation costs.58 Feng Rui tabulated similar projections, as seen in Table 4.4. Crop Improvement and Market Control As Feng Rui explained, there would be good returns on investment in modern sugar milling in Guangdong thanks to two significant gaps: between production costs and market prices, and between market prices for muscovado sugar and centrifugal sugar.59 These projected profits, however, could only be realized given the necessary sugarcane to supply the mills and customers to buy the sugar. In addition to the sale and installation of equipment, therefore, HIW provided advice on how to expand supplies of sugarcane and secure markets. To help Feng Rui increase sugarcane supplies to support the expansion of sugar milling in Guangdong, HIW representatives advised him to employ an expert to manage the introduction of high-yielding sugarcane varieties to the province and recommended Rex King, an agronomist at the University of the Philippines. After King made an initial visit to Guangzhou, he was appointed to a position beginning 1 January. He began gathering sets of sugarcane cuttings for propagation at the Bureau of Agriculture and Forestry’s experimental farm before returning to take up his new post.60 HIW also advised its client to adopt measures of market regulation in order to ensure profitability for the new sugar mills. An assistant treasurer’s letter to a family friend about the firm’s contracts in China makes this clear. As the HIW

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employee wrote, “We came on the scene and have worked out for the Guangdong government a plan under which the government is to erect a series of sugar mills and monopolize the growth, manufacture, and sale of sugar throughout Guangdong province.”61 This statement of October 1934 suggests that the idea for a provincial sugar monopoly originated with HIW and was a topic of conversation between HIW and Guangdong officials. As will be seen in Chapter 6, a provincial sugar monopoly was in fact established in June 1934 under Feng Rui’s supervision. To monopolize the manufacture of white sugar in Guangdong, it would be necessary to impose restrictions on the operation of privately owned mills. Feng Rui drafted a set of regulations on private sugar milling and discussed them with Lin Yungai in August and September 1933. The regulations required independent millers to report to the government on their operations and to provide details on the acreage of sugarcane on which their mills depended. The regulations provided for official supervision over private milling operations by a provincial Sugar Industry Management Office; in the final version, the word “control” (qudi) was used to describe the office’s function.62 The prospect that before long Guangdong’s provincial mills would be able to supply all of China with sugar grown and milled in Guangdong was attractive to both parties to the agreement to construct sugar mills. Writing about plans to “monopolize the growth, manufacture, and sale of sugar throughout Guangdong province,” HIW’s enthusiastic assistant treasurer also predicted that with a third sugar mill in the course of construction by HIW, abundant cheap labour, and the benefit of the firm’s expertise, factories built by the firm would “soon be in a position to supply all domestic consumption with locally grown sugar at a low cost.”63 Feng Rui mentioned this goal in his reports as well, stating, for instance, that Guangdong’s ample land suitable for sugarcane cultivation would enable the province to fully supply the domestic market for white sugar.64 He also provided a rough estimate of the value of this prospective market. Without mentioning quantities or types of sugar, Feng stated in an article of 1935 that the total annual value of sugar consumption in China was then more than G$200 million.65 Like others before and since, Guangdong’s top officials and HIW were eager to take advantage of the scale of China’s consumer markets, captivated by the potential for profits in selling five pounds of sugar to each of hundreds of millions of consumers.66 Establishing a Partnership In March 1934 Feng Rui drew up a revised three-year plan for the sugar industry, which was more detailed than his outline of June 1933.67 Xian Zi’en compared the second plan to a proposal submitted to the Department of Reconstruction

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by representatives of Honolulu Iron Works who had visited in 1933, and found the cost estimates and “even the wording” to be very similar.68 HIW records show that this is because Feng Rui and Weng Shiliang drew up the plan together with G.W. Hall and Charles J. Henderson, HIW’s manager in Manila, in preparation for its presentation to the Guangdong Provincial Council. Their presentation to the Council on 7 November 1933 concluded a week of intense discussions and visits to mill sites that included the Military Reclamation base in Huizhou, where soldiers were at work clearing land for sugarcane cultivation. As Guangdong’s sugar industry advisor, Hall was invited to address the council first. After outlining the successes of Hawaii and the Philippines in expanding sugar production, he pointed out that in addition to similarly favourable conditions, Guangdong had the significant advantage of possessing its own market for the output of a modern sugar industry. Marshal Chen Jitang then asked Feng Rui to explain the proposed Sugar Industry Revival Plan in Chinese to the members of the council. Following a few questions from council members, the plan as outlined was approved. Chen then instructed the director of Guangdong’s Department of Finance to make provisions in the provincial budget for the necessary payments. After receiving official acceptance of their proposal the next day, the HIW representatives had a meeting with Ou Fangpu, the provincial commissioner of finance. They then departed for Hong Kong by train.69 The HIW managers believed they had signed a promising agreement. Less than two weeks after his return from Guangzhou, Hall was pleased to report to Henderson that the managers’ superior had approved the contract they had negotiated and that Guangdong’s first payment had been received.70 During the negotiations in Guangzhou, HIW defended its bid for the Huizhou contract by emphasizing that although other dealers might sell milling equipment more cheaply, they could not provide the engineering expertise and advisory service that HIW was offering. To their surprise, the Chinese side accepted their price. Rather than negotiating on the basis of questions about the total cost of the contract, Guangdong’s representatives instead tried to delay making significant installation payments as long as possible. Hall and Henderson had an improved understanding of the bottom-line concerns of their client after a meeting with Feng Rui and Weng Shiliang on 30 October 1933. Guangdong’s schedule of payments for equipment and installation work was the topic of discussion for four hours, as Feng Rui insisted that monthly payments could not exceed 5 percent of the total cost of the mill. With no banks to finance the project, his side evidently hoped that HIW would provide a portion of the material and expertise in advance, thus extending a form of credit. But HIW stuck to its position that it would at

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no point be in the red on the project. Hall and Henderson insisted that they could not agree to monthly payments of less than 7.5 percent of the total cost of the contract for the first eight months. However, they finally acquiesced, and Feng and Weng agreed to a scheme of payments that would gradually decrease from 7.5 to 3 percent over a period of twenty months. Although the HIW team was optimistic about earning profits on the contract, it was determined to protect the firm from the risk of a suspension of payments. According to the contract, if a monthly payment was ever missed, HIW would immediately cease work and halt deliveries of equipment.71 The four-hour bargaining session on 30 October 1933 was a revelation for the HIW team. Hall and Henderson had not expected the Guangdong side to be more concerned with credit than with total cost and realized that they were in danger of losing their edge in the China market. They now understood that because Guangdong’s government leaders were mainly concerned with credit terms when considering equipment purchases, a competitor might be able to displace HIW by coming up with more attractive financing arrangements.72 To secure its stake, therefore, HIW worked hard during the next three years to find a better basis for extending credit to Guangdong. However, there were serious obstacles. HIW managers were well aware that both Guangdong and China’s central government had failed in the past to honour agreements to make regular payments for industrial equipment after deliveries had been completed. They were also concerned about the danger of business disruptions in the event that Guangdong’s rebellious stance against the central government eventually sparked a civil war.73 According to advice that HIW received in Hong Kong, moreover, the authorities in Nanjing were unwilling to arrange financial guarantees for the construction of sugar mills in Guangdong. They were also apparently unwilling to support Guangdong’s preparations to supply sugar to markets outside the province. Thus the newly established Export-Import Bank Agency of the United States also declined to assist HIW on the grounds that the arrangement was too risky in the absence of assurances by Nanjing.74 Because it was building sugar mills in southern China without the assistance of any banks, HIW attempted to protect itself by ensuring that the firm was always in balance with Guangdong in case monthly payments were interrupted.75 Referring to Guangdong’s sugar-mill construction contracts with both HIW and Skoda, Chen Zhaoyu praised Feng Rui’s success in persuading the firms to extend credit by delivering equipment worth “millions” in Guangdong currency in advance of payment. Chen believed that the suppliers personally placed their trust in Feng.76 Although HIW employees did not acknowledge it, in fact they extended credit on a monthly basis and assumed a risk in the process.

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It is possible that HIW also resorted to another time-tested method of doing business by offering direct rewards to key individuals on the Chinese side. According to Chen Zhaoyu, Feng Rui personally guaranteed the success of the sugar-mill construction contracts.77 This may perhaps be explained with reference to a current practice at the time of offering “return commission” to those who facilitated and ensured payments for goods received. “Return commission” was a euphemistic term for a form of “kickback,” and Feng possibly received compensation for his efforts in this manner. Xian Zi’en considered it likely that Feng Rui benefited personally from the Guangdong government’s agreements with foreign firms. He described how Guangdong government representatives were rewarded by equipment suppliers with a standard sum every time they arranged a monthly payment in a contract for sugar mill construction. When Xian assumed a position in the sugar mill at Shitou in 1937, he discovered that the manager of the mill was receiving a commission from Skoda for each of the monthly payments that he arranged.78 HIW correspondence, not surprisingly, contains no direct reference to payoffs to Feng Rui or others involved on the Guangdong government side. One letter contains a reminder that “Feng Rui is a government official, not the firm’s man,” while another suggests unease about the inducements being offered to Guangdong’s representatives by Skoda representatives attempting to win sugar mill contracts.79 Correspondence conducted within the Hong Kong Shanghai Bank around the same time contains details on business methods practised in Guangdong. As a manager in Hong Kong explained to a colleague, a common practice in the sale of foreign machinery and installation services in Guangdong was that the seller would arrange to return 10 percent of the total purchase price to the principal signatory on the purchase agreement. Thus the actual purchase cost was known by both sides to be 10 percent less than the price paid by the provincial Department of Finance. In the banker’s view, Guangdong officials were “keen on reconstruction at present ... simply to get the squeeze, and it is thought that interest in the undertakings will probably abate considerably once they are completed and no more squeeze is available.”80 Feng Rui, however, was not at first the signatory of the agreements for sugar mill construction with HIW and Skoda. They were signed by Lin Yungai and Weng Shiliang.81 Disagreement and Resolution As well as helping to plan and publicize Guangdong’s program of sugar-mill construction and playing an important role in the negotiation of contracts, Feng Rui became a mediator in the resolution of difficulties between HIW and General Weng’s Military Reclamation Bureau. The descriptions of this disagreement

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provide glimpses of Feng Rui’s role, illustrating how a broker must maintain connections across a structural gap. Although HIW’s construction of a first sugar mill at Xinzao, south of Guangzhou, proceeded quite smoothly during the fall of 1933, HIW’s second project, construction of the mill near Huizhou, was more challenging. Both sides discovered that they had underestimated the difficulties to be faced and were stretched to their limits to overcome a host of unforeseen problems. Around this time, moreover, a strong competitor edged in on the sugar-milling business in Guangdong. Observing the mistakes made by HIW, Skoda took steps to avoid them. Provincial officials, meanwhile, played the two firms against one another.82 It was difficult to find capable technical and administrative staff and expensive to recruit staff from Hong Kong and Shanghai. As well as negotiating the employment of Rex King, Feng Rui was occupied in recruiting staff for the factories and sugarcane-extension work by hiring graduates of agriculture programs in Guangdong. According to Xian Zi’en, some of the technicians working in the Guangdong mills were lured from the Taikoo Sugar Refinery in Hong Kong.83 Salaries must have been attractive, as the Guangdong sugar-industry program also recruited John J. Ehrhardt, formerly the representative of the United States Bureau of Commerce in Shanghai, when HIW persuaded him to accept a position as manager of the firm’s work in China.84 But Ehrhardt and others experienced delays and disappointments as construction of the mills proceeded, and they realized they had underestimated the problem of inexperience on the Chinese side.85 When the installation of equipment at the Huizhou site was delayed,and Weng Shiliang threatened to suspend payments to HIW, Feng Rui assumed responsibility for getting the project back on track. Learning that Charles Henderson would travel from Manila to investigate, Feng wrote and urged him to catch the first train to Guangzhou after his arrival in Hong Kong. There were many problems to discuss and “straighten up,” Feng wrote, especially regarding the slowness of the construction work at Huizhou. Work had been delayed because equipment had been shipped from Hong Kong in many small batches, which caused great difficulties in getting it to the construction site. Nonetheless, Feng assured Henderson, “I want your Company to give a good impression to the people and the government here in building the first modern sugar factory in China.”86 From HIW’s point of view, many problems were caused by inattention and inexperience on the Chinese side. As Henderson wrote to a colleague in Manila, the problems arose partly due to the attitude of Guangdong’s construction supervisor at Huizhou: “Feng’s engineer Bo ... has been finding fault

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with the slowness of the work and complaining that we did not have a big enough organization in the field. As you know, this fellow thinks he knows it all but will be easily straightened out.”87 Feng Rui was thus drawn into a critical dispute between HIW and the Military Reclamation Bureau. Although Henderson managed to resolve some problems during his visit at the end of 1933 and reported that Lin Yungai and Feng Rui remained “enthusiastic about our company,”88 problems at the Huizhou site erupted again after Hall was promoted and transferred to Honolulu in 1935.89 HIW notified the Guangdong Provincial Bank that in light of the bureau’s suspension of payments, work had been halted on HIW’s third project in Guangdong, the sugar mill under construction at Jieyang in northeastern Guangdong.90 Despite a test run demonstrating that the Huizhou factory was capable of crushing 1,000 tons of sugarcane daily, thus meeting the contract specifications, Weng Shiliang claimed that the mill had not been built properly.91 In this case, a lack of senior personnel on site was not the only problem. The limited technical base in China meant that even mundane materials and equipment were weeks away, causing expensive delays.92 There were also installation problems. For example, there had been an egregious error in the placement of a particular pinion. Because the pinion was out of place, two cane-crushing rollers missed contact by inches, a problem that should have been “visible to the naked eye.” A senior manager was irate about these shortcomings and even fretted about whether substandard work was being accepted by his staff because they were party to a Chinese conspiracy designed to sabotage the project so as to damage HIW’s reputation. He later learned that the Military Reclamation Bureau’s factory manager had fired most of the trained staff recruited to operate the factory, replacing them with completely inexperienced men who took prolonged holidays. Skoda’s representatives, reportedly, had observed these problems; the rival firm was consequently including provisions in its contracts with Guangdong that required the employment of trained personnel be managed by the Skoda side.93 By this time, HIW’s owner and senior manager in Honolulu had anticipated low profits for the firm as a whole for 1935 and attributed the poor returns mainly to the payments withheld and the repairs that had been demanded by the Chinese side during the dispute over the Huizhou mill.94 Feng Rui was asked by both sides to serve as a mediator in the dispute about construction problems at the Huizhou mill. An HIW telegram of 20 June 1935 notified the Manila office that negotiations on the Huizhou case had been delayed by Feng Rui’s absence from Guangzhou and that it would be necessary to be patient because the Chinese had some justification for their demands. However there would be no further deliveries of equipment until the Chinese had

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made two outstanding payments.95 This patient attitude was short-lived. On 28 June a further message declared that there should be no more forbearance, as the Chinese side had made certain “fantastic” claims in its most recent report.96 To resolve the difficulties at the Huizhou mill, Feng Rui brought the parties together for discussions and helped them to make new arrangements. On 14 March 1936, two and a half years after the difficulties began, Feng signed and submitted a report about the final resolution of the problems at Huizhou.97 The association between HIW and Guangdong, which had begun as such “pleasant relations,” had gone through an adversarial phase. HIW’s president, Theodore Davies, sent remarks to his staff in Manila, stating his diagnosis and suggesting solutions. Apparently, there was a lack of supervision by a consulting engineer, and the Chinese had expected someone to “put all the pieces together” as Hall had done until his departure from China. To salvage the situation, perhaps HIW should deal directly with Weng Shiliang instead of Feng Rui. Davies made this suggestion despite the fact that Feng was the person responsible for keeping the “pieces together” on the Guangdong side. On the basis of conversations with HIW’s financial officer in Manila, who was under pressure to explain what had gone wrong, Davies gathered that it was risky to trust Feng Rui. He concluded that HIW should be cautious in its dealings with Chinese officials. How, when we talk to General Yung [Weng], or any other Cantonese official, do we know that our remarks and the Chinese replies are being correctly interpreted? On looking over the group of men who have been dealing with these very clever Chinese gentlemen, I find none who have had sufficient experience in China for us to be able to say that they understand the methods of doing business with the Chinese.98

This expression of the limits of trust illustrates well the risks associated with brokerage. After crossing a cultural gap, the broker represents each side to the other. If problems arise in the relationship he facilitates, either side will focus on him as the possible cause. The unknown terrain behind him is perceived too dimly for close consideration. The person who keeps pieces connected, therefore, can be viewed instead as the one allowing them to fall apart. Around this time, rumours reached the United States consulate in Guangzhou, explaining what had gone wrong at Huizhou. According to hearsay, the younger brother of a general in the provincial army had been appointed as manager of the Huizhou mill and, with the help of a professional fortune-teller appointed as his assistant manager, he caused the mill to suffer losses of G$1 million during the 1934-35 cane-crushing season.99 Later, sugar milled at the Huizhou mill

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proved unmarketable. A large shipment was sent back from Shanghai, and, eventually, arrangements were made to dilute the low-quality sugar by mixing it with newly crushed sugarcane in the Skoda-built mill at Shunde before putting it through another round of processing.100 Despite its difficulties, the Huizhou mill reportedly earned profits during its second year of operation. During the cane-crushing season, from January to March 1936, it earned returns of G$600,000.101 Thus the dispute with HIW and continuing problems in operating the new mill did not deter the Huizhou management from planning to expand. In May 1936 it announced plans to purchase a second set of equipment from HIW in order to expand its operations. The Military Reclamation Bureau, moreover, was planning to build an even larger mill, with a daily milling capacity of 2,500 tons, at a cost of G$6 million, in Tanzhou, a locality with plentiful supplies of sugarcane.102 However, in the uncertain political conditions emerging in May 1936, the plans for further expansion of Guangdong’s sugar industry were halted. As part of the reorganization of the provincial government during the summer of 1936, the Military Reclamation Bureau was merged into the Department of Reconstruction, which was then directed by Lin Yungai.103 There was no further investment of provincial funds in sugar milling in Guangdong until after 1949. How the milling at Huizhou and elsewhere eventually succeeded in earning returns will be outlined in Chapters 5 and 6. Attention to sugar production shifted Feng Rui’s career beyond agricultural improvement and trade protectionism and onto an industrial path. Responsible for coordinating the most ambitious and costly program within the Guangdong government’s three-year plan, Feng Rui became the pivotal person in Guangdong’s “reconstruction” efforts through his ability and willingness to act as a spokesman, interpreter, negotiator, and trouble-shooter. In short, he played a brokerage role between Guangdong’s civil and military officials and between international and Chinese business interests. HIW, a publicly listed firm that reportedly suffered financial losses in 1932, was in improved circumstances two years later. By early 1936, its New York City office was able to move to a better address, at 165 Broadway Avenue in Manhattan.104 Feng Rui, meanwhile, was left behind to implement the Sugar Industry Revival Plan that HIW had helped to design. He possibly received material bonuses from his superiors or rewards from international associates in recognition of his work in the sugar program. Whatever the rewards, the corresponding risks were significant. This account of the construction of sugar mills in Guangdong during the mid-1930s sheds light on the planning and financing that established China’s

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state-owned industrial sector. In this early case of investment in modern industry at the provincial level, official plans were evidently little more than responses to business opportunities that appealed to powerful civilian and military provincial officials and to two sets of skilful equipment salesmen. In some ways, their responses did not make good business sense. As a top-down initiative, Guangdong’s sugar-milling program encountered many difficulties in implementation. Planning was based on ideal conditions projected by the foreign equipment suppliers, whereas actual implementation required solutions to a variety of unforeseen problems. After Feng Rui helped to bring together the parties in contractual arrangements for the construction of sugar mills, they required his continued involvement to resolve unexpected difficulties. The satisfactory installation of equipment was just the first hurdle. To avoid financial loss, it was also necessary to secure supplies of raw material and markets for the products of Guangdong’s new sugar mills.

5 Bitter Experiences with Sugarcane

Hostility against Feng Rui The official press release reporting Feng Rui’s execution stated that Guangdong’s farmers were so incensed that he had “competed for profit” and enriched himself at their expense that they wished to “eat his flesh and sleep on his skin” (shi qi rou qin qi pi).1 This ancient idiomatic expression was the most strongly worded phrase of the report identifying Feng as a criminal and announcing his execution by a firing squad. As well as emphasizing Feng’s wrongdoing, the harsh language drew attention to the contradiction between Feng Rui’s responsibilities to the rural population and his alleged misconduct. Among the various misdeeds and failings attributed to him as director of Guangdong’s Bureau of Agriculture and Forestry was his alleged serious negligence in his duties as an agriculture expert. The claim that “all” of Guangdong’s farmers were angered by Feng Rui’s behaviour was an exaggeration, of course. Nonetheless, the interests of individual sugarcane growers in the vicinity of the government mills were generally at odds with those of the province. Despite Feng Rui’s evident idealism about the general benefits of modern industry, the need for abundant supplies of sugarcane to supply the new mills built by the government of Guangdong during the 1930s tended to set the priorities for implementation of the plan for a revival of the provincial sugar industry. As Guangdong’s newly built sugar mills began to crush sugarcane beginning in early 1934, Feng Rui directed their operations as general manager. He was responsible for supervising the management of four of the six mills in the set, built on behalf of the provincial Department of Reconstruction at Xinzao, Shitou, Shunde, and Jieyang.2 The mills built for the provincial First Army’s Military Reclamation Bureau at Huizhou and Dongguan were managed by the bureau. According to brief press reports, Feng Rui’s accusers alleged that he had aroused indignation and protest in the course of his supervision of the provincial milling program by unlawfully seizing land and by underpricing sugarcane delivered to the government’s mills.3 Records describing the implementation of the provincial sugar-milling program, however, do not reveal evidence of deceit on Feng Rui’s part. To the extent that problems such as disputes over

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sugarcane prices and land ownership were Feng’s responsibility, it appears that they arose out of flawed planning rather than dishonesty. Arguing that Guangdong’s sugar industry had fallen into decline because of technological backwardness, Feng Rui was optimistic when he implemented the provincial Sugar Industry Revival Plan that improved sugarcane crops and milling methods would transform the industry. It seems that he assumed two other conditions as well, namely that prices would be attractive and that sugarcane cultivation and milling would be well coordinated. Given the encouraging prospect of government mills prepared to purchase their crops at high prices, and with help from the official promotion of cooperativism in production, Guangdong’s farming population would be able to greatly increase sugarcane yields per mu. In addition, their labour would be more productive, allowing for the expansion of the total land area devoted to sugarcane cultivation.4 Feng Rui faced difficulties in implementing plans for the expansion of sugar production in Guangdong because provincial plans did not accurately represent the value of the resources to be used. In his planning, Feng Rui underestimated costs. Most seriously, he underestimated the cost of sugarcane. The crux of his difficulties as general manager of the provincial sugar-milling program was that his plans to expand supplies of sugarcane did not succeed, in the short term, in providing adequate supplies of cane to the new factories built for the Guangdong government by two foreign firms. Aware in 1933 that sugarcane grown in Guangdong would be expensive at first, because of its poor quality and the fact that too few farmers were growing it, he expected that the price would soon fall. Lower prices would result as farmers expanded their production of sugarcane in response to the government’s provision of crop loans, improved varieties of sugarcane, and a reliable purchaser for their new and improved output. But because producers did not respond as enthusiastically as hoped, Feng’s plans proved to have overestimated how rapidly sugarcane supplies could be expanded and delivered to the mills. As a result, he was vulnerable to criticism. Not all costs and conditions affecting the implementation of the Sugar Industry Revival Plan could be precisely measured. In some places, the planning was based on rough estimates. The problem of inadequate cane supplies, however, might seem to have been caused partly by inattention to available information on conditions in agriculture and sugar cultivation and on consumption in Guangdong. Perhaps Feng Rui neglected the principles of agricultural economics. As one of his graduate school advisors, James E. Boyle, stated in a textbook that Feng Rui cited in his doctoral dissertation, problems apparently caused by the greed and deceit of middlemen in agricultural marketing may be analyzed more reasonably by careful attention to all of the costs involved in supplying a

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product to a consumer. In addition to taking into account land and labour, the basic inputs of agricultural production, storage costs, transportation, and credit must all be considered.5 A result of the style of the Guangdong government’s investment in sugar milling described in Chapter 4 was a large gap between the cane-crushing capacity of the new sugar mills and the availability of raw material. Moreover, it was necessary to supply the mills with enough sugarcane to allow them to run at full capacity and operate at a profit, which could in turn pay for the raw material required. The contracts with suppliers of sugar-milling equipment had based the province’s schedule for payments on the early profitability of the new mills. The necessity of earning profits by operating the mills at full capacity dictated a rough agricultural production plan for the province. Assuming responsibility for implementing the plan, Feng Rui single-handedly took on the task of supplying government factories with farm produce in vast quantities. He was the first Chinese official to handle this type of project on such a large scale. Like many pioneers, he faced serious unforeseen difficulties. The Sugarcane-Supply Problem While promoting the expansion of sugarcane deliveries to government mills, Feng Rui made efforts to narrow the gap in yields that then existed between Guangdong’s commonly planted cane varieties and those used in the Philippines and elsewhere. Gaps existed both in yields of sugarcane per unit of land and in sugar content per unit of cane by weight. To expand supplies of sugarcane for the government mills, Feng emphasized crop improvement and the extension of cane cultivation, which the propagation of improved cane varieties could be expected to encourage. He also administered a rural credit program designed to make the improved cane available to farmers and to help cover their production costs. Another objective of the program was to bring producers together in cooperative associations, a reorganizational effort expected to increase efficiency. The planning did not emphasize price incentives. The mills would not pay particularly generous prices for the sugarcane delivered to their doors. Instead, the program expected that the improvement, reorganization, and expansion of sugarcane cultivation, together with the opportunity to sell cane to the provincial mills, would provide good returns to the cane growers. Because the large new provincial mills required plentiful supplies of sugarcane, official management of agricultural production was a key part of the sugar industry program directed by Feng Rui. Even given the national tariff protection on which the plans for expanded production in Guangdong in the 1930s were based, the profitability of Guangdong’s new factories depended on their operation at full capacity. The provincial government had been persuaded, partly

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Table 5.1 Sugar-production costs and market value, 1933 (Currency: G$) Muscovado Juice-extraction rate Sugar volume (dan) Purity Price per dan Milling cost per dan Milling cost per 100 dan Sale value per 100 dan Net value per 100 dan

70% 10.5 70% $16.00 $5.00 $52.50 $168.00 $115.50

“Plantation white” (centrifugal) 85% 9.5 99.5% $27.00 $3.00 $28.50 $268.65 $240.15

Source: Feng Rui, “Guangdong tangye shiye sannian jihua” [Three-year plan for the Guangdong sugar industry], Guangdong jianshe 2.2 (March 1934): 88-91.

by foreign sellers of sugar-milling equipment, that investment in up-to-date sugar mills could be recouped within a few years. The key to profits was a plentiful supply of sugarcane. Profits in large-scale sugar milling were more dependent on supplies of raw material than were profits in other industries because the cost of sugarcane typically constituted about 80 percent of total sugar-milling costs.6 The preponderance of sugarcane in total milling costs also left room for variation, unpredictability, and manipulation. With the introduction of the new mills, Guangdong’s sugar industry had vaulted upward to a scale of production that massively expanded cane-crushing capacity in the province. Whereas the new mills could crush 500 or 1,000 tons of cane daily, the old-fashioned, animal-powered grindstone operations (called liao), which produced either Guangdong’s standard off-white “muscovado” sugar or its yellow-coloured “flake sugar” (piantang), could handle at most four or five tons a day. In other words, the new factories were 100 or 200 times larger in capacity than the mills they superseded.7 Therefore, at the beginning of what may be called for convenience “modern” sugar milling in Guangdong under Feng Rui, there was a large gap between the total milling capacity of the new factories and the current production of sugarcane in the province. Feng met this challenge with a three-part program that consisted of crop improvment and extension work, an agricultural credit program, and the cooperativization of sugarcane cultivation. First on the agenda came measurement of the total land area suitable for sugarcane cultivation in the province. The work of Robert Pendleton, the specialist on soils who had been commissioned by Feng Rui to conduct a provincial

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survey, provided a basis for planning. As discussed in Chapter 2, Pendleton advised against a rapid increase in sugarcane cultivation in Guangdong. His report of May 1933, however, indicated that soil conditions in the province were generally favourable to sugarcane.8 During the same year, a party of officials led by Guangdong’s chairman, Lin Yungai, was conducting an ambitious study aimed at gathering detailed, firsthand information on social and economic conditions in each of Guangdong’s ninety-five counties. The results of their survey were published in three volumes in 1934. The volumes contained excellent county maps and general outlines of the economic pursuits of local populations with scattered references to sugarcane cultivation and processing. A few tables analyzed the basic data collected by ranking the counties according to land area, annual tax revenue, and population size.9 These reports provided an improved understanding of physical conditions in Guangdong, confirming the belief that large parts of the province were ideally suited to sugarcane cultivation. Frosts were rare, and a great advantage was the quantity and timing of Guangdong’s rainfall. Rain was abundant but fell mainly at the beginning of the growing season, allowing plenty of sunshine for maturation of the crop and dry weather for harvesting and shipping sugarcane.10 Interest in Guangdong’s potential for sugar production was not new in the 1930s. Researchers at the National Zhongshan University in Guangzhou had conducted a study a decade earlier, identifying sugarcane cultivation as Guangdong’s most promising agricultural-development prospect. With a suitable climate, large domestic market, and inexpensive labour supply, the province should seek to regain its past dominance in the sugar industry. The surveyors had hoped that their work would serve as a basis for planning the reform of both cultivation and milling methods.11 Emphasizing Guangdong’s sugar industry potential in physical terms, rather than with careful attention to market trends, the provincial Sugar Industry Revival Plan of 1933 was formulated with reference to such information on the province’s past performance as a sugarcane producer. Late in 1934, Tan Yingbin, one of Feng Rui’s associates in the revival program, briefly reviewed available data on past production, citing a Japanese survey of 1919. The Japanese investigator estimated Guangdong’s total sugarcane production at 7.5 million dan annually (roughly sufficient to produce 0.5 million dan of processed sugar). Since Taiwan had become a Japanese colony in 1895, Tan noted, its total annual production of sugarcane had increased tenfold, from 0.7 million to 7 million dan.12 On the basis of land-use surveys, Feng Rui estimated in November 1934 that Guangdong’s sugarcane-cultivation area then totalled 450,000 mu. On this area, Guangdong produced about one-sixth of the sugar processed in China annually. To supply the new mills and meet total provincial consumption needs,

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he stated, the total area of land under sugarcane in Guangdong would double by 1937, increasing by 150,000 mu a year during the period of the province’s three-year plan. It seems that precise figures for the required area of cultivated land devoted to sugarcane were not available to Feng Rui. He estimated that 150,000 mu, given yields of 10 dan of processed sugar per mu, could supply the annual consumption of white sugar in Guangdong and that it would not be difficult to increase the area under cultivation from the 90,000 mu that was currently under sugarcane cultivation in Panyu County alone. Feng even stated that Guangdong’s total land area available for sugarcane cultivation was 10 million mu.13 In this estimation, perhaps, Feng’s optimism reflected that of HIW’s sales team. The firm’s prospectus remarked that in Guangdong, “The area available for sugarcane seems unlimited.”14 Such sweeping statements indicate that the land-use considerations in the planning of the provincial milling program were imprecise and even imaginary to a certain extent. Guangdong’s Sugar Industry Revival Plan was partly based on a reconstruction of Guangdong’s sugar-producing heritage. While estimating potential and projecting the expansion of sugarcane cultivation in Guangdong, Feng Rui referred to the past as though Guangdong, formerly an important Asian sugar exporter, had inherited a natural right to a leading role in sugar production. The cultivation of sugarcane in the region dated back to the fourth century, and Guangdong had indeed at one time exported more sugar than any other Chinese province,15 but Feng referred to Guangdong as though it also produced most of China’s sugar. In fact, according to a study published in 1927, Sichuan province was a more important producer than Guangdong by far, then producing half of China’s estimated total annual production of 5 million dan of processed sugar, whereas Guangdong’s output was less than 0.5 million dan.16 The low level of production reported for Guangdong was likely the result of the province’s greater accessibility to sugar importers compared to Sichuan’s. In a comparison with the world’s largest sugar exporters of the time, the anachronism of the idea that China and Guangdong were natural sugar producers is clear. Cuba’s output of 1.4 million tons of “plantation white” sugar annually during the mid-1930s, was an enormous reduction from its peak above 5 millions tons a decade before. Java, meanwhile, also produced over 1 million tons of white sugar a year, having cut back from over 2 million tons. Whereas those leading producers were also leading exporters, sugar became China’s second most important import during the 1920s: China had become only a minor exporter of raw sugarcane and a few muscovado products since about 1900. Furthermore, most of Guangdong’s sugarcane crop was consumed locally. About one-quarter of the province’s sugarcane harvest was consumed fresh, serving as a fruit in the local diet.17

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Table 5.2 Sugarcane-cultivation area required to supply four government sugar mills, 1936 (total crushing capacity: 48,750 dan per day) Required area (mu) Average yields 5 dan/mu 10 dan/mu 15 dan/mu

100-day crushing season

150-day crushing season

975,000 487,500 325,000

1,462,500 731,250 487,500

Note: On the types of sugarcane commonly grown in Guangdong, Feng Rui stated that “bamboo cane” yields were generally 3 or 4 dan per mu, whereas “wood cane” yielded 8 or 9 dan per mu. Source: Feng Rui, “Fuxing Guangdong tangzhe shiye jihua” [Plan for the revival of sugar and sugarcane production in Guangdong], Guanggdong jianshe yuekan [Reconstruction in Guangdong], special issue on agriculture and forestry, 1.8 (30 June 1933): 130.

Feng Rui stated in 1934 that the government’s new sugar mills would require supplies of 100 dan of cane per mu from a total area of 280,000 mu.18 He did not explain how he had made that calculation, however, and he alternated between tons and dan in his discussion, also stating that to supply the new mills during the first year – when two mills near Guangzhou as well as the Jieyang mill and the Huizhou mill would be operating – would require 3,000 tons of cane a day in supplies.19 Taking 3,000 tons as 45,000 dan, if each mu provided 100 dan per season, at least 450,000 mu would be required to supply the milling requirements for 100 days. But three times as large an area could be necessary given low yields. This comparison is shown in Table 5.2. Sugar milling is not a year-round activity because the raw material cannot be stored and there are limits to prolongation of the cane-harvesting season. But the more days a mill operates (ideally, nonstop day and night), the more it will earn. So if low-yielding sugarcane was planted and the mill operated for as long as possible (about 160 days), the land area required would be greater. On the basis of the crushing capacity of the four mills managed by Feng Rui in 1935 and 1936 (their total grinding capacity was 3,250 tons of cane daily) and the information he presented in 1933 on typical yields per mu, it may be estimated that between 500,000 and 750,000 mu were required to supply the annual crushing capacity of the mills, depending on types of cane planted and on the length of the milling season. According to these calculations, a minimum of 325,000 mu devoted to cane cultivation was required to meet the needs of the new sugar mills in 1936. But estimates published by Feng Rui and in other sources, which might have been

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derived from his reports, base much lower figures for land area on unrealistically high yield rates of cane per mu.20 All this gives an impression of haste in the planning process. The Crop-Improvement Program To supply Guangdong’s new sugar mills, it would not be enough to expand the area devoted to sugarcane cultivation. It was also very important to improve the quality of the sugarcane grown in the province. Feng Rui’s crop-improvement program was intended to substantially increase sugarcane yields per unit of land area through the adoption of improved sugarcane varieties. Thus, according to his plan, while the area under cane doubled, the volume of sugarcane produced in the province would more than double. Feng Rui was certain that the quality of Guangdong’s sugarcane could be greatly increased. Backwardness in the areas of crop improvement and milling technology, he declared, was the cause of the decline of the Guangdong sugar industry.21 The value of propagating improved strains of the sugarcane plant in Guangdong was clear from the examples of rapid expansion of output in the world’s leading sugar-exporting regions. Compared to sugarcane supplied to mills in Java and the Philippines, Guangdong’s cane had a low commercial value. Low yields and low sucrose content caused the costs of production of milled sugar in Guangdong to be much higher than the industry’s international average. Feng Rui’s sugarcane improvement program was designed to close the large gap in scale and costs that had widened between Guangdong and regions where advanced milling technology had been introduced and where the large-scale integration of cane cultivation and crushing had developed. As modern milling had expanded in other parts of the world in association with the development of new sugarcane varieties, it had become dependent on high-yielding varieties containing high levels of sucrose to operate competitively. As Feng Rui described the gap, Guangdong’s common “wood cane” variety contained at best 12 percent sucrose, whereas the sucrose content of improved Javanese cane varieties could reach over 17 percent.22 John J. Ehrhardt, the managing engineer posted to Guangzhou by Honolulu Iron Works (HIW) in 1933, estimated that the low yields and low sucrose content of Guangdong’s sugarcane crops resulted in milling costs in the province that were “perhaps the highest in the world.” In a discussion on the prospects for sugar milling in Guangdong in 1935, partly because of an enormous difference in sugarcane quality, Ehrhardt claimed that if it were not for China’s sugar tariffs, processed “plantation white” sugar could be bought in Java and delivered to a Guangdong mill site for much less than the cane required to produce an

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equivalent amount of white sugar could be purchased locally.23 This basic fact about the conditions for sugar milling in Guangdong demonstrates the challenges facing Feng Rui. Feng’s basic training in agronomy proved to be valuable expertise in this crucial part of the Sugar Industry Revival Plan. After the sugar-milling program was launched, Feng made a second trip to the Philippines in mid-1934, returning with fifty-two superior strains.24 To plant and test the samples, he leased a 400mu farm named Yong’an Yuan in Huangpu County near Guangzhou and established it as an experimental farm for the development of varieties adapted to local conditions.25 As mentioned in Chapter 4, he recruited a sugarcanecultivation specialist named Rex King from the University of the Philippines to manage the experimental farm. In 1935 Feng reported that fourteen excellent strains had already been developed at the Yong’an Yuan site and would be propagated in Guangdong’s cane-cultivating areas.26 Later that year, he reported that about 10 percent of the area newly planted in sugarcane had been planted in improved varieties.27 Referring to criticisms predicting that the cost of sugar milling would be higher in Guangdong than elsewhere,28 Feng Rui acknowledged in defence of the provincial plan that costs would be high at first because of the deficiency in sugarcane quality, estimating that for the first three years of operation, the total production costs of the government mills would be about 10 percent above levels prevailing abroad. He claimed, however, that because of careful attention to the quality of equipment and given the presence of foreign-trained managers and operators, production costs in the government mills were already falling.29 Rex King optimistically stated to a journalist that Guangdong could supply the sugar needs of all China if the methods of sugarcane cultivation and milling were improved.30 Feng Rui made a similar claim, declaring that given Guangdong’s climate and abundance of suitable land, comparable in total area to that devote to sugar cultivation in the Philippines, Cuba, and Java combined, the province’s sugar industry could easily meet China’s domestic consumption needs. Neither he nor Rex King predicted how soon their crop-improvement efforts could yield such results.31 From the outset of the program, it seems that Feng overestimated the speed with which new varieties could be successfully propagated. A snag that weakened and actually slowed down the crop-improvement program was that the seedlings sold to farmers through the government mills were not fully reliable. Later on, the complaints of farmers who claimed to have purchased seedlings that died were on the list of failings attributed to Feng Rui.32 It appears that cuttings from shoots of the imported cane plants and parts of plants, rather than seedlings or cuttings from new plants grown on the

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Figure 4 Feng Rui (right) at the Guangdong provincial sugarcane experimental farm, 1935. Source: Guangzhou sanjiaozhou zhi ganzhe caipei [Sugarcane cultivation in the Guangzhou delta region] (Guangzhou: Guangdongsheng zhengfu, 1935).

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experimental farm in Huangpu, were sold to farmers who had agreed to cultivate cane to supply government mills. It was the standard practice in sugarcane cultivation to plant sections of sugarcane saved from the last harvest. 33 In the case of unreliable seedlings, it seems that true adaptation of the imported varieties had not yet been carried out. The crop-improvement program was perhaps expected to yield useful results more quickly than nature could allow. Eventually, however, the experimental sugarcane farm established in 1934 at Yong’an Yuan and the program of extension across the province that Feng Rui directed were important contributions to the later widespread and intensive use of Javanese sugarcane varieties in Guangdong after 1949.34 Following his visit to the Philippines, Feng Rui had reported that the rapid progress of the sugar industry in the Philippines would “serve us as a mirror” (wei wuren zuojing), or as the model for a similar program in Guangdong. He predicted that Guangdong could soon match the impressive Philippine achievement. By the eve of the independence of the Philippine Islands from the United States in 1935, sugar milling had indeed become a mainstay of the territory’s economy. But this had taken decades, rather than a few months, to achieve. Under American colonial rule, planters in the Philippines had introduced improved varieties beginning in 1905 when the Philippine Bureau of Agriculture began to introduce improved strains, first from Hawaii and later from Java (developed there by Dutch agronomists) and other places. Beginning in 1907, crop improvement in the Philippines had been promoted by the bureau’s efforts to propagate seed and technical knowledge throughout cane-cultivation areas in a systematic education, experimentation, and extension program.35 An agricultural credit program offering sugarcane growers loans at a 10 percent annual interest rate was operating by 1910.36 Moreover, the Philippine industry had lessons to offer in the area of organization as well as crop improvement. Contrasts between conditions in the Philippines and Guangdong reveal that the required expansion of supplies in Guangdong would have required far more than Feng Rui’s straightforward crop-improvement program. The Credit and Contract System More complex problems arose in Feng Rui’s direction of an agricultural credit program. As noted in Chapter 2, he helped to make the arrangements for a loan, totalling N$2 million, from Shanghai through Guangdong’s Department of Reconstruction, partly intended to finance sugarcane cultivation by farmers near the new provincial factories.37 The credit program opened with the disbursement of G$300,000 through the Panyu County Agricultural Bank, which

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opened branch offices near the new mills at Xinzao and Shitou, south of Guangzhou. According to Feng Rui, the rationale of the loan program was that “farmers on the brink of disaster understand the profitability of sugarcane cultivation but are prevented from pursuing the opportunity by their shortage of capital.” He stated that the loan program had a dual purpose. It would help to “rescue villages in crisis” by bringing urban capital to rural circulation and at the same time would secure supplies of cane for the government mills.38 Feng also expected the credit program to facilitate coordination between cane growers and the mills and to encourage cooperation among the cane farmers. Official management of Guangdong’s sugar industry was required, he stated, because it was necessary to link together so many individual producers.39 There was a Philippine inspiration for the credit program. By the 1930s, sugar milling in such places as Cuba, Java, Hawaii, and the Philippines had become a very large-scale business. Mills in those places were located in areas heavily devoted to cane cultivation and depended for their massive supplies of sugarcane on forms of direct contractual relations or indirect coordination with large numbers of cane cultivators. In the Philippines, sugar millers controlled both sugarcane cultivation and the flow of supplies to mills through contracts with many individual landowners and plantation managers.40 Referring to Philippine models, Feng Rui drew up a standard agreement with regulations binding both on the mills and on the cane suppliers.41 The plan was to deal directly with sugarcane growers, “eliminating the middlemen” who appropriated a portion of cane-production profits.42 The basic terms of Guangdong’s standard contract with sugarcane producers were that any farmer or group of farmers who owned or leased a minimum of 100 mu of land suitable for cane cultivation would be eligible to receive loans amounting to G$25 per mu to help cover the costs of production. The contract obliged producers to deliver the cane they grew to the government mill. For its part, the mill was obliged to pay for the cane at the set price, provided that the crop reached a set standard of quality. Notices inviting “farming friends” (nongyou) to “cooperate” in cane cultivation with the government’s new sugar mills by entering crop contracts, along with contract application forms, were drawn up and circulated in the vicinity of the mills.43 Feng Rui stressed that a main aim of the credit program was to extend the cultivation of improved sugarcane strains. By buying improved seed from Guangdong’s Bureau of Agriculture and Forestry with the help of government loans disbursed through the sugar factories, farmers would be able to improve their crops and thereby increase their earnings. As agents of the bureau, the sugar mills made the commitment to growers to buy their cane at the prices of

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G$0.90 per dan for wood cane and G$0.70 per dan for the other common variety, called bamboo cane. According to Feng, the sugarcane-crop credit program also provided a strong incentive for the expansion of sugarcane production. He also hoped that the funds would encourage crop improvement through the extended use of fertilizers. Especially if they applied phospate and potassium fertilizer to their sugarcane fields, cultivators could expect yields per mu to reach from 100 to 160 dan, thereby earning at least G$90 per mu44 and ensuring that they could comfortably repay the G$25 per mu that they had borrowed. However, interest rates on the government loans were high, set at 8 percent monthly. Loan-security measures, moreover, made access difficult for many. For those without fixed assets to serve as collateral, there were four ways to apply: with the guarantee of “two shopkeepers having substantial capital”; with the “joint guarantee” of a group of six sugarcane farmers; with guarantee certification of three or more “trustworthy and eminent” guarantors (only local gentry, political leaders, and asset holders would be eligible); or finally as a sugarcane growers’ cooperative, whose eligibility would be subject to verification.45 The contracts broke down in various ways. Chen Zhaoyu described the problems Feng Rui faced in supervising the cane-cultivation loan program. She declared that the problems had caused her husband so much aggravation every day that he had been driven to the point of exhaustion attempting to deal with them.46 A major problem was that farmers who were short of capital were able to borrow government funds to plant cane but could not invest further to ensure the quality or volume of their harvests. For instance, a farmer might plant as much as 1,000 mu using loans, but the loan funds typically covered only half of the costs of growing good-quality sugarcane. Unable to supply sufficient fertilizer or labour to produce healthy sugarcane, such a farmer would cause the sugar mill to suffer losses. Even when the apparent quality of the sugarcane he delivered met the standards for acceptance by the mill, it was likely that the sucrose content would be seriously low. Such inferior cane was of little use to the mill. Other borrowers undermined the program by using public funds to plant cane and then selling the produce privately. Some producers using loans would deliver to the government mills only enough cane to meet the value of the loans they received, disregarding their contractual obligation to sell their entire crop to the government mill. Instead, they would take part of it to local animalpowered mills. The extension of credit for planting cane on land that did not exist was another of Feng’s troubles. For example, two cane planters who owned land scattered

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in several places, even in more than one county, might both apply for loans. Although a government surveyor would take care to verify their claims, they might partly overlap. As a result, loan funds might be disbursed to cultivate 4,000 mu when only 3,000 mu actually existed. This problem arose partly because the landlords themselves were unsure of the boundaries of their holdings. In a clear abuse of the system, some landowners or borrowers posing as prospective sugarcane farmers borrowed money for investment in other ventures. This problem was very vexatious, for such speculators were able to abscond to Hong Kong and Macau, where they were out of reach of the Guangdong government. Not only were farmers holding less than 100 mu ineligible for the sugarcane loans, but smallholders were sometimes victimized by local usurers who succeeded in getting their hands on the government funds. These borrowers pieced together the holdings of small farmers to claim eligibility for credit and then reloaned the funds in reduced amounts per mu and at high interest rates to the smallholders. Reportedly, such culprits would pocket G$5 or G$10 out of every G$25 they borrowed on the basis of their land claims, as well as cheating smallholders by relending the rest at high interest. Chen Zhaoyu identified this last problem as greatly contributing to Feng Rui’s difficulties. She stated that he had been accused of cheating the people as a result, and because higher authorities also believed or chose to believe that he was responsible for encouraging usury, Feng was unable to clear himself of the accusations.47 Xian Zi’en also commented on the difficulties facing prospective cane growers who, lacking fixed assets, attempted to participate in the government loan program that was supposedly intended to establish direct ties with sugarcane cultivators. It was unlikely that such applicants could gain the guarantee of two wealthy shopkeepers. If they submitted a joint application, they were likely to be refused credit after being checked out. According to Xian, such so-called cooperatives had names like The Farmers’ Benefit Farm and The People’s Livelihood Farm but were actually controlled by landlords and rich peasants. In the end, only local bullies and notables with military or administrative rank were able to gain credit without collateral to supply cane to a provincial sugar factory. They did so through private arrangements with high-level factory administrators.48 Elsewhere, Xian Zi’en wrote that Feng Rui’s mother, Madame Ling, was one such sugarcane supplier. He claimed that she became a familiar sight in the neighbourhood of one of the mills, delivering large quantities of sugarcane.49 Although Xian stated that people believed that Ms. Ling received preferential treatment from the mill, he mentioned elsewhere that she was a village

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moneylender. She might perhaps have had useful experience in lending money in one of Guangdong’s many neighbourhood rotating-credit societies.50 In his reports as the recently appointed director of Guangdong’s Bureau of Agriculture and Forestry, Feng Rui identified the promotion of cooperativization in Guangdong as the main responsibility of his Department of Agricultural Economics and Farm Management. The department’s role was to provide information and leadership in order to help establish new cooperative societies following established structures and methods. To help Guangdong’s farmers overcome the financial obstacles to adopting improved techniques, the department administered a program selling irrigation pumps on instalment plans through such cooperative groups. Feng also reported that a three-year plan for the organization of an agricultural bank had been drawn up to regulate monetary circulation in the rural economy.51 Later, it was mainly through the arrangements established to encourage farmers to pool their funds in order to purchase improved varieties of sugarcane seedlings that these ideas were realized.52 The cooperativization theme linked Feng Rui’s work in Guangdong to his past educational and professional experience. As director of the Bureau of Agriculture and Forestry, however, his responsibilities in this area were much larger in scope. In the early 1930s, Chinese enthusiasm for cooperatives and rural credit programs was peaking. The Nanjing government promoted the idea and passed legislation to govern cooperatives, while Guangdong followed suit to set them up. Later, there was some disillusionment, even among activists committed to cooperatives, with the apathy and incompetence demonstrated by the administrators of rural cooperative programs for agriculture.53 Generally, the shortcomings seem to have been caused by the lack of realistic planning evident in this brief review of the promotion of cooperatives in sugarcane cultivation. Labour Costs Addressing his staff on 31 July 1933, Feng Rui had described the organization of sugar production in the Philippines, where a “central system” was used in which factories were surrounded by fields. “Every plantation area spreads out for tens of li, with the sugar mill in the centre taking charge of producing all the various sugar products,” he stated. Feng also noted that the sugar centrals of the Philippines provided guidance to farmers in their crop-improvement efforts.54 Feng had been confident that in response to the price increases to be expected as a result of new demands for raw materials for the government’s sugar factories, the farmers of Guangdong would grow more sugarcane. He even anticipated that in some locations they might produce more sugarcane than the

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mills could handle, in which case one or more of the new mills would later be expanded.55 Clearly, the main reason that the sugarcane-cultivation credit system did not bring about a rapid expansion of supplies for the sugar mills was that the incentives it provided were not attractive enough to sugarcane growers. This was partly because of Feng’s overly optimistic reliance on the expected gains to producers adopting new sugarcane varieties as well as his overly optimistic view that the varieties could be propagated rapidly. In planning the expansion of production to supply the new factories, Feng placed his hopes less on price incentives than on the expected gains in yields per mu and in sucrose content to be achieved by farmers applying fertilizers and adopting new varieties. A newspaper report of May 1935 quoted his claim that the prices to be paid to sugarcane growers in their contracts with the government sugar mills were “very fair.”56 Referring to the Jieyang mill, the US consul posted in Shantou reported in 1934, “Engineers connected with this project are frank to admit that higher prices to local farmers are not contemplated but that benefits to the farmer will be derived, if at all, from higher extraction rates possible through the use of modern machinery and from the improvement in quality of the local product.”57 That sugarcane prices were low in the eyes of the growers is clear in other serious difficulties Feng Rui encountered in his sugarcane program. These difficulties compounded the problem of continuing low yields of sugarcane per unit of land. They arose because local land and labour resources were not diverted into sugarcane production for the government mills. Feng Rui’s plans had assumed that Guangdong possessed ample idle resources. The idle resources existed in forms such as fertile but uncultivated land scattered throughout the province; unemployed labour in the Shunde area, where many sericulturists had been thrown out of work during the 1930s by depressed markets for Guangdong’s silk; and the land occupied by mulberry orchards in the same region that presumably could be converted to sugarcane cultivation. Although the province as a whole had underused resources, the local response to incentives offered by the government mills indicates that those incentives were weak. Local resources were more profitably employed in other ways. This was serious because not only did the new mills require much larger amounts of sugarcane than had been formerly produced where they were built, but the special characteristics of the sugar industry also required local supplies. The proximity of sugarcane cultivation to mills is critical because the sucrose content of sugarcane deteriorates rapidly after it is cut. For efficient operation, therefore, large sugar mills depend on the establishment of monoculture in sugarcane nearby. In other

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words, Guangdong’s new mills were designed to be the centrepieces of sugar plantations, but plantations did not exist in Guangdong. In his lecture to Lingnan University students in May 1933, Feng Rui stated that Chinese peasants, lacking in initiative, were set in their ways. He contrasted them with industrious Danish farmers, declaring that China’s low labour productivity in rural areas was an obstacle to progress.58 In one of his speeches, Chen Jitang used similar terms, also unfavourably comparing Chinese villagers to Danish farmers.59 This was the intellectual current in which Feng Rui participated, wherein China’s problems were discussed in terms of backwardness and villagers’ idleness. Sharing conventional thinking about the depression in rural Guangdong, Feng Rui expected the government’s milling program to draw underemployed labour into sugarcane cultivation. In his discussion of how production costs in the government sugar factories would soon be lower than those prevailing abroad, he pointed out that Guangdong had the great advantage of low labour costs. In addition to expecting that the technical expertise required for modern milling would develop promptly and that sugarcane yields and quality would increase rapidly enough that production costs, 10 percent above the international standard to start with, would be reduced to the standard level “within three years,” Feng Rui was confident that Guangdong’s sugar mills would soon operate with costs below the world average in sugar milling worldwide thanks to low wage costs. It is not quite clear here or elsewhere whether Feng took the labour costs of sugarcane planting and cutting into account, although it seems so.60 It is clear, however, that he undervalued labour, and land as well, while calculating the costs of production for the new mills. Perhaps this was because he miscalculated the impact of Depression-era conditions in rural Guangdong. It might also have been because he could not predict who would provide the field labour required by the government mills. Even when the prices and other terms offered by the government mills might have served as adequate incentives, cane growers withdrew from the program when they found that middlemen cut into their earnings. Whereas farmers had been guaranteed a set price of G$0.80 or G$0.90 per dan for the sugarcane they supplied to the government factories, the involvement of middlemen depressed prices for cane growers. The farmers might sell their cane at a discount to dealers who delivered it to the mills. Or they might pay the dealers to transport their harvested crop. It was reported that brokers who specialized during the canecutting season in buying the crop in the fields and shipping it to the government mills took advantage of assessments of cane quality made at the time of delivery to pay growers less than they had expected. According to a report of 1935, “Objections have been made by many farmers that they are actually forced to accept

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only 40 to 50 cents per dan for their cane, while the remainder goes into the pockets of the government’s purchasing agents.”61 According to Xian Zi’en, the cane-purchasing middlemen, called zhegun (cane sticks), were deeply detested by the cane cultivators. They would purchase the cane from the farmers for G$0.40 or G$0.50 per dan instead of G$0.90. But the middlemen were not likely to earn the remainder of the G$0.90 themselves because a system of extortion by factory staff at all levels was operating. For instance, the cane-delivery specialists might have to pay bribes at each of several steps, including registration as a qualified “cane supplier” (zhehu), the unloading of cane shipments, the testing of cane quality, and the receipt of payment. In another example, a shipment of cane might be kept waiting in the river for several days if arrangements for its delivery had not been duly made in advance with staff at the sugar mill. While lying in the sun and rain, the cane would inevitably deteriorate and lose its value. If the quality-inspection staff did not receive gifts, they would assess cane shipments at low values, claiming that the cane had not been properly trimmed or did not meet quality standards in other ways. Gifts were also necessary after cane was weighed to ensure that a “raw materials receipt” would be sent immediately to the accounting department. Finally, a supplier could not forget to tip the audit staff of the accounting department to ensure that they would instruct the bank to disburse a payment.62 Given this description, it seems possible that it was in her role as a cane supplier, rather than as an applicant for credit, that Feng’s mother, Ms. Ling, received preferential treatment. Feng Rui was also criticized in 1936 for having employed an incompetent brother-in-law as a factory manager.63 A newspaper report published two weeks after his death mentioned the autocratic behaviour of Feng’s relative by marriage, who had been responsible for managing the Shunde sugar mill.64 The information on shortfalls in sugarcane supplies for the mills under Feng Rui’s supervision is scanty. As well as occasionally suspending operation during the grinding season, they faced the more serious problem of not having raw material to last more than two or three months. Data on how many days each mill operated is presented in Table 5.3. The Competition of Local Mills Feng Rui expected that the Sugar Industry Revival Plan would draw reserves of idle land and underemployed labour into sugarcane production. The undervaluation of rural resources is partly to blame for the shortcomings of the provincial sugar-milling program that he directed. Land and labour resources, viewed by Feng Rui as inexpensive, were not freely diverted from more rewarding uses.

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Table 5.3 Cane-crushing season in the Guangdong sugar mills, 1934-36 Number of days of crushing operations Mill location Shitou Xinzao Shunde Jieyang

1934-35 season

1935-36 season

100 57 not yet operating not yet operating

98 77 83 60

Source: Xian Zi’en, “Chen Jitang ban tangchang jingguo” [The story of Chen Jitang’s investment in sugar milling], Guangzhou wenshi ziliao [Materials on the culture and history of Guangzhou] 16 (1965): 114.

Not only were the prices offered by the government mills unable to compete with other resource uses, meaning that land and labour were not reallocated for sugarcane cultivation, but the provincial milling program also faced the serious and unforeseen circumstance that the prices offered by the government mills were not high enough to compete for sugarcane supplies with private millers. To ensure that expanded cane output would reach the government mills, the Sugar Industry Revival Plan was backed by a new provincial regulation restricting private investment in sugar milling to G$20,000. Feng Rui claimed that this government regulation would benefit the private millers as well as the government through a committee established “to adjust and balance sugar markets and help the private mills to improve management operations.”65 As indicated in the discussion of how recipients of government loans misbehaved, the hundreds of small milling operations that were too small to be restricted by the investment regulation continued to compete effectively with the new factories. This was unexpected. In 1935 Feng had been confident that “profits [for cane farmers] under contract to government mills will certainly be far in excess of those realized by producing native sugar for the old bullock-powered plants.”66 But because they met the needs of both cane growers and sugar consumers, the basic bullock-and-grindstone operations continued to prosper despite his prediction that they would not be able to compete with the new mills.67 One of the advantages of the new mills that Feng Rui had felt confident about was labour efficiency. They used half as much labour per ton of cane crushed as the old-fashioned mills (called liao). Furthermore, the new mills operated with lower fuel costs and extracted juice from the cane they crushed at higher rates. Whereas the standard rate of extraction in the new factories

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was 99.6 percent, only between 80 and 90 percent of the cane juice was extracted by the grindstone mills.68 Feng Rui’s prediction that the new mills would supersede the old ones proved inaccurate for two reasons. First, cane farmers were less concerned about comparative labour efficiency or sugar extraction rates than were the managers of the new mills. Typically, the old-fashioned mills operated as grinding services. Growers could use their own or family labour to crush cane and keep the product to sell on their own, thereby earning all of the final price, and they could keep or sell the incompletely squeezed refuse for use as pig feed. Moreover, the price of Guangdong’s brown sugar and its imported equivalents remained unexpectedly high, while imported white sugar was pervading provincial markets. The continuing demand for homemade muscovado sugar was a surprise to Feng Rui, who had assumed the superiority of the “plantation white” product, which was the object of his import-substitution program. He wrote that Chinese consumers could be expected to prefer the more “hygienic” qualities of white sugar to coarse local sugar, and would naturally turn to the more highly processed sugar as their average incomes rose.69 Market demand for the varieties of sugar processed by the liao, which Feng Rui believed were unattractive to consumers, remained so strong that they were popular even in places where their prices were higher than the prices of imported white sugar. As a result, Guangdong’s sugarcane growers generally were able to earn G$1.00 per dan on their sugarcane if they took it to be ground in the liao and then sold the sugar they produced themselves, in comparison to a maximum of G$0.90 per dan at the government-factory price, not to mention the reduced prices of G$0.40 or G$0.50 about which they had complained. Feng Rui assumed that many of the animal-powered grinding operations would be displaced by the efficient new mills, but the Guangdong sugar-milling program was also expected to complement the traditional mills in regions where sugarcane cultivation was well established. As well as crushing cane, the new mills were equipped to reprocess the raw and brown sugar products of the liao during many months of the year. As Feng Rui’s estimation of profits in the first years of the sugar program indicates, the plans depended on the delivery of large amounts of roughly processed sugar as well as freshly cut sugarcane to the government factories. However, the expected displacement of “domestic sugar” (tutang) from the provincial market did not occur. Writing in 1933 that Guangdong’s white sugar and rock candy products had been completely displaced by imported sugar, Feng Rui himself mentioned that even the yellow-coloured “flake sugar” (piantang) commonly consumed in the province was being made out of imported materials, in a conversion of higher grades of sugar into an imitation of a local product.70 One of the places where

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a reversal of the gap between the prices for raw domestic sugar and imported white sugar occurred was in the traditional area used for sugarcane cultivation and processing in the hinterland of Shantou, in northeastern Guangdong. The US consul who had commented on the prices that Jieyang mill managers expected to pay also reported the phenomenon that Javanese muscovado was selling at $0.26 per kilogram in local currency and that the price of Javanese plantation white was $0.10.71 According to a news report of December 1934 on conditions facing sugarcane farmers in the Chaoshan area, farmers using the services of liao to grind their cane could expect to produce four dan per mu of muscovado sugar in a good year and at least two dan in poor weather conditions. They could then sell their sugar to wholesale dealers for G$12 to G$13, or at a retail price of G$0.15 per jin.72 This may be compared to what they would earn selling their cane to the Jieyang Sugar Mill, which was G$0.70 to G$0.90 per dan of raw sugarcane. Presumably, they grew between five and eight dan per mu. This would earn G$3.50 to G$7.20 per mu rather than G$12 or more if they did not deliver their sugarcane to the provincial mill. Less precise information on the domestic production and consumption of sugar in China was available than on imports during the 1920s and 1930s. Nonetheless, it appears that Feng Rui did not pay as much attention to patterns of consumption as he might have done. At least for publicity purposes, he took the commonly cited figure of five pounds per capita for China’s annual consumption of imported sugar to refer to total consumption.73 In contrast, HIW employees who studied the available information considered imports to account for roughly half of China’s total domestic consumption of processed sugar. Although imported sugar was consumed in the urban centres, large numbers of Chinese never saw it at all. If they did, stated Ehrhardt, the HIW engineer, they were not likely to prefer it to the varieties of sugar to which they were accustomed.74 Land-Related Difficulties When questioned about the potential sugarcane-supply problem by businessmen in the Philippines in 1933, Feng Rui assured them that China had an abundance of fertile but unused land. Now that prices had risen and the farmers were aware they could cultivate sugarcane remuneratively, not only would those in places that had been “parched” for many years be interested, but all would be glad to grow sugarcane.75 Even when Guangdong had supplied Southeast Asian and Indian consumers with sugar in centuries past, sugarcane cultivation as well as sugar milling had been small-scale operations. In the colonized Caribbean in centuries past, the

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plantation-slavery mode of sugar production had concentrated resources within one enterprise. By the twentieth century, sugar production worldwide was no longer dependent on slave labour. Yet, many mills continued to own land, and in many parts of the world secured labour through long-term contracts offering only scanty compensation to the workers. However, circumstances in certain areas made it more efficient to de-integrate production. Modern milling was separated from cane cultivation where wages and land rents were low. In such conditions, it proved less expensive for mill owners to hire workers and rent land than to continue to cover the various overhead costs and bear all the risks involved in integrated plantation-style sugar production. In the Philippines, the de-integrated system of contracts between millers and cultivators seemed successful. However, the Philippine system was not based entirely on efficiency. Philippine millers at one time had the right to sell workers as well as buildings, machinery, and standing crops. A high level of integration actually might have still suited the circumstances when Feng Rui made his visit to the territory. But there was an artificial limit on production scale imposed in 1902 in the form of a legal restriction on the amount of land individuals could own. It was to overcome this hindrance that millers in the Philippines had first sought to secure supplies of raw materials through contracts. A system first developed in the San Carlos region became the model arrangement also used in other areas and made the Philippines unique among the world’s sugar producers. Typically, a miller gained legal obligations from all owners of large plantations nearby that they would supply the milling firm exclusively with the sugarcane they grew for a period of thirty years. In return, the milling firms were obliged to return half of their finished product to the sugarcane planters.76 Comparably favourable access to land did not exist in Guangdong in the 1930s. It is also significant that serious problems existed in the Philippines as well.77 Problems there were a mirror for conditions in Guangdong in some ways. The Guangdong government had only restricted access to potential sugarcane land. It lacked the authority to reallocate this resource for expanded sugarcane production in the vicinity of the new factories. Attempts were made, however, through the leasing or purchasing of land from private owners near the mills.78 In regard to Feng Rui’s brother-in-law, mentioned above, Feng was accused of allowing his relative to withhold the payment of rents to the landowners whose land was being used for cane cultivation near the Shunde mill.79 Records surviving from the Jieyang factory, which began to crush cane in a first partial season beginning in February 1936, illustrate the difficulty of securing land for the purpose of cane cultivation near the Guangdong provincial sugar mills. In a letter dated 19 March 1936, the factory manager, Zhou Dayao (who had formerly been the Customs sugar chemist), reported on difficulties

144 Bitter Experiences with Sugarcane

encountered in an effort to extend cane cultivation to supply the mill during the 1936-37 season by means of a cooperative planting program established in association with the Jieyang County government. According to Zhou, the factory’s role had been “to cooperate with the peasants in planting so as to support the small farmers and the village economy of the area as part of the provincial three-year plan to promote agriculture.” But where the cooperative cultivation had begun, it had been suspended as a result of local opposition. In one case, where a so-called “cooperative sugarcane farm” of several hundred mu had been established by the Jieyang mill, government agents and local farmers who had entered into contracts with the mill faced armed opposition. In this case, a group of local men attacked the cooperative and destroyed a newly planted crop.80 A witness described the incident, saying that a group of dozens of stocky clansmen, led by Lin Dingsheng and his two brothers Xiaoman and Xiaoyin, had arrived at the cooperative farm “shouting out loudly as though confronting a tremendous enemy force.” Using spades, the Lins then destroyed the seedlings of the newly planted area, claiming that the project infringed on the rights of their clan.81 Other reports from the Jieyang mill provide further examples of conflicting property rights and destruction. One man, detained by a factory security guard, had been fishing in a gully on factory property. When questioned by the factory manager, he claimed that he had the customary right to do so and was in fact fishing within sight of his clan’s ancestral temple.82 Chen Zhaoyu pointed out that the ownership of land in Guangdong by clans was distinctive and complex, excusing Feng Rui from blame in the matter of appropriation of land.83 Anthropological research confirms her statement, indicating that clans in Guangdong might have customary rights to land where other owners also claimed property rights, including the right to sell.84 Near the Jieyang mill, another case of destruction involved an individual farmer cultivating cane under contract with the Jieyang mill. The farmer, who was an agriculture-school graduate named Lin Yikai, had reported that his jealous neighbour, a man named Chen, had destroyed his newly planted cane crop by flooding the land with salt water. (Saline irrigation methods were developed by sugar planters in Hawaii.) Although the case was brought to the county court, which ruled in favour of Lin, it proved difficult to exact restitution from Chen.85 The violent incidents that occurred near the government sugar factory at Jieyang during the spring of 1936 resulted in the stationing of troops at the factory. A force was dispatched from the headquarters of the provincial First Army in Guangzhou.86

Bitter Experiences with Sugarcane 145

Coordination Problems Some of the problems with the supply of raw materials that Feng Rui faced were wrinkles he might have been able to iron out given more time. Undeveloped coordination could be identified as his basic problem. By assuming responsibility for implementing the provincial sugar industry plan, Feng Rui and the bureau that he headed had taken the position of a bureaucratic agent formally replacing the “middlemen” who connected those who grew sugarcane to those who turned it into sugar. However, numerous links within the newly established system integrating sugarcane cultivation and cane crushing through the use of contracts were not yet effectively developed. Feng Rui was well aware of the problems in this area because he was compelled to spend long hours at the mills near Guangzhou dealing with them. Meanwhile, many intermediaries remained active in the sugarcane business. Reports from Jieyang regarding the accumulated unmet obligations of fourteen private firms to the Huasheng Company, a cane-delivery subcontracting agent with offices at the mill site, indicate that numerous separate agents continued to be involved in the business of supplying one mill.87 Because intermediaries and their subcontracts greatly complicated the coordination problem, the lack of coordination could also be regarded as indicating the underestimation of costs. Feng’s planning had not considered the costs of gathering the information required to manage the contract system. Transportation was another loose link reflecting the underestimation of costs in the Sugar Industry Revival Plan. In another incident involving violence, the Jieyang mill reported that the night crew on a sugarcane-delivery boat making a regular trip at the height of the cane-cutting season had been robbed of clothes and cash by a group of bandits and had requested regular protection as a result.88 In the Philippines, by contrast, the development over time of a system of railways to support the sugar industry had also helped to reduce milling costs, along with the efficient coordination of grinding and farm work between mills and cane growers. But this had taken decades to achieve, whereas Feng Rui had only two years. In Guangdong, the links in the production process that were covered by contracts between a government sugar factory and the various agents supplying it frequently broke down. For instance, poor quality or insufficient quantities of cane led to equipment failures and to the suspension of milling operations while equipment was being repaired. At these times, growers lost money, for the cane they had continued to cut while news of the stoppage reached them deteriorated in quality as it lay in the fields, field hands hired to cut cane were not paid while

146 Bitter Experiences with Sugarcane

the stoppage lasted, and transport contractors and boat crews lost business while the mill suspended acceptance of shipments. In effect, the government mills shifted the burden of losses onto their suppliers, causing dissatisfaction with the whole program. The contract obligations were unequal. Whereas growers, transporters, and dealers had obligated themselves to supply cane to the factories, the provincial sugar mills were not obliged to accept their cane. A heavy burden of coordination rested on Feng Rui’s shoulders. He worked long hours during the cane-crushing months, attempting to resolve both serious conflicts and minor obstacles to the success of his program. With so much to worry about, Feng Rui was frequently travelling down to the mills south of Guangzhou to put in fourteen-hour days.89 According to a news report on his death, Feng had developed heart disease while still in his mid-thirties.90 In a letter to Chen Zhaoyu composed during the winter milling season of early 1936, Feng Rui reported that he had recently sought medical advice. After examining his health, Feng’s physician diagnosed him with high blood pressure and recommended an eighteen-month leave from work. But when Feng told Lin Yungai that he wished to resign, Lin refused to let him go, saying that there was no one who could replace him as director of the sugar-milling program. “I feel like a caged rat, running around on a wheel,” Feng wrote to his wife.91 The Plantation Model in Guangdong A speech delivered by Chen Jitang in September 1935 is an indication that the Guangdong sugar-milling program was then becoming unpopular. Chen referred to criticisms directed against his government, particularly claims that it was making profits at the people’s expense. As though the sugar mills were the target of specific complaints, he pointed out that the sugar-milling program and other provincial enterprises established during recent years were difficult ventures. People did not understand this, Chen declared, even though, in the meantime numerous and various burdensome taxes had been abolished; those who complained were forgetting the government’s many favourable measures.92 This chapter has described flaws in the design of Guangdong’s Sugar Industry Revival plan and attributed poor planning to Feng Rui, its official director. In projecting the rapid expansion of sugarcane supplies for the mills, Feng apparently assumed that farmers would choose to devote their resources to sugarcane cultivation thanks to the incentives offered by the provincial milling program. To be fair to Feng Rui, it is important to consider his circumstances. Given the information presented in Chapter 4, it is clear that the parameters of a sugar-milling plan were imposed on him. The plan resulted from the desire of foreign firms to sell and install large-scale milling equipment in China and from the decision by Guangdong’s top leaders to invest in large-scale industrial

Bitter Experiences with Sugarcane 147

production. Their commitment dictated efforts to operate the new mills profitably. Given the high cost of sugarcane in Guangdong compared to the cost in regions of the world where large-scale milling had been established decades earlier, Feng Rui was under tremendous pressure. As will be seen in Chapter 6, in 1934 he also assumed supervisory responsibility over the Guangdong Sugar Monopoly (GSM) and thus became associated with a system of “official smuggling.” In contrast to his role in the GSM, in the sugarcane-cultivation portion of the provincial sugar program, Feng Rui did not share responsibility with others at his level and above in the provincial government. Perhaps this helps to explain why the report on his execution emphasized that he had been condemned for “oppressing the people” rather for involvement in smuggling. As seen in Chapter 4, HIW staff were optimistic in predicting Guangdong’s potential for expanded sugarcane cultivation. Under pressure on two sides to ensure flows of payments, Feng Rui assumed responsibility for carrying out an unworkable plan. The most fundamental problem Feng Rui faced as general manager of the Guangdong government’s sugar mills was the difficulty in directing resources into the expansion of sugarcane cultivation. Despite new provincial regulations establishing the mills as exclusive purchasers of sugarcane cultivated by farmers under contracts, the mills were not assured of receiving adequate supplies of raw material. Although sugarcane was indeed being produced in larger quantities thanks to the various incentives put in place, growers did not sell their crops exclusively to the mills even when obligated to do so by the terms of their loan agreements. Neither official authority nor material incentives, therefore, were strong enough to ensure operation of the new mills at their full capacity. The sugarcane-supply problem was solved only after Feng’s death by the increased integration of the Guangdong sugar industry. Integration amounted to the gradual appropriation of needed resources by the government, as Guangdong’s sugar industry moved toward a mode of production similar to that of sugarcane plantations in their classical form. During the 1930s, the sale of large volumes of sugarcane to Guangdong’s provincially owned mills was institutionalized, a basis was established for the mills to gain property rights to the land surrounding them. Land near the government-owned mills came to be “owned by the enterprises” (changyoude) during the Maoist period and remained under the control of the factories even as they shifted their assets out of sugar milling and into other areas of investment.93 Thus although the authorities had declared that appropriate punishment of Feng Rui would “liberate the peasants” of Guangdong,94 continuation of the sugar industry program after his death was based on further and lasting steps toward the appropriation of resources.

6 Brokers, Smugglers, and the Official Sugar Monopoly, 1934-36

The Implementation of Monopoly Regulations On 1 June 1934, the Guangdong government established an official monopoly on the imports, distribution, and sales of white sugar throughout the province. Ten established dealers in the sugar business were newly commissioned as provincial agents in a newly formed Sugar Distribution Merchants’ Association. Provincial decrees announced that from 1 June onward, only dealers licensed and supervised by the official merchants’ association could legally sell sugar wholesale. The unlicensed sale, storage, and transport of imported and provincially milled white sugar were prohibited. As a guarantee that they would not engage in illicit business, sugar dealers were required to post bonds in accordance with the scale of their operations.1 Referred to in the press as the Guangdong Sugar Monopoly (GSM), the organization was formally administered by the provincial Department of Reconstruction. Feng Rui was the coordinator and official supervisor of the program. An experienced sugar merchant named Mo Yinggui was the leading merchant associated with the GSM. Mo was well known in southern China’s business circles as a comprador employed by the Hong Kong-based British trading firm Butterfield and Swire, which owned the Taikoo Sugar Refinery (TSR) established in 1884. Mo’s main business interest was the distribution in China of sugar produced by the TSR in Hong Kong. The only refinery operating in the region, the TSR turned “plantation white” sugar, mainly from Java, into highly refined grades of sugar for sale in China and other Asian markets.2 Feng Rui was active in supervising the GSM, attending all but one of the meetings of its Board of Directors.3 He also served as a public relations representative in this component of Guangdong’s sugar industry program. In an introduction to the GSM, Feng Rui declared that government control was the best solution to the problems faced by sugarcane growers and millers in Guangdong because they were perhaps, among all groups in China, the most seriously affected by China’s increasing reliance on imports to meet daily needs. The national economy was struggling against an invasion of cheap commodities such as sugar, he argued. Thus it was essential to invest provincial resources to establish large up-to-date mills and to unify sugar sales in Guangdong.4 Feng also expressed confidence that the GSM would provide benefits to consumers,

Brokers, Smugglers, and the Official Sugar Monopoly 149

thanks to the price ceiling on sugar and the restrictions placed on the distribution merchants’ commissions in accordance with their actual shipping and handling expenses. Outlining the new regulations, he stated that, in principle, the official sugar prices would be set according to the costs of production in the government mills. Initially set at G$18 to G$20 per dan, the retail price would fall as techniques of milling were perfected in the new mills.5 It was characteristic of Feng Rui to serve as a spokesman and apologist for provincial decisions that made the public uneasy. As seen in earlier chapters, two such policies were the rice-import tax and investment in sugar milling on a much larger scale than sugarcane cultivation in the province at the time could support. In the market control component of the provincial sugar-industry program as well, Feng bravely assumed a leading role while observers wondered whether the new policy would work. In defence of the new provincial monopoly, Feng explained that measures to control provincial sugar markets were necessary to protect Guangdong from the dumping of low-cost imports and also to eliminate predatory middlemen. However, both problems continued. Not only was the GSM unable to control middlemen and smugglers, but their activities seemed to become more rampant. According to Chen Zhaoyu, critical observers considered Guangdong’s sugar program, including factory construction and the GSM, to be a poorly disguised form of provincial taxation.6 Indeed, a month after its establishment, the GSM was operating successfully enough that the provincial Department of Finance announced that its earnings on sugar sales would replace revenue from a set of nineteen miscellaneous taxes that would be abolished as of 1 August 1934. The revenue from these taxes had not been significant and collection had been troublesome.7 From the point of view of many sugar dealers, the licensing fees and restrictions on their business, as instituted by the new regulations, imposed a heavy burden. During the first month of the operation of the GSM, sugar retailers appealed to the province for modification of the restrictions on their business. The retailers argued that they should be allowed to deal directly with wholesalers rather than exclusively through the GSM. They also sought permission to make small-scale shipments of sugar to districts in the provincial interior and requested a tenfold increase, from fifty jin to five dan, in the amounts they were permitted to purchase for sale in shops.8 The protests of retail operators in the sugar trade in Guangdong were just some of many challenges Feng Rui faced in launching the GSM. Another problem was that some of the province’s wholesale dealers in sugar tried to ignore the new regulations. Despite the participation of a few experienced sugar merchants in the establishment of the provincial Distribution Merchants’ Association, others were reluctant to join the organization. At a meeting of the association

150 Brokers, Smugglers, and the Official Sugar Monopoly

Table 6.1 Sugar distribution districts and licensed merchants’ monthly sales quotas, 1935 District Guangzhou Shantou East River Jiangmen North and West Rivers Southern districts Hainan Island

Quota (dan) 21,000 14,000 2,000 11,000 5,000 1,300 700

Source: “Report for May 1-15, 1935,” 1-2, Maritime Customs Archive (MCA) 679/32416.

on 14 June 1934, Feng Rui reported that the work of issuing licences to sugar dealers and signing contracts for sugar sales was seriously behind schedule. Although the plan announced on 1 June included a sales target of 50,000 dan of sugar per month by licensed merchants, the GSM sold only a few thousand dan during its first two weeks of operation. Furthermore, large numbers of branch distribution agents had not yet posted their bonds or collected licensing fees from the dealers at lower levels. Feng urged the distribution merchants to hasten to arrange licensing for branch agents and subdistributors.9 In a revision of the GSM regulations in 1935, the number of licensed merchants was reduced from ten to seven. Each of these agents would be responsible for the disposal of a minimum quantity of sugar per month, varying by area. The quotas are listed in Table 6.1.10 The unenthusiastic response of sugar dealers to the opportunity to serve as agents was particularly serious in the Shantou-Meixian district, the secondlargest sugar market in the province. Challenges in the northeastern region of Guangdong illustrated the limits of merchants’ cooperation with the provisions of the GSM. Fearing that they would suffer losses, sugar dealers in the northeast were unwilling to participate as branch agents in the government sales system. After discussions of the problem in several meetings of the Sugar Distribution Merchants’ Association, Mo Yinggui was commissioned to move to Shantou and to organize the work in that district.11 Later, after Mo requested a leave and left the sugar business of the Shantou-Meixian district in local hands, a case of fraud was discovered there implicating the manager of the branch office of the Sugar Distribution Merchants’ Association.12

Brokers, Smugglers, and the Official Sugar Monopoly 151

The reason for reluctance among established sugar dealers in the northeastern part of the province, where Shantou, the largest city, had been China’s most important sugar-trading port for at least a century, was not that sugar could not be sold but that the market was well served by illicit imports. Imported sugar was regularly sold at prices far below the monopoly minimum. The seriousness of illicit trade in the Shantou area in particular was recognized officially by the GSM with a special surcharge to support smuggling-prevention work in the area. The surcharge of G$0.50 per dan was imposed in November 1934 and applied to all sugar sales in the Shantou-Meixian sales district.13 Causing an increase in the GSM’s sugar price, this provision did nothing to help sales. Moreover, it appeared to encourage smugglers rather than deter them. Defenders of local sugar growers argued that the GSM protected sugar-smuggling operations.14 Evidently, the only way for a sugar merchant in Shantou to operate as a licensed agent of the official monopoly was to collaborate with the smuggling interests. It is not surprising that large quantities of white sugar were smuggled into Guangdong during the 1930s. As described in Chapter 3, after China began to exercise tariff autonomy in 1929, tariff increases resulted in an expansion of smuggling activity along the coast of Guangdong and in inland waters in the Pearl River Delta region. Given particularly high tariffs on sugar and the capacity of world markets to provide large supplies at low prices, as outlined in Chapter 4, white sugar had become the most commonly smuggled commodity in China’s import trade. It was also entering at numerous points along the long coastline north of Guangdong. According to Customs reports, sugar accounted for larger losses to national revenue than did any of the other commodities commonly smuggled during the period. It was not difficult for officials concerned with national revenue to guess that a large portion of China’s sugar-import trade was diverted into illicit channels by the sugar tariff. The volume of registered imports fell off dramatically following the tariff increase of 1931, without corresponding indications of reduced sales of sugar in domestic markets. Tables 6.2 and 6.3 illustrate the impact of the tariff on sugar exports from Hong Kong and on imports into Guangdong and China as a whole. Sugar smugglers in southern China established new routes to bypass Customs stations and patrols. Although he did not discuss the situation in detail, Feng Rui illustrated it in one of his reports by providing a few statistics showing the discrepancy between registered exports of sugar through Hong Kong and registered imports through Guangzhou. His figures are displayed in Table 6.4. Information provided by Mo Yinggui, leader of the sugar-distribution merchants,

152 Brokers, Smugglers, and the Official Sugar Monopoly

Table 6.2 Registered exports from Hong Kong in China’s total sugar imports, 1931-33 Year

Share (%)

1931 1932 1933

41.11 27.5 23.01

Source: Ho Ping-yen, “China’s Industry and Commerce during 1934,” Chinese Economic Journal (CEJ) 16.1 (January 1935): 34-6.

Table 6.3 Sugar imports, 1923-34 (volume in million dan, value in N$ million) A. China’s total imports

B. Guangdong’s total imports

Year

Volume

Value

Volume

Value

1923 1924 1925 1926 1927 1928 1929 1930 1931 1932 1933 1934

6.268 9.519 12.05 11.89 10.27 14.082 14.825 12.633 11.38 6.340 4.755 2.741

81.39 119.652 139.652 128.708 116.719 153.771 153.868 134.596 133.815 73.547 41.874 32.686

0.994 1.422 1.557 1.543 1.497 2.061 2.022 2.305 1.548 1.005 0.579 0.225

12.361 16.937 19.201 16.062 16.056 22.691 20.645 25.255 16.160 11.398 2.514 1.583

Source: “Sugar Manufacturing Enterprises in Guangdong,” Chinese Economic Bulletin 27.16 (October 1935): 235-38.

is shown in Part B of the table. According to Mo, a substantial volume of sugar entered Guangdong duty-free through Bao’an County, adjacent to Hong Kong’s New Territories. Feng Rui declared that a central purpose of the GSM was to restore order in provincial sugar markets. Smuggling would be brought under control through official regulation of the sugar trade to ensure the success of Guangdong’s sugarindustry program. Provisions of the GSM regulations were designed to eradicate smuggling. As Feng explained, the Guangdong government’s commission to

Brokers, Smugglers, and the Official Sugar Monopoly 153

Table 6.4 Sugar trade between Hong Kong and Guangdong A. Registered sugar imports through Guangzhou ..... 1930: 1933:

785,935 dan 14,287 dan

B. Exports from Hong Kong, 1933 ............................... To Macau: 800,000 dan To Guangzhouwan: 300,000 dan C. Imports smuggled through Bao’an County ........... 1933:

120,000 dan

Sources: Feng Rui, A Brief Report on Modern Sugar Industry Development in Kwangtung (Guangzhou: Department of Reconstruction, November, 1934), 7; Mo Yinggui, “Yingshang Taigu yanghang jinbainian zai Huanan yewu huodong yu Moshi jiazu de guanxi” [Activities of the British merchant firm Butterfield and Swire in South China and relations with the Mo family during the past century], Guangdong wenshi ziliao [Materials on the culture and history of Guangdong] 44 (1985): 136.

ten sugar-distribution agents required them to keep detailed records on stocks and also empowered them to seize illegal shipments and fine offenders. In cases of smuggling occurring within their sales districts, the agents would be held responsible.15 The provisions Feng described were part of an official effort to direct the sugar trade back into legitimate channels. New laws enacted by provincial legislation in May 1934 increased the penalties imposed on those found guilty of smuggling in Guangdong. In cases of smuggling on a large scale or in association with violence, or smuggling by agents holding official positions, perpetrators would face heavy fines, and in serious cases, would be subject to the death penalty.16 Despite the supervisory responsibilities of merchants licensed by the GSM and new provisions in provincial law, provincial efforts to control the sugar trade were thwarted by smugglers. Both small- and large-scale violations of the GSM regulations occurred. For instance, it was reported in a meeting of the association for sugar-distribution merchants that many small sugar-processing operations had sprung up along the Kowloon-Canton Railway line and were using smuggled supplies to manufacture candy for sale within Guangdong. A variety of “tricky operators” were setting up such workshops in the Bao’an district in particular, and their success in marketing confectionary products further inland was seriously affecting the GSM’s sales. The association thus resolved that the smuggling prevention agency of the Department of Reconstruction and the Kowloon-Canton Railway Bureau must blockade such operations, supplied by sugar being carried across the border by large numbers of railway passengers.17 On a larger scale, one of the ten district distribution agents, Chen Zhong of Taishan County, was suspected by the other nine agents of dealing in illegal

154 Brokers, Smugglers, and the Official Sugar Monopoly

imports within two weeks of the inauguration of the GSM. He was removed from the program by the end of June 1934.18 However, the departure of Chen Zhong, who forfeited his G$40,000 bond, did not halt illegal imports in his district. A confidential report to the Sugar Distribution Merchants’ Association described the clandestine entry of sugar for sale in the Taishan region. On one occasion in early July 1934, a shipment of unregistered sugar had been brought to Doushan during the night. Four inspectors set out at midnight to investigate, and the Taishan Second Official Warehouse sent out a four-man police squad. On the road leading inland from Taishan, they suddenly came upon several workers unloading sacks. The coolies ran away, abandoning four sacks of sugar weighing about 160 kilograms each.19 During the fall, the GSM was threatened by smuggling in the Zhongshan district near Macau. In October 1934, the Sugar Distribution Merchants’ Association issued orders to four subdistributors in the Zhongshan area regarding the surveillance of smuggling routes. The instructions were to send groups of inspectors to ambush smugglers at the places along the road leading to the major town of Shiqi where they would come ashore during the night to unload shipments of sugar.20 However a system of surveillance of this sort could not be effective against the official protection enjoyed by large-scale smugglers. Years later, the former chief of a police station at Shiqi in the Zhongshan district provided an account of how the GSM was subverted from within the provincial bureaucracy. The chief recalled that he had once halted a shipment of 250 tons of unregistered sugar brought from Macau. Following the intervention of someone in a higher-ranking official position, he complied with a request from higher authorities to let the shipment’s handlers proceed on their journey after payment of a nominal fine.21 Another aspect of the system of surveillance against smuggling that was instituted with the GSM was that the officially licensed sugar dealers were also officially authorized tax collection agents. As Feng Rui described the distribution merchants’ duties, they would not only keep track of sugar stocks in the province, seize unregistered shipments, and impose fines on violators of the GSM regulations, they were also responsible for the collection of a provincial tax on sugar sales.22 Although this tax was not new, the close link between the GSM and tax collection raised suspicions among observers. Guangdong’s regulation of sugar markets appeared to be a means of collecting revenue internally on shipments that had not paid Customs duties at the ports of entry into China. In an article published in Hong Kong, Feng Rui referred to a claim made by “observers who had seen little of the world” that the GSM was simply a device for the appropriation of tariff revenue. In defence of provincial policy, Feng argued that

Brokers, Smugglers, and the Official Sugar Monopoly 155

government support was required to save Guangdong’s sugar industry from complete collapse under the onslaught of low-cost imports. He also claimed that, thanks to government leadership, the volume of sugar milling and processing in the province had increased many-fold since the Sugar Industry Revival program had been launched.23 Yet he did not deny that revenue collection was a function of the GSM. Because the provincial tax on imported sugar was not new, the GSM would not have appeared as a significant departure from past practices to an audience familiar with business conditions in Guangdong. Tax-Farming Antecedents of the Provincial Sugar Monopoly Records of Taikoo Sugar Refinery (TSR) operations in Hong Kong during the 1930s reveal that the GSM was to a large extent the continuation of a sugarmarketing system established over a period of twenty years or more by the refinery’s Chinese agents, known as compradors. The compradors marketed Taikoo products on a consignment basis, posting security bonds in accordance with the size of their commitments and remitting payment after making their sales. Below these agents, sales were supervised by the managers of sugar-distribution branch offices who earned 2.25 percent of the value of sugar sales in their districts. A network of travelling salesmen earned commissions as well.24 Glimpses of how this system functioned in Guangdong and the impact of increased sugar tariffs on its operations may be seen in later accounts based on interviews with Mo Yinggui. In these published reminiscences, Mo described his participation in a system of sugar-tax farming in Guangdong before the establishment of the GSM. At the time, he was still employed as a comprador by Butterfield and Swire, owners of the TSR.25 Mo Yinggui’s description makes clear that the GSM was in many respects a continuation of a system of brokerage on the collection of a provincial tax on imported sugar that operated in Guangdong from 1928 to 1934.26 Another memoir, by a former tax broker named Zheng Shougen, explained that a broker would typically gather twice the quota of revenue that he had contracted to collect in order to pay his expenses and make a profit. Zheng gave the total value of the provincial sugar-import tax collected in 1928 and 1929 as G$1.5 million, of which G$700,000 was turned over to the provincial Department of Finance, while the brokers pocketed the rest as profit.27 According to Zheng, in the 1920s and early 1930s, a merchant named Zou Minchu was the most powerful agent collecting the sugar tax in Guangdong. Zou was the leader of a bang (group) of businessmen from Dapu County in northeastern Guangdong, operating his agency through a firm called the Tongxing Company.28 According to Mo Yinggui, a total collection of G$1 million in revenue from the collection of taxes on imported sugar was turned over to Guangdong’s

156 Brokers, Smugglers, and the Official Sugar Monopoly

Department of Finance for 1930. Since 1928, the department had invited merchants to bid for the brokerage contract every year. The competing bids pushed up the value of the contract along with the total collection remitted to the department. The total revenue rose from between G$400,000 and G$500,000 a year in 1928 and 1929 to about G$1 million from 1930 on. Two types of white sugar were imported: fine granulated sugar produced by the TSR in Hong Kong and “plantation white” from Java. Mo recalled that in the early 1930s, Guangdong’s imports of white sugar totalled about 800,000 dan annually, of which about 200,000 dan entered the province as smuggled goods, evading the provincial levy.29 In another account, Mo stated that Major General Yuan Dai, military counsellor to Chen Jitang representing the five-county Wuyi region, to the southwest of Guangzhou, told him that the time was not yet ripe for investment in sugar factories in Guangdong. In Yuan’s view, it would be more profitable to manage the sugar-tax collection. An important advantage would be that as an officially designated tax collector, Mo would have at his disposal vessels lent by the provincial Department of Finance from its antismuggling fleet. Advising Mo to take advantage of the opportunity to participate in Guangdong’s sugar trade, Yuan Dai suggested a partnership venture. Agreeing to cooperate with Yuan, Mo thus became what he described as “the general manager of the last firm conducting sugar-tax farming during Chen Jitang’s era.”30 He and Yuan together established an enterprise called the Dali Company, agreeing that Mo would raise the capital and act as the firm’s general manager. As the general administrator, Yuan Dai would handle relations with government officials. After making these arrangements with Yuan, Mo Yinggui decided to make a bid for the 1933-34 provincial sugar contract. To raise funds, Mo visited friends and acquaintances in Hong Kong, inviting four businessmen to join the firm. Mo and these associates agreed to invest a total of G$200,000 in the company (G$40,000 each) before commencing operations. Mo Yinggui was then appointed treasurer of the enterprise. After the Department of Finance invited bids for the sugar-tax farm during the summer of 1933, the Dali Company was one of eight or so firms to submit bids. Zou Minchu’s Tongxing Company appeared to be the strongest contender. Mo Yinggui related that by bidding G$810,000, he succeeded in winning the sugar-tax contract for the 1933-34 year for the Dali Company.31 While becoming involved in setting up the GSM, Mo Yinggui continued to work as a salesman for the TSR as well as operating the Dali brokerage firm. His experience as a comprador proved to be valuable. Describing his activities as a comprador before Guangdong’s Sugar Industry Revival Plan was devised,

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Mo confessed that one of his challenges had been to identify and seize opportunities to make extra sales. For instance, he advised the TSR to expand production temporarily between the time of the announcement in 1930 of the largest in the series of increases in the sugar tariff imposed by the Nanjing government and the date it came into effect. Through Mo Yinggui’s arrangements, the TSR sold its increased supplies by means of a surge of shipments to Chinese ports and also emptied 100,000 dan of unsold stocks from its Hong Kong warehouse, delivering this sugar to Guangzhou and other ports.32 According to Mo’s account of the origins of the GSM, Feng Rui asked for his help as a sales agent when the provincial program of sugar-mill construction was in the planning stage. In the course of their discussions, Feng and Mo agreed that Mo would invite some fellow sugar traders (tonghang) to assist in the distribution of a total of 600,000 dan of white sugar a year. Each of the traders would post a bond of G$40,000 and take charge of marketing a portion of the total quota in a particular district. After Feng Rui discussed this plan with his superiors in the provincial government, they authorized the establishment of an association of merchants under Mo’s leadership and agreed that the group would be permitted to retain commissions on the sale of sugar at the rate of 9 percent of the total value of sales.33 During the first year of operation of the GSM, Mo Yinggui wrote in response to reports published in “all the newspapers in Hong Kong” that the merchants taking on responsibility for sugar distribution in Guangdong “all had the taxfarmer mentality and would surely conspire to control the market and collude in sugar-smuggling schemes.” To dispel such suspicions, Mo stressed, as did Feng Rui, that control of the sugar trade was intended to protect the province’s nascent sugar-milling industry.34 Yet Mo Yinggui’s later accounts reveal that the GSM was indeed, as critics feared, a revamped system of tax farming. Smuggling-Prevention Organizations Government officials expected that smuggling activity would expand significantly following the across-the-board increases in import tariffs to be instituted in 1929. In preparation, the Maritime Customs Administration established a Preventive Service in 1928 and began to equip the service with a fleet of armed vessels, as well as drawing up a detailed code of regulations for their deployment against smugglers and training a new officer corps. In mid-1935, the Customs Preventive Service operated thirty-three launches for coastal and river surveillance and twenty-six ocean-going ships.35 But the new antismuggling service was of limited use in Guangdong. Its effectiveness was constrained by Chen Jitang’s support for the re-establishment in 1933 of Guangdong’s own Preventive

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Service, inactive since 1927. In 1934 the provincial organization was strengthened under Guangdong’s Department of Finance and renamed the Guangdong Headquarters for Smuggling Prevention on Land and Water.36 The effectiveness of Guangdong’s antismuggling agency was in turn constrained by a variety of competing revenue-collection agencies at the subprovincial level. It was in Chen Jitang’s interest to control the smuggling situation, and he persuaded Customs officials of his determination to do so.37 From Chen’s point of view, however, the best way to tackle the smuggling was to concentrate and direct the activity in channels under his own control. His first step toward controlling Guangdong’s coastal trade had been to wage war on a powerful rival, Admiral Chen Ce, based on Hainan Island. Chen Jitang was victorious over Chen Ce, who departed to take a tour of Europe early in 1933.38 When the provincial Headquarters for Smuggling Prevention was established, Chen Jitang appointed his older brother, Chen Weizhou, as director. Chen Jitang had already promoted his brother to high-ranking military commands and lucrative posts. Since 1931 Chen Weizhou had been the provincial salt commissioner in an organization parallel to the national Salt Administration, running it as a fiefdom without interference from Nanjing, whose salt representative sat idly in Guangzhou. The provincial salt distribution agency was authorized to supply Guangxi and Hunan with salt, as well as Guangdong, and was reputed to provide Chen Jitang with substantial earnings for the purchase of military supplies.39 The annual value of the salt tax collected in Guangdong, nominally considered to be a “national tax,” was about G$2 million.40 In principle, Guangdong was responsible for remitting to Nanjing a small portion of this revenue, in accordance with longstanding loan-repayment commitments to foreign creditors of the national government but had suspended these payments in 1931.41 As commander of the armed forces responsible for enforcing the law against private trade in salt, Chen Weizhou already had a fleet of ships at his disposal, nominally owned by the provincial Department of Finance. Two of Chen’s favourite gunboats, the Haiwei and the Haizhou, were evidently named after him. Chen also commanded numerous “salt guard” units assigned to antismuggling duties. In the Shantou area alone, he controlled a force of several hundred armed men.42 Chen Weizhou even occupied a piece of property owned by Customs on an island in the Huangpu estuary, which he turned into a gravesite and memorial to his father, causing the Customs commissioner in Guangzhou to remark in a letter to Shanghai: “I imagine that we have about as much chance of recovering it as we have of acquiring the British Museum for a London office.”43 Informally, Chen Weizhou was also involved in the collection of opium-transit taxes. Guangdong’s “opium-suppression” tax revenue was the responsibility of the provincial Opium Suppression Bureau. This revenue was protected by the

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bureau’s own armed forces and a separate fleet of ships. Chen Weizhou built up two formidable preventive forces to back up his revenue claims, commanding units of opium guards as well as his salt-guard corps. He was therefore in a good position to unify smuggling-prevention work in Guangdong, as he was expected to do as director of the provincial Headquarters for Smuggling Prevention. In addition to the salt and opium authorities, a number of other organizations had been active in “antismuggling” activity in Guangdong.44 Provincial smuggling prevention was a lucrative business. In coastal and inland waters and at various points on land, the preventive organizations seized unregistered shipments, imposed fines on those who transported and owned them, and sold seized goods on the open market, keeping the proceeds.45 Since 1931 the provincial Department of Finance had loosely supervised units responsible for protecting the province’s revenue collections on the sugar-import tax and on imported cement, among other commodities.46 In 1933, when the “benefit agriculture” taxes on imported rice were imposed, and the Agricultural Commodities Special Tax Bureau was established to collect taxes on rice and other imports, armed guards were posted at some of its branches around the province. As Chen Weizhou took steps to consolidate the activities of a variety of smaller antismuggling entities, he gained control of a major portion of Guangdong’s tax revenue. From the point of view of the Nanjing government, naturally, Guangdong should not operate its own smuggling-prevention agency but should cooperate fully with the national-level Preventive Service. There were signs that Guangdong’s smuggling-prevention fleet protected smugglers and that the smugglingprevention ships even carried smuggled goods. One such indication was the sinking of one of Guangdong’s patrol boats by a national Preventive Service corps on 5 November 1934. Guangdong’s ship, the Haiying, was discovered to have a large shipment of sugar and other goods on board. After rescuing the Haiying’s captain from his sinking ship, the Preventive Service officers turned him over to provincial authorities, and he was later tried on a smuggling charge in Guangzhou.47 Soon after this incident, high-level Customs officials involved Feng Rui in an attempt to gain Guangdong’s cooperation in smuggling-prevention work. Feng Rui visited Shanghai at the end of November 1934. Carrying a letter of introduction, dated 9 November, from the Customs commissioner in Guangzhou, he paid a visit to L.H. Lawford, the acting inspector general of Customs.48 In his conversation with Lawford, Feng Rui acknowledged that smuggling remained a problem in the area where the Haiying had been pursued and sunk. Feng then became a participant in the Customs agency’s effort to demarcate, in principle, the boundaries between the coastal waters and inland waterways constituting “spheres of control” that would be

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allocated to the national and provincial preventive forces respectively.49 As an internal memo from the director of the Customs Preventive Service described the situation that concerned the Customs in January 1935: It is too much to expect of the Guangdong authorities that they will entrust all preventive work in the province to the Customs at the present time. I believe that the transfer of control must be gradual. In the meantime, however, I consider that as a first step the division of the province into spheres of control allotted to ourselves and to the provincial preventive organizations respectively, could be arranged and would free the areas where we are accustomed to operating without intrusion on the part of the preventive organizations, which make use of the opportunity to carry on smuggling operations on a large scale.50

The director of the Preventive Service was optimistic about the possibility of demarcating “spheres of control” in an agreement with Guangdong. This was because his colleague L.H. Lawford had agreed to consider Feng Rui’s requests for concessions (discussed later in this chapter) favouring the distribution of Guangdong’s Five Rams sugar in exchange for Feng Rui’s assurances that his government was taking steps to control smuggling. Lawford was pleased to discover that Feng was in sympathy with the views of the Customs about rampant smuggling in Guangdong, sharing his concern about the chaotic situation in the western part of the Pearl River Delta in particular. Lawford hoped that a concession from the Customs to Feng Rui would bring about some long-awaited cooperation between Guangdong and Nanjing. In instructions to the Customs commissioner at Guangzhou, Lawford designated Feng Rui as Guangdong’s representative for discussions on the unification of antismuggling operations. Not only should the commissioner in Guangzhou take up matters with Feng Rui, but those in charge of the ports west of the Pearl River, where smuggling was serious, should also be encouraged to meet Feng to discuss these problems.51 Thanks to this attempt to use him as a go-between, therefore, Feng Rui’s name became inextricably linked to the phenomenon of “official smuggling” in southern China as he continued to supervise the GSM. Near the end of 1934, Feng assured Lawford that smuggling would be controlled in Guangdong. However, in Lawford’s account of their conversation, it is not clear whether Feng understood clearly that they were discussing national finances rather than local smuggling-prevention arrangements.52 However, it seems that he and Lawford established a rapport. After meeting Feng Rui, Lawford expressed, with apparent sincerity, an optimism about the prospect of regularizing smugglingprevention work that suggests an uncanny ability on Feng’s part to inspire

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confidence in those who encountered him. In any case, it is clear that he considered Feng Rui suitable for deployment as an intermediary in an effort to regain influence in Guangdong. Perhaps he was disappointed, and resentful of Feng Rui, as it became clear during the following year that sugar imports into Guangdong had not been returned to what Customs would consider legitimate channels of trade. Feng Rui’s assurance to Lawford that smuggling-prevention work in Guangdong would be regularized proved to be rash. The activity of outsiders engaged in the illicit sugar trade continued to put large quantities of sugar out of reach of the GSM. These rivals ran operations in a range of sizes. Among them, Chen Weizhou was the most flagrant offender. In his reminiscences, Mo Yinggui recalled that Chen Weizhou engaged in large-scale sugar smuggling, using his smuggling-prevention forces while serving as director of the provincial Headquarters for Smuggling Prevention.53 He stated that the Haiwei and the Haizhou ships in particular made many trips to buy sugar in Hong Kong on Chen Jitang’s behalf.54 Zheng Shougen’s comments on this business indicate that Chen Jitang’s policy of importing supplies of sugar without paying either customs duties or the provincial tax on imported sugar predated the establishment of the Guangdong Sugar Monopoly and the plans for government investment in sugar milling as well. According to Zheng, the managers of the Tongxing Company, based in Dapu County, complained to the Department of Finance during the 1932-33 tax-collection season about the damage to their business caused by the competition of organized smuggling by ships nominally owned by the department. In response to Tongxing’s complaint, the Department of Finance temporarily tightened its control over the provincial smuggling-prevention fleet.55 Recounting the history of the Sugar Distribution Merchants’ Association licensed by the GSM, Mo Yinggui stated that the commissioned sugar merchants were pushed to the side by the commanders of military units in Guangdong during the first year of operation of the GSM. Local commanders controlled the movement of sugar and other goods through their territory, collecting fees from merchants, including those authorized by the government to control trade, and making use of customs-exempt naval transport to ship goods themselves. Acknowledging that the plan he and Major General Yuan Dai devised was intended to monopolize smuggling operations as well as the sugar-tax collection, Mo stated that their venture earned disappointing returns as a result of the competition of numerous local military forces in addition to Chen Weizhou’s control of antismuggling gunboats.56 After winning the sugar-distribution contract for 1933-34, Mo planned to establish branch tax agencies at fifteen locations throughout the province. Except in the area where he had Yuan Dai’s

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backing, however, local army units or powerful locals were in control, and, as he stated, Mo was unable to gain their “cooperation.” In the Chaozhou-Shantou area, for instance, Zhang Duangui was operating, Dongguan County was Ye Daxia’s territory, and Chen Hanguang controlled the sugar business in Hainan. In their respective areas, these strongmen sponsored tax collectors of their choosing, backing the smuggling operations of these proteges. Antismuggling squads detailed from the Department of Finance were not only aware of these activities but would also be included in arrangements to share the profits of smuggling. They received shares of the profits, euphemistically referring to these payments as a “bonus in support of smuggling prevention.” Mo Yinggui also stated that a major means of conveying sugar across the border from Hong Kong was to bring it in under the authority of the province’s smugglingprevention agency.57 The elaborate antismuggling provisions of the GSM regulations made the unregulated sale of sugar convenient and profitable for both licensed and unlicensed participants in the business. A system of rewards for the confiscation of smuggled sugar in fact provided a strong incentive to smugglers. Confiscated sugar would be sold through the official distribution system, and the proceeds were designated to be shared as follows: 35 percent to those who handled the capture, including 5 percent for gunboat crew members; 25 percent for the warehouse; 45 percent to those who had reported the smuggling; and the remaining 5 percent to others assisting in reporting and seizing the illegal shipment.58 In another indication of how the tax-brokerage businesses operated, Mo also described the large sums regularly expended as “gifts” of various sizes to a host of Department of Finance officials, secretaries, section chiefs, and other recipients, stating that these expenses consumed about half of the sugarsales revenue handled by his firm.59 The Department of Finance, apparently, expected a payoff in exchange for the loan of its preventive ships and armed forces.60 In May 1935, Yuan Dai was arrested and charged with conspiring against the Government of Guangdong. Several other alleged conspirators were also arrested in the case.61 According to provincial announcements in March 1935, measures would soon be implemented to improve the operations of the GSM. The statements acknowledged that sugar-distribution merchants had difficulty in meeting their quotas and that smuggling had not been brought under control.62 While the GSM was under review, the income from sugar sold under official supervision was reported by another provincial agency, the Guangdong Provincial Native Products Sales Office. Presumably to strengthen confidence in the provincial economy, this entity made its annual earnings public in April 1935. Its report

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Table 6.5 Income of the Guangdong Native Products Sales Office, 1934-35 Commodity White sugar Molasses Tungsten ore Artificial fertilizers Cement Cotton products

G$ 9,200,000 650,000 3,700,000 1,360,000 640,000 500,000

Source: South China Morning Post (SCMP), 22 April 1935, 15.

suggested why Guangdong’s sugar markets were rife with crime and conflict. As seen in Table 6.5, sugar sales accounted for almost three-quarters of the agency’s total collections. Producing “Smokeless Sugar” Despite the pervasive collusion between smugglers and the officially licensed sugar-distribution merchants at various levels, the GSM was undermined most seriously by the direct involvement of officials such as Chen Weizhou. Such practices came to be called “official smuggling.” Yet the problem was not simply that officials were importing goods without paying Nanjing’s duties. By definition, after all, trade that is openly conducted by officials is not truly “smuggling.” The trade became a more serious problem when it appeared to be directly connected to Guangdong’s new sugar-milling program. Even before the organization of the GSM, customs officials began to suspect a connection between the phenomenon of “official smuggling” in Guangdong and the province’s newly built sugar mills. Shortly before the establishment of the GSM, there were reports that “smokeless sugar” was being routed through the first of the mills, the factory in Xinzao, south of Guangzhou, and that Feng Rui approved of the shipments. On 18 May 1934, MCA officers stopped a 110-ton vessel on the river south of Guangzhou, seizing the ship and its cargo of 100 bags of white sugar after discovering that the sugar was not covered by an import permit. The ship happened to be the Haiying, still in operation at the time. Thanks to the Customs intelligence system, the officers were aware that the cargo carried by the Haiying had recently been transferred directly from a Dutch ship in the Hong Kong harbour. The following day, the Guangzhou customs commissioner received “a letter from Guangdong’s Bureau of Agriculture and Forestry,” stating that the shipment of sugar in question should be released

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because it was a product of the Xinzao sugar mill.63 Meanwhile, a detachment of soldiers from the provincial army was sent to occupy the ship. Before the end of the day, the Guangzhou commissioner ordered the release of the vessel and its cargo, reporting to superiors in Shanghai that he had done so “on the request of the provincial government.”64 After Feng Rui’s meeting with L.H. Lawford later in the year, the Customs Preventive Service ceased operations in the Pearl River, respecting the riverine routes as part of Guangdong’s “sphere of control” in antismuggling operations. Thus the investment in sugar milling by the provincial government created the new product, called “smokeless sugar.” From the time they opened, the new provincial sugar mills were in the business of reprocessing imported as well as local muscovado sugar. In itself, the re-processing of milled sugar to produce higher grades was legitimate and commonplace in the sugar industry around the world. Moreover, the practice was in accordance with the original plans of the Guangdong sugar-milling program. As Feng Rui explained around the time of the sinking of the Haiying, Although the various factories have been established in [Guangdong], yet, on account of the time of sugar-cane maturity, they will not be in operation until December 1 this year. During the transitional period, besides having local sugar refined, it is necessary for the time being to purchase a certain amount of sugar from abroad in order to meet the demand of the public. The surplus profits belong to the provincial Treasury to be used for developing the sugar industry and rural improvements.65

In March 1934 Feng Rui called at the offices of the Taikoo Sugar Refinery in Hong Kong. He outlined the progress of the sugar-milling plans underway in Guangdong. At the time, the mills at Xinzao, Huizhou, and Jieyang were either in the planning stages or under construction. Each would crush up to 500 tons of sugarcane daily for up to four months a year, dependent on sugarcane supplies. Feng had been encouraged to visit Hong Kong by the TSR’s representative in Guangzhou, who had expressed an interest in possible cooperation with the Guangdong sugar mills, suggesting that perhaps in the future the refinery in Hong Kong could process “plantation white” from Guangdong. Feng Rui’s immediate concern, however, was to arrange a flow of sugar in the opposite direction. As the Guangzhou-based representative reported, “We gathered the impression that he might be interested in our refining their sugar for them or even in buying our sugar to market under their label.”66 The response in Hong Kong to Feng’s suggestion was a qualified agreement to cooperate:

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Although ... we would probably still want the Taikoo marks to be stamped on the bags, there would be no difficulty in arranging for their own mark on the bags also. What they have in mind, no doubt, is to sell Taikoo Refined Sugar as the product of their own mill, and even though we could hardly acquiesce in this, there would not be the same objection to our producing a special grade or grades of sugar for them under their own mark.67

The TSR’s executive manager then wrote to the firm’s owners in London about the matter of providing sugar supplies to Guangdong’s mills.68 A few days later, the TSR learned through confidential channels that during Feng Rui’s visit, another firm in Hong Kong had signed a contract with Guangdong government interests for the delivery of several shipments of Javanese sugar to Hong Kong. A deposit of 10 percent of the purchase price had been paid, and the first shipment was due to arrive in mid-May. It was also reported that the buyers planned to repack this sugar for sale as Five Rams sugar, the product of the Guangdong government mills.69 Thus it was in 1934 that the “smokeless sugar” business commenced. The rebagging of Javanese sugar possibly began even before the mills had been completed. According to a TSR employee writing on 27 April 1934, at that time the new mills in Guangdong were active “mainly, if not only” in repacking “direct consumption” sugar from Java and that this sugar had not passed through customs controls.70 As the United States Consulate in Guangzhou reported from “reliable confidential sources” in September 1934, although no sugarcane processing or reprocessing of muscovado sugar had yet been done in the new mills, large quantities of sugar had already appeared on the local market, packed in sacks marked “made in Guangdong.” According to the Consulate’s informants, during the summer of 1934, workers at the Xinzao mill were “engaged in repacking sugar smuggled past Customs by local Government gunboats from Hongkong.”71 Similar activities were apparently going on at the other mills. This helps to explain how, between the date when they began crushing cane in January 1936 and mid-March of the same year, the mills in Huizhou and Dongguan reportedly earned “profits” of G$900,000 and G$600,000 respectively.72 Mo Yinggui recalled that the sugar-smuggling routes managed by military units were linked with the sugar factories built for the Military Reclamation Bureau at Huizhou and Dongguan.73 In July 1934, the GSM completed its arrangements to purchase TSR sugar, placing orders for a variety of the refinery’s products, including sugar cubes. Having received permission from London to do so, the TSR’s managers agreed to the GSM’s request that Guangdong government markings be stamped on

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the bags of sugar before they left the refinery in Hong Kong. The firm’s chief executives had considered the question carefully and determined that there was no better alternative. If the TSR did not supply sugar for the GSM to claim as its own manufacture, then it was in danger of losing its share of the China market, given that Japanese and Java-based dealers could be expected to do as the GSM asked. The TSR refused, however, to go along with a direct request from Feng Rui to disguise the origins of the sugar. On 29 July 1934, the TSR’s sales manager discussed this issue with Feng Rui, when Feng visited the refinery to discuss the terms of Guangdong’s first purchase from the TSR. Because the management insisted on identifying the sugar being packed for delivery to the GSM as the product of the TSR, Feng requested as a concession that the marking “Refined by Taikoo” should be stamped on the bags in English only rather than with the characters Taigu jingzhi. Feng tried hard to win this concession but the TSR’s managers could not agree, having received firm instructions from the refinery’s owners in London on the labelling of goods to be sold to Guangdong government agents.74 Well aware of the sugar-smuggling problem, the TSR was careful to keep the GSM at arm’s length. It avoided direct dealings by selling the sugar through a separate sugar-brokerage firm. In this way, the GSM made its own arrangements to transfer its purchases from the TSR’s warehouse and deliver them to their destinations in Guangdong. Thus the GSM employed a third firm in Hong Kong to hire the small boats required to transfer cargo between ships and docks or warehouses in Hong Kong. As the TSR reported to supervisors in London, “we do not ... wish to load sugar into Chinese Gunboats or Transports in Hong Kong Harbour nor yet to have direct financial dealings with the [Guangdong] Government.”75 George Mitchell, who represented the TSR’s owners in Shanghai, described the GSM’s sugar purchases in Hong Kong in a letter to the inspector general of the Customs. Mitchell reported that the GSM purchased a total of 3,000 tons of TSR sugar products between July and December 1934. No duty was paid on any of the shipments to Guangdong, all of which were carried on “naval transports,” he stated. He also reported that all such sugar imports were sold entirely in southern China rather than being sent northward. According to Mitchell’s estimates, however, the TSR was supplying only about a tenth of the refined and milled sugar purchased by official agencies in Guangdong during the same period, which totalled 31,300 tons. About a third of the total consisted of purchases by the Military Reclamation Bureau, which handled its imports separately from the GSM.76 Mitchell’s main concern when he wrote to the Customs inspector general in 1935 was about the activities of a Java-based competitor in the sugar business

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named Huang Jiangquan. Plantation white sugar shipped from Java formed the bulk of Guangdong’s purchases in Hong Kong, and Huang’s firm, named Kian Gwan, was the most important supplier. By this time, the staff of the British Consulate in Shanghai had been informed that Kian Gwan, like TSR, was selling pre-packaged sugar for sale by the GSM as its own product. Kian Gwan, however, apparently had no scruples about acceding to requests that the sugar be made to look as though it had been milled in Guangdong, and it packed its products before they left Java in sacks that had been suitably labelled in Chinese.77 Many years later, Mo Yinggui also described the sugar-marketing part of Guangdong’s Sugar Industry Revival Plan. In a confessional manner, he gave himself credit for suggesting the “smokeless sugar” scheme to Feng Rui as a means of paying for sugar-milling equipment and factory construction. The first purchases of foreign milled sugar could be made using the bond money collected from the sugar-distribution merchants. Following his suggestion, Guangdong leaders approved the use of their gunboats on trips to fetch sugar from Hong Kong. Two types of sugar were purchased in Hong Kong: soft, white, granulated sugar produced by the Taikoo Sugar Refinery and muscovado sugar imported from Java.78 Following the establishment of the GSM, Mo earned profits both by selling Taikoo sugar to the Guangdong government as a comprador for TSR (he did not mention whether he earned commissions) and by selling “smokeless sugar” as a sugar-distribution merchant on behalf of the Guangdong government.79 According to Mo Yinggui, Feng Rui also made some money on his own account from duty-free imports thanks to molasses. Problems had arisen with unrestricted imports into Guangdong of molasses with a high sugar content. Therefore, the sale of molasses came under provincial control as well, although directly under the Guangdong Provincial Native Products Sales Office rather than the GSM. Four wholesale dealers were to be appointed, each responsible for selling 6,000 dan monthly. The molasses monopoly came into effect on 1 October 1934.80 Mo Yinggui recalled an occasion in which Feng was involved as a government negotiator in negotiations for the purchase of Javanese sugar, claiming that Feng managed to collect “return commission” on contracts for molasses sales discussed at the same time. Mo claimed that Feng did this by signing his own name to English-language copies of agreements signed in their original Chinese versions by Chen Yuanying, who, as manager of the Guangdong Provincial Native Products Sales Office, was officially the Chinese partner in the molasses-import agreements.81 By this time, Honolulu Iron Works (HIW) had also begun to supply foreign sugar to the Guangdong government’s sugar mills. HIW realized that participation in the “official smuggling” of sugar would help to ensure the timely receipt

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of payments for the sugar-milling equipment delivered and installed on behalf of the Guangdong government. The firm thus made itself into an agent for Guangdong’s procurement of sugar supplies, extending the “smokeless sugar” supply chain to the Atlantic. According to internal correspondence, HIW managers began to consider the possibility of buying raw or refined Cuban sugar in New York for sale to a Guangdong government agent in February 1934. While colleagues in New York investigated the possibility of purchasing Cuban sugar more cheaply than the Guangdong government was buying Javanese sugar, the firm’s representatives in Guangdong approached a purchasing agent in the Department of Reconstruction and offered to sell 2,500 tons or more of Cuban sugar. As a letter from Honolulu instructed representatives in Guangzhou, the department should be encouraged to use HIW’s New York office as its agency and would be required to pay cash in advance for individual shipments. An HIW sales manager wrote in encouragement of the scheme, “I really hope that you can get them to buy from us in New York because the difference in exchange between guilders and dollars could possibly more than make up for the difference in freight costs Java-Hong Kong compared to Cuba-Hong Kong.”82 Thus HIW began to act as a purchasing agent for Guangdong, arranging deliveries of Cuban sugar to Guangzhou via Hong Kong.83 Even without this direct involvement, HIW benefited from duty-free imports of sugar into Guangdong. When sugarcane supplies were short during their first two years of operation, most of the earnings of the government mills resulted from the reprocessing business and from “smokeless sugar.” As one of the HIW managers in the Philippines wrote to Honolulu, “the 1934 windfall of illicit Java duties is, in a nutshell, the reason why factories can still be built and our instalments met.”84 By this time, however, the Customs was on guard against the possibility that Guangdong would attempt to flood national markets with sugar shipments brought in duty-free. The attitude of the Customs seemed to block the prospects of Guangdong’s Five Rams sugar developing into a nationally known brand. On 1 December 1934, shortly after meeting Feng Rui in Shanghai, Lawford sent a confidential telegram informing the Guangzhou commissioner that special arrangements had been made for the sale of Guangdong’s sugar in other parts of China. The Ministry of Finance in Nanjing had authorized special provisions, lasting one month, for the shipment to Shanghai of up to 60,000 dan of sugar produced by Guangdong mills. However, several conditions were imposed on Guangdong, and they were Feng Rui’s responsibility to fulfill. One condition was that interport duties be paid on the sugar when it was shipped north. A more costly condition was that a Customs officer be stationed in the sugar mill while the sugar was being produced. The officer would supervise production

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and ensure that the Five Rams sugar was genuinely produced either from Chinese sugarcane or from lower grades of white sugar that had been legitimately imported. The officer’s expenses and accommodation would be provided by the mill. Finally, no bag of sugar would be accepted in Shanghai without a stamped Customs seal. As a return for this concession, Nanjing expected Guangdong to take several steps toward the unification of China’s customs administration, authorizing the Guangzhou commissioner to take up certain questions, “through Dr. Feng, with the local authorities.” These “questions” were actually further conditions. In return for permission to ship sugar north for one month, Feng Rui was expected to arrange adjustments in Guangdong’s “smuggling prevention” procedures, as described above, to conform with national policy. He was also expected, moreover, to arrange to bring Guangdong’s policy on rice-import taxation into line with the national regulations on grain-import tariffs.85 Feng Rui bravely accepted a tall order. He became a broker between conflicting interests when the acting inspector general of Customs bargained with him in an effort to gain leverage over a set of military men who were plying the southern coast in armed vessels, carrying commodities freely between ports in different jurisdictions. Or perhaps Lawford’s attitude was based on a conviction that Customs had already granted too many concessions to Guangdong. This is suggested by the fact that in requiring Guangdong to pay interport duties on sugar shipments, Lawford included a demand to comply with regulations that he considered obsolete.86 Perhaps Customs officials had simply lost patience and wished to take an opportunity to draw up a list of reasons why Guangdong should not ask the Customs for favours. Just a month earlier, for instance, the commissioner at Guangzhou had agreed under pressure from the Guangdong finance commissioner to allow duty-free entry of “raw materials” for the provincial sugar mills as long as they were covered by a permit from the Southwest Political Council. The commissioner had then observed shipments of 80,000 dan of raw sugar and 40,000 dan of molasses being delivered to the Xinzao sugar mill. In a letter to Shanghai, he remarked wryly on the provincial government’s explanation of the need for the materials. The reasons given were that Guangdong was using molasses to make fuel for military use and that the provincial program of industrial development should receive official support to ensure that the costs of production in domestic industry remained low, which would benefit consumers and be a means of competing with smuggled sugar.87 Feng Rui’s superiors in Guangdong confirmed acceptance of the terms on which Five Rams sugar could be sold in other provinces. Arrangements were made first for the stationing of Customs personnel in the sugar mills that had

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begun to operate. Various details about their housing and pay continued to be worked out during 1935, following an extension of the period of special concessions for sales of Guangdong’s sugar, and Feng Rui made visits to the mills to help arrange accommodations for Customs personnel.88 A procedure was worked out for the sealing of bags containing sugar produced in the mills under Customs supervision.89 Thanks to their friendly contacts with staff members at the TSR in Hong Kong, Customs representatives in Guangdong were aware of arrangements between the refinery and the Guangdong provincial mills, according to which, sugar that had already been refined in Hong Kong was purchased for “reconditioning” at the mills. TSR’s representatives in Guangzhou helped to mediate in discussions about Customs supervision of sugar milling in Guangdong. From TSR’s point of view, the Customs should be persuaded to handle the matter flexibly.90 After the one-month period granted by Customs for shipments of Guangdong’s sugar had ended, Feng Rui negotiated for the acceptance of a more permanent arrangement. He submitted a proposal to the Ministry of Finance requesting a reduction of the tariff duties payable on imported muscovado sugar for the purpose of supporting domestic industry. The imported sugar would be processed in Guangdong’s mills during the months when local sugarcane was not available. Customs authorities then advised the Ministry of Finance that Guangdong’s desire to sell surplus sugar in Shanghai provided an opportunity to collect at least partial tariffs on some of the large sugar shipments that were currently entering Guangdong without stopping at Customs stations.91 After Feng Rui received somewhat favourable responses to his proposal to the Ministry of Finance, he met the Guangzhou customs commissioner on 25 May 1935 to explain that he would be bringing in the first shipment under the new arrangements three days later.92 As well as informing the Customs commissioner at Guangzhou verbally of the new plan, Feng Rui wrote to Customs authorities in Shanghai on 27 May 1935 to say that the Guangdong government expected the Ministry of Finance to permit the importation of 30,000 tons of foreign raw sugar during the period from May to December 1935, paying half-tariff rates in cash at the time of importation, with the remaining half to be paid at the end of the third year thereafter. The processed sugar would then be treated as a domestic product when sold outside Guangdong. Feng proposed that the sugar imported in this manner would be considered as held in bond until it was shipped up the coast after being processed in Guangdong. His proposal was accepted with modifications and a degree of reluctance. A Customs official in Shanghai commented that certain details needed clarification and pointed out that the whole procedure would be “ridiculous” without specifications and careful inspection to ensure

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that the sugar imported for further processing had not already reached a certain standard of purity in refining, suggesting a maximum level of 96 degree polarization. Also, it was not clear what tariff rates Guangdong planned to pay. Would they be based on the polarization degree at the time of import or after the “refining”?93 The currency used to pay the half tariffs was another matter for negotiation. The Customs insisted on payments in gold-equivalent currency and finally won the point, bringing the Central Bank of China and the Bank of Guangdong into the arrangements. At the request of his superior in Shanghai, the Customs commissioner in Guangzhou began to prepare frequent reports on the amounts of sugar imported under these negotiated terms.94 Another question debated by Customs officials was whether the processing at the three mills was actually “refining,” as claimed by Feng Rui, or just bleaching. This confusion was finally cleared up by the Dutch director of the Java Sugar Producers’ Marketing Organization, an expert on the industry and also on the China market, who visited Guangzhou to see the mills. He informed the Shanghai Customs that the process was “technically refining, but a very expensive and therefore unusual method of refining.”95 After provisional arrangements for Guangdong’s imports of sugar at reduced rates were worked out in multilateral discussions, a series of Customs-registered deliveries of imported sugar to the provincial mills began in July 1935. Immediately, there was a problem. The first load of sugar bonded and tested according to the agreed arrangements was discovered to polarize at the 98.7 degree level. After the shipment was detained by the Guangzhou Customs, another round of discussions and negotiations ensued, with numerous confidential telegrams flying between Customs offices in Guangzhou and Shanghai in late July 1935 until the sugar was eventually released.96 The Guangdong side argued successfully that it could not be sure that the Customs agency’s sugar chemist was adequately trained and perfectly unbiased.97 In accordance with the Customs condition that the special import arrangements would end before 1 December 1935, the customary date for commencement of the annual sugarcane-crushing season, the total volume of Guangdong’s sugar imports under special arrangements was tallied up. The Guangzhou Customs commissioner reported on 5 December that “the total allotment of 100,000 quintals of brown sugar for refining has now been imported. The last shipment came in before the end of November. An excess of about 2,000 quintals (which was placed in bond and subsequently released on payment of a deposit for the full duty) has now been passed on the same terms as the original allotment ... as instructed by your telegram.”98 Thanks to the loans to farmers and the agricultural extension efforts that Feng Rui supervised, sugarcane cultivation was expanded in the vicinity of

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Guangdong’s sugar mills during 1935. Three of the mills, at Shitou, Shunde and Jieyang, were scheduled to begin crushing cane for the first time during the milling season beginning in December. From Guangdong’s point of view, tariff concessions granted by the Ministry of Finance helped to establish operations in the mills and a market share for their products. As the sugar milling season began in December 1935, Chen Jitang delivered a speech to encourage the expansion of sugar production in Guangdong. He predicted that increased supplies of sugar would be required for the Shanghai market, where Five Rams sugar had proven to be popular during recent months. Chen also announced plans to open a branch of the provincial Native Products Sales Bureau in Shanghai to handle the expected demand for sugar from Guangdong.99 Feng Rui between Nanjing and Guangdong In further visits to Shanghai and Nanjing, for instance in May 1935, Feng Rui continued to promote the Guangdong sugar industry, seeking investment and support for the formation of a national-level sugar-marketing organization that would extend or be linked to the operations of the GSM.100 Both in Shanghai and Guangzhou, Customs representatives followed up with him, seeking compliance with the terms he had accepted in arrangements to sell Five Rams sugar outside Guangdong. In these discussions, the Customs superintendent in Shanghai, Tang Hai’an (H.O. Tong), came to be Feng Rui’s main counterpart in the national government.101 Tang was a British-educated Guangdong native who had formerly served as a personal secretary to Song Ziwen and was considered to be Song’s confidant.102 In addition, Tang travelled to Guangzhou for discussions on revenue matters on several occasions in 1935 and 1936. The most widely publicized of his visits took place in August 1935, when he convened a week-long meeting of national and provincial officials.103 Following the discussions in Guangzhou, a photograph taken on August 26 showing Tang Hai’an and Feng Rui standing side by side and smiling was published in national and local news journals.104 Later, after Feng Rui’s arrest, Tang told reporters that he and Feng had become friendly in the course of intergovernmental discussions during the past year.105 On several occasions, the two travelled on the same steamship between Shanghai and Hong Kong, thus spending two days in close proximity en route.106 During the talks in August 1935, Nanjing offered to repay up to a total of 10 million yuan of the outstanding loans made by Guangdong in support of the Northern Expedition. In exchange, Guangdong would transfer all smugglingprevention responsibilities in the province to Customs. The provincial leaders refused these terms.107

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The special sugar-import privileges granted to the Guangdong sugar mills lapsed near the end of 1935. As the Guangzhou Customs commissioner advised his superior, there was no sign that Guangdong officials had made a move to fulfill their side of the bargain according to which Customs had permitted the duty-free entry of sugar into Guangdong for “refining” and resale in other parts of China. No steps had been taken to unify the work of the local “antismuggling” forces with the national smuggling-prevention service. Nor had preparations been made to begin collection of the national tariff duties on rice imported into Guangdong. The commissioner was instructed not to permit further sugar imports under the half-tariff terms. For both sides, the end of the sugarcanecrushing season in the spring of 1936 held the prospect of a new round of negotiations about arrangements to permit Guangdong to sell sugar beyond provincial boundaries. During the operation of the GSM, Guangdong imported table-ready white sugar from around the world with the help of foreign firms and conditional sanctions by Customs. HIW and TSR earned profits and Customs regained authority in Guangdong while procedures for the disposal of imported sugar within China were worked out with assurances by Feng Rui. Feng served as a broker facilitating indirect cooperation among a number of influential parties whose contact with one another would otherwise have been limited and less fruitful. He negotiated between the sugar-milling equipment suppliers who wished him to cooperate in efforts to ensure payment for their wares, Customs officials who wished to regain control of tariff collections in Guangdong, provincial merchants who found it difficult to comply with the GSM, and government authorities such as Chen Jitang who protected commodity arbitrage under the guise of smuggling prevention. Feng’s role in securing special arrangements for the distribution of Guangdong’s sugar absorbed significant amounts of his time, diverting his attention from other aspects of the provincial Sugar Industry Revival Plan, not to mention provincial agriculture more generally. Eventually, his negotiator’s role also set him up as a target for public humiliation when the program that he represented became unpopular. Even earlier, Feng Rui must have been the first to be blamed for any shortcomings in the implementation of agreements. Everyone’s middleman, he was a broker facilitating cooperation between separate interests on the basis of mutual benefit. But the scope of mutual benefits, for instance between Chen Jitang and the Customs, was narrow. Whenever a party stepped back, perceiving an incompatibility of interests, Feng Rui could be caught in between, identified as an agent of the other side. As noted in Chapter 3, Feng Rui became prominent in the course of drawnout and contentious negotiations between Guangdong and Nanjing authorities.

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However, it is possible that he was not involved in the most important meetings or responsible for any key decisions. Many years later, also noted in Chapter 3, Li Jiezhi claimed that Feng Rui devised a rice-taxation policy for Chen Jitang. As described above, the retired comprador Mo Yinggui similarly attributed the idea of “official smuggling” of sugar on Chen’s behalf to Feng Rui. These claims do not hold up to closer examination. There is no evidence that Feng initiated the policies and practices concerning rice and sugar. To understand Feng Rui’s activities, it is important to remember that he was the protege of Marshal Chen Jitang and Chairman Lin Yungai. It is evident that he did their bidding. Zhou Dayao, sugar chemist for Customs, who was later recruited to serve as the manager of the Jieyang Sugar Mill, reported confidentially to a colleague in March 1935 that Chen Jitang was eager to see the products of the Guangdong sugar mills provided with free access to markets throughout China. To further his plans to supply the entire nation both with sugar produced in Guangdong using native sugarcane and sugar reprocessed using imported supplies, Chen asked Zhou Dayao to help Feng Rui negotiate in Nanjing for special exemption from tariff duties on sugar imported into Guangdong. To help him get senior-level attention, Chen entrusted Zhou with a personal letter that he had signed together with Lin Yungai to present to the Ministry of Finance.108 Given this description of how Chen and Lin asked an outsider to help them work things out in Nanjing, we can be sure that they expected more from Feng Rui. Rather than devising grand schemes, Feng promoted provincial programs, pursued fund-raising efforts, and sought to resolve specific problems following the directions of his superiors. As a promoter, for instance, one of his duties during March and April 1936 was to meet a visiting delegation from the Shanghai Chamber of Commerce. The delegation of about a dozen members was engaged in assessing the investment potential of development projects in Guangdong and Guangxi on behalf of the Shanghai Chamber.109 Thus Feng was active in raising funds for provincial ventures both in Guangzhou and Shanghai, and he served as a liaison between the two centres. Feng Rui’s responsibilities certainly provided him with increased status. According to a journalist writing unsympathetically and speculatively soon after his death, Feng “was looked on as a big official from the South and lavishly entertained by the local merchants” when passing through Shanghai en route to talks in Nanjing.110 Known to be a special envoy representing Chen Jitang and Lin Yungai, Feng Rui was conspicuous and perhaps vulnerable. In June 1936, Feng travelled northward for the last time, visiting Shanghai and Nanjing to discuss financial matters with officials and in private circles. As noted in Chapter 3, Feng Rui met Chiang Kaishek in an appointment on 16 June 1936. Feng visited Chiang in the company of Yang Dezhao, Chen Jitang’s resident

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representative to the Nanjing government, and he delivered a letter to Chiang signed by Chen Jitang and Lin Yungai.111 Although Chiang Kaishek’s staff recorded that the meeting was held to discuss issues of concern between the central government and Guangdong, it seems that details on the conversation or ensuing decisions have not been preserved.112 En route to Shanghai during his last trip northward, Feng wrote to his wife that he hoped he could succeed in this demanding mission.113 On 19 June, Feng spoke to journalists in Nanjing in response to public interest in the progress of talks between representatives of Nanjing and the Southwest. He stated that an intergovernmental agreement had been reached on a set of issues including the adoption of the new national currency in Guangdong.114 It is possible that Feng Rui had participated in one of the final intergovernmental negotiation sessions held before Chiang Kaishek asked Chen Jitang to resign. However, numerous other representatives of the central and provincial governments were also travelling back and forth between Guangzhou and Nanjing at the time. Although Feng Rui was an articulate spokesman for the Guangdong government, he might not have known about the most important bargaining sessions conducted by senior colleagues. Even if he was one of the best-informed officials on the Guangdong side, Feng Rui would have been at a disadvantage in discussions with officials of the central government. His willingness to serve as a representative in Nanjing and to agree to intervene in revenue-collection practices in Guangdong suggest that he did not fully understand Nanjing’s advantages in access to information. For instance, as described in this chapter, central officials were well aware that the GSM, established in 1934 to manage sales and raw-material supplies for its sugar-milling program, functioned as a front for smugglers who shipped sugar in gunboats belonging to the provincial army and the provincial Department of Finance’s antismuggling fleet. But Feng Rui was probably not aware when he met Customs and Finance officials in Shanghai and Nanjing of how well-informed they were about the “official smuggling” in Guangdong. The Maritime Customs Administration was an authoritative agency under the Ministry of Finance. Its staff had access to intelligence reports thanks to a system established in 1933 to monitor smuggling along the southern coast.115 Song Ziwen, the former minister of finance and a member of the Nanjing government’s Economic Council, had also gathered information on the smuggling of sugar (see Table 6.6).116 Thus officials such as the minister of finance and inspector general of Customs, had a more complete picture of the situation in Guangdong and his role in it than Feng did himself. His behaviour suggests that he did not understand this and thus did not realize the implications of his acceptance of the terms requiring him to push Guangdong to comply with national fiscal policy.

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Table 6.6 China’s sugar imports, 1933 (dan) Exporter

Volume

Java Cuba Japan Taiwan Great Britain Other foreign sources Hong Kong Japanese firms (based in Dalian) Java via Taiwan

1,636,471 118,810 901,525 67,875 31,658 5,373 2,946,735 504,950 324,240

Total

6,537,637

Imports registered by the Customs Total of presumed smuggled imports

4,251,918 2,295,719 (138,193 metric tons)

Source: Letter from Hong Kong to Shanghai, 20 June 1934, 1-2, Swire Papers, Taikoo Sugar Refinery records (TSR), Box 25, No. 96.

The change of government in Guangdong during the summer of 1936 was soon followed by organized protests against the GSM. At the end of July, Guangdong merchants were organizing to petition for the abolition of the GSM.117 They then joined forces with like-minded sugar merchants in Hong Kong. A delegation of ten representatives of sugar interests in Hong Kong travelled to Guangzhou for discussions.118 After two days of talks, the alliance of sugar dealers called a meeting to discuss how to present their demands in Nanjing. Representatives of over sixty firms then signed a petition to Chiang Kaishek requesting the abolition of the GSM.119 A general meeting was held in the Taoliyuan Hall on Taiping Road in Guangzhou on the evening of 5 August. According to Feng Baqing, chairman of Guangzhou’s Sugar Guild, only a few firms were in favour of the continuation of the GSM. Over one hundred sugar merchants attended the meeting on 5 August, unanimously agreeing to petition again for abolition of the GSM and selecting two representatives to deliver the petition to authorities in Nanjing. Before the date of the representatives’ planned departure, however, an announcement from Nanjing declared that the GSM would not be abolished because the protection of Guangdong’s nascent sugar industry could not be abandoned midway. The newly appointed director of Guangdong’s

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Department of Reconstruction made a public statement after his arrival in Guangzhou on 8 August, that the GSM would therefore continue in effect.120 Huang Musong’s first speech as the newly appointed provincial chairman of Guangdong gave rise to hopes that the GSM would be abolished.121 With Chiang Kaishek at his side, Huang discussed the New Life dress code, the promotion of standard Chinese (putonghua) for all official business in the province, and how because of the three years of high prices for consumers caused by the GSM its discontinuation was under consideration.122 A few days later, Chiang Kaishek criticized Guangdong’s former government in a speech and characterized its entrepreneurial efforts as “competing with the people for profits” (yu min zheng li).123 Southern sugar merchants then renewed their efforts by organizing a further protest against the GSM. On 30 August 1936, at a meeting at the headquarters of the Sugar Guild in Hong Kong, the guild’s chairman declared that the GSM so far had imported 1 million bags of foreign sugar into Guangdong without paying duties, sending gunboats down to Hong Kong every time a foreign shipment arrived. The cheap duty-free sugar was causing problems for “native sugar,” he claimed, and the domestic white sugar industry had been “practically crushed,” with heavy losses for plantation owners in Guangdong. To take advantage of Chiang Kaishek’s presence in Guangdong at the time, the sugar merchants then resolved to present another formal appeal to the government of Guangdong and to forward a copy to Chiang.124 As noted in Chapter 3, Song Ziliang was another official who arrived in Guangzhou during the summer of 1936. Newly appointed as a special finance commissioner for Guangdong, Song Ziliang announced in late July 1936 that there would be a thorough financial clean-up. He set up a commission tasked with abolishing “exorbitant taxes and miscellaneous levies” in Guangdong and assumed the direction of a Unified Taxation Bureau to supervise the collection of “national” taxes in the province. Song Ziliang also reorganized Guangdong’s Department of Finance by dismissing supernumerary staff and reducing its divisions from six to four, and he attempted to reform recruitment to the antismuggling forces under the department. Until 20 September, Song also acted as the head of the provincial Headquarters for Smuggling Prevention and replaced Chen Weizhou in this post. Song defended his decision not to dismantle the provincial preventive agency by explaining that although there had been plans to close it, the agency would continue to operate for the time being because of the essential nature of its work. He also mentioned that he wished to revive some patrols and surveillance systems in the Henan district, south of Guangzhou, that had not been functioning during the past year.125 To create a foundation for regularizing taxation in Guangdong, Song supervised the floating of G$2 million in provincial bonds, secured on the revenue of the tobacco, liquor,

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and stamp taxes imposed in Guangdong in conformity with national regulations.126 With the help of the bond issue, Song succeeded in reducing or abolishing a number of levies that were either unpopular in Guangdong or unwholesome in appearance. The unpopular practice of collecting compulsory assessments on merchants’ assets, for instance, was abolished.127 Most important, a tax on gambling that had recently earned G$14.5 million of the province’s annual revenue, was abolished as of 1 September, and the collection of fees on opium distribution and consumption was suspended as well.128 Together with the abolition of miscellaneous other exactions, Song claimed, these measures amounted to a total of almost G$21 million in tax reductions. Despite its unpopularity and the disrepute into which it had fallen, however, Song Ziliang did not dismantle the GSM. Instead, Feng Rui was sacrificed.

7 National Reunification and the Punishment of Feng Rui

Feng Rui’s Arrest Feng Rui apparently returned from Hainan near the end of July 1936. While staying for a few days in Hong Kong, he learned that Chen Jitang and other former leaders had resigned from their posts and left Guangzhou. Friends in Hong Kong warned him that it might be dangerous to return to the provincial capital.1 Nonetheless, Feng returned to his house in Guangzhou and his projects in the provincial Bureau of Agriculture and Forestry. He might reasonably have assumed that his role was indispensable to the Guangdong government and that his friends would rely on him for help in the reorganized administration.2 It certainly seems that provincial chairman Lin Yungai tried to keep Feng Rui out of danger by sending him to Hainan on the day that Chen Jitang resigned from his official positions, as described in Chapter 3. Lin Yungai’s protection is also indicated by the fact that Feng was arrested shortly after Lin left Guangzhou to take up an appointment in Nanjing. Hearing of Feng’s arrest, Lin sent a telegram to Yu Hanmou appealing for his release and sent a second appeal to Chiang Kaishek before Feng’s death sentence was carried out.3 As noted in Chapter 6, Feng Rui was on friendly terms with Tang Hai’an, a Customs official in Shanghai. In July 1936, Tang became one of the new appointees to posts in the Guangdong provincial government, taking up a position as commissioner of the Salt Administration in Guangdong. Following Feng Rui’s arrest, there were rumours that Tang Hai’an offered personal assurances of safety to Feng before Feng’s return to Guangzhou.4 A week before Feng’s death, Tang resigned from his new post and returned to Shanghai.5 Whatever the basis of Feng’s confidence, it proved to be a mistake – he was arrested soon after returning to Guangzhou. According to the local press, because questions had arisen about financial affairs in the Bureau of Agriculture and Forestry, Feng had been detained for discussions at the provincial military headquarters.6 Feng Rui was not removed from his official position until several weeks after the departure of Chen Jitang.7 In fact, he was assigned new responsibilities in the reorganized provincial government and also to a position in a semi-official national coordinating agency for the sugar industry. These signs of confirmation of continued trust in him in the provincial and national bureaucracies help

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to explain why Feng returned to Guangzhou after the top layer of the Guangdong government had been peeled off and replaced with the central government’s appointees. In Guangdong, Feng became a member of a Rural Rehabilitation Commission under the direction of He Qili, formerly his supervisor as director of the provincial Department of Reconstruction. Hu Jixian, Feng Rui’s original superior in the government and colleague at Lingnan University, was also a committee member. The committee was a new agency formed through the merger of several separate organizations that had been responsible for rural affairs in Guangdong. Meeting in the office of the Department of Reconstruction, it convened informally on 28 July and in a formal inauguration on 1 August 1936.8 Feng Rui attended these meetings and drafted a charter. Around the same time, Feng was also appointed as one of thirteen directors of a new National Association for Sugar Production and Sales, established on 26 July 1936.9 He was not present at the inauguration in Shanghai of this second organization that he had been asked to join, but he must have felt honoured by the invitation to serve a national-level agency. After all, to strengthen the national economy was a long-held ambition for Feng, and he had advocated the formation of a national-level association for sugar sales. Moreover, even a part-time directorship in a national organization based in Shanghai was a prestigious position. The execution of Feng Rui was an isolated act of violence marking the change of leadership in Guangdong in 1936. The “Nanjing decade” (1927-37) was distinguished by Japanese invasions, conflict between warlords, anti-Communist military campaigns, a murderous underworld, and political assassinations, such as the 1933 murder of Yang Quan (1893-1933), secretary of the China League for the Protection of Civil Rights.10 Violence in the form of the execution of a well-known civil official, however, was anomalous. Why was Feng Rui singled out? In the public view, he was a scapegoat. One of many corrupt officials, yet punished as an example, Feng was unluckier but not any more at fault than the others.11 Thus a basic explanation is that Feng Rui was high enough in the Guangdong government to be discredited along with the ousted leaders. As one of the most prominent of the civilian officials who remained, Feng was a convenient target for repudiation when new leaders were declaring that with the installation of an honest administration, corrupt practices such as the contravention of national tariff regulations would be stamped out. Yet, this does not explain such a severe reprisal. Even if Feng was indeed guilty as charged, it was unjust that he was sentenced in such a manner. Official statements made no mention of any legal representation for the defendant at the trial. Other than a mention that complaints had been received from farmers, the nature of the evidence used against him was

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not made public. Furthermore, his execution followed a long incarceration during which he could receive no visitors and was not permitted to contact anyone. Not only were details on the charges against Feng Rui unavailable, but there was no mention of any criminal associates and no public solicitation of evidence of his guilt or innocence. In her account, Chen Zhaoyu made a bitter comment about China’s backwardness compared to countries where such a mockery of proper legal proceedings would be unacceptable.12 Even if there was no doubt about the charges of Feng’s misconduct, the severity of his punishment was disproportionate. Corruption was not a capital crime according to China’s law code at the time. According to the Criminal Code of China, promulgated in 1928, embezzlement in an official or professional capacity was punishable by imprisonment for six months to five years, and bribery could result in a sentence of from one to seven years in prison. Otherwise, according to the code, China’s only capital crimes were malicious homicides and acts of piracy combined with arson or rape.13 The taciturn position of officials regarding Feng’s case suggests that they concealed their real reasons for sentencing him. Thus it is helpful to consider his case in relation to the interests of some powerful players on the domestic, national, and international political scene. To begin with, this chapter considers the position of Chiang Kaishek, whose presence in Guangzhou in August and September 1936 was salient in the circumstances of Feng’s arrest and execution. Chiang Kaishek’s Denunciation Chiang Kaishek made several visits to Guangzhou to oversee the dissolution of the Southwest Political Council and to establish a new line-up of leaders for Guangdong. By his own account, he spent “fifty days” in Guangzhou during the period.14 He arrived in Guangzhou on the day after Feng Rui’s arrest in August and was making another visit when Feng was shot by the firing squad on 9 September. On the same day that it reported Feng Rui’s arrest, the Guangzhou newspaper Qunsheng bao (Popular Voice) editorialized about Chiang’s arrival, welcoming his lofty goals of establishing a corruption-free government in Guangdong.15 For the public record, Feng Rui’s punishment was announced as Yu Hanmou’s initiative. According to Li Jiezhi, Chiang Kaishek agreed to authorize Yu Hanmou’s decision to execute Feng Rui. Perhaps, as Li suggested, Chiang was angry at Feng for reasons of his own.16 Chiang had already brought Guangdong under control. National armies had marched south and threatened to attack with a combined force of 350,000 troops held in five positions just outside the Guangdong-Guangxi territory.17 Soldiers and civilians alike were relieved that civil war had been avoided. Why was it necessary to send a junior civilian official to his death?

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Chiang Kaishek appeared in public to make a major speech on the day of Feng Rui’s death. Although Chiang did not mention Feng or any other living person in his address, it appears to have been an oblique account of why Feng Rui was singled out for repudiation. Chiang’s two-hour speech on the morning of 9 September 1936 was addressed to a large assembly in the Sun Yatsen Memorial Hall in Guangzhou. It seems to have been eloquent and was probably prepared by Chen Bulei, a personal secretary who accompanied Chiang on his visit to Guangzhou.18 The explicit theme of the speech was commemoration of the forty-first anniversary of an abortive uprising led by Sun Yatsen in Guangzhou in 1895. The rebellion was allegorical in the speech. Instead of mentioning current conditions directly, Chiang referred repeatedly to the heroism of “The President” (i.e., Sun) and to the several young anti-monarchists who had been martyred on 9 September 1895. No living persons were mentioned in the speech, nor was there an explicit reference to Japan. Nonetheless, the threat of invasion by Japan was clearly the real theme. Chiang’s main points, each repeated several times, were that Guomindang members and Chinese citizens must unify to oppose the current threat to national sovereignty, that they must be determined to root out “traitors” (hanjian), and that they must oppose and condemn corrupt local officials just as Sun and his revolutionary associates had struggled in 1895 to overthrow the illegitimate foreign dynasty that held the enslaved Chinese people in thrall across the country and had permitted corrupt local officials to prey on the populace. Therefore, Chiang’s speech implied that Feng Rui was a corrupt local official, probably a traitor, and that to tolerate behaviour such as his would be to fail in the duty of protecting the nation. Such a failure would serve as an invitation to enemy invasion and the renewed enslavement of the Chinese people. “Our descendants would not forgive us!” Chiang declared.19 For his audience and news readers across China, Chiang’s speech linked Feng Rui to Japan. In 1936, the term “hanjian” referred to smugglers, particularly those operating in association with the Japanese. As seen in Chapter 6, Feng Rui appeared to be on the wrong side of the border between native and imported commodities. At a time when Japanese-backed smuggling in coastal China was alarming the world, Feng Rui had evidently disguised smuggled imports as provincial products. Two years earlier, Chiang Kaishek commented to a journalist that contention between the central government and Guangdong was nothing more than “a war of words.”20 By presenting the attack on Feng Rui as part of a defensive effort against Japan, Chiang waged verbal warfare against the former provincial regime as well. His attack implied that the punishment of Feng Rui was a consequence of his association with Japanese-backed smuggling. Feng’s death was an opportunity for Chiang to draw and police a boundary line that

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separated patriots from local hanjian and distinguished national identity from the invading enemy. “Smokeless Sugar” and Feng Rui’s Demise It seems clear that Feng Rui became vulnerable to criticism and attack as a result of the contradictory nature of the Sugar Industry Revival program that he directed. After proclaiming that the goal of the program was to substitute Chinese-made sugar for imported supplies, Feng Rui became the official supervisor of a program that substituted imported sugar for domestic products. Because a portion of the sugar brought through “official smuggling” into Guangdong was shipped to Shanghai thanks to Feng Rui’s arrangements with Customs authorities, a significant share of the white sugar consumed in China entered Guangdong’s ports duty-free and was sold in regions protected by the national tariff. Therefore Guangdong’s import-substitution program appeared to be a front for increased imports. As “official smuggling” continued during the three years of the Guangdong government’s program of constructing sugar mills, observers in Nanjing suspected that the Guangdong government was deliberately exploiting the sugar-import tariff as an indirect revenue-raising device rather than as a protective barrier for Chinese industry. As the Commercial Attaché for the United States described the situation, Guangdong had used the sugar tariff as a means of wresting revenue away from Nanjing: The sugar tariff was purely a revenue tariff for when it was promulgated the modern South China industries did not exist, and many influential members of the Central Government see in the high sugar tariff nothing more than a channel through which revenues which should legitimately accrue to the National Treasury are diverted into the hands of their political opponents in South China.21

At the same time, sugar was entering the country in flagrant violation of national regulations along the coast of Hebei province in northern China. In that region, the Japanese military presence and political influence had created a free-trade zone by sponsoring the establishment of the East Hebei AntiCommunist Autonomous Government at the end of 1935. The smuggling of sugar and rayon in large quantities was conducted openly along the northern coast thanks to Japanese military protection. By the spring of 1936, smuggling had become an issue of intense public concern throughout China. In April, Customs announced that the tariff revenue lost to smuggling would amount to one-third of the previous year’s total collection if the unregistered importations continued at their current level.22 Chinese public criticism castigated Japan

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and urged the Nanjing government to act.23 Japan’s diplomatic representatives, however, claimed that smuggling in China was a problem of Chinese political disunity. Pointing to the situation in Guangdong, they argued that “official smuggling” in Guangdong proved that Japan was not responsible for the illicit trade in the north. The inability of China’s government to maintain unity was the real cause.24 Thus, informal fiscal accommodations between Nanjing and Guangdong, including provisional sanctions of irregular practices in the sugar industry during 1934 and 1935, were no longer tenable by mid-1936. Guangdong’s contravention of national tariff regulations had become part of an international issue. The most damaging aspect of the controversy over Guangdong’s sugar industry program was increasing public concern about “Japanese” sugar smuggling. By 1936, Japanese traders’ ability to supply large quantities of sugar cheaply made this product Japan’s most important export to China and contributed to overwhelming the capacity of Customs service authorities to enforce tariff regulations.25 Japanese-ruled Taiwan, where sugarcane production had recently reached a volume that was twice as high as all of mainland China’s, was a significant source of smuggled sugar.26 The white sugar imported into China mainly originated on Javanese plantations, however, and was shipped from the Dutch East Indies to China and Hong Kong by Dutch, British, and Chinese traders as well as by Japanese firms. It was because Japanese interests dominated the Asian trade in sugar through investments in milling, refining, and shipping throughout the region that China’s smuggling problem became a problem of national defense.27 Alarm about the commodity invasion occurring in coastal China led to legislative measures. As noted in Chapter 6, smuggling on a large scale, or smuggling activity by officials, became a capital crime in Guangdong in 1934. At the national level, smuggling became a capital crime in May 1936. The Legislature at Nanjing passed a set of antismuggling regulations on 15 May, reflecting the government’s shift toward active intervention as the most direct method to halt large losses of customs revenue. The new legislation prescribed the death penalty for those convicted of smuggling or aiding smugglers in the transport or release of smuggled goods on which N$6,000 or more in payments to Customs were due.28 There was clear and ample evidence on the central government’s side that Feng Rui was associated with smuggling. Because he had been responsible for the withholding of customs revenue estimated at more than N$6,000 on just one shipment brought to the Xinzao sugar mill by a government vessel in May 1934,29 Feng Rui could thus have been considered culpable if associated with any similar shipments between May and August

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1936. Indeed, the sugar importations in association with the Guangdong mills continued until the time of Feng’s arrest. Article 8 of the Regulations Governing Punishment for Participation in Smuggling, promulgated in May 1936, provided for the handling of smuggling cases by military authorities in localities subject to martial law: “Violators of any regulation provided for in these regulations in places where a state of emergency exists shall be court-martialed by the highest military organ in the place concerned. The due punishment shall be meted out to the smugglers upon approval of the superior military organ.”30 This provision explains why Feng Rui was sentenced by a military commander although he was a civilian and thus not subject to military discipline. From the time of Chen Jitang’s departure on 18 July 1936, Guangzhou was under martial law, lifted only after Chiang Kaishek’s departure from the province at the end of September.31 In accordance with the national antismuggling regulations, therefore, General Yu Hanmou indeed had the authority to conduct a trial to examine the charges against Feng Rui, to render a sentence of capital punishment, and to carry out the death sentence following approval from Chiang Kaishek, his military superior.32 It makes sense to link the death of Feng Rui to the intensity of public and official concern about the wave of smuggling that threatened to wreck national finances and flood the domestic markets on which Chinese industry depended. Moreover, Feng’s arrest and execution took place less than four months after national legislation determined that smuggling was a capital crime. Remarkably, however, Feng’s case was not linked in official statements to the new laws or to the critical smuggling problem that featured prominently in national and local news at the time. Although “passing off foreign sugar” as a provincial product was one of the more specific charges made against Feng, this was not specified precisely as smuggling and was just one of several alleged misdeeds. The charge against Feng Rui was the more general one of “corruption.” The official statement following his death mentioned collusion with smugglers only as an aspect of his misconduct. News headlines reporting his death read “Corrupt Official Executed,” and most made no mention of smuggling.33 Although smuggling by government officials became a capital crime in 1936 and Guangdong’s “smokeless sugar” was notorious, the antismuggling legislation with its new provisions for capital punishment was not mentioned in public statements outlining Feng Rui’s misconduct. Perhaps the public made the connection between the national smuggling crisis and Feng Rui’s death sentence thanks to the reference in the official statement to “passing off foreign sugar” as produced in Guangdong. Nonetheless, it seems contrary to the purpose of the legislation that the statement was not more explicit. Legislation is not likely to have a

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strong deterrent effect on wrongdoers if it is not clearly linked to the punishment of violators. The charges of corruption also remained general and vague in Li Jiezhi’s two essays on Feng Rui. Li Jiezhi added a few details to his earlier account, including the fact that because Morris Cohen and his team of armed men were guarding Feng, Li did not succeed in his first attempt to carry out the order to arrest him.34 It is significant that in neither version did Li connect Feng’s case to the problem of smuggling in Guangdong. He did not mention that smuggling was a capital crime in 1936 or that sugar smuggling was an issue of nationwide concern at the time of Feng Rui’s death, despite the fact that general readers in 1963 or in 1990 might not have been aware of these circumstances. Li’s accounts, together with news reports and official statements describing Feng’s culpability in August and September 1936, suggest that Guangdong authorities made an effort to downplay the extent to which their interests were still closely connected with unregistered foreign trade. To avoid confirming the Japanese point that smuggling was a problem of China’s weak governance, Chiang Kaishek and other central officials also preferred not to connect the case of Feng Rui to the smuggling issue. The vagueness of the official charges against Feng Rui may be explained with reference to Chinese-Japanese relations at the time. Central leaders such as Chiang Kaishek naturally did not wish to acknowledge that there might be truth in the Japanese claims that Chinese local officials were the perpetrators of smuggling. Moreover, it was better for Chiang to make a strong gesture that could be construed as anti-Japanese with the help of a stirring speech than to mention Japan directly. Chiang’s critical references to Japan in his speech of 9 September 1936 were oblique because of the central government’s commitment to diplomatic negotiation with Japan at that time. A policy of friendliness toward Japan on China’s part, demanded by Japan and respected to a large extent by Chinese officials, had a dampening effect on public discussion of the smuggling problem in 1936. The effect may be seen, for instance, in numerous essays in Zhongguode Yiri (One Day in China), Mao Dun’s edited volume of hundreds of individual reports from across the country composed on a particular day: 21 May 1936. On mention of smuggled goods originating in Japan, many contributions to the volume referred to “a certain country” or used the symbol “X” to refer to Japan.35 Thus the impact of Japanese pressure on China’s internal politics helps to explain the case of Feng Rui’s execution. On closer examination, however, Feng Rui’s death does not appear to have truly been a consequence of his involvement in smuggling. Within the context of escalating tensions between China and Japan, other circumstances specific to Feng’s work were more important in leading to his disgrace.

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A Proposed National Sugar Monopoly The charge of collusion with smugglers was generally applicable to Guangdong’s military and civil officialdom at the time of Feng Rui’s arrest. Other circumstances to consider in his case are rivalry between cliques in Guangdong and opposition to the intrusive bureaucratic interests that he represented. It is possible that Feng Rui had been a thorn in the side of traders specializing in trade between Java and China, especially in the Chaozhou region and especially in sugar products. As noted in Chapter 6, Mo Yinggui stated that sugar traders from Chaozhou had been edged out by Chen Jitang’s proteges in the sugarimport business. Examination of Japanese records, however, reveals a more multisided struggle for control of China’s sugar markets.36 Beginning in 1934, Feng Rui became associated with Huang Jiangquan, a Chinese-Javanese sugar merchant with roots in Chaozhou. Huang was an owner of sugar mills in Java and a major importer of white sugar into China through his firm, Kian Gwan.37 Between 1934 and 1935, Huang tried to organize a sugardistribution cartel by winning official support for the idea of replicating the GSM on a nationwide basis. Through lobbying efforts in Nanjing, he gained backing within the national Ministry of Industries for a proposal to establish a Sugar Distribution Commission. He proposed to serve as one of five commissioners and also recommended that Feng Rui should be appointed to the commission. During a visit to Shanghai in February 1935, Feng Rui tried to win support for the idea of combining the supervision of sugar distribution in Guangdong and Shanghai under the authority of a single agency. He contacted Shanghai’s sugar merchants and invited them to a meeting to discuss the plan. However, only a few dealers responded to the invitation. The sugar business in Shanghai was very competitive because of the availability of supplies at low cost from a number of overseas sources. It was also a self-regulating business represented by a well-organized Sugar Dealers’ Association. Shanghai’s sugar merchants did not see the need for a national sugar monopoly. The representatives of firms engaged in the sugar-import business in Shanghai did not publicly express their reservations about the proposed Sugar Distribution Commission when they were first informed about it, perhaps assuming that, like other ideas announced by government agencies and by newspaper reporters, the proposed organization would not materialize. But after Huang Jiangquan was successful in gaining approval for the scheme from the Ministry of Industries and after newspaper announcements appeared in May 1935 stating the rules and regulations that sugar dealers would be required to follow as of 1 June 1935, Shanghai’s sugar guilds immediately organized meetings and protests.38 They protested vigorously that a distribution agency would be of benefit to no one but Huang Jiangquan and that, as a major dealer in sugar, he should

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not have been appointed to an official commission to supervise the sugar trade. The guild leaders warned that because it would disrupt China’s sugar business, a monopoly could result only in lost tariff revenue for the government. At this time, the Ministry of Industries, responsible for China’s agriculture as well as industry, was headed by Chen Gongbo (1892-1946), an active, articulate, and left-leaning intellectual. Chen was a strong advocate of official economic control and argued that it should be implemented at the central level, not by provinces.39 He had also become interested in the possibility of developing sugar manufacturing in Shanghai, communicating with the Jincheng Bank about the matter.40 In a display of international solidarity, Shanghai-based sugar dealers of many nationalities were in near unanimity in opposition to Chen Gongbo’s decision to impose monopoly regulations on China’s white sugar business. The Japanese dealers in Shanghai, numbering about a dozen, were not invited to the first meetings called by Butterfield and Swire’s senior representative in Shanghai for the purpose of organizing a protest, but were soon included in efforts to draft and deliver formal statements. Formal protests were signed by twenty-five sugar-trading firms altogether. It was not long before the Ministry of Finance stepped in to settle the dispute. After a brief investigation, finance officials issued instructions that the Sugar Distribution Commission should be viewed as a private concern. It would have no official status, and its commissioners would not serve as agents of the central government. Nothing further was heard from Chen Gongbo or the Ministry of Industries to clarify the situation. Huang Jiangquan’s attempt to corner Chinese sugar markets had evidently been defeated. Among the sugar dealers in Shanghai, Japanese wholesalers had been particularly concerned about the damage a national sugar monopoly would do to their business. They viewed Huang Jiangquan’s plan as a scheme designed to push them out of China. Thanks to Java’s vast capacity for low-cost sugar production, Huang would be able to supply China’s sugar-import requirements directly and entirely from the Dutch East Indies if he succeeded in becoming the government’s sugar-purchasing agent. Nervous about anti-Japanese sentiment in China, the Japanese dealers feared that a plot had been organized against them. Naturally, they distrusted Feng Rui as well as Huang Jiangquan. In correspondence with their diplomatic representatives, they stated that the sugar monopoly organized in Guangdong the year before had not been successful. Whereas British traders interested in China’s sugar business had been content, despite their concerns and strong protests against the proposed government monopoly, merely to inform their consular representative about the situation,

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Japanese traders prevailed on the Ministry of Foreign Affairs in Tokyo to make statements on their behalf to ministries in Nanjing. The GSM had a poor reputation among sugar merchants in Shanghai even before they heard about the plan to establish a national monopoly along similar lines. Nonetheless, the idea of concentrating the control of sugar markets for the nation as a whole in the hands of just a few agents remained attractive in certain quarters. The unofficial Sugar Distribution Commission apparently continued to exist despite the fact that it did no business, and after an eighteenmonth period of dormancy it returned to the news at the end of July 1936. The revival of the national sugar-monopoly scheme at that juncture seems to have resulted from the shake-up of sugar market control that was occurring with the change of government in Guangdong. Once again, Feng Rui’s name appeared on a list of official agents commissioned to control the sugar trade. The revival of the national monopoly scheme possibly precipitated the denunciation of Feng Rui in Guangzhou. At the eleventh hour of his bureaucratic career, Feng became part of a new National Sugar Production and Marketing Cooperation Association inaugurated in Shanghai on 26 July 1936 (the day that Yu Hanmou arrived in Guangzhou to take up his new appointment).The formation of a new Sugar Merchants’ Association in Shanghai was announced as well. A group of businessmen there was interested in forming a national sugar-trade monopoly and had been discussing the idea with the Ministry of Finance. Feng Rui was elected to the Board of Directors, along with thirteen others, including Yuan Liang, a major general and former mayor of Beijing, and Lu Zuolu, the financial commissioner of Sichuan. The new association announced that it had been approved by the Ministry of Finance, that it was supported by sugar merchants nationwide, joined by fifty firms in Shanghai alone, and that it aimed to “combat the smuggling of sugar and to organize and develop the domestic sugar industry along cooperative lines.”41 Various other reports on the new monopoly appeared during the next few days. Shanghai sugar merchants were said to have joined forces with manufacturers in Guangdong, Guangxi, Shandong, and Sichuan and would regulate the production of sugar, be watchful against smuggling activity, and help China to recoup the loss of N$200 million spent annually on 20 million dan of imported sugar. The new organization would be formally established within a few days as the National Sugar Production and Marketing Cooperation Association.42 During his last visit to Shanghai in June 1936, Feng Rui continued his efforts to set up a national organization to handle sugar sales. Following his meeting with Chiang Kaishek on 16 June, he spent ten days in Shanghai, where he reportedly negotiated arrangements for the sales organization.43 Returning to

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Guangzhou on 2 July 1936, Feng spoke to a reporter who met him on his arrival and stated that his discussions in Shanghai and Nanjing had proceeded “with good results” and had included Guangdong’s plans to expand sales of sugar in other parts of the country. Officials in Nanjing, he stated, were considering Guangdong’s request for a renewal of tariff concessions on sugar imports for processing in the provincial mills.44 News reports on Feng Rui’s activities between 14 July, when he was about to leave for an investigative tour of Hainan Island following orders from Guangdong’s chairman, Lin Yungai, and his arrest on 10 August, make clear that he was not in Shanghai for the inauguration of what news reports referred to as a “national sugar monopoly.” However, he defended the new entity against criticisms in a statement to the press published two days before his arrest. Feng claimed that the National Sugar Production and Marketing Cooperation Association had received central government approval and that the Ministry of Finance was committed to providing a portion of its operating expenses.45 Shortly afterward, however, a statement from Nanjing denied that the new entity had received official approval. Sugar dealers who had joined the association were ordered to formally renounce it in letters to Nanjing within three days. Feng Rui and his colleagues were accused in news articles of launching the association under false pretences.46 Thus, the scheme for a national sugar monopoly collapsed a second time, and, as it did so, Feng Rui was arrested in Guangzhou. Revenue and Regionalism Sugar alone cannot explain Feng Rui’s death sentence. As seen in Chapter 6, sugar and rice were both important in his career and became closely linked when Customs officials asked him to bring Guangdong’s policy on rice-import taxes in line with Nanjing’s in return for concessions related to sugar shipments. Other issues debated between the provincial and national governments during 1935 and 1936 were relevant as well. These included revenues from the sale of opium and salt, the control of tungsten exports, and Guangdong’s maintenance of a separate currency. There were several other contentious topics as well, including the provincial tax on kerosene imports and the rights to establish an airline route connecting Guangzhou to cities in Indochina.47 Central and provincial leaders also disagreed about the Guangdong government’s plans, announced on 6 March 1936, to set up a provincial Tobacco Monopoly and require merchants to turn their stocks of tobacco and cigarettes over to the new agency. This particular plan was shelved in the face of strong opposition in both Guangzhou and Nanjing.48 As explained in Chapter 3, since 1931, the Guangdong provincial government retained almost all the taxes they collected in the province, including customs duties on goods imported through Guangdong ports

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for sale elsewhere in the country. The central government reluctantly recognized the province’s authority to retain funds that were claimed essential to paying soldiers and covering other costs. But in negotiations with Guangdong’s leaders, representatives of Nanjing claimed that the province’s taxation policies amounted to indirect national subsidies of provincial spending.49 Chen Jitang was ousted in July 1936 partly because the Nanjing government had made gains in the struggle to control revenue. In 1935, the position of the Southwest alliance was seriously weakened when Chiang Kaishek managed to wrest control of opium away from Guangdong and Guangxi. Chiang arranged for opium shipments to be diverted through Hunan and Hankou on their way out of China from Guizhou and Yunnan rather than following their usual route via Guangxi and Guangdong. Thanks to the anti-Communist campaigns that took his armies southwestward, Chiang Kaishek succeeded in diverting the shipments, sending them up to the Yangzi River. Escorted by military detachments, convoys of trucks laden with opium were now constantly on the roads passing through Hunan toward the Yangzi River port at Hankou.50 The southwestern leaders suffered enormous losses as a result. Formerly, they had collected major portions of their total revenue as transit taxes imposed on opium transported through Guangxi and Guangdong. Customs reports stated that the transit taxes on opium from Guizhou had netted between G$13 and G$16 million in annual revenue for the Guangxi and Guangdong leaders. This opium was now coming to Guangzhou by way of Hunan.51 In May 1936, the position of the Southwest vis-à-vis Nanjing was greatly weakened by the death of Hu Hanmin, its most respected leader. By mobilizing troops and calling for concerted military efforts against Japan on 1 June, Chen Jitang and his allies made a bid to regain their strength before their position weakened further. As one writer describes the situation, the leaders of the Southwest wore their anti-Japanese resistance slogan like a “protective amulet” as they mobilized troops to march northward.52 The call for an anti-Japanese campaign was a challenge difficult for the central government to condemn and allowed Chen to buy time. Chiang Kaishek then began to use his “silver bullet” tactics to persuade several of Guangdong’s top officials to abandon Chen Jitang.53 During the confrontation that ensued, the financial terms of a possible settlement were discussed at intergovernmental meetings. One of the last such meetings before the regime change in Guangdong was held in Hunan in June 1936, mediated by the Hunanese leader General He Jian. Nanjing’s representatives reportedly offered to fund Guangdong’s reconstruction projects in exchange for complete remittance to national accounts of tax and tariff revenue collected in the province. But the Southwest delegation refused the offer and held out for

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full repayment of the 1926 loans to fund the Northern Expedition. On the loan question, however, Nanjing’s position was that Guangdong’s retention of revenue had already cancelled out that debt. Central representatives declared the immediate cessation of all national subsidies paid to Guangdong, claiming that these amounted to a total of N$6 million monthly. This allowance was the “national” revenue collected in Guangdong.54 At the time of the meeting in Hunan, Feng Rui was seeking concessions in Nanjing. It seems doubtful that his proposals were seriously entertained. It seems more likely that, without being aware of it, he was considered useful as an informant on Chen Jitang’s finances. General Yu Hanmou, Sugar, and Tungsten General Yu Hanmou had been Chen Jitang’s ally and nominal subordinate in the national military hierarchy until he decided to make a new alliance with Chiang Kaishek in July 1936.55 Because Guangdong’s new chairman, Huang Musong, was in poor health, General Yu Hanmou dominated the provincial administration.56 At the formal level, Yu’s order to execute Feng Rui symbolized subordination to Nanjing’s authority and commitment to the establishment of an honest administration. Therefore, it might seem that Yu submitted to the central government by punishing Feng Rui. The change of government in July 1936 was partly a rebalancing of power between the central government and Guangdong. However the provincial leaders, more like allies than subordinates of the central government, were also rivals as well as allies of one another who competed among themselves at the same time as they aired disagreements with Chiang Kaishek. It is helpful, therefore, to consider Yu Hanmou’s possible motivations. As well as serving as an intergovernmental negotiator, Feng Rui was a middleman within Guangdong. From Yu Hanmou’s perspective, there were practical reasons for arresting Feng Rui. On the basis of tax farmer Zheng Shougen’s account (see Chapter 6), it seems plausible that Yu wished to sever Feng Rui’s connections to revenue collections established under Chen Jitang. According to Zheng, General Yu’s brother, Yu Jixian, had been one of the parties behind the scenes in the sugar smuggling business operated under the management of Chen Weizhou. When the owners of the Tongxing Company protested that the smugglers were stealing their business, Yu Jixian did not help them, siding instead with the “smokeless sugar” clique. After the departure of Chen Weizhou, however, General Yu returned to the business of collecting revenue on sugar imports to his fellow natives of northeastern Guangdong.57 In November 1936, Yu Hanmou at last formally relinquished Guangdong’s right to control sugar sales by abolishing the GSM.58 He supported amendments

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to the Sugar Monopoly Regulations of 1934, which aimed at giving any dealer access to sugar markets in any part of the province. For an annual fee of G$500, anyone could operate a sugar business, provided he purchased supplies amounting to at least thirty sacks directly from the Provincial Products Sales Office.59 Before this, however, General Yu had already sold or leased parts of Guangdong’s sugar industry. The main buyer was no other than Huang Jiangquan, operating through his Kian Gwan company. As the United States Consulate in Guangzhou reported in September 1936, a firm “composed of Javan Chinese” took over parts of the sugar business. Dealing with the provincial “military authorities,” the firm first “secured a concession to handle and sell all the sugar needed in [Guangdong] in addition to that required by the local sugar mills.” The military leaders then leased the two army-run sugar mills, built in Huizhou and in Dongguan, to Kian Gwan. According to the agreement, the firm would turn over a percentage of the earnings of the mills to the Guangdong Army.60 Chen Zhaoyu’s explanation of her husband’s fate was that he had been unable to get along with the group of poorly educated military men and their wholly self-interested merchant associates, who, despite enlightened government efforts, were in real control of the sugar trade in Guangdong. She also pointed out that Feng could not justly be held responsible for practices, including the production of “smokeless sugar,” that were continuing after his death.61 The practice of “using sugar to feed armies,” which had become notorious under Chen Jitang, indeed continued under Yu Hanmou. Yu’s interests created a significant link between sugar and tungsten, another politically sensitive, internationally traded commodity. Tungsten, also called wolfram, is a nonferrous metal of great value in armaments production. After Feng Rui’s death, a journalist claimed that Feng had participated in Guangdong’s illicit trade in tungsten ore as well as having helped Chen Jitang collect revenue through sales of smokeless sugar and rice.62 Although evidence is lacking to support or refute this allegation, the tungsten business was clearly very important in southern China at the time of Feng Rui’s arrest. In addition to his business interests in sugar described above, General Yu Hanmou was also involved in the trade. The fall of Chen Jitang provided Yu with an opportunity to strengthen his control over exports of tungsten from South China. Yu’s power base was in the border-straddling area of northern Guangdong and southern Jiangxi. In 1936, half of the world’s total production of tungsten was mined in this region, especially in the vicinity of a village named Dayu.63 While supervising the defence of Guangdong against Communists in Fujian and Jiangxi in the mid-1930s, Yu Hanmou took advantage of access to the supplies of small isolated tungsten mines.64 Thus Yu’s ascendancy in provincial politics in 1936 was supported by his control of tungsten, as prices for this

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mineral were pushed upward while Germany and other industrial nations were preparing for war.65 Tungsten originating either in Guangdong or mined across the provincial border before passing through Guangdong en route to overseas markets was officially controlled by a tungsten monopoly established under Guangdong’s Department of Reconstruction in November 1933. The monopoly did not impose order or unity on the tungsten trade. In fact, it competed for control with the authorities of Jiangxi and the central government as well. By the end of 1935, the provincial monopoly’s control of Guangdong’s tungsten had slipped from about 70 percent to 35 percent of exports from the province.66 Rapid price increases caused tungsten to slip from its grasp. As a result of increasing demands for tungsten from European powers engaged in rearmament programs during the 1930s, the exploitation of small-scale tungsten deposits was becoming more profitable in various places in northern and northeastern Guangdong as well as in the areas of large deposits in southern Jiangxi. Small mines that had not operated since 1918 were reopening in response to the price increase.67 Much of the new output, however, was evading the control of the Guangdong Tungsten Monopoly. Tungsten from mines in Jieyang, Chaozhou, and Meixian was being sent to Hong Kong in junks and small steamers.68 At the port of Shantou, observers commented that the unauthorized exports of tungsten were less significant than the smuggling inward of sugar, salt, and miscellaneous other goods in evasion of Nanjing’s tariffs and Guangdong’s taxes as well.69 It is likely, however, that the sugar shipments helped to secure traders’ access to the tungsten supplies, which could be shipped out of China by a number of different routes. Easily transportable and welcome to isolated miners, sugar had a special value as a means of procuring tungsten ore from small mines scattered throughout central and northern Guangdong. Records of the GSM indicate that sugar was smuggled into Jiangxi and Hunan in exchange for tungsten sent out in evasion of the tungsten controls. In the fall of 1934, representatives of sugar-dealing firms that had jointly established a Branch Sugar Distribution Agency in the counties surrounding Shaoguan, in northern Guangdong, submitted a request that sales of Guangdong sugar no longer be contracted to merchants based across the provincial border in Hunan and Jiangxi. When establishing their agency, the northern sugar dealers had counted on those merchants as customers. Now their business was being ruined by direct sales of white sugar from within Guangdong, and they were unable to meet their monthly sales quota of 2,000 dan (for which they had jointly submitted a bond of G$2,000). Chen Yuanying, head of the Provincial Products Sales Office, responded to their request with a statement that if such sales outside the GSM existed, they were illicit, adding that the sugar dealers themselves must make efforts to halt them.70 The

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fact that General Li Hanhun, commander in the Shaoguan region, had opened a tungsten mine and established a Northwestern Enterprise Bureau to manage it in 1934 suggests that Li brought supplies of smokeless sugar to the area to support his mining operation.71 Possibly, he also purchased tungsten from the mining areas of southern Hunan and Jiangxi.72 According to a Customs report, officers of the Guangdong armies stationed in southern Jiangxi formed their own firm to deal in tungsten. In May 1935, Chen Jitang’s headquarters ordered that this operation be taken over by the Military Reclamation Bureau, which would purchase tungsten directly from the miners.73 Yu Hanmou was one of the main suppliers of the Guangdong Tungsten Monopoly. At one point in 1934, Yu was pressing Guangdong’s Department of Reconstruction for payment of the sum of G$1 million owing to him for tungsten delivered to the Guangdong Tungsten Monopoly. In May 1935, Yu notified the Tungsten Monopoly that he was planning to send tungsten exports out through Shanghai, where he could earn ready cash rather than a promise of payment from the monopoly, which was behind in payments to miners and tungsten dealers.74 This occurred soon after Chen Jitang’s First Army Group had formally taken over the Guangdong Tungsten Monopoly from civilian management. The First Army Group sold tungsten to various buyers from Europe through its Agricultural Products Sales Office.75 Its supplies were purchased from miners by provincial military commanders. For instance, in the case of the military reclamation base at Huizhou, a Mineral Products Receiving Office had been established to handle tungsten.76 As previously noted, Yu Hanmou chose to re-direct the sugar business into the hands of his fellow northeasterners after Chen Jitang’s departure. Perhaps Yu also hoped to expand his tungsten business to take over the share formerly controlled by Chen Jitang.77 Given the evidence that Chen Jitang was in debt to Yu Hanmou for tungsten, perhaps Yu detained Feng Rui with the hope of shaking down Chen Jitang, who might have departed with tungsten revenue that should have been transferred to Yu. If so, Chen abandoned Feng Rui when he left Hong Kong for Europe at the end of August.78 While they were growing up, Feng Rui’s daughters learned from relatives and their mother’s loyal maid that Yu Hanmou had arrested and sentenced their father because Feng had denounced Yu’s illegal tungsten-export operations. In this account of how he got into trouble, Feng Rui and two friends met in Hong Kong and shared their unhappiness about Yu Hanmou’s appointment as commander of the Guangdong armies. The friends happened to be Tang Hai’an and Song Ziliang.79 In an attempt to have Yu removed, they decided to send a letter of protest to Chiang Kaishek. Tang and Song delegated Feng to compose the letter because he was the most skilful writer. Feng accordingly wrote to

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advise Chiang that Yu Hanmou was not suitable for appointment to the top command in Guangdong because he had been selling tungsten for personal profit.80 This information suggests that Tang Hai’an and Song Ziliang betrayed Feng Rui, and that Yu Hanmou removed Feng from the scene in order to protect his tungsten business and his reputation. Guangdong and Japan By relating Feng Rui’s activities to competition in the tungsten and sugar markets and to Chiang Kaishek’s political concerns in mid-1936, this discussion has considered aspects of Feng’s case that were not mentioned in the accounts of his contemporaries. Another long-obscured aspect of his case is the existence of cooperation between Japanese sugar suppliers and local agents in Guangdong. The day after Chen Jitang stepped down from his command in Guangdong, Yu Hanmou sent a telegram to Nanjing denouncing Chen for secret collaboration with Japanese military and business interests.81 There were certainly regular contacts between Japanese military officers and businessmen and Guangdong’s top leaders during the “era of the Southern Empire” under Chen Jitang. Japan was represented in Guangzhou by a consul general who made arrangements for many visiting delegations and provided assistance to hundreds of Japanese residents in the district. Sales of weapons and other military equipment to Guangdong was an important business for many visitors. During the period of the change of government in Guangzhou, the consul general actually acknowledged the armaments sales, stating that they were private, not official, business.82 Although many of the records of the Japanese Consulate in Guangzhou were scattered and lost, a few surviving documents reveal a connection between the GSM and Japanese business interests. According to a dispatch of 18 March 1935 from the commercial attaché of Japan’s Consulate in Shanghai following a visit to South China, Guangdong’s top leaders entered into an arrangement with a Japanese firm based in Taiwan whereby they would purchase Japanese sugar for duty-free shipment to Guangdong. Negotiated by the Japanese commodities behemoth Mitsui Bussan, the deal established a partnership between the GSM and the Taiwan Sugar Company (in which Mitsui Bussan had an interest).83 At the beginning of March 1935, Major-General Doihara Kenji visited Guangzhou. Doihara, a commander in Japan’s North China Army, was possibly more influential over Japanese policy toward China at the time than was the minister in charge of Japan’s legation in Nanjing. Guangdong’s authorities prohibited reporting on Doihara’s visit.84 Details of their discussions were not included in brief reports published in Hong Kong. Nonetheless, the circumstances suggest

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that Doihara authorized the agreement that Mitsui Bussan had negotiated. Following his visit, it was finalized.85 As the official supervisor of the GSM, therefore, Feng Rui assumed responsibility, at least nominally, for the distribution of Japanese “smokeless sugar” within Guangdong.86 Presumably, he was involved in arranging customs clearances for shipments to Shanghai of the sugar from Taiwan as well as for stocks purchased from Chinese-Javanese traders and various other suppliers in Hong Kong. Although it is not clear how long the shipments continued, the Japanese side was certainly interested in reducing large sugar stocks accumulated in Taiwan by increasing sales in China.87 According to managers of the Taikoo Sugar Refinery in 1934, compared to Java-based dealers such as Huang Jiangquan, Japanese sugar interests were not threatening competitors in the China trade, simply because Chinese customers preferred not to buy Japanese goods, and Japanese businesses were especially unpopular in Guangdong.88 In a condition of the deal negotiated by Mitsui Bussan, the Japanese side requested a reduction of the taxes on agricultural commodities imported into Guangdong from the Japanese-occupied Manchuria region.89 Records do not state whether Guangdong acceded to the request, but this matter of taxes helps to explain the dispute at Shantou in September 1935, in which importers refused to pay duty on rice and other agricultural products, resulting in General Li Hanhun’s being sent to negotiate with a large contingent of Japanese military forces.90 The arrangements between the Taiwan Sugar Company and the GSM appears to have been kept secret effectively. An indication of this is that in his discussion of Guangdong’s tariff-protected sugar industry program, the United States trade attaché, Julean Arnold, reported that the prospect of serious competition had been troubling to Japanese dealers in white sugar. During the summer of 1935, a delegation of Japanese sugar traders visited Guangzhou to investigate the provincial sugar-milling program. In a communication about the visit to Arnold, it was stated by the “director of the provincial sugar-milling program at Guangzhou” (i.e., Feng Rui) that a member of the Japanese delegation had bluntly declared that Japan regarded the development of modern sugar milling in Guangdong as a definite and undesirable handicap to Japanese exports.91 Given the secret deal arranged just a few months earlier, we see that Feng Rui perhaps provided a piece of misinformation by stating that the Japanese visitors were hostile to the provincial sugar program. How could they have investigated Guangdong’s sugar industry without an official welcome? But perhaps Feng’s statement indicates, instead, that he was not aware of the arrangements to import Japanese sugar through the GSM. Although Arnold did not directly express any suspicions, in the context of other correspondence from US consular representatives to State Department superiors, his mention of the Japanese

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delegation’s view implied possible collusion between Japanese sugar traders and the GSM. The State Department was informed, for instance, that after stepping down from power in Guangzhou, Chen Jitang seemed to be in regular communication with Japanese associates during his stay in Hong Kong. A consular dispatch reported that, according to the Hong Kong Chinese press, which was not very sympathetic to Chen Jitang because he was believed to accept Japanese assistance secretly,92 Chen was observed to be in close contact with Japanese agents during his six-week stay in Hong Kong.93 Given their suspicions that Chen Jitang was actually pro-Japanese, reporters might have pounced on information about the secret dealings in sugar arranged by Mitsui Bussan in 1935 if it had been available to them. As reports on Chen Jitang’s Japanese contacts indicate, reporters occasionally voiced suspicions. The comments of a journalist in Hong Kong on Feng Rui’s arrest suggest that suspicions of Chen Jitang could be linked to his case. As the writer declared, “It is essential that the Guangdong government be cleansed of the longstanding habits of corruption before war with Japan begins.”94 Reflecting these concerns, a few news reports on Feng Rui’s case published outside Guangzhou referred to “Japanese” sugar. In Hong Kong, reports stressed that the smuggled sugar was “Japanese” and linked the officially backed smuggling of Chen Jitang’s government with Japan. According to a Hong Kong newspaper report of Feng’s arrest, For the past few years, most of Guangdong’s official promotion of agricultural development has been in the form of a provincial sugar industry. While declaring that they are encouraging the people to grow sugarcane for processing, the provincial authorities have actually been misusing official privileges in the large-scale smuggling of Japanese sugar. While the smokestacks of the so-called sugar mills emit no smoke, the method of the government’s so-called sugar-milling program has actually been to take Japanese sugar and repackage it. At most, the sugar is passed through one more round of boiling before being labelled as a domestic product.95

This report suggests that there were suspicions in certain quarters that the Guangdong government was dealing directly with Japanese interests. Thus, the existence of an organized, off-the-record trade between Japanese sugar suppliers and local agents in Guangdong contributed to Feng Rui’s disgrace. The remarkable silence on this aspect of his case in the published accounts of his contemporaries such as Li Jiezhi and Mo Yinggui suggests a general effort among the people of Guangdong to distance themselves from Japan ever since the regime change of 1936. It seems that Yu Hanmou in particular took steps to disassociate himself from Japanese interests. After Chen Jitang’s departure from Guangzhou

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and on the date of Feng Rui’s last visit to Hong Kong, an editorial in the Hong Kong newspaper Gongshang ribao (Industry and Commerce Daily) expressed suspicions of Yu Hanmou. Were Yu Hanmou’s associations more legitimate than those of Chen Jitang? Both were engaged in collaborative activities, the article suggested.96 Thus, Feng Rui’s execution protected Yu Hanmou from public criticism as he continued the arrangements to import Japanese sugar. As noted, he did not dismantle the GSM for several months despite repeated petitions from sugar merchants in Hong Kong and Guangzhou requesting that it be abolished. The change of leaders in Guangdong in 1936 was related to a set of political realignments and shifting priorities occurring across China under the shadow of impending invasion by Japan.97 Given the vigour of idealistic anti-Japanese national salvationism in public discussion at the time, a fervour easily directed against government authorities, a convincing way to make sense of Feng’s execution is to attribute to Yu Hanmou the motive of obscuring his own complicity with smugglers who represented a hostile foreign power. Rather than take the risk that Feng Rui might publicize damaging details about Yu’s cooperation with Japanese sugar dealers, it was safer for Yu to arrest and incarcerate Feng to protect his own public credibility. The Japanese commercial attaché’s report on the deal brokered by Mitsui Bussan illuminates the wider range of Yu Hanmou’s interests and indirectly confirms the Feng family story that he arrested Feng Rui to protect his position in the tungsten trade. The Japanese attaché reporting on secret arrangements in Guangdong in 1935 actually described a larger agreement in which other parties were involved in addition to the GSM and the Taiwan Sugar Company. The Mitsui-brokered agreement of March 1935 was a multilateral barter-trade arrangement in which Japanese sugar was exchanged for tungsten. The other parties were the Taiwan Electric Company, a firm called Kobe Chemical Industries, and the Guangdong Tungsten Monopoly. According to the trade attaché’s information, discussions and planning for the barter agreement had begun during the fall of 1934, when Chen Jitang had asked a Japanese military officer to help him sell some tungsten stocks in an effort to raise some cash. The tungsten found a buyer but at a lower price than Chen had requested. The Japanese negotiators had taken the view that a lower price was reasonable given the quantities of tungsten available in Guangdong and their interest in entering a more permanent arrangement to purchase it. As part of the preliminaries to the final agreement in March, a team of mining experts escorted by Japanese military officers toured the province to conduct a survey of tungsten deposits.98 Although Chinese sources note their travels, observers were apparently unaware of the group’s purpose.99 Until they were both abolished in November 1936, the

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GSM and the Guangdong Tungsten Monopoly presumably continued to conduct barter trade with Japanese firms.100 As Guangdong’s most important player in the tungsten business, Yu Hanmou had reason to fear that Feng Rui might expose details of the tungsten-sugar barter trade. Smuggling in collusion with foreigners was one of the violations of national regulations against smuggling that was punishable by death.101 From Yu Hanmou’s point of view, Feng Rui knew too much. Possibly, Feng Rui himself was not astute or informed enough to realize the significance of what he knew and the politically sensitive nature of the information. From Yu’s point of view, nonetheless, Feng was dangerous simply because he was not Yu’s protege and therefore should not be trusted to keep to himself information about the profitmaking ventures in which he had been involved as Chen Jitang’s agent. Yu had taken over two of the most important of those ventures and presumably planned to keep honouring the multilateral agreement with Japanese firms that had been finalized in March 1935. He was probably aware of the editorial commentary criticizing him in Hong Kong and wished to suppress rumours about his dealings with the undeclared enemy before they damaged his legitimacy as Guangdong’s new leader. There is no evidence that Feng revealed anything about Yu Hanmou’s offthe-record tungsten trade to the public. Regarding Feng Rui’s possible letter to Chiang Kaishek reporting Yu’s engagement in unauthorized tungsten exports, it seems likely that Yu Hanmou feared public attention more than he feared censure from Chiang. Chiang Kaishek was also interested in the tungsten trade.102 But he was at the centre of an intelligence network. Particularly given the number of parties involved in the sugar-tungsten barter-trade agreement, it is unlikely that the arrangements had not already been reported to Chiang when Feng Rui wrote to him. It appears, therefore, that Feng Rui died because he had been involved in or knew about a second risky business in addition to sugar smuggling. Either on purpose or through carelessness, Feng could too easily have undermined General Yu by revealing details about dealings with Japanese traders that would have shocked the public. At that moment of surging indignation over Japan’s effort to conquer China’s economy by means of a flood of smuggling, Yu might not have lasted long as Guangdong’s commander-in-chief if Feng Rui had spoken out. Considering the circumstances of his case, particularly the steps taken to prevent Feng Rui from contacting friends and relatives who might have helped him, it seems clear that Feng Rui was not killed because he was guilty of collusion with smugglers or on account of corruption more generally. The charges against Feng Rui were the justification for his death, not the cause.

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Figure 5

Feng Rui with his daughters, 1935 or 1936. Photo courtesy of Feng Puyu,

daughter of Chen Zhaoyu and Feng Rui

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Feng Rui’s Personal Life There are indications that the public accepted the official story that Feng Rui had been corrupt and thus accepted the death sentence as a fitting punishment. Taking “the public” to include Feng’s acquaintances in the United States, it seems that some were convinced that Feng Rui must have been guilty of corruption by the fact that he had been executed. For instance, a senior colleague in agricultural sciences in the United States who had met and corresponded with Feng Rui remarked, “I may say for several years back that I have been having suggestions in correspondence from Americans at Lingnan that all was not well with Feng Rui.”103 This remark suggests that Feng’s associates at Lingnan University had heard and passed on details about Feng Rui’s advocacy of unpopular and contentious causes such as the provincial rice tax and the GSM. Perhaps former friends and acquaintances accordingly accepted Yu Hanmou’s judgment because of rumoured irregularities in the official practices associated with Feng Rui. There was general agreement that corruption had existed in the outgoing regime, and Feng Rui had been a leading figure in the Guangdong government, especially in the eyes of the English-speaking westerners for whom he was a point of contact with provincial authorities. Such acceptance helps to explain why the case has not been investigated for so long. Acceptance of the claim that Feng Rui deserved capital punishment, after the death sentence had been carried out, does not explain the sentence itself. Yet, unsympathetic attitudes toward Feng Rui are part of the circumstances of his death. It seems that they made him vulnerable to attack. Li Jiezhi, the police commissioner who arrested Feng Rui, suggested in his account that the men who decided on the death sentence knew that Feng had gained notoriety and that their decision would therefore be accepted. According to Li, Yu Hanmou and his associates deliberated about a suitable punishment while Feng was held in detention. They expressed opposing views, one being that Feng deserved execution and the other that it would not be fitting to sentence an educated expert to such harsh punishment. Li Jiezhi recounted that they nonetheless decided after reviewing a stack of reports describing Feng Rui’s misconduct that only his death would calm public outrage at his scandalous behaviour. Yu Hanmou then sent a telegram to Chiang Kaishek in Nanchang that requested authorization for an order of execution. Chiang wired his approval on 3 September 1936, and the execution was scheduled.104 On the same day, Qunsheng bao briefly reported that a death sentence had been passed on Feng Rui, former director of Guangdong’s Bureau of Agriculture and Forestry. No charges were mentioned.105 By 1936, Feng had made arrangements for Chen Zhaoyu to seek medical treatment in Europe. In her absence, he shared his house in the Dongshan

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district of Guangzhou with a woman with the family name of He.106 Li Jiezhi’s account implies that the leaders who made the decision to execute Feng Rui considered that rumours of his immoral behaviour would make the public inclined to accept their decision. Appointed as the provincial police chief commissioner on 25 July 1936, Li Jiezhi was one of the few officials to retain power during the change of government in Guangdong.107 Because he served both successive governments and was responsible for Feng’s arrest, Li was perhaps well aware of the real reasons for Feng’s death and addressed his account to readers who had questions about it. Li recounted that Yu Hanmou and his associates were influenced by reports of Feng’s extravagant behaviour when they passed judgment on his case. They had heard that He Lili responded to the news of Feng’s arrest by claiming personal knowledge of his corrupt behaviour in a set of notices published in Hong Kong newspapers.108 But Li’s suggestion that Yu Hanmou and his advisors were swayed by reports about Feng’s immoral behaviour is not convincing. As noted in the Introduction to this book, Li should not have assumed that He Lili posted the notices herself. Other newspapers reported after Feng’s death that He Lili had been his concubine, which is more believable. In any case, Ms. He behaved like a family member in response to Feng’s arrest and death, according to other news reports. One article noted that she had lived with Feng Rui since December 1934.109 While he was held in prison, Feng’s influential acquaintances might not have been aware that his life was in danger. Perhaps they were hesitant later to seek a posthumous clearing of his name. It would have been risky to discuss the case once Yu Hanmou had consolidated his position as Guangdong’s commander-in-chief. Nonetheless, a possible lack of sympathy on the part of his contemporaries helps to explain the long silence on Feng Rui despite the disproportionate severity of his punishment for official misconduct. Naturally, his friends from the United States did not approve of smuggling. Others, such as James Yen, his former employer, were principled opponents of concubinage. James Yen’s disapproval might explain why the extensive network of colleagues and acquaintances Feng developed during his Ding County days did not rescue him after his arrest.110 Years later, Feng Rui’s younger daughter recalled that her mother was often bedridden as her health declined. On one occasion, her father was kneeling and apologizing to Chen Zhaoyu for not being able to spend more time by her side. In one of the undated letters that Chen published with her book, Feng described indefinite plans to retire to a peaceful life in Beijing as soon as he could wrap up his affairs in Guangdong, declaring that in her native climate of the north, his dear wife would recover her health. In that bedside scene, which made a lasting impression on a little girl, perhaps Feng was also apologizing for his

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attention to another woman. Their older daughter remembers an outing with her father during which He Lili accompanied them. Afterward, Chen Zhaoyu protested that Ms. He was not suitable company for her child.111 It is doubtful that Feng Rui’s death had anything to do with He Lili or any other aspect of his personal life beyond the usefulness of insinuations that he was immoral. Although Feng Rui was frequently in the news, reports did not mention personal details until after his death, when journalists reporting his execution as a “corrupt” official attempted to explain it, elaborating on the vague official statements about his misdeeds. They suggested that Feng Rui fell, or deserved to fall, because of his immoral behaviour.112 The Death of Feng Rui When Feng Rui was led out of his prison cell after a month of confinement on the morning of 9 September 1936 and bundled into a large automobile, observers noted that his white summer suit was grubby and his hair unkempt. He was also extremely agitated. Qunsheng bao reported that the commander of the detachment of military police assigned to carry out the execution was the first to inform Feng Rui of his death sentence. While being taken to an execution ground on the eastern outskirts of Guangzhou, Feng shouted from the car window that he had been unjustly accused. During the hours that he was at the execution ground, Feng seemed not to believe that the sentence would actually be carried out. When he was summoned by the executioner at four o’clock, he realized that no one had intervened to save him. He then collapsed in shock, unable to walk across the field. Given a sheet of paper to record his last words, he tried to write but could not hold the pen. In a final humiliation, the officers assigned to the execution lifted Feng Rui into a cart and pulled him to face the firing squad.113 Three shots in succession killed Feng Rui. His body was left where it fell to await collection by relatives. As blood gradually soaked his clothing, rain began to fall. It was several hours before anyone came to claim the body. Feng Rui’s mother had been notified but did not understand or believe the news that he was dead. Finally, He Lili arrived with a small group of friends. Ms. He was identified as Feng’s concubine (qie) in several news reports the following day. With difficulty, she was able to persuade the military police to release Feng’s body and make arrangements for its collection by a funeral services company.114 Feng Rui originally had a two-syllable given name. It seems characteristic of his self-assurance and determination that, disliking his name, he dropped the second character during his school days. According to his elder daughter, his

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full name has been lost. Above all, it is unfortunate that knowledge of Feng Rui’s intelligence and initiative in significant efforts to reform China’s economy has been lost to his descendants. Ashamed and unable to explain why their father had been executed on charges of corruption, Feng’s daughters seldom mentioned him to their children and grandchildren.115

8 Provincial Sugar Industry Programs, 1945-58

Provincial Plans, 1947 and 1950 During the 1950s, China’s newly reunified national state implemented policies that allowed the provincial leaders of Guangdong to complete an industrial project initiated two decades earlier when the province had been autonomous. In the changed circumstances following the Communist victory and the establishment of the People’s Republic of China (PRC), Guangdong’s new leaders were able to realize Feng Rui’s plans for the expansion of sugar milling in the province. The main foundation of their success was that Chinese markets for sugar were more closed to foreign imports than during the 1930s. Given the protected environment, Guangdong’s infant modern sugar-milling industry flourished during the early socialist period primarily because the state-owned factories were able to secure and begin to control their supplies of raw material. Close ties between the sugar mills and sugarcane growers were established as government officials became more involved in the agricultural economy than ever before in Chinese history. After 1949, the sugar mills proved to be a valuable asset for Guangdong’s new leaders. Under Song Ziwen, who served as provincial chairman from 1947 to 1949, Guangdong implemented a program of expansion in the sugar industry. It was based on a comprehensive Five-Year Reconstruction Plan drawn up by provincial officials in 1947. According to their published reports on the plan, sugar milling was the province’s most promising industry. Soil and climate conditions made a large part of the province’s arable land suitable for expanding sugarcane production beyond pre-1937 peaks, and sugar consumption in China, then far below Japanese levels, could be expected to increase rapidly. The report described the benefits of investment in sugar milling in Guangdong in Mencian fashion: not only would it provide opportunities to countless villagers in sugarcaneproducing areas, but the proposed program would also increase government revenue. Other positive effects would be foreign-currency earnings, a reduction of Guangdong’s foreign trade deficit by the end of the five-year period, and a more immediate improvement in Guangdong’s balance of trade with other provinces. Just as during the prewar years, rice supplies were a main concern for provincial administrators. Because of Guangdong’s continued reliance on other provinces for a portion of its grain supplies, the planners of 1947 hoped

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that the province would soon be able to trade white sugar for grain. Their plan set a target of 70,000 tons of white sugar sales to other parts of China to be achieved by the end of the five-year period. This amount was equivalent to about one-quarter of the province’s prewar production of processed sugar, or one-third of production in 1946.1 To reach the goals for sugar industry expansion in Guangdong, the authors of the report on the five-year plan proposed that the provincial government invest funds both directly to repair and reopen state-owned sugar factories that had not operated during the war and indirectly as loans to private entrepreneurs who would build or upgrade smaller sugar mills.2 According to the government planners, great gains in output could be realized through investment in more modern equipment that could extract sugar from sugarcane at higher rates in Guangdong’s thousands of small privately owned sugar mills.3 To finance this program of reconstruction and expansion, Song Ziwen actively sought foreign investment and loans, especially from overseas Chinese and from the United States government. Hoping to supply machinery to the provincial government and private investors, foreign salesmen specializing in sugar-milling equipment reappeared in Guangzhou.4 Song Ziwen and the industry experts who helped him to implement plans for the expansion of sugar production and government revenue in Guangdong in 1947 were unable to mobilize enough investment or to stay in power long enough to meet the targets they had set. But the Dongguan sugar mill, which had operated for only a year before the war with Japan and had not been seriously damaged during the war, reopened in 1948 and produced 25 percent more sugar than during its first year of operation.5 The sugar mill at Jieyang, another of the six provincial sugar mills built during the 1930s, also reopened. It was leased to a private entrepreneur. Numerous other investors built, re-equipped, or reopened smaller factories. The private factories were typically about one-tenth the size of the mills owned by the provincial government. A three-year period (1945-48) of expansion of sugar production in Guangdong appeared to reflect the liberation of energies following the long period of Japanese military occupation. However, the revival of sugar milling in Guangdong suddenly slumped. During the 1948-49 sugarcane-crushing season, many mill owners lost money, and the farmers whose individual investments had contributed to the general increase in sugarcane production suffered the effects of a sharp decline in the market value of sugarcane. Faced with a market price less than the production cost of sugarcane, some producers even burned their sugarcane as fuel.6 Many others chose not to cultivate sugarcane when the new planting season began in March and April 1949. The overseas Chinese investor who had leased the Jieyang mill, for instance, suffered a loss of HK$300,000.7 Prices fell because of a surge

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in imports from Taiwan. According to Communist Chinese leaders, the Taiwanese imports had been “dumped.” An investigation by British trade authorities also concluded that the new government of Taiwan had sold sugar at an unfair discount in 1948 and 1949.8 Planners with the Nationalist government in Guangdong had stated their intention to direct shipments from Taiwan to the markets of North China to avoid competition between the sugar producers of Taiwan and Guangdong. This attitude changed, however, with the Nationalist military retreat from South China to Taiwan. Furthermore, the sugar export situation was not entirely under official control; sugar production in Taiwan also increased during the postwar years, while unsold stocks had accumulated in the warehouses of importers in Japan, where most Taiwanese sugar had been consumed. 9 Although an official monopoly on trade in Taiwanese sugar had been established by the Nationalist government, private traders shipped a large proportion of the Taiwanese sugar to northeastern Guangdong, where the Jieyang mill was located. Sugar Mills in New China In February 1950, after the founding of the People’s Republic of China, Guangdong’s newly established Department of Provincial Industry announced an investment plan for the current year. Efforts were to be directed into reviving production in factories built by the Guangdong government before 1937. A plan for the sugar industry topped the list of tasks for 1950. To achieve an output target of 40,000 to 50,000 tons of milled sugar in the state-owned enterprises in 1950, sugarcane production would be increased, and the Shitou Sugar Factory would be repaired and reopened in time to crush sugarcane during the season beginning in December.10 Like provincial planners a few years before, Guangdong’s new officials saw the best prospects for industrial expansion in the province in the sugar mills built before the Anti-Japanese War. Officials of the newly established Department of Provincial Industry declared that their limited investment funds must be concentrated where good foundations already existed and that the strongest of these points was the sugar industry. Investment in heavy industry, and more attention to the other inherited factories, which produced cement, beverages, paper, and textiles, would be postponed until more funds were available. In the meantime, a portion of the funds required for further investment would be earned through sales of sugar produced in the province’s modern factories.11 Production of sugar in Guangdong’s government-owned mills fell somewhat short of the targets set by provincial-industry planners for 1950. Because resources were inadequate, the Shitou mill was not reassembled and repaired in time to handle part of that year’s sugarcane crop. It began crushing cane on 28 December 1951.12 However, the production target of “40,000 to 50,000” tons of sugar was

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met. The combined total output of the Shunde and Dongguan factories during the 1950 calendar year was 41,403 tons.13 However, this figure may represent some shifting of production totals by sugar factory accountants, who reported that part of the sugar processed early in 1951 had been produced a month or two earlier. The two factories produced a combined total of 38,619 tons of granulated sugar during the 1950-51 crushing season.14 Both reported totals well below the levels of production achieved by the two factories in 1948 and 1949. The shortfall reflected the great reduction in sugarcane planting in 1949. During the 1951-52 crushing season, however, the combined production of the Shunde and Dongguan factories reached a much higher total than ever before, at 129,433 tons. This achievement resulted mainly from the success of a sugarcane-purchasing program, described below. In view of their need for rapid returns, Guangdong’s new leaders were wise to choose sugar milling as a key point for investment when they first took on the tasks of governing the province. Guangdong was not the only part of China where sugarcane production flourished. Several other provinces were also major producers, notably Sichuan, and government planners in those regions also encouraged the expansion of output. But only Guangdong possessed large modern sugar mills in 1950. By focusing efforts on expanding production in these few enterprises, Guangdong’s Communist-led provincial leaders were soon able to achieve most of the goals for the sugar industry that had been set during the 1930s. The idea that Guangdong might become a major supplier of sugar on the world market was the only unrealized Nationalist ambition. In 1952, however, Guangdong’s official trade organizations did begin to supply sugar to other provinces, with a shipment of 6,000 tons that year and 161,000 tons the next, or more than double the target set for 1952 in the 1947 plan.15 Sales of sugar helped Guangdong to pay for goods imported from other parts of China. Grain continued to be the most important of these imported goods during the 1950s, and interregional trade in grain reappeared as an issue of contention between the Chinese central government and Guangdong, just as it had been during the 1930s. During the earlier period, central leaders in Nanjing had complained that provincial officials failed to collect national tariffs on importations of approximately 1 million tons of grain annually. During the 1950s, supplies of foreign grain declined, and Guangdong became less reliant on shipments from other provinces as national leaders and local Communist cadres encouraged the expansion of grain production. However, the objective of self-sufficiency in grain was not achieved in Guangdong. Extra-provincial sales of sugar, soon a rationed good, contributed to Guangdong’s ability to resist external pressure to become self-sufficient in grain and also to transfer grain surpluses to other provinces.16 Although transfers out were regularly made while other shipments were brought

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in, Guangdong’s net grain imports were positive, except in 1954 and possibly in 1953 as well.17 In increasing government revenue, Guangdong’s post-1949 leaders were unquestionably successful in realizing the aims of their investment in sugar milling. By concentrating efforts on repairing, reopening, and later expanding five of the six sugar factories built under Feng Rui’s direction during the 1930s (the sixth, at Xinzao, was completely destroyed in 1938), provincial officials responsible for industrial production soon succeeded in establishing sugar as the province’s most important single source of revenue. According to a report in Nanfang ribao (Southern Daily) on 9 January 1957, Guangdong’s “big five” sugar mills contributed 99 million yuan to the province’s “accumulation funds” (i.e., state revenue). For the province as a whole, revenue collection totalled 959 million yuan in 1956.18 The contribution of the government-owned sugar factories to provincial revenue was therefore about one-tenth of earnings received from all sources in 1956. A major reason for the success of Guangdong’s Communist leaders in carrying out a program of expansion in the sugar industry was that they did not have to contend with the competition of sugar supplies produced more cheaply overseas. The division of China into two mutually hostile parts with the retreat of Nationalist forces from the mainland in 1949 blocked the flow of sugar shipments from Taiwan. Such shipments had aborted efforts to expand sugar production in Guangdong in the late 1940s, and contributed to Feng Rui’s downfall in 1936. The new Chinese government prohibited sugar imports in 1949, and prices soon rose. Although white sugar production also expanded in many other parts of the world during the 1950s, the anti-Communist embargo imposed by Western nations on trade with China helped to protect domestic markets for Guangdong’s sugar. In addition, the illegal trade in imported sugar that had flourished along the coast of Guangdong during the 1930s was restricted by police and by units of the People’s Liberation Army (PLA) more effectively than the disunified military forces of Feng Rui’s time had enforced the tariff on sugar imports imposed by the Nanjing government. Improved enforcement of Chinese import regulations and the embargo on trade with the PRC imposed during the Korean War, however, do not fully explain why China’s sugar imports dropped off. A great deal of smuggling activity continued along the coast of Guangdong during the early 1950s. Given low prices for foreign sugar, the incentive to import it illegally remained. Another possible reason for the decline in sugar imports was the diversion of smuggling activity to other goods. The American-led embargo on sales of “strategic goods” to China at the start of the Korean War in 1950 caused a lively trade in such commodities between

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residents of Guangdong’s coastal areas and foreign dealers, who were either unscrupulous or neutral. Although Chinese customs authorities made efforts to curb illegal imports of bicycles, cigarettes, and salt into Guangdong, they welcomed shipments of gasoline, kerosene, industrial chemicals, and pharmaceutical products.19 A Hong Kong newspaper reported that Guangdong officials had established purchasing stations for imported liquid fuels at points along the coast and the Kowloon-Canton Railway.20 But sugar was not mentioned by writers who took an interest in the involvement in and control of trade by Guangdong officials. It seems that trade in goods that were subject either to the foreign embargo or a Chinese import ban could not flourish without official protection during this period.21 The atmosphere was one of military preparation and defensive anxiety resulting from the Korean War, the threat of attack from Taiwan, and the rise to power of the Vietminh in northern Vietnam. A series of fortified surveillance points was established all along the coast of Guangdong, where guards were posted with orders to sink any passing vessels that did not display the flag of the People’s Republic of China.22 Securing Sugarcane Supplies Whereas external forces fostered the expansion of sugar milling in Guangdong, the construction of close links between government-owned factories and sugarcane producers was the main internal cause of success for the provincial government in promoting the industry compared with earlier periods. By gradually extending ownership claims beyond the factory gates to the fields where sugarcane grew, provincial officials succeeded in securing flows of the raw material needed to “feed” the factories. Farmers who happened to live near the government’s sugar mills became tied to them in relations that began contractually and soon became compulsory for sugarcane producers. The process of linking farmers to the factories in an increasingly compulsory relationship reminiscent of the use of labour in plantation sugar production in other parts of the world proceeded as the new Chinese state gradually socialized ownership of productive resources in general and restricted private trade. The government monopoly on trade in sugar that Guangdong officials had attempted to impose in 1934 was re-established two decades later. The first step in the process of turning Guangdong’s sugarcane producers into plantation workers was a decision to extend credit to farmers in areas specializing in sugarcane crops close to the two government factories that were operating during the 1949-50 season, namely the mills at Shunde and Dongguan. The loans were provided in the form of grain and fertilizer. At the time when sugarcane was planted (“soon before the Qingming festival”) in the spring of

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1950, teams formed of representatives of the Guangdong branch of the Bank of China, county governments, and the state factories distributed grain to producer households that joined Peasants’ Unions or Producers’ Small Groups. Near the Shunde mill, 186,000 tons of rice were distributed to 6,029 households; the sugarcane they produced would supply about one-third of the factory’s rawmaterial needs.23 In Dongguan County, the support system was less extensive. There, 1,136 sugarcane-producing households received a total of 32,500 tons of grain.24 In Shunde and Dongguan, farmers used the grain they borrowed to buy sugarcane seedlings (the price then was 75 kilograms of rice, enough to plant one mu)25 as well as to live on. In Shunde, they could also exchange borrowed grain for fertilizer at designated locations, thanks to arrangements made by the managers of the Shunde sugar mill.26 After the sugarcane crop had been planted, the teams and factory representatives organized the distribution of credit in another form. They distributed to farmers a shipment of 2,500 tons of soybean-cake fertilizer from North China, purchased by the Sugar Management Bureau of Guangdong’s Department of Provincial Industry.27 When they accepted the government loans of rice and fertilizer, farmers in Shunde, Dongguan, and Zhongshan Counties agreed to two main conditions. The first was to deliver the sugarcane they grew to the government factory in their neighbourhood. That the loans were intended to guarantee supplies for the two factories is explicit in the newspaper reports. The second condition of the credit agreements was that the farmers would repay their loans with a set percentage of the sugar extracted from their crops by the factories. In payment for his sugarcane, a farmer would receive 57 percent of the processed sugar it yielded, while the factory claimed the remaining 43 percent as repayment of the loan. Farmers sold the sugar they earned themselves, often in barter for rice or sugarcane seedlings to use for the next planting. This system of circulating inputs and products differed from arrangements standard during the pre-socialist period, when farmers had agreed to repay loans and sell sugarcane at set values; according to the government, they benefited from the new system because the sugar mills were rapidly increasing the rate of extraction of processed sugar from sugarcane.28 Guangdong’s sugarcane fields had been starved of nutrients during the war years, both because fertilizer production had declined and because of disruption in the channels of distribution. The distribution of fertilizer in areas where sugarcane plants had become stunted and fields so depleted that more crop rotations were necessary than during the prewar years29 resulted in dramatic increases in the volume and value of sugarcane crops in the Pearl River Delta area. It appears that the availability of fertilizer was the main attraction of the

Provincial Sugar Industry Programs, 1945-58 213

new crop-to-mill system for producers during this early period and that it was a stronger incentive than the adjusted pricing practices or the guarantee of sales to the sugar mills. The system of apportioning set shares of the milled sugar also worked to the advantage of the sugar factories. They would pay producers according to the sugar content of their deliveries, penalizing them for substandard sugarcane. Moreover, it was in the factories that the sugar content of the delivered crops was measured. The pricing system did not work smoothly at first, according to complaints made by sugarcane growers against the managers of the Shunde sugar mill in 1952. Sometimes, the price of brown sugar rose above the state-set price for Shunde’s Wuyang brand sugar. When this happened, some farmers reacted by attempting to convert to “flake sugar” (piantang), the more highly processed milled sugar that they had received as payment for their sugarcane deliveries. Another reported problem was the devaluation of farmers’ sugarcane deliveries by the factory in cases where it had not been processed soon after delivery, losing its sugar content while lying near the factory waiting to be weighed and assessed.30 This wasteful mismanagement, which had also been a problem in Feng Rui’s time, indicated that, under socialism, state-factory managers continued to impose on sugarcane cultivators some of the burdens of risk associated with sugar milling. Writers publicizing the new system of attaching farmers to sugar factories praised it for restricting the exploitation of peasants by middlemen. Farmers typically spent half of their earnings from sugarcane production to pay for transport and the services of sugar dealers. If they received 5 kilograms of milled sugar in return for 100 kilograms of sugarcane, for example, they would barter away 2 kilograms for the services of various middlemen.31 The aim of the system instituted in Shunde and Dongguan in 1950 was to replace all private business in the areas supplying raw material to the government mills with direct links between the factories and the sugarcane fields. As the program designed to ensure adequate supplies of sugarcane to the stateowned sugar factories was carried out during the next few years, the ownership of land where sugarcane was grown was redefined. Through the practice of supplying farmers with inputs in exchange for their produce, certain fields became attached to particular factories. Each came to possess a certain number of mu devoted to sugarcane crops. For example, the total land area in the respective sugarcane-purchasing areas of the Shunde and Dongguan factories increased, as seen in Table 8.1. According to a report of mid-1950, the sugarcane acreage supplying the two factories together totalled about 100,000 mu, out of a total of about 240,000 mu in the Pearl River Delta area as a whole. Shunde County contained most of

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Table 8.1 Land area devoted to sugarcane supplying government mills, 1951-57 (mu) Crushing season 1951-52 1952-53 1953-54 1954-55 1955-56 1956-57

Shunde factory

Dongguan factory

48,304 63,242 66,367 81,748 84,360 85,663

54,137 61,679 68,139 88,751 88,441 113,309

Source: Guangdong shengying zhitang gongsi (Guangdong Provincial Paper and Sugar Corporation), Guangdongsheng zhitang gongye jingji jishu ziliao [Economic and technical records on the Guangdong provincial paper and sugar industries] (Guangzhou: Guangdongsheng tongjiju, 1964), 61-62.

this sugarcane acreage: about 200,000 mu.32 The figure of 48,304 mu given in Table 8.1 indicates that about three-quarters of this land supplied sugarcane to private mills. Dongguan County, in contrast, must have had no private mills, for its sugarcane-purchasing area of 54,000 mu exceeded the total sugarcane area of the three counties of Nanhai, Panyu, and Donguan in 1950, given as 30,000 mu by Huang Shuiguang. (In Zhongshan County, 10,000 mu were planted in sugarcane in 1950.) The Dongguan sugar mill was therefore heavily reliant during its first years of operation on supplies of sugarcane brought by boat from counties on the other side of the Pearl River.33 The low level of development of sugarcane production and sugar trade in Dongguan also retarded the implementation of government policies to support and expand sugarcane production. Networks did not already exist as they did in Shunde County, where private merchants distributed fertilizers and seedlings, transported sugarcane, and purchased processed sugar. The costs of sugar production were much higher in Dongguan than in Shunde both because sugarcane was carried farther, deteriorating in quality en route, and because fewer farmers in Dongguan and Zhongshan Counties were supplied with grain, seedlings, and fertilizers. Yet the sugarcane-purchasing acreage attached to the Dongguan factory through the contracts with producers described above expanded as rapidly as did the area belonging to the Shunde factory. This was possible because the higher costs of production were borne by producers. From the perspective of the provincial Sugar Management Bureau, the earnings of the two factories were similar. But the returns on sugarcane production for farmers supplying the Dongguan factory were low compared to the earnings

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Table 8.2 Average sugarcane yields in areas supplying government mills, 1951-58 (metric tons per mu) Crushing season 1951-52 1952-53 1953-54 1954-55 1955-56 1956-57 1957-58

Shunde purchasing area

Dongguan purchasing area

4.310 4.000 3.440 3.650 3.805 3.201 3.090

3.897 4.013 3.475 3.364 3.377 2.464 2.137

Source: Guangdong shengying zhitang gongsi (Guangdong Provincial Paper and Sugar Corporation), Guangdongsheng zhitang gongye jingji jishu ziliao [Economic and technical records on the Guangdong provincial paper and sugar industries] (Guangzhou: Guangdongsheng tongjiju, 1964), 74-76.

of sugarcane growers in Shunde. The Dongguan farmers, however, had few alternative opportunities compared to those who chose to grow sugarcane in richer, more economically diversified Shunde County. The burden of higher costs borne by cane farmers in the Dongguan purchasing area seems to have increased. This is indicated in figures showing average sugarcane yields per mu in the two sugarcane-purchasing areas. Although, as seen in Table 8.1, Dongguan’s sugarcane area was expanding more rapidly than Shunde’s, sugarcane output per mu fell from a roughly equal level to an average far below that of the Shunde factory’s purchasing area. As seen in Table 8.2, this occurred while average yields in Shunde were also falling during this period of rapid expansion of sugarcane production. As the cane-crushing capacity and efficiency increased in each factory during the decade, sugar industry administrators needed to expand the sugarcanepurchasing territory attached to each one. State-set prices for grain and sugarcane, the institution of compulsory quotas for sales to the state, and the continued supply of fertilizers to farmers enabled the factories to expand their territories, but they often experienced periods of “hunger” during which they operated below their cane-crushing capacity. This problem of raw-material supplies lagging behind milling capacity also resulted from initially low yields on land shifted to sugarcane from other crops. Yields per mu in the sugarcane-purchasing areas of the Dongguan factory also illustrate this situation, as shown in Table 8.2. Inherited conditions account for the variation in production costs among the Guangdong government’s sugar mills. Another interesting contrast is between the Dongguan factory and the larger Shitou factory. Although the

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Department of Provincial Industry and the managers and engineers who were assigned to the Shitou factory wished to reopen it, the resources they needed could not be found at first. In November 1949, the factory applied to the provincial government for a loan of 100 tons of grain to feed workers hired to repair machinery and reconstruct the factory but was turned down.34 The managers of the Dongguan factory appear to have had more clout. At a meeting of the Department of Provincial Industry in March 1950, at which priorities were defined, the Dongguan factory was the only enterprise represented by military officers.35 The military role seems to be an important aspect of the differences in access to supplies among the Guangdong sugar mills. The Dongguan Sugar Mill was not located in a traditional sugarcane-production area. The choice of location in 1933 had been a political one favouring a provincial official who was native to the area.36 The factory fell under the control of military units stationed in the county early in its history. The Dongguan mill happened to be near the major garrison point of Humen, where Lin Zexu destroyed 40,000 chests of opium stocks in 1839. In Chen Jitang’s time, the Humen forts were commanded by General Li Jiezhi, an officer so independent of Marshal Chen that he once arrested Chen’s brother, salt commissioner Chen Weizhou. In this incident in 1931, Chen Weizhou had been passing Humen on a return trip from Hong Kong with two boats full of smuggled goods. General Li seized the boats and refused to release them until Chen Weizhou made a substantial financial contribution to the upkeep of roads in Dongguan County.37 The autonomy of armed forces based in Dongguan persisted after 1949. After the People’s Liberation Army secured power in Guangzhou, troops from Guangdong and Guangxi belonging to the 15th PLA Regiment were posted in Dongguan. But these soldiers clashed so frequently with local, armed public security forces under a jealous commander named Mai Dingtai that the PLA soldiers were transferred and replaced with two battalions of Chen Yi’s Third Field Army from Fujian in August 1950. Mai Dingtai’s police forces, meanwhile, were divided into a number of small groups to accompany provincial and county government cadres on excursions to collect that summer’s state procurement quotas of grain from Dongguan’s peasant households.38 It appears that the Dongguan sugar mill was less reliant on loans from the province to restore and expand production than were other government enterprises because local resources were tightly controlled by local authorities. Sugar in Extra-Provincial Trade Far from the sugarcane farmers who participated in exchanges of sugar for fertilizer, extra-provincial trade in soybean cake and milled sugar by the Guangdong government paralleled their exchanges. This was an important link in the provincial

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sugar industry’s circulation system that was developed during the early 1950s. An organization named the South China Sugar Industry and Native Products Company purchased and resold sugar processed in the provincial sugar factories. It offered the brand-name products of the Shunde and Dongguan mills (i.e., Wuyang sugar and Liuhua sugar, respectively) for sale retail and wholesale in Guangdong and other provinces. It also purchased bean-cake fertilizer in Hankou and shipped it to Guangzhou.39 The reopening of the railway between Guangzhou and Hankou in January 1950, after years of disrupted service, made this business possible.40 The railroad provided Guangdong’s sugar industry with access to more sugar consumers and to suppliers of greatly needed fertilizer than was available to provinces such as Guangxi and Fujian, which might otherwise have rivalled Guangdong in sugar production and extra-provincial sales during the 1950s. Another dimension of the fertilizer question is that, although imports of fertilizers were also prohibited by the new national government in 1949, Guangdong nonetheless began importing chemical fertilizer from the Soviet Union in 1950. According to newspaper reports in Hong Kong, Soviet fertilizer shipments were imported at Shantou by the Guangdong Native Products Company.41 The Native Products Company marketed various types of agricultural produce, including sugar, which Guangdong produced in greater surplus than did other provinces. Fertilizer imported at Shantou probably helped to increase paddyrice output in the parts of neighbouring counties, especially Chao’an and Jieyang, that were becoming the province’s most specialized and high-yielding grainproduction base. Whereas Panyu and Dongguan Counties, near Guangzhou, became major sugarcane producers for the first time, Jieyang County, formerly a leading sugarcane producer, became part of a grain-base area during the 1950s. Guangdong’s altered agricultural map reflects both the constraints of new national policies and the protection of provincial privileges. Despite the pressures toward selfsufficiency, especially in grain production, imposed on provinces by PRC policy, Guangdong after 1949 continued to import grain in exchange for goods with higher added value. Guangdong’s new leaders continued to benefit from and protect provincial privileges based on a rich agricultural endowment, along with a well-developed transport network and foreign trade opportunities. Guangdong as a whole maintained economic diversity, earning income through industry and trade as well as expanding agricultural output. Despite the fact that the number of items traded with other provinces and foreign countries became smaller after 1949, the province continued to earn a large share of its revenue through the processing and sale of agricultural commodities. Yet, within the province, substantial shifts of resources between grain and sugarcane and from other activities

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into grain and sugarcane production occurred as a result of the narrowing scope of interprovincial trade and the increasing share of state ownership in the economy. Sugar Milling and State Revenue Sugar milling in Guangdong is an illustration of the importance of light industry for local government revenue and regional autonomy within the fiscal system of the PRC. Especially during the 1950s, light industry was largely reliant on agricultural raw materials. The underpricing of agricultural inputs delivered to light industry was a form of tax on agriculture. Regional governments’ reliance on industries processing farm products was consolidated in Maoist China, where agriculture was taxed in kind through a system of compulsory sales to government agents. Over the years, a substantial “scissors gap” developed, which undervalued the agricultural produce purchased compared to the fertilizers and other goods supplied to the rural sector.42 The new revenue base that Feng Rui had helped to establish for the government of Guangdong was a foundation for the consolidation during the 1950s of the style of economic administration characteristic of Chinese socialism. Especially during the early Maoist period, growth and earnings in the light-industry sector of the national economy were high relative to investment, providing revenue for investment in the more sluggish heavy-industry sector. Sugar mills were particularly valuable assets in the early years. During the period of the first five-year plan of the 1950s, for instance, China’s sugar industry yielded state revenue 4.3 times higher than the funds invested in the sector during that period.43 This revenue was earned on profits and taxes paid to the state by factories. The state also indirectly benefited from sugar mills thanks to a consolidated industrial and commercial tax introduced in 1958, which set high rates on processed sugar, at between 27 percent and 44 percent of the price, compared to 4 percent for grains. In effect, this was a second source of revenue beyond the factories’ payments of profits, taxes, and depreciation funds.44 The value of sugar milling to the socialist government of Guangdong is reflected in the data shown in Table 8.3. The importance of Guangdong’s sugar production relative to total national output is clearly displayed in the first two columns. Provincial sugar production as a share of annual national totals has been calculated based on data published in 1990. Showing the accumulation of funds in sugar milling in proportion to the light-industry sector as a whole, the next column provides an indication of the financial value of sugar milling for the province. It is also useful to compare Guangdong’s production of white sugar to China’s total exports of sugar. For the sake of comparison, white sugar production in Guangxi province is also displayed, showing that Guangxi’s

Provincial Sugar Industry Programs, 1945-58 219

Table 8.3 White sugar production and exports, 1952-89 (1,000 tons)

Year

Total national production

Guangdong annual output

Guangdong output share (%)

Guangxi annual output

Exports (national total)

1952 1957 1962 1965 1970 1975 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989

451 864 347 1,460 1,350 1,738 2,500 2,570 3,166 3,384 3,771 3,798 4,512 5,246 5,056 4,611 5,009

217 395 190 744 625 808 980 823 1,115 1,204 1,421 1,235 1,720 1,926 1,868 1,434 1,524

48 46 55 51 46 46 39 32 35 35 38 32 38 37 37 31 30

40.2 32.5 19 105 137 194 373 418 486 498 592 575 646 970 1,054 1,017 1,203

0.2 16.5 160 335 63.5 108 80 281 107 48.7 55 43 215 264 399 428 350

Note: In 1978 the 527 sugar mills under the Ministry of Light Industry earned 5.47 percent of the ministry’s total collection of “taxes and profits.” Source: Guangdongsheng tongjiju (Guangdong Bureau of Statistics), Guangdongsheng guomin jingji he shehui fazhan tongji ziliao, 1950-1989 [Statistical materials on the economic and social expansion of Guangdong, 1950-1989] (Guangzhou: Guangdongsheng tongjiju, 1990), 60-61, 104-5, 176-77.

production was second to Guangdong’s for the entire period. China’s other provinces were far behind Guangdong and Guangxi. Shifts of resources out of sugarcane cultivation and milling in Guangdong since the beginning of the reform period are also reflected in the data, which show sugar production in Guangxi expanding to overtake that of Guangdong during the 1980s. Thanks to the head start in large-scale milling that was made while Feng Rui was involved in Guangdong’s sugar industry, the province was able to supply half of the milled sugar consumed in China as a whole by the mid-1950s. In contrast, when government milling began in the 1930s, the province had supplied one-sixth of the national market. The set of sugar mills built two decades earlier formed a substantial part of Guangdong’s state-owned industrial base when Chinese Communist Party leaders assumed authority in the province.

220 Provincial Sugar Industry Programs, 1945-58

After the factories were repaired and the 1930s program to promote sugarcane cultivation was reinstituted and extended, sugar milling became the provincial government’s most important industrial source of revenue. Guangdong’s dominance in China’s national sugar markets, moreover, provided a basis for favourable terms in extra-provincial trade. Twenty years after Feng Rui’s death, plantation-style sugarcane production was established in Guangdong, linking sugarcane growers and large mills in a system similar to those characteristic of major sugar-producing areas elsewhere in the world by 1930. Arguably, this development brought about a reversal of Guangdong’s attempts during the 1930s to shift from taxes on agricultural produce, often paid in kind to extra-bureaucratic agents, to the direct collection of taxes based on land values.45 During the 1950s, farmers were again paying a tax in kind to the representatives of a state agency that determined the value of their produce. In Guangdong, therefore, the declaration of a representative of the Honolulu Iron Works, that investment in a tariff-protected sugar mill was an excellent way for an Asian government to earn revenue, proved to be more true of a Communist-led provincial government than of Chen Jitang’s regime. Tariff protection for the industries of the 1930s was clearly only nominal. Moreover, it was not until after 1949 that the control of labour was adequate to secure the supplies of sugarcane needed to operate mills that had been designed to be the central fixtures of vast plantations. Until recently, sugarcane continued to be grown in large areas surrounding the mills constructed in Guangdong during the 1930s. The system first put in place by Feng Rui continued into the 1990s, despite the fact that the enterprises no longer earned profits in sugar milling and despite the ever-increasing opportunity costs of sugarcane production in the province, especially in the Pearl River Delta region, where many new mills were built after 1949. By the mid-1990s, sugarmilling administrators managing the pools of capital collected over decades of controlled markets and labour directed resources into more profitable investments in consumer-goods manufacturing rather than agricultural production.46 Continuity in Regional Industrialization As seen in earlier chapters, Feng Rui assumed remarkably comprehensive duties in Guangdong’s Sugar Industry Revival Plan of 1933 to 1936. Feng was responsible for industrial production, sugarcane cultivation, and the marketing of finished products. He played an overall supervisory role that appears to have been unprecedented in China’s industrial history. No other industrial program had attempted to encompass on such a scale both the control of markets and the cultivation of agricultural raw materials as well as manufacturing. Guangdong’s sugar-milling program is a significant early experiment in comprehensive

Provincial Sugar Industry Programs, 1945-58 221

Figure 6

Sugarcane delivery at the Shitou provincial sugar mill, 1992. Photo courtesy

of the author

222 Provincial Sugar Industry Programs, 1945-58

official economic planning. The fact that comprehensive planning was instituted as the norm throughout China during the 1950s makes attention to this case worthwhile. In China’s cellular economy after 1949, enterprises, regions, and whole sectors attempted to secure their own raw materials and markets.47 This study has shown that Guangdong’s present economic endowment includes a legacy inherited from the province’s autonomous government of the Republican period. It draws attention to the role of the state in early industrialization in a part of China that has become well known for its rapid industrialization since the 1980s. Here the state is represented by a provincial government. The program to expand sugarcane production and milling that Feng Rui led as a provincial official was irrational from an economic perspective and opposed by the national government. Nevertheless, the ownership of sugar mills helped to strengthen the Guangdong provincial government during the Mao era (1949-76), serving as a foundation for the impressive growth of the province’s economy that has occurred since the PRC’s program of economic reforms began in 1978. Under Chen Jitang, Guangdong stepped ahead of the rest of China not in private entrepreneurship but in state direction of the economy.48 From 1949 to 1976, similarly, costly import-substitution industries, control of commerce, and policies of self-sufficiency in food supplies helped to unify the PRC state and to strengthen its autonomy. Perhaps it is because the regional “warlords” of the prewar period are imagined as cynical and self-serving characters that the economic impact of their power has been understudied.49 The lack of attention to Chinese governments’ military expenditures during the Republican period also reflects the facts that those governments were very numerous and that their record-keeping practices were often erratic. Although political disunity or territorial disintegration is well known as a main characteristic of China during the so-called “warlord period” (conventionally dated from 1916 to 1927) and the subsequent decade, this understanding has not led to close consideration of the role of regionalism in the evolution of Chinese economic institutions. In the case of Chen Jitang’s Guangdong, self-preservation, perhaps the primary aim of a leader known as a “King of the South,” helped to build one of China’s most developed pre-socialist industrial bases. Recent works by economists reveal the significance of the fact that state-owned factories built in China before 1949, mainly in separate construction booms occurring in various parts of the country during the period 1927-37, were built by governments at the level of the province and below.50 Research has revealed that, compared with other socialist countries, the PRC has an economic system characterized by patterns of regional self-sufficiency and by the strong property

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rights of local governments in industrial enterprises. Analyzing indicators of China’s low level of economic integration, Thomas Lyons demonstrated that patterns of autarky and dispersion of industrial enterprises may have greatly constrained economic growth since 1949.51 In his study of China’s industrial enterprises, David Granick was struck by how local “property rights” make China anomalous among socialist planned economies.52 Both authors drew attention to the power of China’s regional governments to command resources. Whereas Lyons linked this to the Chinese socialist system of state planning, which he considers to have been “partitioned” to make it manageable, Granick suggested, without elaboration, that local power in China’s industrial sector was possibly rooted somewhere in history.53 Their findings show that China did not conform to the Soviet economic model even before the reforms of the Deng Xiaoping era began.54 That many of the Guangdong government’s important enterprises were constructed under Chen Jitang is an indication that the PRC was not built on an empty construction site. State ownership in industry was already well established before 1949. Industries built by local governments during the 1930s affected the shape of China’s post-1949 economic system. According to William Kirby, two-thirds of the industrial enterprises existing in 1949 were in state hands.55 Many had been established with state direction and investment. They formed a skeleton that was fleshed out by new construction. In the absence of that particular skeleton, contemporary China’s industrial sector might have grown up as a more rationally organized system or perhaps as less fit for survival in its environment. In Guangdong, a provincially directed program of factory construction resulted in impressive industrial expansion during the 1930s. The factories built by the autonomous Government of Guangdong, which survived the war with Japan, became the property of the new Communist-led government of Guangdong in the name of “the people” in 1949. Among these, the sugar factories built under Feng Rui’s direction were the most important. They are an example of how the industrial sector of the PRC was first built on a foundation of inherited state-owned investment rather than nationalized private property. The review in this study of industrialization and attempts to control revenue in Guangdong during the 1930s and 1950s also suggests that, by doing their best to concentrate the control of resources, local interests did central authority a favour in the long run.56 Although the “socialist transformation” of private enterprises was one of their goals, China’s new leaders reconstructed Chinese industry during the early 1950s mainly by expanding a second-hand state sector. The state-owned sector, furthermore, had come into their hands in regional

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pieces. The industrial sector of the PRC did not break into fragments sometime after 1949 but began as separate segments. First hastily glued together during the Anti-Japanese War, the segments were linked more permanently but still imperfectly after 1949. When newly established socialist administrators took possession of enterprises after 1949, they also inherited interregional rivalry and the incentives to establish protectionist barriers.57 During the contemporary period, China’s economy continues to feature “local developmentalism” – the initiative and decisions of local governments in industrial investment overshadow the role of the central government in shaping economic life.58 This study suggests, therefore, that although China’s pre-socialist political disunity is a well-known fact, the possibility that the current phenomenon of regionalism in industrial management is rooted in that disunity has not been investigated fully.

Conclusion: Shaping China’s Economic Nation on the Eve of War

Feng Rui once said to someone, “If there is a war between China and Japan, we will need to struggle against invasion on several front lines at the same time – in military, political, and economic affairs. In the economic sector, the sugar industry will be our first line of defense.” — Chen Zhaoyu, Guangdong tangye yu Feng Rui [The Guangdong sugar industry and Feng Rui]

In a sense, Feng Rui has been an agent in this investigation. Long after his death, he has served to link past and present. To conclude this account of his negotiations between zones in space and culture, this chapter sums up the processes through which he helped shape China’s economy on the eve of full-scale war against Japan and offers a few further comments on his role as a broker. In 1924 Feng Rui wrote a doctoral thesis that defined and problematized China as agrarian. Early in his career he participated in the varied efforts of the rural reconstruction (jianshe) movement. Associated with the flagship Ding County project, he participated in efforts to improve and distribute materials such as higher-yielding seeds and more efficient tools that would help farmers expand their harvests. He was also interested in rural education, and he expressed confidence in its potential for stimulating production and in the concrete knowledge to be gained through social-survey projects. More notably, he was also part of a national-level discussion about China’s economy in abstract terms. He argued that China’s mainly agrarian economy would progress once producers were coordinated through cooperatives and the direct involvement of government agencies. In short, his practice of agrarian reform stressed investment in improved inputs at the level of the farmers’ fields and efficiency gains through the rationalization of organization in paperwork on the desks of bureaucrats. As China’s national economy was perceived as primarily agrarian and characterized by backwardness in agricultural production, it was accepted that the nation should industrialize under official guidance and behind tariff barriers. The belief that there should be central coordination and regulation was accepted in theory, while, in practice, regional authorities took steps to institutionalize these beliefs.

226 Conclusion

After his departure from Ding County, Feng Rui joined a provincial government. His position as director of the Guangdong Bureau of Agriculture and Forestry seemed an opportunity to rationalize provincial agriculture. The bureau was a generously funded organization with a sizeable staff. After putting a number of improvement projects in place, which represented a significant commitment of government resources to the provincial agricultural sector, Feng was distracted by industrial projects. White sugar began to consume him. The provincial sugar-milling program was imposed on the farmers and relied on low-cost imports, contradicting the principles of agrarian reform that he had outlined earlier. A system of linking the producers of crops directly to government-owned industry was established, which sidelined sugarcane dealers and the owners of smaller mills. These were the foundations for a significant revenue stream for the government of Guangdong after 1949. Thus, Feng Rui helped to create the sugar plantation in its Chinese form. His confidence that direct connections between government and producers would benefit both sides paved the way. The story of Feng Rui draws attention to the fact that, during the years before full-scale war against Japan began, Guangdong province took the lead among China’s regions in directing spending into industrial-development projects. But Guangdong’s three-year plan was also an agricultural-reform program. The Nanjing decade was a period of institution-building in China’s administration of the agricultural sector. It may seem contradictory that Feng Rui concerned himself so much with factories and commerce while directing a Bureau of Agriculture and Forestry. Yet, at the time, it seemed appropriate that Feng’s training in agricultural sciences led him to play a leading role in industrial management. Feng Rui and other Chinese intellectuals of the period shared the premise that rural poverty was a worsening problem and believed that it could only be solved by the reorganization of agricultural production through enlightened official direction. They also tended to stress the reorganization of production with an optimistic emphasis and suggested that even in the absence of material inputs, great gains could be made by rationalizing agricultural production through the application of up-to-date knowledge. Feng Rui was a professional agriculture expert who applied ideas about increasing production levels in China’s rural economy through the government-led application of knowledge and the reorganization of productive activity. Moreover, not only was he a Nanjing-era government official who paid attention to the rural economy, but his principles, practices, and policies flowed into those of the Mao period. To a great extent, Feng promoted ideas that were shared by reformers in the CCP both at the time and during later decades. This common ground was not just on the intellectual plane. Feng’s work in the sugar industry had

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concrete and lasting results. As seen in Chapter 8, the provincial investment in the vast increases in industrial capacity with which Feng Rui was associated from 1933 to 1936 laid important foundations for Mao-era policies of resource allocation in agriculture and industry. Agriculture in the National Economy Later criticized for neglecting the agricultural sector, China’s Nationalist government has been judged by its own standard. In a boomerang fashion, the emphasis on China’s rural economic problems that was articulated during the period, partly by administrators like Feng Rui, who were advocating official intervention in the agricultural sector, led to blame being cast for their apparent inattention to rural China’s problems. Lloyd Eastman provided a concise expression of this assessment in 1974, declaring, Leaders in [Nanjing] were largely uninterested in the problems of the peasants. To the extent that they concerned themselves with economic problems, they were oriented primarily to the modern sectors of the economy. They aspired to create a significant industrial base, and they produced numerous plans and issued innumerable directives to realize that aspiration.1

This indictment of the Nationalist government has been used to explain the Chinese Communist victory in 1949. Yet, the tendency of Nationalist officials to focus more on modern industry than on peasants reflects an emphasis that was accepted as common sense at the time. In their ambitious industrialization schemes, Chinese officials of the 1930s followed the conventional wisdom of the day. Rapid industrialization was the answer to China’s seemingly critical “peasant problems.” In fact, agriculture lost its separate status in the Nanjing government when the nation’s agricultural sector became a responsibility of the Ministry of Industries in 1931.2 Educated Chinese of the 1930s generally believed that because of rural overpopulation, an enormous labour surplus existed in the Chinese economy. As noted in Chapter 1, Feng accepted, as a working assumption, the standard estimate that the proportion of the nation’s population engaged in agricultural production full-time amounted to at least 80 percent. Because analysts presumed that the problem of over-abundant, low-paid labour would only get worse with technological advances, they agreed that industrialization was the key to raising the people out of poverty. They also believed, along with American experts and Chinese Communists at the time, that reorganization of the rural sector, rather than capital investment, was the crucial requirement for agricultural progress. As a result, twentieth-century analyses of China’s agrarian economy tended to

228 Conclusion

emphasize a problem of low returns on the investment of labour.3 This idea was based on a comparison of China with industrialized nations where labour productivity in agriculture had reached much higher levels. As noted in Chapter 1, observers considered this to be a result of the reorganization of farm work. Rational management methods had improved efficiency. The more significant contribution of new material inputs, such as land, machinery, and fertilizers, to increase production and labour productivity was poorly understood. Applying what they supposed to be the lessons of agricultural development elsewhere, China’s agrarian reformers, in consequence, were confident that reorganization was the key to unlocking the nation’s economic potential. During his training, Feng absorbed this widely held belief in the power of the reorganization of production to improve economic conditions, even in the absence of significant material investment. The new sciences concerned with rural problems that had developed mainly in the United States seemed particularly appropriate for use in China. They could be applied to transform China’s agrarian nature according to two models of the American experience. One was the model of advance from the arcadian past to the industrial present in the United States, and the other was the model of advance in the rural present toward an industrialized future. In both visions, a boundary was drawn excluding the agricultural-rural sector from the modern economy. Across this line, new links of reform and assistance would be forged. In Guangdong during the 1930s, mainstream ideas about economic change were applied in the provincial Sugar Industry Revival program. As explained by Feng Rui, the program was aimed at crop improvement, the elimination of middlemen, and the improved processing of sugarcane. Therefore, as a policymaker and the general manager of a set of government-owned factories as well as a rural reformer, Feng Rui was an important actor in the institutionalization of a system that transferred resources from China’s agricultural sector to strengthen industry and the provincial state. While serving as an agent of statebuilding, however, Feng Rui was confident that he was promoting prosperity for the people of the province. To Feng Rui and his contemporaries in official positions, “government” was a force for good. It was one of the sectors to be built and strengthened in Guangdong’s Three-Year Reconstruction Plan. Confident in the capacity of government to promote rational and planned progress, therefore, Feng Rui helped to build lasting links between government offices and crop cultivation, processing, and commercial practices. Although it was always his intention to serve the government as well as agricultural producers, his efforts unfortunately seemed to benefit the former at the latter’s expense. Chinese Communist Party (CCP) doctrine on China’s problems of economic backwardness changed little after the rival parties’ paths diverged following

Shaping China’s Economic Nation on the Eve of War 229

their initial cooperation under Sun Yatsen in 1927. Certainly, the CCP’s approach to rural China also stressed reorganization over investment. The theoretical basis of economic policy after 1949 was still that China’s enormous population contained a substantial rural labour surplus that must be directed in productive activity to serve a national industrialization program. By 1936, another consideration arose – a strengthened defence against Japan was urgently necessary. As we have seen, Feng Rui spoke in militant tones about the importance of being self-sufficient in foodstuffs and halting the drain of domestic economic resources in payment for the products of international capital. He also, as Chen Zhaoyu recalled, declared that modernizing China’s sugar industry would be a step in the strengthening of national defenses against Japan.4 He and others increasingly equated industrialization with strengthened military capacity.5 In September 1937, Chen Jitang returned to China after about a year in Europe. He declared in public that he was anxious to contribute to the defence of China against Japan, and he was appointed to a bureaucratic position in Nanjing. After the government moved to the wartime capital at Chongqing, Chen was appointed China’s Minister of Agriculture.6 Despite the fact that Feng Rui died in disgrace, Chen Jitang’s reputation for implementing progressive agriculturerelated policies survived, developed thanks in part to his support for a provincial Bureau of Agriculture directed by a prominent specialist. Chinese officials during the Nanjing period sincerely pursued reformist goals while simultaneously promoting regional interests and seeking personal benefits. The case of Feng Rui shows that the pursuit of local interests and personal ambitions was not incompatible with a sincere belief in progress and a local government official’s responsibility to promote reform for both the people of a province and for the nation as a whole. Feng Rui’s fate even suggests that naive assurance was a more serious problem than were cynicism and corruption for Nationalist China’s economic-reform projects. But naive assurance is perhaps integral to the psychological makeup of bureaucratic activists like Feng Rui in a variety of settings. Feng Rui’s story helps to direct attention toward impractical idealism, the investment climate of the Depression era, and the effects on inter-regional politics of the challenge of Japan. This account also views an individual Chinese agent as the active creator of his nation’s distinctive institutions. Explaining Centralism and Economic Control More conspicuous than resentment of the new government-owned mills in nearby villages, official purchases of imported sugar were a remarkable feature of the provincial Three-Year Sugar Industry Revival Plan directed by Feng Rui.

230 Conclusion

It seems that Feng Rui was unaware of how this involved him in inter-regional and international politics. As his wife remarked, Feng did not behave like others in official positions who avoided action because of perceived risks to personal security. He was an idealistic pragmatist focused on getting things done.7 Especially in matters concerning tariffs and taxation, Feng Rui moved in corridors of negotiation between foreign and Chinese knowledge of China as an economic entity, between public and private economic interests, between Chinese industry and foreign capital, and between Guangdong and Nanjing. His conspicuous career and anomalous death provide a sharper understanding of the shifting lines in these interactions – lines that were emphatically redrawn to expel him. Because Guangdong province was largely independent of the central government of the Republic of China, based in Nanjing during the 1930s, a provincial government represented the “state.” This study has shifted attention away from Nanjing to the lesser-known personalities and programs of a provincial capital. Attention to a lower-level government’s involvement in trade and industry helps to reveal the importance of regionalism in the development of China’s economic institutions. In Yu Hanmou’s continued interest in tungsten and sugar following Guangdong’s official reintegration into Nationalist China, and in the continuing strength of provincially owned enterprise after 1949, we glimpse an enduring particularism. Feng Rui shared a set of beliefs held by many educated Chinese of his time and articulated ideas about the national economy that contributed to its construction. One such view was that economic “reconstruction” was a government responsibility. Confidence in scientific methods and the government-led rationalization of systems was also part of the set, along with optimism about nationbuilding through rational planning. A few studies give the Nanjing government credit for promoting economic programs that became widely accepted as nationalist projects and point out continuity to the present.8 Yet to be fully examined, however, is the unitary economic sovereignty claimed by China’s central state. This examination of Feng Rui in Guangdong and his concern with sugar and other commodities makes clear that the shaping of China’s institutions was a process involving a provincial state as well as China’s central state. China’s modern economy was formed through interactions on both the international and the domestic stage. Domestically, the centre pushed against an internal frontier. Close examination of the circumstances of Feng’s arrest and execution on charges of corruption helps to explain the early formation of the centralist principles as well as the anti-capitalist policies adopted nationally by the Chinese Communist Party (CCP) during the 1950s.

Shaping China’s Economic Nation on the Eve of War 231

Like the factories built during the 1920s and 1930s by local governments, which formed the backbone of the new China’s economy and continued to be wholly or in some cases partly owned by local governments after 1949, lasting conceptions of the responsibility of governments for managing productive activity were also largely constructed during the 1930s. The advocacy of official “economic control,” a term often referring to the establishment of government monopolies that became widespread during these years, had much in common with support for government intervention in other parts of the world during the Depression years. Yet, the circumstances in China were particular. Because Chinese financial institutions were undeveloped, the control of trade and light industry was an attractive policy for governments seeking to gain access to credit. As described in the preceding chapters, reliable flows of tax revenue and industrial properties were often mortgaged to banks and to tax-farming merchants. Worth further exploration is that this was a period of strengthening the financial basis of the centralized sovereign state. Confidence in the potential of “economic control” to direct economic development served as a foundation for financial state-building at both the provincial and national levels during the 1930s. Claims that official control of industry and commerce were more legitimate than private enterprise were reiterated and were beginning to be enforced. Feng Rui was a leading agent of provincial ownership and management in industry. Nonetheless, to ensure the legitimacy and viability of Guangdong’s sugar monopoly, he also engaged in negotiations aimed at the establishment of a national-level agency of control and coordination in the sugar trade. In the rice trade, Feng asserted bureaucratic claims in opposition to those of the grain dealers’ guilds, and, at the same time, he supported the retention of rice-import earnings within the province rather than remittance to Nanjing. These policies helped to build a financial capacity based primarily on securing and tapping flows of revenue through commercial channels. During the 1930s, China’s national credit-worthiness was first challenged by “smuggling” and its assaults on Customs. In 1936, it was strengthened by the political reintegration of Guangdong. Representing Nanjing’s Ministry of Finance and banking interests in Shanghai, Song Ziwen and his associates then moved to integrate Guangdong’s trade-based financial resources within a larger pool of capital. Nanjing’s assertion of control over the southern marchlands boosted the confidence of foreign investors as well.9 An idealistic view of early twentieth-century China is that a federalist system was in the making but that its potential was crushed by coercive centralism. Significant numbers of intellectuals and regional political leaders preferred federalism to centralism. Guangdong was perhaps the strongest contender for

232 Conclusion

provincial-level political sovereignty.10 As Philip Kuhn describes the result of a struggle between centralism and federalism, “the authoritarian side of the Sun Yatsen legacy triumphed decisively over the communitarian side.” In Kuhn’s internalist interpretation, China’s political authoritarianism today is a legacy of the imperial period.11 However, there is another interpretation. From 1931 to 1936, federalist sentiments were overwhelmed by distress about the loss of the Northeast. The stress on economic reconstruction reflected serious dislocations, and the emphasis on state leadership in economic affairs reflected how undeveloped state capacity actually was in areas of revenue collection and financial intermediation. Similarly, the stress on national unity resulted largely from actual division, the loss of the Northeast, and a split in the Nationalist party caused by the separatist stance of Guangdong and Guangxi. Together with the Japanese and Communist threats, China’s southern separatism was one of the three biggest political challenges of the Nanjing era. In this aspect as well as in economic protectionism, the emphasis on a unitary Chinese nation was based on insecurity and aspiration. Centralization seemed urgently necessary at the time. In 1936, China was not a unified entity meeting the criteria for acceptance as a sovereign state. Japan’s diplomats justified encroachments and invasion by arguing at the League of Nations that China was “not an organized state.”12 Seeking recognition and whatever protection was available through conformity to the international standards of state sovereignty in 1936, China’s national leaders made a show of integrating Guangdong. The repudiation of Feng Rui was part of this performance. In a dramatic performance on the international stage, Chiang Kaishek’s regime pursued sovereignty by formally reintegrating Guangdong within a centralist state following the rebellion of Guangdong and Guangxi in 1936. There can be no doubt that Feng Rui was cruelly sacrificed. Yet, his case suggests that on the propaganda front, China’s Nationalist-led government faced the Japanese challenge more effectively than has been generally understood. The idea of a Chinese population united in the face of Japan’s bullying appears to have been significantly shaped by official efforts, indicating that the Nanjing government shaped China’s nationalist consciousness through control of the press. Historians have re-assessed Nanjing’s administrative competence and the success of its international diplomacy but have yet to dwell on this aspect of the Nationalist record. Nanjing’s nationalistic propaganda deserves closer attention. It made concerted and lasting efforts to shape public understanding. Chiang Kaishek’s speech in Guangzhou on 9 September 1936 provides an example. It provides evidence that a modern Chinese awareness was taking shape at the time, not only because of circumstances such as the international economic Depression and confrontation between China and Japan, but because it was

Shaping China’s Economic Nation on the Eve of War 233

being shaped by official guidance, largely through control of the press.13 Thus the daily news guided the public in the repudiation of Feng Rui. The connections uncovered in this investigation between Feng Rui’s death and the Nanjing government’s pro-unity and anti-Japanese domestic and international propaganda campaign are significant because the government led by Chiang Kaishek and the Nationalist party has hitherto not been recognized for its active role in guiding popular opinion. On the contrary, this role has been attributed to opponents and rivals of that government, particularly the liberal and leftist intellectuals who criticized Chiang and others for alleged passivity in the face of Japanese bullying. Critics even charged Chiang with bowing to Japanese pressure in muzzling their freedom of speech.14 Historians’ attention to critics of the Nanjing authorities is ironic because the very restrictions and censorship that such critics protested against deserve greater attention as indications of a concerted official effort to shape the news, along with a formidable capacity to curb and control the press.15 Nanjing’s censorship is here taken to be more than simply a form of authoritarian repression. This study suggests that its aims and effects should be taken more seriously. Guangdong and the Japanese Invasion To study the Guangdong-Guangxi Incident of the summer of 1936 is valuable in coming to an appreciation of the anti-Japanese position that Chiang Kaishek assumed from 1931 to 1936. Conventionally, China’s national government at Nanjing, with Chiang Kaishek at its centre, has been judged tardy in responding to the Japanese challenge, resorting to what nervous critics called a policy of “appeasement” that presumably whetted the appetite of encroaching armies. In a standard criticism of Chiang Kaishek himself that has barely changed since his political opponents expressed it in 1935 and 1936, Chiang remained stubbornly committed to the eradication of patriotic Chinese Communists rather than making efforts to stand up to Japan. More balanced accounts note that the government’s commitment to continued diplomatic negotiation with Japan precluded public statements about plans for a possible military confrontation.16 Recent work has revised the received view of Chiang Kaishek’s presumed attitude of “appeasement” by tapping abundant documentation showing that, behind the scenes, the Nanjing government’s planning and resources were actually directed increasingly toward preparations for war against Japan during the period from 1931 to 1936.17 The leaders of Guangdong have been seen as disloyal post hoc. Their former independence seems disreputable even to historians who are in sympathy with regional leaders’ complaints that Chiang Kaishek was dictatorial.18 Southern Chinese separatism during the 1930s is alleged to have precipitated the conflict

234 Conclusion

with Japan. Guangdong’s independent stance increased China’s vulnerability to Japanese attack.19 Despite the number of decades that have passed, the smoke has not yet cleared enough to allow unclouded discussion of Guangdong’s independence from the central government from 1931 to 1936. It can be argued that Guangdong’s successful creation of an air force, stockpiling of arms, and training of troops during the Southwest Political Council era helped to strengthen China against Japan. The ousting of Chen Jitang in 1936 was reported to have added 200,000 armed men and China’s largest fleet of airplanes to the resources under Chiang Kaishek’s control.20 During the summer of 1936, when the confrontation between China’s autonomous Southwest and national forces occurred at last, Japanese observers followed developments closely. As the denouement unfolded and Chen Jitang’s subordinates resigned in large numbers to take up job offers from Chiang, foreign observers generally came to the conclusion that the curbing of regional power in southern China would create a much-strengthened government in Nanjing. In British eyes, this was an occasion for “congratulations” to Chiang Kaishek and praise for his “brilliant diplomacy.”21 At the same time, Japanese observers declared that the change of government in Guangdong was a victory for the central government and a great enhancement of Chiang Kaishek’s personal power. Some were anxious about the increased militancy in China that his victory seemed likely to bring about.22 A “new mood,” labelled and described by Lloyd Eastman, had been spreading across China since sometime in the spring of 1936. It was one of new confidence about national unity and a new militancy in the face of the Japanese challenge. 23 It made the Japanese nervous to see China gaining confidence and international support because Chinese interests seemed to conflict with Japan’s. Partly in response to a more militant mood in public opinion, the Nanjing government refused further compromises in diplomatic negotiations with Japan following the victory over Guangdong and Guangxi.24 Japanese expansionist schemes during the 1930s certainly did aim at exploiting China’s regional divisions. But the view of Guangdong under Chen Jitang as disloyal is one-dimensional like the standard criticism of Chiang Kaishek as an appeaser of Japan. Chiang has not been given credit for anti-Japanese motivations in his efforts to gain control of the autonomous Southwest. The Southwest rebelled against Chiang in June 1936 in the transparent guise of an anti-Japanese national salvation campaign. Conversely, the public repudiation of southern separatism that Chiang displayed in Guangdong, most notably in his speech on the day of Feng Rui’s death, was a veiled declaration against Japan. The meaning of Chiang’s speech against traitors in local official positions has become obscure but must have been clear at the time.

Shaping China’s Economic Nation on the Eve of War 235

Despite associations in the press between Chen Jitang’s government and Japan, as noted in Chapter 7, it is significant that the official statements of the new authorities did not link the problem of “organized smuggling” to Japan or identify the illicit sugar as Japanese. In part, this reflects the fact that the Nanjing government had repeatedly agreed to maintain “friendly relations” with Japan, which insisted that China’s government should restrain and suppress antiJapanese sentiment among the people as a condition of continuing talks. The efforts of central authorities to continue diplomatic negotiations with Japan while preparing for the possibility of war thus required strict censorship of the news. Not only were anti-Japanese statements prohibited, but censorship resulted in a situation in which Japanese pressure on China was the most important daily news but the name “Japan” was rarely mentioned in print. Thus, Chiang referred to but did not identify the invading enemy in his speech on the day of Feng Rui’s death. Public awareness of Guangdong’s associations with Japan helps to explain the general acceptance of Feng Rui’s death sentence. In a sense, Feng was a casualty of Japan’s economic incursions during the prewar period. In his five years in the position, Feng Rui became an important person in Guangdong, rising in status above the level expected of someone with his rank, as a bureau director in the provincial bureaucracy. The circumstances of his death sentence suggest that “corruption” was emphasized to avoid the more sensitive and volatile issue of traitorous collaboration. Given the sensitivity of references to Japan when Japanese negotiators insisted that their country be viewed as “friendly,” protesting about references in news articles that they construed as hostile, “corruption” was a convenient euphemism. This study reveals that the execution of Feng Rui was part of the Nanjing government’s unannounced preparations for war. An idealist from an academic background, Feng was out of his depth. Moreover, he was heedless of the warnings of friends who tried to keep him out of harm’s way after Chiang Kaishek and his allies succeeded in removing Feng’s political patrons from office in Guangdong during the summer of 1936. Yet further examination is needed to make sense of the charge of traitorous collaboration with Japan, the allegorical message of Chiang Kaishek’s speech on the day of Feng Rui’s death. Brokerage and China’s Borders Interaction shapes boundaries, which in turn define the entities that they separate. Thus, Feng Rui helped to constitute the contemporary Chinese political economy by operating as an intermediary on the frontier between regional and central power, between state-owned industry and private enterprise, and between China and Japan.

236 Conclusion

This study of Feng Rui, the border-crossing bureaucratic agent, suggests the value of further work on boundary lines at the external edges of the Chinese economy as it was being defined and also at the internal frontier between the modern and the agricultural sector. Understanding the construction of difference at China’s territorial edge has perhaps not surpassed Owen Lattimore’s observations that the settled and steppe people along China’s “inner Asian frontiers” were not different in ethnicity but had continually created one another through interaction. “In this way the Chinese as they evolved into Chinese, helped to create the steppe way of life as well as the Chinese way of life.”25 For coastal China, and southern maritime China in particular, scholars have not offered such compelling insights. A recent study distinguishes China’s land and coastal frontiers, suggesting that the latter were not as productive of cultural change in pre-modern times. The maritime frontier was a more definite barrier, easier for states to manage, and thus it functioned as an interface rather than an extensive zone of contact.26 For the twentieth century, exploration in such terms is lacking. But Lattimore’s insight that the great nomad conquests of China came not from the steppe but from the borderlands,27 suggests that more attention should be paid to what was established in coastal areas rather than gazing into the distance overseas. We have seen that during the 1930s, Guangdong’s assertion of control over the resources of China’s southern border zone was much more than a distant irritant from Nanjing’s perspective. Leveraging the central tariff regime to local advantage, activity at the border reached the state’s constitutional core. In 1979, Akira Iriye argued that there was a need for understanding “what the Chinese and the Japanese have meant to each other.” In plain language, he called for a constructionist approach to understanding the twentieth-century formation of modern China and Japan. He called for research on relations between Japan and China through “the exploration of ways in which ideas, institutions, and individuals of one country contributed to social change, cultural definition, and intellectual discourse in the other.”28 Studies so far have done valuable work in examining Japanese institutional presence and varied economic interests in China.29 More recent studies have placed Chinese and Japanese constructions of nation side by side30 and have demonstrated how Japanese-administered Manchukuo was a site for the interactive construction of cultural authenticity, with lasting effects in both Chinese and Japanese nation forms and nationalism.31 But historians of China have yet to respond fully to Iriye’s call. There have been few detailed studies of interactions between China and Japan in constructing economic space during the prewar period. One reason for this gap in the literature might be that other parties were involved. A bilateral constructionist model is too limited. Work attempting to approach the subject from

Shaping China’s Economic Nation on the Eve of War 237

more difficult multilateral perspectives is less developed. Through a cultural studies analysis, Chih-yu Shih contributes an update to this effort, showing the key function of anti-imperialism, particularly a “Japan as Other” concept as part of China’s participation in the Western-dominated game of national sovereignty during the twentieth century.32 His insightful survey of China’s pursuit of sovereignty in relation to the rest of the world as well as Japan could be extended to investigate the complex regional interactions of the interwar period, generally one of increased acceptance of national economic sovereignty. Also helpful is Manu Goswami’s exposition of how “India” was produced in a space built by British rule. She elucidates the discursive formation of a native economy contained in territorial space through the efforts of nationalists to separate and protect that entity from global capital.33 Her approach suggests that it would be well worth pursuing a parallel examination of how China’s economy was created in association with British hegemony. This study of Feng Rui features the monitoring and regulating role of the British-dominated Maritime Customs Administration in defining the revenue-gathering efforts of China’s Southwest as “official smuggling.” Closer attention to how British agents interacted with both Japanese and Chinese actors in creating and monitoring China’s modern borders would advance understanding of the formation of the Chinese national economy. Moreover, if the significance of British interests in China’s maritime frontier zone were examined more carefully together with the mutually constituting interactions of Chinese and Japanese interests in the same space before 1937, a more balanced understanding of the ensuing conflict between China and Japan would emerge. The Broker’s Role Feng Rui is an example of a broker in action and defeat. A broker is an intermediary between parties that otherwise lack the trust and information they need to engage in a beneficial interaction. Because he serves as a link to the unfamiliar, a broker runs the risk of being re-assigned to the category of the “other” with whom he is in communication. Further risks are that resentment of the gains that arbitrage allows the broker may heighten the animosity directed against him and that rivals may take steps to supplant him and take possession of his rewarding position. According to Charles Tilly, boundaries between social groups may be activated through brokerage as a dangerous step toward collective violence. As the boundary is emphatically drawn when conflict begins, hostility is directed at particular targets.34 It follows that those situated close to boundaries, especially those who cross them regularly, take the risk of becoming the targets of violence. Feng Rui’s labelling as a “corrupt official” was part of the redrawing of lines between

238 Conclusion

regional and central authority as well as of strengthening the emphasis on China’s international border. His case helps to illuminate the close connection between the activation of internal and external boundaries at this point in China’s national formation. A person in a mediator’s or negotiator’s role is usually considered to be a representative of a particular group. Feng Rui himself seems to have been confident in his role as the loyal representative of broader interests. In fact, his confidence in himself as a representative of Guangdong, of China, and of government rationality made him well-suited for a mediator’s role. In the role of representative, however, an intermediary runs the risk of being undermined by his own group. For instance, a mediator might be sent on a pro forma mission for the purpose of signalling a willingness to negotiate, thus buying time. In this situation, the representative agent is excluded from the principal’s inner circle of trust. Judging from the letters he sent to his wife while en route to represent Guangdong’s leaders in Nanjing in May and June 1936, Feng Rui suffered acute anxiety about these deployments at the end. Just months before his death, he expressed his confusion and stress in a letter to his wife, describing his uncertainty about the success of his mission to the capital.35 Elevated from the level of inter-governmental industrial policy adviser to the role of diplomat, Feng was not sure that he could accomplish what was expected of him. Perhaps he was uncertain about what that was. It is probable that he was in the dark about the overall situation at this critical juncture in domestic and international affairs. Thus it seems that he had been demoted from the position of policy adviser to that of pawn. In August 1936, Feng Rui was removed from the chessboard by players with their eyes on larger issues. Explaining the Death of Feng Rui It is likely that no one gained significantly from the death of Feng Rui and that no one would have been harmed if he had lived. He had been pushed off-stage at the very end of “the era of the southern empire” with orders to take a trip to Hainan. Missing the preparations for departure that were made by his superiors while he was away, Feng Rui was perhaps in the dark about the political arrangements they had made. Later, although he was not allowed to contact friends from his prison cell, brief news announcements notified possible supporters that Feng was in trouble. No one of high standing came to his rescue. But the execution was not scheduled to take place until just after Chen Jitang had ended his sojourn in Hong Kong, embarking on an ocean liner bound for Europe. Any attempt that might have been made to exact concessions from Chen in exchange for a pardon for Feng had not been effective. In expectation of Chiang

Shaping China’s Economic Nation on the Eve of War 239

Kaishek’s arrival in Guanghzou, it seems, Feng was kept waiting in prison for a few more days. Earlier, Chiang Kaishek arrived for a visit to Guangzhou on the day of Feng Rui’s arrest in August. Chiang’s main concern in early August 1936 was to negotiate a settlement with the leaders of Guangxi.36 References in official statements and essays by Li Jiezhi, an observer of the events leading to Feng Rui’s death, attributed to General Yu Hamou the decision to impose a death sentence on Feng. This investigation leads to the conclusion that the handling of the case in public was also the work of Chiang Kaishek and his advisers. When Chiang returned to Guangzhou for another prolonged visit in September, he arrived four days before the execution of Feng Rui.37 Chiang then made the punishment of Feng Rui into part of his reunification campaign. Perhaps it was not necessary for definite gains to be achieved for it to seem a good idea to put Feng Rui to death. In fact, however, there were some positive propaganda effects. It appears that there were also more urgent considerations. At the moment that Feng Rui was led to the execution ground, Chiang Kaishek was not yet sure that he would triumph over the Guangxi militarists as well as over Guangdong. Feng’s death served as an announcement to all regionalists that regional autonomy was repudiated. At the same time, the execution of Feng Rui was a response to Japanese arguments that Chinese regional interests were the real root cause of the smuggling problem for which Japan was blamed by China and the Western powers. To a Japanese audience, Feng’s death conveyed the threat that a more strongly unified China would soon confront and check Japanese military pressure. Feng Rui’s association with smuggling provided Chiang with an opportunity to present a concession to Japan’s demands for action against smuggling on the Chinese side. It also responded to westerners’ behind-thescenes advice that “organized smuggling” in Guangdong helped to strengthen Japanese arguments that Chinese perpetrators were likewise responsible for the smuggling problem in North China. Frederick Maze, inspector general of the Maritime Customs Administration was offering such advice. Commenting on the situation in Guangdong, Maze wrote on 15 July 1936: “It is a pity that Chinese officials allow this smuggling when the world at large is so interested in the events in the North. It is so apt to ruin China’s case internationally.”38 For the Chinese audience, likewise, Feng’s death served both to threaten and encourage. It announced Chiang’s determination to oppose Japan as well as to suppress southern regional autonomy. In the context of escalating tension between China and Japan and the veiling required in public expressions of anti-Japanese commitments at the time, Chiang Kaishek signalled his stance against Japan by approving the execution of Feng Rui.

240 Conclusion

Chiang’s effort to get propagandistic value from the punishment does not fully explain why he supported Yu Hanmou’s attack on Feng Rui. A full explanation requires consideration of the damage that Feng might have done to the national cause if he had lived. Just as Yu Hanmou was aware that China’s “new mood” would make any relevation of his well-established business relationships with Japanese tungsten buyers unacceptable to the public, Chiang Kaishek was also in danger. His brother-in-law Song Ziliang had taken charge of revenue collections in Guangdong, maintaining many of the irregular methods practised under Chen Jitang. Guangdong continued to maintain an independent smuggling prevention agency, tariff duties were still not being collected on rice imports, fertilizer shipments continued to be taxed, and the Guangdong Sugar Monopoly had not been dismantled despite its unpopularity in Guangdong, Hong Kong, and Shanghai. Information on the importance of tungsten exports to Japanese buyers provides an explanation for the continuation of these systems. Having appointed Yu Hanmou as commander-in-chief in Guangdong in exchange for Yu’s commitment to national unity, Chiang would bring Yu’s profitable tungsten export operations under closer supervision. It is possible that Chiang Kaishek had more at stake than Yu Hanmou in the fate of Feng Rui. Not only did Chiang need to pay attention to the new mood in public opinion but was also under pressure from the Western powers to face up to Japan and was assiduously courting their assistance. Chiang and his diplomats were urgently seeking to build an international coalition to counter Japan.39 While Chinese observers might have supported the idea of selling tungsten to Japan in order to buy more arms to fight Japan, Chiang could not expect overseas sympathizers to accept justifications for elaborate secret business arrangements with Japanese firms and military officers. The existence of the sugar-tungsten barter-trade agreement that Yu Hanmou had taken over from Chen Jitang had been kept secret. The danger was that Feng Rui, who evidently knew something about the agreement linking the Guangdong Sugar Monopoly and a group of Japanese sugar-tungsten dealers, not only knew too much but also had too many Western friends and acquaintances. If Feng were to inform his friends that, like the Guangdong militarists, Chiang too was secretly pro-Japan, the consequences could be far-reaching. The diplomatic efforts then underway as China sought support in London, Washington, Berlin, and Moscow in strengthening defences against Japan might be seriously damaged. Given the influence of public opinion in policy-making in the Western democracies, the broadcasting of news about China’s leaders being in collusion with their worst enemy, possibly for personal profit, would have damaged China’s cause in national capitals overseas.

Shaping China’s Economic Nation on the Eve of War 241

Figure 7 Chen Zhaoyu, wife of Feng Rui, circa 1933. Photo courtesy of Feng Puyu, daughter of Chen Zhaoyu and Feng Rui

The punishment of Feng Rui was part of the redefinition of lines between regional and central authority as well as a strengthened emphasis on China’s international border. It has been observed that the inhabitants of a borderstraddling zone of interaction are apt to denounce as a “traitor” a group member who shifts position to identify too closely with the nation to which he or she nominally belongs.40 In an insightful discussion of the implications and usage of the term hanjian (traitor) during the period of the Anti-Japanese War, Frederic Wakeman pointed out the term’s connotation of sexual transgression. Thus the hanjian label was a suitable and useful tool for wielding against Feng Rui.41 The success of efforts made in August and September 1936 to portray Feng as immoral according to both Chinese and Western standards helps to explain why the injustice of his execution was not seriously questioned among his influential acquaintances. Most other observers, meanwhile, were soon too distracted by war to look back. Epilogue: Chen Zhaoyu Feng Rui’s wife died of tuberculosis nine months after his execution. Chen Zhaoyu died at sea, drawing her last breath in a passenger cabin on a steamship bound from Hong Kong to Shanghai. She said farewell to her daughters, aged six and eight and entrusted their care to her maid. Chen Zhaoyu had been a

242 Conclusion

forceful woman despite her illness. During the months following her husband’s death in September 1936, she exhausted her energies in composing a detailed account of his career, seeking to restore Feng Rui’s reputation in the intellectual, political, and diplomatic circles in which he had been known and admired. After settling her husband’s affairs and publishing her book in Hong Kong in early 1937, Chen set out with her children to return to her home in Beijing. Despite his widow’s efforts, Feng Rui’s reputation was not rehabilitated. Although Feng Rui was well known during his academic and official career, his name has not been familiar since, even among historians. With constraints on the freedom of the press in Guangzhou and official repudiation of the recently ousted government of Chen Jitang, his case was not discussed in public. Even his sympathetic former associates were soon too preoccupied with other matters to dwell on the injustice of his death sentence. A few days before Feng Rui was executed, a Japanese shopkeeper who had resided in China for twenty years was murdered in Beihai (Pakhoi) in southwestern Guangdong, sparking a diplomatic crisis as the news of the murder broke. As the crisis unfolded, it involved troops deployed by both southern regional leaders and the central government and was punctuated by emphatic statements from Japan’s diplomatic and military envoys to China. The Beihai crisis then merged with a continuous succession of further incidents leading to full-scale war with Japan.

Notes

Introduction 1 Reports are found in Huazi ribao (HZ) [Chinese Mail], 10 September 1936, sheet 2, 8; and Qunsheng bao (QS) [Popular Voice], 10 September 1936, sheet 1, 3. 2 South China Morning Post (SCMP, Hong Kong), 10 September 1936, 12. The official statement was also published in a special extra news-sheet issued by Guohua bao [National Illustrated News], 9 September 1936. 3 Xian Zi’en, “Ban tangchang jingguo jiqi zhenxiang” [The process of operating sugar mills and the true situation], in Nantian Suiyue: Chen Jitang zhu Yue shiqi jianwen shilu [Era of the Southern Empire: Eyewitness historical accounts of the period of Chen Jitang’s Rule in Guangdong], ed. Guangzhoushi zhengxie wenshi ziliao yanjiu weiyuanhui [Committee for historical research materials of the Guangzhou branch of the Chinese People’s Political Consultative Conference], 260-61 (Guangzhou: Guangdong renmin chubanshe, 1987). 4 Registration card for Feng Rui, September 1921, Cornell University Manuscripts and Archives (CUMA), Deceased Alumni File. 5 For example, in Shenbao (SB), 9 May 1936, sheet 3, 4; and SCMP, 24 August 1935, 15. 6 Chen Zhaoyu, “Xianfu Feng Dixia xingkuang” [Brief biographic sketch of my late husband, Feng Dixia], 2 pages, not numbered, in Guangdong tangye yu Feng Rui [Guangdong’s sugar industry and Feng Rui] (Hong Kong: Chen Zhaoyu, 1937), and a personal communication from Feng Puyu, March 2004. 7 Chen Zhaoyu, Guangdong tangye, 19. 8 Ibid, 87. 9 QS, 12 August 1936, sheet 2, 2; Zhongyang ribao (ZY) [Central Daily], 21 August 1936, sheet 1, 3. 10 Chen, Guangdong tangye, 85-86; Gongshang ribao (GS) [Industry and Commerce Daily], 15 August 1936, sheet 2, 3. 11 QS, 12 August 1936, sheet 2, 2; ZY, 14 September 1936, sheet 2, 2. 12 On the arrest, see QS, 11 August 1936, sheet 2, 2; and Minguo ribao [Nationalist Daily], Guangzhou edition, 12 August 1936, sheet 4, 1. 13 Li Jiezhi, “Guanyu Feng Rui zhi si” [On the death of Feng Rui], Guangdong wenshi ziliao [Materials on the culture and history of Guangdong] 11 (1963): 130-34. 14 Li Jiezhi, “Guanyu Guangdong tangye qiyejia Feng Rui zhi si” [On the death of Feng Rui, Guangdong’s sugar industrialist], in Li Jiezhi wencun [Collected essays by Li Jiezhi], vol. 2, ed. Xingning County Historical Committee, 39-43 (Guangzhou: Xingning County Historical Committee, 1990). 15 Li, “Guanyu Feng Rui,” 133-34; and Li, “Guanyu Guangdong,” 42. 16 A handful of works mention Feng Rui, including Charles Hayford, To the People: James Yen and Village China (New York: Columbia University Press, 1989), 71-72, 89, 191, and 285; and David Faure, The Rural Economy of Pre-Liberation China (New York: Oxford University Press, 1989), 240n78. Virgil K.Y. Ho discusses one of Feng’s journal articles in

244 Notes to pages 3-7

17 18 19 20 21 22 23

24 25 26 27

28

29 30

31 32

33

34

35 36

Understanding Canton: Rethinking Popular Culture in the Republican Period (New York: Oxford University Press, 2005), 28-30. Stanley F. Wright, China’s Struggle for Tariff Autonomy (Shanghai: China Maritime Customs, 1938), 638-39. Times, 3 June 1936, 14; New York Times (NYT), 3 June 1936, 1. SB, 3 September 1936, sheet 3, 4. HZ, 29 July 1936, sheet 2, 2; SB, 12 September 1936, sheet 2, 1. SB, 14 September 1936, sheet 3, 1. “Fan tanwu guan” [“Opposing corrupt officials”], QS, 10 September 1936, sheet 2, 2. Wright, China’s Struggle, 670-73; China Maritime Customs Archive, Second National Archives, Nanjing (MCA), “Aide Mémoire for Ting Kwei Tang,” 4 December 1933, 1-2, 679/27773. National Archives, Kew, UK, Foreign Office records (FO) 371/20256 (September 1936), 516. Wright, China’s Struggle, 689-90; letter from Shanghai to Nanjing, 31 May 1934, 3, MCA 679/28345. Wright, China’s Struggle, 657-58; Chen Han-seng, “Japanese Penetration in Southernmost China,” Far Eastern Survey 5.22 (4 November 1936): 231-36. Shimada Toshihiko, “Designs on North China,” in The China Quagmire: Japan’s Expansion on the Asian Continent, 1933-1941, ed. J.W. Morley, 161-74 (New York: Columbia University Press, 1983); Son Juk Sik, Zhanqian Riben zai Huabei de zousi huodong [Japan’s smuggling activities in North China before the war] (Taipei: Academia Historica, 1997). Examples are Liu Tang, “Zouside jieguo ruhe” [The consequences of smuggling], SB, 18 May 1936, 15; and a set of articles compiled anonymously in Zousi wenti [The smuggling problem] (Shanghai: Zhongguo wenti yanjiu congshu, August 1936). The problems this presented to China’s Customs agency are described in Wright, China’s Struggle, 642, 657, 662. Frank H.H. King, The Hong Kong Bank Between the Wars and the Bank Interned, 1919-1945: Return from Grandeur (New York: Cambridge University Press), 365. In solidarity with China, moreover, Hong Kong remained on a silver standard when its other trade partners used gold-based currencies. Ibid., 166-73. Michael Williams, “Hong Kong and the Pearl River Delta Qiaoxiang,” Modern Asian Studies 38.2 (2004): 272-75. Chinese travellers were exempt from an ordinance of 1934 requiring passports or other documents to enter Hong Kong; see Peter Wesley-Smith, “Anti-Chinese Legislation in Hong Kong,” in Precarious Balance: Hong Kong between China and Britain, 1842-1992, ed. Ming K. Chan, 95 (Armonk, NY: M.E. Sharpe, 1994). Arbitrage, or the exploitation of price differentials in transactions between separate markets, remains important to the economy of Hong Kong. Barry Naughton describes a distinctive practice of property-rights arbitrage between Hong Kong and the rest of China in, “Between China and the World: Hong Kong’s Economy before and after 1997,” in Cosmopolitan Capitalists: Hong Kong and the Chinese Diaspora at the end of the Twentieth Century, ed. Gary G. Hamilton, 80-99 (Seattle: University of Washington Press, 1999). Donna Brunero, Britain’s Imperial Cornerstone in China: The Chinese Maritime Customs Service, 1854-1949 (New York: Routledge, 2006), 103. Referred to during the 1930s and in this book as “the Customs,” the agency was staffed at its higher levels by foreign-born officials, predominantly natives of England and Ireland. Wright, China’s Struggle, 661-62. Although “National Government” was adopted as the government’s official English name on October 4, 1928, it has been called the “Nationalist” government in English because it

Notes to pages 8-9 245

37 38

39

40

41

42

43 44

45 46

47

48

49

was led by the Nationalist party (Guomindang). See T.Z. Tyau, “National Government of the Chinese Republic,” Chinese Social and Political Science Review 14.3 (July 1930): 313. C. Martin Wilbur, The Nationalist Revolution in China, 1923-1928 (New York: Cambridge University Press, 1984), 1-2. Michael Murdock, Disarming the Allies of Imperialism: The State, Agitation, and Manipulation during China’s Nationalist Revolution, 1922-1929 (Ithaca, NY: Cornell University East Asia Program), 76-89 and 67-68; and Wright, China’s Struggle, 605-7. Britain, France, Germany, Japan, the United States and several other states demonstrated their recognition by the end of 1928; see Wilbur, The Nationalist Revolution, 160, 167, 18990; and Edmund S.K. Fung, The Diplomacy of Imperial Retreat: Britain’s China Policy, 1924-31 (New York: Oxford University Press, 1991), 164-73. In constitutional terms, Guangdong was the only province not fully subordinate to the central government in Nanjing from 1928 to 1936. See Nai-cheng Shen, “The Local Government of China,” Chinese Social and Political Science Review 20.2 (July 1936): 177. For other cases of autonomy and separatism, see D.G. Gillin, Warlord: Yen Hsi-shan in Shansi Province, 1911-1949 (Princeton, NJ: Princeton University Press), 1967; and J.E. Sheridan, China in Disintegration: The Republican Era in Chinese History (New York: Free Press, 1975). On the characteristics of a marchland, see R.R. Davies, Lordship and Society in the March of Wales, 1282-1400 (Oxford: Clarendon Press, 1978), 1-16; and Jeremy Black, “Frontiers and Military History,” Journal of Military History 72 (October 2008): 1051. Diana Lary, Region and Nation: The Kwangsi Clique in Chinese Politics (New York, NY: Cambridge University Press, 1974), 90, 159-62. The term Southwest was used because in 1931 the provinces of Yunnan, Guizhou, and Fujian aligned themselves with Guangdong and Guangxi, together creating a Southwest Political Council to represent the region in relations with the government in Nanjing. See Lary, Region and Nation, 160. Arthur N. Young, China’s Nation Building Effort, 1927-1937: The Financial and Economic Record. Palo Alto: Stanford University Press, 1971), 42; Wright, China’s Struggle, 689. Lü Fang-shang, “Kangzhan qiande zhongyang yu difang: yi Jiang Jieshi xiansheng yu Guangdong Chen Jitang guanxi weili (1929-1936)” [Centre and region before the AntiJapanese War: The case of relations between Chiang Kaishek and Chen Jitang, 1929-1936], Jindai Zhongguo [Modern China, Taipei] 144 (August 2001): 170-98. Julia Strauss, Strong Institutions in Weak Polities: State-Building in Republican China, 19271940 (Oxford: Clarendon Press, 1998), 80-105 and 152-80; William C. Kirby, “The Internationalization of China: Foreign Relations at Home and Abroad in the Republican Era,” in Reappraising Republican China, ed. F. Wakeman and R.L. Edmonds, 180-89 (New York: Oxford University Press, 2000). Such studies revise the revisionism of The Abortive Revolution: China under Nationalist Rule, 1927-1937, by Lloyd Eastman (Cambridge MA: Harvard University Press, 1974). Eastman was skeptical of reports of progress such as China’s NationBuilding Effort by Arthur Young, a former advisor to the Nanjing government. Diana Lary, Region and Nation, 182-93; Eugene Levich, The Kwangsi Way in Kuomintang China, 1931-1939 (Armonk, NY: M.E. Sharpe, 1993), 111-40, 201-41; on the expansion of tax-gathering capacity in Guangdong under Chen Jitang, see Elizabeth Remick, Building Local States: China during the Republican and Post-Mao Eras (Cambridge MA: Harvard University Asia Center, 2004), 41-88. Alfred H.Y. Lin reviews these efforts, arguing that Chen Jitang was motivated only by personal political goals. See Lin’s “Building and Funding a Warlord Regime: The Experience of Chen Jitang in Guangdong, 1929-1936,” Modern China 28.2 (April 2002): 177-212.

246 Notes to pages 9-13

50 Julean Arnold, “China Annual Economic Report for 1935.” Arnold Papers, Hoover Institution Archives, Stanford University. Box 6, Book 2, 1-2. 51 Morris L. Bian, The Making of the State Enterprise System in Modern China: The Dynamics of Institutional Change (Cambridge MA: Harvard University Press, 2005). 52 The total value of the Guangdong government’s investments in industry from 1933 to 1936 was about US$14 million; see “Guangdong shengying gongye jinkuang” [The recent situation in the Guangdong provincial industries], HZ, 4 August 1936, sheet 4, 2. Expenditures in heavy industry in a plan implemented by the National Resources Commission in Nanjing apparently did not reach the scale of Guangdong’s investment before the war began; see Bian, The Making of the State Enterprise System, 45-76, and Tables 1.3, 2.2-3. 53 Tomoko Shiroyama, China During the Great Depression: Market, State, and the World Economy, 1929-1937 (Cambridge MA: Harvard, 2008), 130-39, 207-26; and Margherita Zanasi, Saving the Nation: Economic Modernity in Republican China (Chicago, 2005), 103-30. 54 Two-thirds of the total of G$50 million spent to develop modern industry in Guangdong was invested in sugar milling; see “New Industries in Kuangtung,” China Economic Journal 17.2 (March 1936): 45. 55 Ronald S. Burt, Brokerage and Closure: An Introduction to Social Capital (New York: Oxford University Press, 2005), 11-28. In Burt’s analysis, brokers usually do not receive direct and immediate rewards for their work. Many are conduits of knowledge and interpreters of information. 56 Sherman Cochran points out how entrepreneurs have served as cultural brokers in the diffusion of commodities in Chinese Medicine Men: Consumer Culture in China and Southeast Asia (Cambridge MA: Harvard University Press, 2006), 8, 161-64. 57 Chen Zhaoyu, Guangdong tangye, 10-11. 58 On the boundary as a resource, see S. Ellis and J. MacGaffey, “Research on Sub-Saharan Africa’s Unrecorded International Trade: Some Methodological and Conceptual Problems,” African Studies Review 39.2 (1996): 19-42. 59 Conventionally, a border is a line and a frontier is a zone where the control and definition of clear boundaries remain undeveloped; see J.R.V. Prescott, Boundaries and Frontiers (London: Croom Helm, 1978), 31. 60 Michiel Baud and Willem van Schendel, “Toward a Comparative History of Borderlands,” Journal of World History 5.2 (November 1997): 231. 61 Owen Lattimore, “The Frontier in History,” Studies in Frontier History: Collected Papers, 1928-1958 (London: Oxford University Press, 1962), 470. 62 On the concept of the internal frontier, see Jeremy Black, “Frontiers and Military History,” 1048-49. 63 Suisheng Zhao, A Nation-state by Construction (Stanford University Press, 2004), 84. 64 Kirby, “The Internationalization of China,” 182; see also Kirby’s “When Did China Become China?: Thoughts on the Twentieth Century,” in The Teleology of the Modern Nation-State: Japan and China, ed. J.A. Fogel, 105-14 (Philadelphia: University of Pennsylvania Press, 2005). 65 Prasenjit Duara, Rescuing History from the Nation: Questioning Narratives of Modern China (Chicago: University of Chicago Press, 1995), 177-204. 66 See in particular the essays in Becoming Chinese: Passages to Modernity and Beyond, ed. Wen-hsin Yeh (Berkeley: University of California Press, 2000). 67 For this usage and a positive view of the movement, see H.D. Fong, Toward Economic Control in China. Shanghai: China Institute of Pacific Relations, 1936.

Notes to pages 13-19 247

68 For the classic statement of this view, see Karl Polanyi, The Great Transformation [1940] (Boston: Beacon Press, 1968). A related work is Harold James, The End of Globalization: Lessons from the Great Depression (Cambridge, MA: Harvard University Press, 2001). 69 William Kirby, “Engineering China: Growth of the Developmental State: 1927-1937,” in Becoming Chinese, 137-60. 70 Thomas G. Rawski, Economic Growth in Prewar China (Berkeley, CA: University of California Press, 1989); and Loren Brandt, “Reflections on China’s Late 19th- and Early 20th-Century Economy,” in Reappraising Republican China, 29-31. 71 As shown in Shiroyama, China during the Great Depression, 130, 180-95, 207. 72 Eric J. Hobsbawm, Nations and Nationalism since 1780: Programme, Myth, Reality (Cambridge University Press, 1992), 132. Hobsbawm also discusses the ideas of Friedrich List (1789-1846), progenitor of economic nationalist thought, 30-31. 73 Zanasi, Saving the Nation, 25-53, 158, 175. 74 Tim Wright, “Coping with the World Depression: The Nationalist Government’s Relations with Chinese Industry and Commerce, 1932-1936,” Modern Asian Studies 25.4 (October 1991): 649-74. 75 Wen-hsin Yeh, Shanghai Splendor: Economic Sentiments and the Making of Modern China, 1843-1949 (Berkeley: University of California Press, 2007), 30-50, 70-73, and 129-51. 76 Karl C. Gerth, China Made: Consumer Culture and the Creation of the Nation (Cambridge, MA: Harvard University Asia Center Publications, 2003). 77 Parks M. Coble, Facing Japan: Chinese Politics and Japanese Imperialism, 1931-1937 (Cambridge, MA: Harvard University Press, 1991). 78 On this conception of the creation of structure through interaction, see Alexander Wendt, “Anarchy Is What States Make of It: The Social Construction of Power Politics,” International Organization 46, 2 (Spring 1992): 394; for the “constructivist” approach to social interaction, see Nicholas G. Onuf, World of Our Making: Rules and Rule in Social Theory and International Relations (Columbia, SC: University of South Carolina Press, 1989). 79 See SB, 11 August 1934, sheet 3, 10. In this case Guangdong justified the discrimation by alleging that Shanghai’s factories were foreign-owned. 80 A news report in Shanghai, for instance, quoted Feng’s statement that Guangdong had the conditions needed to produce “national sugar,” SB, 26 May 1935, sheet 4, 3; see also Feng Rui, “Fuxingzhongde Guangdong tangye” [Guangdong’s Sugar Industry in Revival], Jianshe (January 1936): 89. 81 Feng Rui. “Mianjiu woguo nongcun jingji bengkui zhi juti banfa” [“Concrete methods of rescuing China’s collapsed village economy”], in Nanda Jingji [Lingnan University Economic Studies] 2.2 (June 1933): 4. 82 “A Program of Chinese Agriculture” (Unpublished PhD Thesis, School of Agriculture, Cornell University, 1924), 209. 83 Chen Zhaoyu noted that her husband’s published works were “innumerable.” Guangdong tangye, introduction to letters section, n.p. 84 For an overview of Chen’s career, see Li Jiezhi, “Chen Jitang zhu Yue shimo” [The story of Chen Jitang’s Rule in Guangdong], in Nantian Suiyue, ed. Guangzhoushi zhengxie wenshi ziliao yanjiu weiyuanhui, 2-29. 85 SB, 16 May 1936, sheet 2, 2. 86 On the investment patterns, see Ramon H. Myers, “The World Depression and the Chinese Economy, 1930-36,” in The Economies of Africa and Asia in the Inter-War Depression, ed. Ian Brown, 253-78 (London: Routledge, 1989).

248 Notes to pages 21-24

Chapter 1: The Formation of Agricultural Expertise 1 For this positive view, see Frank H. King, Farmers of Forty Centuries (Madison, WI: Democrat Printing, 1911). 2 Margherita Zanasi, Saving the Nation: Economic Modernity in Republican China (Chicago: University of Chicago Press, 2005), ch. 5. 3 Feng Rui, “A Program of Chinese Agriculture” (PhD diss., School of Agriculture, Cornell University, 1924), 278-79. 4 Chen Zhaoyu stated that Feng drafted this in March 1936 for an editor in Nanjing who was preparing a History of Republican China. See Chen Zhaoyu, Guangdong tangye yu Feng Rui [Guangdong’s sugar industry and Feng Rui] (Hong Kong: Chen Zhaoyu, 1937), 6. 5 Feng Rui, “Feng Rui zizhuan” [Feng Rui’s autobiography], in Chen, Guangdong tangye, 1. 6 For photographs of the Feng clan temple in the village of Feng Rui’s birth, see Guangzhou huaqiao yanjiu hui [Guangzhou Overseas Chinese Research Committee] et al., eds., “Feng Rui,” in Fengpu gujin: Gu Huangpugang xunzong [The Fengpu district, past and present: Seeking the traces of the former Huangpu Port], 71-72 (Guangzhou: Guangzhou chubanshe, 2000). 7 Personal communication from Feng Puyu, July 2004. On the early development of China’s postal system under the wing of the Customs service, see Stanley F. Wright, Hart and the Chinese Customs (Belfast: W. Mullan, 1950), 629-31, 848-49. In 1882, a government policy provided for village postmasters belonging to private organizations to receive training in English in preparation for joining a unified Empire-wide postal service. 8 Xian Zi’en, “Guanyu Feng Rui shiliao de buchong” [Supplementary historical information on Feng Rui], Guangdong wenshi ziliao [Materials on the culture and history of Guangdong] 17 (1964): 188. Xian wrote about Feng Rui in response to Li Jiezhi’s 1963 essay; see Li Jiezhi, “Guanyu Feng Rui zhi si” [On the death of Feng Rui], 11 (1963): 130-34. Xian also contributed several detailed accounts of the Guangdong sugar industry program to the officially sponsored local history project. Xian was not personally acquainted with Feng Rui, however, or familiar with the circumstances of his death. 9 The Canton Christian College, The Canton Christian College, Ling Naam Hok Hau: Its Growth and Outlook (New York: Trustees of the Canton Christian College, 1919), 17. When Sun Yatsen visited the school in 1912, he addressed about 300 students; see C.H. Corbett, Lingnan University: A Short History Based Primarily on the Records of the University’s American Trustees (New York: Trustees of Lingnan University, 1963), 49. 10 G.W. Groff to a benefactor, 26 December 1946, Guangdong Provincial Archives (GPA) 38 (4) 26. Xian Zi’en was also a Lingnan alumnus (personal communication from Xian, October 1992). 11 Corbett, Lingnan University, 109. For further detail on the curriculum at Lingnan, see Dong Wang, Managing God’s Higher Learning: U.S.-China Cultural Encounter and Canton Christian College (Lingnan University), 1888-1952 (Lanham, MD: Lexington Books, 2007), esp. 61-86. 12 On the missionary ethos in China during the period, see Peter Buck, American Science and Modern China, 1876-1936 (New York: Cambridge University Press, 1980), 8-45. 13 The Canton Christian College, Canton Christian College, 30. 14 Corbett, Lingnan University, 39-40. See also E.H. Walker, Fifty-One Common Ornamental Trees of the Lingnan University Campus (Guangzhou: Lingnan University, 1930). 15 Pennsylvania State University Library, Report on the G. Weidman Groff Collection (College Station, PA: Penn State in China Committee, Pennsylvania State University, 1961), 413-15.

Notes to pages 24-28 249

16 George Weidman Groff, Agricultural Reciprocity between America and China (New York: Trustees of the Canton Christian College, 1911), 21. 17 This history is told in Randall Stross, The Stubborn Earth: American Agriculturalists in China – American Agriculturalists on Chinese Soil, 1898-1937 (Berkeley, CA: University of California Press, 1986). 18 John Lossing Buck, “Americans Who Have Assisted in the Improvement of Chinese Agriculture.” Transcript of interview by Dr. G. Colman, 21 September 1962. Cornell-in-China Oral Histories, Cornell University Manuscripts and Archives (CUMA), 13-6-21 7.. 19 J.B. Griffing, Report of Three Years’ Cotton Improvement Work, University of Nanking Agriculture and Forestry Series 1.6 (Nanjing: University of Nanking, September 1923), 1-5; Stross, Stubborn Earth, 123-26. 20 Clyde H. Myers, Final Report of the Plant Improvement Project Conducted by the University of Nanking, Cornell University, and the International Education Board (Nanjing: University of Nanking College of Agriculture and Forestry, 1934), 23. 21 Feng, “Feng Rui zizhuan,” 1. 22 Kang Chao, The Development of Cotton Textile Production in China (Cambridge, MA: Harvard University Press, 1977), 22-26. 23 Griffing, Report, 6-7. 24 Buck, “Americans Who Have Assisted in the Improvement of Chinese Agriculture,” 2. 25 These fashions can be seen in photographs in the Harry H. Love Papers, 1930, CUMA, box 13, folder 36, 18; see, for example, one captioned “Roguing seed rows of wheat, Taiping-men, 1930.” 26 Griffing, Report, 6-7. 27 See Buck’s comments on Griffing’s travels in “Americans Who Have Assisted in the Improvement of Chinese Agriculture,” 13. 28 Ibid. Griffing, Report, 7-8, explains that several of the experimental cotton stations in his project were associated with mission stations. 29 Pearl S. Buck, The Good Earth (New York: John Day, 1931). See also Peter Conn, Pearl S. Buck: A Cultural Biography (New York: Cambridge University Press, 1996), 1-44. 30 Feng, “Program of Chinese Agriculture,” 197-98. 31 Feng, “Feng Rui zizhuan,” 1-2. 32 On the scholarship program, see M.H. Hunt, “The American Remission of the Boxer Indemnity: A Reappraisal,” Journal of Asian Studies 31 (1972): 539-60; and Buck, American Science, ch. 2. 33 Harry H. Love Papers, 1933, CUMA, box 3, folder 14. 34 Tsinghua University Alumni Records, ed., Qinghua tongxue lü [Registry of Qinghua Alumni] (Beiping: Qinghua tongxue hui, 1936), 135. 35 Feng Rui, “The Breeding and Culture of the Silkworm, Bombyx mori, Linn” (MSc thesis, School of Agriculture, Cornell University, 1922). 36 According to Buck’s reminiscences, during the 1918 to 1924 period, T.H. Chien’s sericultureimprovement project employed up to 157 workers to prepare and feed mulberry leaves to silkworms around the clock, incubate their eggs, and keep their trays clean; see J.L. Buck, “Americans Who Have Assisted in the Improvement of Chinese Agriculture,” 3. On efforts to improve production and management in the silk industry, see Lillian Li, China’s Silk Trade: Traditional Industry in the Modern World, 1842-1937 (Cambridge, MA: Council on East Asian Studies, Harvard University, 1981), 188-95. 37 Harry H. Love Papers, 1931, CUMA, box 5, 14. 38 Feng, “Feng Rui zizhuan,” 1.

250 Notes to pages 28-34

39 Harry H. Love Papers, 1931, CUMA, box 5, unnumbered folder. 40 Feng Rui, “Zuijin Meiguo zhi duiwai jingji zhengce” [The current foreign trade policies of the United States and their effects on China], Dongfang zazhi [Eastern Miscellany] 20.5 (May 1923): 39-55. 41 James E. Boyle, Agricultural Economics (Philadelphia: J.B. Lippincott, 1921). 42 E. Dwight Sanderson, The Social Areas of Oswego County (Ithaca, NY: Cornell University Agricultural Experiment Station, 1923). 43 The Cornellian, 1922-24 editions. 44 “Feng Rui,” 1, CUMA, Deceased Alumni File. 45 A thorough review is Henry C. Taylor and Anne Dewees Taylor, The Story of Agricultural Economics in the United States, 1840-1932 (Ames: Iowa State College, 1952). 46 Henry Ford, Today and Tomorrow (1926), 141-42, cited in Wilson Gee, The Place of Agriculture in American Life (New York: Macmillan, 1930), 197. 47 Deborah K. Fitzgerald, Every Farm a Factory: The Industrial Ideal in American Agriculture (New Haven, CT: Yale University Press, 2003). 48 Edward Brunner, The Growth of a Science: A Half-Century of Rural Sociology Research in the United States (New York: Harper, 1957); Olaf F. Larson and Julie N. Zimmerman, Sociology in Government: The Galpin-Taylor Years in the US Department of Agriculture, 1919-1953 (University Park, PA: Pennsylvania State University Press, 2003). 49 On the history of sociology, see Dorothy Ross, The Origins of American Social Science (New York: Cambridge University Press, 1991), 219-56, 439-48. 50 Specialists in medicine, meanwhile, were also trying to establish their field as a respectably scientific profession; see Barbara G. Rosenkranz, “Cart before Horse: Theory, Practice, and Professional Image in American Public Health, 1870-1920,” Journal of the History of Medicine 29 (1974): 55-74. 51 Ralph A. Loomis and Glen T. Barton, Productivity of Agriculture: United States, 1870-1958 (Washington, DC: United States Department of Agriculture, 1961). 52 Zvi Griliches, “Agriculture: Productivity and Technology,” in International Encyclopedia of the Social Sciences, vol. 1, ed. David L. Sills, 242 (New York: Macmillan, 1968). 53 See, for example, The Business Men’s Commission on Agriculture, The Condition of Agriculture in the United States and Measures for Its Improvement (New York/Washington, DC: National Industrial Conference Board/United States Chamber of Commerce, 1927). 54 Feng, “Zuijin Meiguo,” 51-52. 55 Feng, “Program of Chinese Agriculture,” 1-4. 56 Ibid., 75-81. 57 The grant was from the Chinese Educational Foundation of New York. See Feng, “Feng Rui zizhuan,” 3. 58 Card marked “For Cornell Alumni Records (Mailing List),” CUMA, Deceased Alumni File. 59 Luo Shishi, “Shisinian Dongnan xuechao yu wo” [My experiences in the student movement at NSE in 1925], Chuanji wenxue [Biographical Literature] 1.5 (1962): 24, 27-29; Yeh Wen-hsin cites this account and refers to unrest at NSE in The Alienated Academy: Culture and Politics in Republican China, 1919-1937 (Cambridge, MA: Harvard University Press, 1990), 133-34. 60 Letter from H.L. Russell to the International Education Board, 27 January 1926, Rockefeller Archive Center, Records of the International Education Board, I-2, box 27, folder 384. 61 Feng Rui, “Guangdong Panyu Henandao wushiqi cun xiangcun diaocha baogao” [Report on a rural survey of fifty-seven villages on Henan Island, Panyu, Guangdong](Nanjing:

Notes to pages 34-37 251

62

63

64

65

66

67

68 69

70 71 72

73 74 75 76 77 78

Guoli Dongnan Daxue jiaoyu ke xiangcun jiaoyu ji shenghuo yanjiu suo [National Southeastern University Education Department office of research on rural education and life] 1926); and Feng Rui, Yung Ping-hang, and ed. G.W. Groff, “A General Descriptive Survey of the Honan Island Village Community,” Lingnan Science Journal 10.2-3 (1931): 153-86. Zhonggong zhongyan wenxian yanjiu shi [Archival Research Office of the Central Committee of the Chinese Communist Party], ed., Mao Zedong zhuan, 1893-1949 [Biography of Mao Zedong, 1893-1949] (Beijing: Zhongyang wenxian chubanshe, 2004), 99-105. Mao Zedong, “Zhongguo shehui ge jiejide fenxi” [Analysis of China’s social classes] Zhongguo nongmin [Chinese peasants] 2 (1 January 1926): 133-45. In a slightly different version dating from March 1926, the essay has since been memorized by tens of millions of children; see Mao Zedong, The Selected Works of Mao Zedong (Beijing: Foreign Languages Press, 1967), 1-12. Mao Zedong, Report from Xunwu, trans. Roger R. Thompson (Palo Alto, CA: Stanford University Press, 1990). For a critical discussion of Mao’s methods of survey research, see Chiang Yung-chen, Social Engineering and the Social Sciences in China, 1919-1949 (New York: Cambridge University Press, 2000), 148-57. The difficulty of avoiding arranged marriage was an obsession for many in Feng Rui’s generation. See Charlotte Furth, The Chinese Enlightenment (Berkeley, CA: University of California Press, 1986), 110-15. Personal communication from Feng Puyu, June 2004. Puyu learned about how her father had handled his hometown betrothal from his younger brother, who was rueful about his own timidity in comparable circumstances. C. Martin Wilbur, The Nationalist Revolution in China, 1923-1928 (New York: Cambridge University Press, 1984); Michael Tsin, Nation, Governance, and Modernity in China, Canton, 1900-1927 (Stanford, CA: Stanford University Press, 1999); Michael G. Murdock, Disarming the Allies of Imperialism: The State, Agitation, and Manipulation during China’s Nationalist Revolution, 1922-1929 (Ithaca, NY: East Asia Program, Cornell University, 2006). On Yen and his projects, see Charles W. Hayford, To the People: James Yen and Village China (New York: Columbia University Press, 1990). Feng, “Feng Rui zizhuan,” 4-5. That this was not a new direction for Yen may be seen in James Y.C. Yen, China’s New Scholar-Farmer (Beijing: China National Association of the Mass Education Movement, 1919), 24. Hayford, To the People, 70-72. Ibid., 74. Feng Rui, Xiangcun pingmin shengji jiaoyu [Village mass education in production], pamphlet (Shanghai: n.p., 1928). See also Feng Rui, “Henan Cunzhi Xueyuan tuiguang nongye jihua” [The agricultural extension plan of the Henan academy for village government], Cunzhi [Village government] 1.12 (December 1930): 1-10. Zhu Enrong, ed., Yan Yangchu quanji [Collected works of Yan Yangchu], vol. 3 (Changsha: Hunan jiaoyu chubanshe, 1989), 60-62. Yen, China’s New Scholar-Farmer, 25. Hu Guangbiao, Bozhu liushinian [Living in a turbulent era] (Taipei: Xinwen tiandi, 1962), 177. Hayford, To the People, 103. See another of Yen’s letters in Zhu, ed., Yan Yangchu quanji, vol. 3, 142-43. Personal communication from Feng Puzheng, November 2003. There is no record in the university’s archives of Chen’s graduation from Beijing Normal University. I thank Selda Altan for searching through the university’s records on my behalf.

252 Notes to pages 38-41

79 Personal communication from Feng Puyu, March 2004. 80 Feng Rui, Xiangcun shehui diaocha dagang [Outline for the investigation of village society] (Beijing: Mass Education Movement, 1929). 81 Letter from James Yen to Sidney Gamble, in Yan Yangchu quanji, vol. 3, 129-30. 82 Li Jinghan, Dingxian shehui gaikuang diaocha [A general social survey of Ding County] (Beijing: Mass Education Movement, 1933). 83 Sidney D. Gamble, Ting Hsien: A North China Rural Community (New York: Institute of Pacific Relations, 1954). 84 In his autobiography, Feng mentioned a period of convalescence from lung disease. See Feng, “Feng Rui zizhuan,” 5. 85 Li, Dingxian shehui, 5. 86 J. Stewart Burgess, “Trends in Social Reconstruction in China,” The Chinese Social and Political Science Review 14.1 (January 1930): 97. 87 Feng Rui, “Pingjiao zonghui ban pingmin shengji jiaoyu zhi liyou fangfa ji xiankuang” [The rationale of the MEM’s methods of mass education on livelihood and the current situation], Jiaoyu zazhi [Education Magazine] 19.9 (September 1927): 1-12. 88 Feng Rui, “Dingxian Huabei puji ji nongyuekexue shiyanchang” [The experimental farm for agricultural extension and research in Ding County, North China], Xin jiaoyu pinglun [Critical discussion on the new education] 3.23 (1927): 16-18. See also Chen, “Guangdong tangye, 15-16. 89 James Y.C. Yen, The Ting Hsien Experiment (Beijing: Mass Education Movement, 1934), 20. See also a letter on cotton seed from Yen to Feng dated January 1930, in Yan Yangchu quanji, vol. 3, 142. 90 Guo Renfeng, Feng Rui, and Shao Desu, “Zhongzhi Meimian xuzhi” [The essentials of planting cotton from the United States], in Jinling Daxue Nonglinke Nonglin Congkan [Agriculture and Forestry Department Agriculture and Forestry Series] no. 11, 1-14 (Nanjing: Agriculture and Forestry Department, University of Nanjing, 1930). 91 Nongmin was published from 1 June 1929 to May 1930. Feng contributed to every issue. 92 Feng Rui, “Xiangcun shehui xinli zhi fenxi” [An analysis of the psychology of rural society], Shehui xuejie [The Sociology Field] 2 (1928): 209-21. 93 Hu, Bozhu liushinian, 177. 94 Funded by John D. Rockefeller, the inquiry of 1932-33 commissioned a delegation of fifteen men to visit mission stations in India, Burma, China, and Japan. Their voluminous findings were presented as a one-volume version by William E. Hocking, ed., Re-Thinking Missions: A Laymen’s Inquiry after One Hundred Years (New York: Harper and Brothers, 1932). 95 Guy W. Sarvis, “Report on Mass Education,” unpublished typescript, 13, Rockefeller Foundation Archives, RG 01.0001.601.5. The Rockefeller Archive Center, Tarrytown, New York. As secretary to Kenyon Butterfield, Guy Sarvis was in Ding County from 25 November to 2 December 1930. On the Layman’s Foreign Missions Inquiry, see also Hayford, To the People, 145-46. 96 Henry H. White (writing as “One Who Knows”), “Opportunities in Agricultural Mission Work,” World Agriculture 1.2 (June 1920): 30. 97 For a description of rural mission efforts, see George Weidman Groff, “Christian Forces Awakening to the Needs of Rural China,” Lingnaam Agricultural Review 2.1 (1924): 56-58. 98 An earlier version appeared as a two-part article; see Feng Rui, “Gaijin woguo nongye zhi jianshe jihua shu” [A development plan for the improvement of Chinese agriculture], Nongxue [Agricultural Studies] 1.2 (1921): 1-27; and 1.3 (1921): 1-48.

Notes to pages 41-46 253

99 Feng, “Feng Rui zizhuan,” 3. According to Chen Zhaoyu, Feng Rui explained his reform plan as aiming to merge all basic social units in a single economic system. See Chen, “Guangdong tangye,” 15. 100 On Liang, see Guy S. Alitto, The Last Confucian: Liang Shu-ming and the Chinese Dilemma of Modernity (Berkeley, CA: University of California Press, 1979); and Edmund S.K. Fung, “Nationalism and Modernity: The Politics of Cultural Conservatism in Republican China,” Modern Asian Studies 43.3 (2009): 788-93. 101 Fung, “Nationalism and Modernity,” 791-92; and Stig Thøgersen, “Reconstructing Society: Liang Shuming and the Rural Reconstruction Movement in Shandong,” in Reconstructing Twentieth-Century China, ed. K.E. Brødsgaard and D. Strand, 139-62 (Oxford, UK: Clarendon, 1998). 102 Liang Shuming, “Liang Shuming xiansheng zai Dingxianli shifan yanjiang” [Mr. Liang Shuming’s model lecture at Ding County], Nongmin [The Farmer], 11 June to 11 July 1929, in four parts. 103 Feng Rui, “Cong hezuozhuyi chuangzao Zhongguo xin jingji zhidu” [Using cooperativism to create a new economic system for China], Cunzhi [Village Government] 1.3 (May 1930): 1-15; 1.4 (June 1930): 1-11; 1.5 (July 1930): 1-17; 1.6 (August 1930): 1-9; 1.7 (September 1930): 1-8; 1.9 (October 1930): 1-6; 1.10; and 1.11-12 (November 1930): 1-8. 104 Fung, “Nationalism and Modernity,” 792; and Feng Rui, “Using cooperativism,” 11. 105 Boyle, Agricultural Economics, 158-73. 106 See Richard S. Kirkendall, Social Scientists and Farm Politics in the Age of Roosevelt (Columbia, MO: University of Missouri Press, 1966), 1-49; and Larson and Zimmerman, Sociology in Government. 107 On the differences of opinion, see Taylor and Taylor, Story of Agricultural Economics, 641-709. 108 See James E. Boyle, Cooperation in the United States, Based on Official Sources, Designed as a Text Book on Cooperation ... Showing the Advantages and the Limitations of Cooperation (Toledo, OH: Grain Dealers’ National Association, 1925); and James E. Boyle and J. Ralph Pickell, The Fate of the Wallace Fallacies (no publisher, c. 1933). 109 Sophia H.C. Zen, ed., Symposium on Chinese Culture (1931; reprint, New York: Paragon Reprint, 1969), 224-36. 110 Ibid., 228. 111 Feng, “A Program of Chinese Agriculture,” 356-57. 112 The intellectual interest and official efforts are discussed in Chen Yixin, “The Guomindang’s Approach to Rural Socio-Economic Problems: China’s Rural Cooperative Movement, 1919-1949” (Phd diss., Department of History, Washington University, Saint Louis, 1995). 113 Feng Rui, “Minzhong shengji jiaoyu” [Mass education for livelihood], Jiaoyu yanjiu [Research in Education] 33 (1932): 51-54. 114 See Zhang Jian, “Jinling Daxue Nongxueyuan yu Zhongguo nongye jindaihua” [The College of Agriculture at the University of Nanjing and the modernization of Chinese agriculture], Shilin [Historical Review] 3 (1998): 88-90. 115 Feng, “Feng Rui zizhuan,” 2. 116 See Myron Cohen, “Cultural and Political Inventions in Modern China: The Case of the Chinese ‘Peasant,’” Daedalus 122.2 (Spring 1993): 151-70. 117 Loren Brandt, “Reflections on China’s Late 19th and Early-20th Century Economy,” in Reppraising Republican China, ed. F. Wakeman and R.L. Edmonds, 52 (New York: Oxford University Press, 2000). 118 Henry Ford, cited in Gee, The Place of Agriculture, 197.

254 Notes to pages 47-50

Chapter 2: Public Service in Guangdong, 1931-36 1 Feng Rui, “Feng Rui zizhuan” [Feng Rui’s autobiography], in Chen Zhaoyu, Guangdong tangye yu Feng Rui [Guangdong’s sugar industry and Feng Rui], 3 (Hong Kong: Chen Zhaoyu, 1937). 2 She used the terms feibing and feiji, which can mean tuberculosis. See ibid., vii, 15 3 D.C. Dunham, “The Influence of American Education in South China,” 1935, 12, United States Consular Records, Canton (CRC)/1935.842/850.1. 4 Feng Rui, “A Program of Chinese Agriculture” (PhD diss., School of Agriculture, Cornell University, 1924), 355-59. 5 Guangdongsheng mishuchu [Guangdong government secretariat], ed., “Guangdong Nonglinju zhi yange” [The evolution of Guangdong’s Bureau of Agriculture and Forestry], in Guangdong Nonglin [Agriculture and forestry in Guangdong], 3 (Lianxian, Guangdong, Guangdongsheng mishuchu, 1942). 6 Deng Yanhua, Guangdong jianshe wenti [Problems in reconstruction in Guangdong] (Guangzhou: Department of Reconstruction, 1929), 14. 7 Feng was known in Guangzhou as a successful young man even before his return; see Dunham, “Influence of American Education,” 10. The Ding County model was described approvingly in Guangdong jiansheting (Guangdong’s Department of Reconstruction), Guangdong shiyede xianzai ji jianglai, originally published in English as Industrial Project and Scheme of Kwangtung Province (Guangzhou: Guangdong jiansheting, 1930). 8 Xian Zi’en, “Guanyu Feng Rui shiliao de buchong” [Supplementary historical information on Feng Rui], Guangdong wenshi ziliao [Materials on the culture and history of Guangdong] 17 (1964): 188. 9 Lin also studied in the United States, receiving a master’s degree from Syracuse University. See Ye Yunsheng and Ye Baiheng, eds., Guangdong shiren lu [Directory of contemporary Guangdong natives] (Guangzhou: Kaitong chubanshe), 42; and Minguo renwu dacidian [Biographical dictionary of Republican China] vol. 1, ed. Xu Youchun (Shijiazhuang: Hebei renmin chubanshe, 2007), 826. 10 Gongshang ribao (GS) [Industry and Commerce Daily], 12 August 1936, sheet 2, 3. 11 Lingnan University, ed., Sili Lingnan daxue yi lan [Lingnan University handbook] vol. 44 (Guangzhou, Lingnan daxue, 1932), 6, 19; C.H. Corbett, Lingnan University: A Short History Based Primarily on the Records of the University’s American Trustees (New York: The Trustees of Lingnan University, 1963), 189. Chen Zhaoyu mentioned that Hu Jixian sent an enquiry to Feng Rui about his interest in the directorship of Guangdong’s Bureau of Agriculture and Forestry before the position was offered. See Chen, Guangdong tangye, 16. 12 Lingnan tongxue hui [Lingnan Alumni Association], ed., Zhong Rongguang xiansheng zhuan [Biography of Chung Wing Kwong] (Guangzhou: Lingnan tongxue hui, 2003), 72-83. 13 Letters between Groff and Feng, Guangdong Provincial Archives GPA 38 (4) 203: 30. 14 G.W. Groff to the Dean of Agriculture at Penn State, 5 January 1933, GPA 38 (4) 212. A short visit by Selskar Gunn of the Rockefeller Foundation followed; see Groff ’s letter to the Lingnan Board of Trustees in New York, 11 January 1933, GPA 38 (4) 214. 15 GPA 38 (4) 203: 13. Letter from Love to Feng, 20 July 1932. 16 Feng Rui, “Mianjiu woguo nongcun jingji bengkui zhi juti banfa” [Concrete measures to rescue China’s collapsed village economy], Nanda jingji [Lingnan University Economic Studies] 2.2 (June 1933): 1-6; Feng Rui, “Guangdong tangye fuxing yu jingji jianshe” [Revival of the Guangdong sugar industry and economic reconstruction] Nanda Jingji [Lingnan University Economic Studies] 3.1-2 (January 1934): 5-12.

Notes to pages 50-52 255

17 Diana Lary, Region and Nation: The Kwangsi Clique in Chinese Politics, 1925-1937 (New York: Cambridge University Press, 1974), 160; Xiao Zili, Chen Jitang (Guangzhou: Guangdong renmin chubanshe, 2001), 115. 18 Xiao Zili, Chen Jitang, 143-46; and Lary, Region and Nation, 169-71. 19 Shi Jiashun, Liangguang shibian zhi yanjiu [Research on the Guangdong-Guangxi incident] (Kaohsiung, Taiwan: Fuwen tushu chubanshe, 1992), 7-9. 20 Lary, Region and Nation, 160-61; Alfred H.Y. Lin, “Building and Funding a Warlord Regime: The Experience of Chen Jitang in Guangdong, 1929-1936,” Modern China 28.2 (April 2002): 182. 21 Li Jiezhi, “Chen Jitang tongzhi Guangdongde shimo” [An account of Chen Jitang’s control of Guangdong], in Chen Jitang yanjiu shiliao, 1928-1936 [Historical materials on Chen Jitang, 1928-1936], ed. Guangdong dang’anguan, 394 [Guangdong Provincial Archives] (Guangzhou: Guangdong dang’anguan, 1985). The tungsten is mentioned by Edgar Snow, Red Star over China (New York: Grove Press, 1968), 246. 22 Liu Xuemin, “Hongjun yu Chen Jitangde mimi tanpan” [Secret negotiations between the Red Army and Chen Jitang], Junshi lishi [Military History] 3 (1991): 51-52. 23 Jiang Zuyuan, ed., Jianming Guangdongshi [A concise history of Guangdong] (Guangzhou: Guangdong renmin chubanshe, 1987), 717-18. 24 Xu Guangqiu, “American-British Aircraft Competition in South China, 1926-1936,” Modern Asian Studies 35.1 (2001): 157-93. 25 For a glowing overview, see Edward Bing-shuey Lee, Modern Canton (Shanghai: Mercury Press, 1936). 26 Like other military officials of his generation, Chen composed poetry in the classical style, collected in Chen Jitang, Chen Bonan xiansheng cigao [Draft poems by Mr. Chen Bonan] (Hong Kong: Wenjiao shuju, 1959). He also drafted an autobiography, Chen Jitang zizhuangao [Chen Jitang’s draft autobiography] (Taipei: Zhuanji wenxue chubanshe, 1974). 27 Xiao, Chen Jitang, 320-21; Jiang, ed., Jianming, 716-17. 28 Xiao, Chen Jitang, 322. Feng Puyu’s older relatives claimed that her father had a great influence on Chen Jitang. Personal communication from Feng Puyu, June 2004. 29 Chen Jitang, “Qianyan” [Prefatory words], in Guangdongsheng sannian shizheng jihua shuomingshu [Explanation of the Guangdong Three-Year Plan for the Development of Government], 1 (Guangzhou: Government of Guangdong, 1933). 30 According to Diana Lary, although government plans were seldom realized, there was a sense of achievement and rationality in drafting them during the period. See Lary, Region and Nation, 166. 31 Lin Yungai, “Lin Yungai zai lianhe jinianzhou zuo guanyu Guangdong sannian shizheng jihuade baogao,” [Lin Yungai’s report on the Guangdong Three-Year Plan for the development of government] in Chen Jitang yanjiu shiliao, 158. 32 “Industrial Phases of the Kuangtung Three-Year Plan,” Chinese Economic Journal (CEJ) 16.1 (January 1935): 58. 33 Both in Chinese and English, the terms correspond closely to “development” today. See Claude A. Buss, “Governmental Reconstruction in China,” Annals of the American Academy of Political and Social Science 193 (September 1937): 150-53; George E. Taylor, The Reconstruction Movement in China (London: Council for International Affairs, 1936). 34 Lin Yungai “Lin Yungai zai lianhe,” Guangdong dang’anguan, ed., Chen Jitang yanjiu shiliao, 163-64. 35 Chen Jitang, “Guangdongsheng sannian zhengfu jianshe jihua shi jiezao xin Guangdong de zhunbei jihau” [The three-year plan for the development of government is a preparatory

256 Notes to pages 52-57

36 37 38 39

40

41 42 43

44 45 46 47 48

49 50

51

52 53 54 55

56 57

58 59

plan for the construction of a new Guangdong], ed. Guangdong dang’anguan, Chen Jitang yanjiu shiliao, 156. Chen Jitang, “Jiuji Guangdong nongcun jihua” [Rescue plan for the villages of Guangdong], ibid., 302. Qunsheng bao (QS) [Popular Voice], 9 December 1935, sheet 2, 2. Xiao, Chen Jitang, 335. Guangzhoushi difangzhi bianxuan weiyuanhui [Guangzhou local gazetteer editorial committee], in Guangzhou shizhi [Guangzhou municipal gazetteer], vol. 19, ed., “Feng Rui,” 361 (Guangzhou: Guangzhou chubanshe, 1996). Feng Rui, Guangdong nongye sannian jianshe jihua gangyao [Outline of the Guangdong Three-Year Plan for the Development of Agriculture]. Guangzhou: Guangdong jiansheting nonglinju, 1933. Feng, “A Program of Chinese Agriculture,” 327-46. Feng, “Feng Rui zizhuan,” in Chen, Guangdong tangye, 2. Feng Rui, Guangdong nonglin jianshe zhengce ji yinianlai shishi zhi zhuangkuang [Guangdong’s policies of reconstruction in agriculture and forestry and their implementation during the past year] (Guangzhou: Guangdong nonglinju, 1933), 2-5. Feng, “A Program of Chinese Agriculture,” 392-30. Dunham, “Influence of American Education,” 8-10. Ibid., 6-28. Guangdong jianshe yuekan: Nonglin zhuankan [Guangdong Reconstruction Monthly: Special issue on agriculture and forestry] 1.8 (30 June 1933), large folded diagram, n.p. Feng’s new associates were graduates of the following universities: California, Kansas, Illinois, Minnesota, Washington, Wisconsin, and Cornell; see Dunham, “Influence of American Education,” 12-22. A file on foreign-trained staff, with notes on their foreign-language skills and salaries, is held in GPA 6 (3) 267. Dunham, “Influence of American Education.” For contrasting views, see David Faure, The Rural Economy of Pre-Liberation China (New York: Oxford University Press, 1989); and Alfred H.Y. Lin, The Rural Economy of Guangdong, 1870-1937: A Study of the Agrarian Crisis and Its Origins in Southernmost China (New York: St. Martin’s Press, 1997). Tomoko Shiroyama, China during the Great Depression: Market, State, and World Economy, 1929-1937 (Cambridge, MA: Asia Center Publications, Harvard University, 2008), 118-30, 168-99. Feng, “Feng Rui zizhuan,” 3-4. Feng, “Guangdong tangye fuxing.” Feng, Guangdong nonglin jianshe zhengce, 1-4. Harold James, The End of Globalization: Lessons from the Great Depression (Cambridge, MA: Harvard University Press, 2001), 101-58; and Lewis L. Lorwin, “Economic Nationalism and World Cooperation,” Pacific Affairs 6.7 (1933): 361-72. Chen Zhaoyu uses the term in this sense in her discussion of Feng’s work. See Chen, Guangdong tangye, 17. Li Jiezhi, “Chen Jitang tongzhi Guangdongde shimo,” in Chen Jitang yanjiu shiliao, 19281936, ed. Guangdong dang anguan, 403-4; and Alfred H.Y. Lin, “Building and Funding a Warlord Regime.” Huazi ribao (HZ) [Chinese Mail], 4 August 1936, sheet 4, 2. “Industrial Phases,” 61; Qin Jun, “Chen Jitang bangongye zhenxiang” [The true story of Chen Jitang’s promotion of industry], Guangzhou wenshi ziliao [Sources on the culture and history of Guangzhou] 16 (1965): 95-107. According to Li Jiezhi, a total of G$37.2

Notes to pages 57-60 257

60 61

62

63

64 65

66

67 68

69 70

71 72

73 74

75

million was invested in Guangdong’s sugar industry under Chen Jitang; see Li Jiezhi, “Guanyu Guangdong tangye qiyejia Feng Rui zhi si” [On the death of Feng Rui, Guangdong’s sugar industrialist], in Li Jiezhi wencun [Collected writings by Li Jiezhi], vol. 2, ed. Xingning County Historical Committee, 41-43 (Guangzhou: Xingning County Historical Committee, 1990). Feng, Guangdong nonglin jianshe zhengce, 7. Feng Rui, “Guangdong Nonglinju zhi shijiu xiang zengjia nongye shengchan tuiguang shiji” [Nineteen extension projects for the improvement of agriculture and forestry production in Guangdong], Xin Guangdong [New Guangdong] 3 (March 1933): 1-10. “Gailiang tufeng biaozheng jihua” [Pilot plan for the improvement of local bees], Guangdong jianshe yuekan [Guangdong Reconstruction Monthly], special issue on agriculture and forestry, 1.8 (30 June 1933): 80-83. Feng Rui, “Nonglinju zengjia nonglin shengchan shisi xiang gongzuo ji yuhua” [The Bureau of Agriculture and Forestry’s fourteen projects to increase production and future plans] Guangdong jianshe yuekan [Guangdong Reconstruction Monthly], special issue on agriculture and forestry, 1.8 (30 June 1933): 1-14. Feng Rui, Guangdong nongye, 3-11. Guangdong Bureau of Agriculture and Forestry, “Estimate of Possible Increase in Agricultural Production in the Various Projects Now in Progress,” circa November 1933, GPA 38 (4) 417. See, for example, Feng Rui, “Fuxing Guangdong tangzhe shiye jihua” [Plan for the revival of sugar and sugarcane production in Guangdong], Guanggdong jianshe yuekan [Guangdong Reconstruction Monthly], special issue on agriculture and forestry, 1.8 (30 June 1933): 129-34. Feng, “A Program of Chinese Agriculture,” 205. Sericulture, however, was not within the scope of Feng’s responsibilities. Liao Zongzhen, former deputy director of the provincial Bureau of Agriculture and Forestry, was appointed the director of a provincial Bureau of Sericulture Improvement, also under the Department of Reconstruction. Liao outlined his work in a lecture in August 1934; see Liao Zongzhen, “Kuangtung Silk Industry, Scheme of Control and Prospect of Revival,” CEJ 15.4 (October 1934): 373-87. Francesca Bray, Agriculture, vol. 6.2 of Joseph Needham, ed., Science and Civilization in China (New York: Cambridge University Press, 1984), 601. Christian Daniels, Agro-Industries: Sugarcane Technology, vol. 6.3 of Joseph Needham, ed., Science and Civilization in China (New York: Cambridge University Press, 1996), 89-115; Sucheta Mazumdar, Sugar and Society in China: Peasants, Technology, and the World Market (Cambridge, MA: Asia Center Publications, Harvard University, 1998), 100-9, 346-58. From 1918 through 1920, China imported an annual average of 13.8 million dan of white sugar. See Feng, “Fuxing Guangdong,” 129. Feng, Guangdong nongye, 1; Feng Rui, “Fuxingzhong zhi Guangdong zhetang shiye” [Guangdong’s sugarcane industry in revival], Zhongguo jianshe [China’s Reconstruction] 13.1 (January 1936): 87-88. Feng Rui, Guangdong nongye, 1. Feng Rui, “Jieshi bensheng fuxing tangye jihua zhi yaozhi” [An explanation of the principles of the Guangdong Sugar Industry Revival Plan], Nongye tuiguang [Agricultural Extension] 3-4 (April 1934): 1-3. Feng Rui, A Brief Report on Modern Sugar Industry Development in Kwangtung (Guangzhou: Department of Reconstruction, November 1934), 1-2.

258 Notes to pages 60-64

76 Feng, “Fuxing Guangdong,” 131. 77 Guangdong jiansheting (Guangdong’s Department of Reconstruction), ed., Guangdong jianshe yuekan [Guangdong Reconstruction Monthly], special issue on industry and commerce, 2.1 (31 January 1932). 78 Chen, “Jiuji Guangdong,” 302-4. 79 Letters from Feng Rui to Robert Pendleton, 29 March 1932 and 6 May 1932, GPA 38 (4) 203: 11-12, 22. 80 Robert Pendleton to Feng Rui, 28 November 1932, GPA 38 (4) 203: 78-80 (emphasis in the original). 81 Feng, “A Program of Chinese Agriculture,” 207-8. Feng Rui’s commitment to forestry, expressed in a speech in November 1932, was also overshadowed by large-scale sugar milling thereafter. See a brief report on Feng’s speech in “Yaowen” [Major news] section, Guangdong jianshe yuekan 1.1 (30 November 1932): 9. 82 Letter from Gu to Pendleton, 1 October 1932, 1, GPA 38 (4) 204: 172. A synopsis of Pendleton’s report was published, see R. L. Pendleton, “A Reconnaissance Soil Survey of a Portion of Kwangtung Province (China), Soil Bulletin No. 6 (Beiping: National Geological Survey of China, 1933): 1-4. 83 Lin Yunkai, “Guanyu Guangdongsheng,” 167. 84 Chan Kei-on, “The Kwangtung Military Establishment, 1924-1936” (PhD diss., Department of History, University of Chicago, 1971), 188. 85 Feng Rui, “Guangdongsheng fuxing tangyede sannian jihua” [Guangdong’s Three-Year Sugar Industry Revival Plan], 1. 86 Feng Rui, “Guangdong tangye fuxing,” 5-6. 87 Feng, “Mianjiu woguo nongcun,” 4-5. 88 Dunham, “American Education,” 23, 12. 89 Without specifying the sources of funds, Xiao Zili claims that Chen Jitang increased the annual budget of the Bureau of Agriculture and Forestry to G$8 million in 1936. See Xiao, Chen Jitang, 336. 90 Feng Rui, “Mianjiu Zhongguo bengkui nonglin jingji jiqie banfa” [Urgent measures to rescue China’s collapsed agricultural and forestry economy], Guangdong jianshe yuekan [Guangdong Reconstruction Monthly], special issue on agriculture and forestry, 1.8 (30 June 1933): 15-18. 91 Shenbao (SB), 13 May 1935, sheet 2, 8 and 31 May 1935, sheet 3, 10; Dagongbao (DG), 1 June 1935, sheet 4, 1; Report of 8 June 1935, 15, United States Consular Records, Canton (CRC)/1935. 893.00. 92 South China Morning Post (SCMP), 29 May 1935, 16. The two banks were the Bank of Communications and the Shanghai Commercial and Savings Bank. 93 SB, 5 October 1935, sheet 3, 10; and 15 October 1935, sheet 3, 10. 94 QS, 18 November 1935, sheet 2, 2. On this mission, Feng was accompanied by Chen Yuanying, director of a provincial agency called the National Products Sales Association. 95 Xie Yingming, “Shengying gongye gaikuang jishi” [Record of conditions in the provincial industries], in Guangzhoushi zhengxie wenshi ziliao yanjiu weiyuanhui, ed., Nantian suiyue, 236. 96 “Xicun shimintu chang chengli ji kuochong jingguo” [The establishment and expansion of the Xicun Cement Works], Guangdong jianshe yuekan, special issue on industry and commerce, 2.1 (30 January 1932): 31-33. 97 Document T-00250266, National Archives of Japan Digital Archive, http://www.digital. archives.go.jp.

Notes to pages 64-69 259

98 “Guangdong shimintu chang gongzuo baogao,” [Report on the work of the Guangdong cement factory] Guangdong jianshe yuekan 1.3 (31 January 1933): 93-102. 99 “Yaowen” [Important News], Guangdong jianshe yuekan 1.1 (30 November 1932): 18-20. 100 Xiao, Chen Jitang, 333. 101 North China Daily News (NCDN), 24 September 1935, 6. 102 The total is given as G$15 million in Jiang, ed., Jianming Guangdongshi, 717. 103 “Yuesheng shimintu zhizaoye diaocha” [An investigation into Guangdong’s cement manufacturing business], QS, 1 September 1935, sheet 1, 4. The anonymous author of this report did not explain the difference between the figures for production and sales. 104 “Report for 1933,” 16 February 1934, 1, GPA 94 (1) 2212: 19. 105 Chen Piyang, “Wo suozhidaode Xicun shimintu chang” [My memories of the Xicun Cement Factory], in Guangzhoushi zhengxie wenshi ziliao yanjiu weiyuanhui, ed., Nantian suiyue, 241-44. 106 Ho Ping-yen, “China’s Industry and Commerce during 1933,” CEJ 14.1 (January 1934): 1940; Ho Ping-yen, “China’s Industry and Commerce during 1934,” CEJ 16.1 (January 1935): 19-37. 107 “Report on Smuggling in the Canton District during January 1934,” 12 February 1934, Appendix 1, Second National Archives, Nanjing, Maritime Customs Archive (MCA) 679/28159. 108 Lin Hongzhao, “Guangdong shuini shichang he shuini gongye” [Guangdong’s cement markets and the cement industry], Guangzhou wenshi ziliao [Materials on the culture and history of Guangzhou] 16 (1965): 49-69. 109 Pritchard memo, 12 October 1934, 8-9, MCA 679/28345. French Indochina surpassed Japan as the major supplier of cement to China between 1934 and 1935. 110 Report for 1-15 May 1934, 1, MCA 679/32416. 111 North-China Herald (NCH), 3 October 1934, 2. 112 Xie, “Shengying gongye gaikuang jishi,” 220, 236. 113 Qin, “Chen Jitang bangongye zhenxiang,” 96. 114 Li, “Guanyu Guangdong,” 42. 115 “Industrial Phases of the Kuangtung Three-Year Plan,” 61. 116 “Political Report for August 1935,” 9 September 1935, 13-14, CRC/1935.893.00. 117 Hong Kong General Chamber of Commerce, ed., Annual Report, 1934 (Hong Kong: Noronha, 1935), 58. 118 Guangdongsheng gongbao [Guangdong Provincial Gazette] no. 254, 10 March 1934, 1-2. 119 Report for 1-15 April 1934, 2, MCA 679/32416. 120 Guangdongsheng Zhongshan tushuguan, ed., in Minguo Guangdong da shiji [Major events in Guangdong during the Republican era], ed. Guangdong shengli Zhongshan tushuguan [Zhongshan Provincial Library], 491 (Guangzhou: Yangcheng wanbao, 2002). 121 Chen, Guangdong tangye, 22. Chen also mentioned that her husband proposed the collection of taxes on imported agricultural commodities as a means of financing provincial industry, Ibid., 17. 122 “Industrial Phases,” 61. 123 Letter from Guangzhou to Shanghai, 23 December 1936, 1-2, MCA 679/32396. 124 Letter from Guangzhou to Shanghai, 11 December 1936, 4, MCA 679/32396. 125 Lin, “Guangdong shuini,” 67. Noted in passing in another account, an enterprise producing “smokeless medicines” also existed. This source commented that the factories operating under Chen Jitang generally used mainly imported finished goods as their inputs. See Xie, “Shengying gongye gaikuang jishi,” 220.

260 Notes to pages 69-73

126 GS, 12 August 1936, sheet 2, 3. 127 SB, 12 September 1936, sheet 3, 1. Countering these charges, Chen Zhaoyu stated that agencies entirely separate from Feng Rui’s bureau handled the import taxes, see Chen, Guangdong tangye, 31-32. 128 See Aubert J. Clark, The Movement for International Copyright in Nineteenth Century America (Washington, DC: The Catholic University of America, 1960); and Fritz Machlup and Edith Penrose, “The Patent Controversy in the Nineteenth Century,” Journal of Economic History 10.1 (1950): 1-29. 129 Ezra Vogel, One Step Ahead in China: Guangdong under Reform (Cambridge, MA: Harvard University Press), ch. 4. Chapter 3: Rice and Revenue 1 Li Jiezhi, “Guanyu Guangdong tangye qiyejia Feng Rui zhi si” [On the death of Feng Rui, Guangdong’s sugar industrialist], in Li Jiezhi wencun [Collected writings by Li Jiezhi], vol. 2, ed. Xingning County Historical Committee, 40 (Guangzhou: Xingning County Historical Committee, 1990). 2 Lü Fang-shang, “Kangzhan qiande zhongyang yu difang: Yi Jiang Jieshi xiansheng yu Guangdong Chen Jitang guanxi wei li (1929-1936)” [Centre and region before the AntiJapanese War: The case of relations between Chiang Kaishek and Chen Jitang, 1929-1936], Jindai Zhongguo [Modern China] 144 (August 2001): 170-98. 3 Chen Zhaoyu, Guangdong tangye yu Feng Rui [The Guangdong sugar industry and Feng Rui], 17-18 (Hong Kong: Chen Zhaoyu, 1937). 4 For the sake of clarity, Guangdong’s commodity import duties are herein referred to as taxes to distinguish them from the central government’s tariffs. 5 Feng Rui, “A Program of Chinese Agriculture” (PhD diss., School of Agriculture, Cornell University, 1924), 203-4. 6 Looking back in early 1936, Feng explained his choice of dissertation topic by emphasizing China’s invasion by foreign goods. “Feng Rui zizhuan” [Feng Rui’s autobiography], in Chen, Guangdong, 2. 7 Harry H. Love Papers, Cornell University Manuscripts and Archives (CUMA), news clippings, box 14, folder 44. 8 Li Jiezhi, “Guanyu Guangdong,” 40-41. 9 Tomoko Shiroyama, China during the Great Depression: Market, State, and the World Economy, 1929-1937 (Cambridge MA: Harvard University Asia Center, 2008), 92-98. 10 T.H. Shen, Agricultural Resources of China (Ithaca, NY: Cornell University Press, 1951), 340. 11 See Loren Brandt, Commercialization and Agricultural Development: Central and Eastern China, 1870-1937 (New York: Cambridge University Press, 1989), ch. 2; and Peter A. Coclanis, “Distant Thunder: The Creation of a World Market in Rice and the Transformations It Wrought,” American Historical Review 98.4 (October 1993): 1050-78. 12 Shen, Agricultural Resources, 338-40; Frederick V. Field, “China’s Foreign Trade,” Far Eastern Survey 4.5 (March 1935): 36. China’s wheat imports increased in importance as well, averaging over 1 million tons annually during the period 1929-33, and wheat also reached its peak share in China’s total import trade in 1933. 13 China Maritime Customs Administration, The Trade of China, 1932 (Shanghai: Statistical Department of the Inspectorate General of Customs, 1933), 49; Donald A. Jordan, China’s Trial by Fire: The Shanghai War of 1932 (Ann Arbor, MI: University of Michigan Press, 2001), 195-97.

Notes to pages 73-77 261

14 Originally scheduled to last for two days, the meeting was prolonged by several days. Zhongyang ribao (ZY) [Central Daily News], 7 October 1932, sheet 3, 2; Shenbao (SB), 7 October 1932, sheet 2, 3; SB, 14 October, 1932, sheet 4, 1. 15 SB, 18 October 1933, sheet 3, 3. 16 This point was stressed by Ding Ying, Dean of the College of Agriculture at Zhongshan National University in Guangzhou; see Seong-joon Lee, “National Rice vs. Foreign Rice: Food, Culture, and Politics in Modern Canton, 1900-1937” (PhD diss., Department of History, University of California, Berkeley, 2005), 267-68, 292-93. 17 Hu Jixian, “Zuijin bensheng liangshi xingzheng zhi gaikuang” [Recent conditions under the provincial grain policy], Nanda jingji [Lingnan University Economic Studies] 3.1-2 (June 1934): 9-18 and tables; Table 14 gives the province’s population as 33 million. Another source gives Guangdong’s total population as 30.8 million in 1934; see Guangdong shengli Zhongshan tushuguan [Guangdong Provincial Zhongshan Library], ed., Minguo Guangdong da shiji [Major events in Guangdong during the Republican era] (Guangzhou: Yangcheng wanbao chubanshe, 2002), 499. 18 Huang Peisheng, “Guangdong yangmi shurude lishi kaocha” [Investigating the history of Guangdong’s grain imports], Nanda jingji [Lingnan University Economic Studies] 3.1-2 (June 1934): 19-21. 19 Ding Shenzun, ed., Guangdong minguoshi [The history of Guangdong during the Republican Period], vol. 2 (Guangzhou: Guangdong renmin chubanshe, 2004), 760. According to Customs, total remittances were about one-tenth of what they had been in the 1920s. See China Maritime Customs Administration, The Trade of China, 1932, 71-72. 20 Chen Ta, Emigrant Communities in South China: A Study of Overseas Migration and Its Influence on Standards of Living and Social Change (Shanghai: Kelly and Walsh, 1939). The International Labour Organization reported a total of 5.89 million unemployed persons in China in 1935, of whom 1.57 million were in Guangdong; see Guangdong shengli Zhongshan tushuguan, ed, Minguo Guangdong, 518. 21 Arthur N. Young, China’s Nation-Building Effort, 1927-1937: The Financial and Economic Record (Palo Alto, CA: Stanford University Press, 1971), 382-86. Totals of US$1.1 million worth of the available flour and US$6 million in wheat were eventually purchased; see ibid., 383-85. See also Shiroyama, China during the Great Depression, 213-14. 22 Guangdong shengli Zhongshan tushuguan, ed, Minguo Guangdong, 466; Wu Jingping, Song Ziwen zhengzhi shengya biannian [Chronological record of Song Ziwen’s life in politics] (Fuzhou: Fujian renmin chubanshe, 1998), 279. 23 Ibid.; New York Times (NYT), 11 June 1933, 26. 24 Guangdong shengli Zhongshan tushuguan, ed., Minguo Guangdong, 473. For Hu’s telegrams of protest, see Hu Hanmin, Hu Hanmin xiansheng zhenglun xuanbian [Selected political critiques by Hu Hanmin] (Guangzhou: Xiandao she, 1934), 336-37, 680-87. 25 Wang Ching-wei, “The Control of Raw Materials,” China Weekly Review (CWR), 2 September 1933, 26-28; Wu Jingping, Song Ziwen pingzhuan [A critical biography of Song Ziwen] (Fuzhou: Fujian renmin chubanshe, 1998), 185. 26 Guangdongsheng zhengfu gongbao, No. 306 (20 September 1933), 1-3, 42-43. 27 South China Morning Post (SCMP), 18 November 1933, 14. 28 Guangdongsheng zhengfu gongbao, No. 306 (20 September 1933), 42-43. 29 SB, 18 October 1933, sheet 3, 3. 30 Letter from G.W. Groff to a friend in Panama, 10 January 1933, Guangdong Provincial Archives (GPA) 38 (4) 214. 31 Feng Rui, “Liangguang liangshi jiejue banfa [Methods of solving grain problems in Guangdong and Guangxi], Guangdong jianshe yuekan [Guangdong Reconstruction

262 Notes to pages 77-82

32

33

34 35

36

37 38 39 40 41

42 43 44 45 46 47 48

49 50 51

Monthly] 1.3 (January 1933): 15-22. Feng mentioned that he visited Guangxi at the invitation of Guangxi’s military leader Li Zongren (Li Tsung-jen, 1890-1969). Feng Rui, “Mianjiu Zhongguo bengkui nonglin jingji jiqie banfa” [Urgent measures to rescue China’s collapsed agricultural and forestry economy], Guangdong jianshe yuekan [Guangdong Reconstruction Monthly], special issue on agriculture and forestry 1.8 (30 June 1933): 15-18. Feng Rui, “Wei fandui wuqianwan Meimai mianbu jiekuan er chengdao bensheng nongye” [Opposition to the $50 million loan for American wheat and cotton and praise for provincial agriculture], Guangdong jianshe yuekan [Guangdong Reconstruction Monthly], special issue on agriculture and forestry 1.8 (30 June 1933): 19-21. Guangdongsheng zhengfu gongbao, no. 238 (20 October 1933), 40. Guangdong shengli Zhongshan tushuguan, ed., Minguo Guangdong, 486; Guangdongsheng difang shizhi bianzuan weiyuanhui [Guangdong provincial historical gazetteer compilation committee], ed, Guangdong shengzhi: Liangshi zhi [Guangdong provincial gazetteer: Grain] (Guangdong renmin chubanshe, 1996), 72-73. The commission published a report on its work, see Guangdong liangshi tiaojie weiyuanhui [Guangdong grain regulation commission], Guangdong liangshi wenti [Guangdong’s grain supply problem] (Guangzhou: Guangdong liangshi tiaojie weiyuanhui, 1935). Report for 16-31 August 1934, 2, MCA 679/32416; Dagongbao (DG), 14 May 1935, sheet 3, 1. SB, 13 May 1935, sheet 3, 2; SB, 5 October 1935, sheet 3, 2; SB, 15 October 1935, sheet 3, 3. Zou Minbang also visited Changsha to arrange shipments of Hunanese rice to Guangdong; see DG, 28 September 1933, sheet 3, 1; CWR, 7 October 1933, 256. DG, 28 October 1933, sheet 9, 3; North China Daily News (NCDN), 19 October 1933, 6. The precise proportions were 53.5 percent in 1929 and 47.3 percent in 1935. See Arthur N. Young, China’s Nation-Building Effort, 73. Like that of the United States until about 1920, China’s government was highly dependent on tariff revenue. See J.M. Hansen, “Taxation and the Political Economy of the Tariff,” International Organization 44.4 (Autumn 1990): 527-51; and Harold James, The End of Globalization: Lessons from the Great Depression (Cambridge MA: Harvard University Press, 2001), 114-15. Report for 1-15 October 1934, 2, MCA 679/32416. Ibid. Dispatch from Guangzhou to Shanghai, 14 December 1934, 1-2, National Archives of France, Archives Diplomatiques (AD), series A, folder 23-A. For the use of this term and an overview of the goods to be taxed, see Guangdongsheng zhengfu gongbao, No. 326 (30 September 1933), 1-3. Ibid., 43-44; Guangdong shengli Zhongshan tushuguan, ed., Minguo Guangdong, 469-70. D.C. Dunham, “The Influence of American Education in South China,” 1935, 23-25, United States Consular Records, Canton (CRC)/1935.842/850.1. Feng Rui, “Mianjiu woguo nongcun jingji bengkui zhi juti banfa” [Concrete measures to rescue China’s collapsed village economy], Nanda jingji [Lingnan University Economic Studies] 2.1-2 (June 1933): 1-6. Chen Zhaoyu mentioned Feng’s references to China’s idle land and labour; see Chen, Guangdong tangye, 19. On Feng Rui’s direction of Guangdong’s program for rice-crop improvement, see Seongjoon Lee, “National Rice vs. Foreign Rice,” 269-73. Feng, Guangdong nonglin jianshe zhengce, 7; see also “Feng Rui zizhuan” [Autobiography by Feng Rui], in Chen, Guangdong tangye, 4. Feng Hefa, ed., Zhongguo nongye zhi ziliao [Materials on Chinese Agriculture], vol. 2 (Shanghai: Commercial Press, 1935), 47-83.

Notes to pages 82-85 263

52 The ministry assumed responsibility for agriculture in 1931, see Arthur Young, China’s Nation-Building Effort (1971), 159. On Chen Gongbo’s advocacy of economic autarky, see Margherita Zanasi, Saving the Nation: Economic Modernity in Modern China (Chicago: University of Chicago Press, 2004), 38-41. 53 Two of Chen Gongbo’s articles on the grain question are “Zhongguo liangshi de ziji” [Grain self-sufficiency in China], Minzu [The Nation] 3.6 (1935): 931-62; and “Selfsufficiency in Food Supply,” Chinese Economic Journal (CEJ) 17.2 (August 1935): 97-135. 54 “Feng Rui zizhuan,” 4. 55 See Lee, “National Rice vs. Foreign Rice,” 296-302. 56 DG, 18 September 1933, sheet 3, 1. 57 CWR, 14 October 1933, 280. 58 Dunham, “The Influence of American Education,” 24-25. 59 Chen, Guangdong tangye, 19. 60 Xiao Zili, Chen Jitang (Guangzhou: Guangdong renmin chubanshe, 2001), 165-66. 61 Li, “Guanyu Guangdong,” 131-32; Xian Zi’en, “Guanyu Feng Rui shiliao de buchong” [Supplementary historical information on Feng Rui], Guangdong wenshi ziliao [Materials on the culture and history of Guangdong] 17 (1964): 189. 62 South China Morning Post (SCMP), 14 April 1936, 13. 63 SCMP, 19 April 1936, 14. 64 Wright, China’s Struggle, 605. 65 Michael G. Murdock, “Exploiting Anti-Imperialism: Popular Forces and Nation-StateBuilding during China’s Northern Expedition, 1926-1927,” Modern China 35.1 (January 2009): 65-95. 66 Wright, China’s Struggle, 64; and Stanley F. Wright, China’s Customs Revenue since the Revolution of 1911 (Shanghai: Inspectorate General of Customs, 1935), 296-99, 327-30. 67 Wright, China’s Struggle, 607-8. 68 See John Fitzgerald, “Increased Disunity: The Politics and Finance of Guangdong Separatism, 1926-1936,” Modern Asian Studies 24.4 (1990), 757. 69 Ibid., 745, 756-77; Hallett Abend, My Life in China, 1926-1941 (New York: Harcourt, Brace, 1943), 33; Michael Tsin, Nation, Governance, and Modernity in China: Canton, 1900-1927 (Stanford, CA: Stanford University Press, 1999), 146-47. 70 Kwok Hung-wai, “A Study of Chen Jitang’s (1890-1954) Fiscal Reform” (MA thesis, Department of History, University of Hong Kong, 1989), 22; Fitzgerald, “Increased Disunity,” 758. 71 Guangdong’s annual quota of payments from salt revenue was set at N$933,000 in 1929. See Kwei Chungshu, ed., The Chinese Year Book, 1935-36 (Shanghai: Commercial Press, 1935), 482. According to Alfred H.Y. Lin, Guangdong remitted no funds at all to Nanjing. See Lin, “Building and Funding a Warlord Regime: The Experience of Chen Jitang in Guangdong, 1929-1936,” Modern China 28.2 (April 2002), 193. This is difficult to confirm, perhaps because Nanjing did not wish creditors to be clearly aware of Guangdong’s refusal to remit its share of interest payments. On interest payments by provinces from tariff revenue, see Wright, China’s Customs Revenue since the Revolution of 1911, ch. 3. 72 Kwok Hung-wai, “A Study of Chen,” 22-23; Fitzgerald, “Increased Disunity,” 758. 73 SB, 2 June 1934, sheet 3, 1. 74 Guangdong dang’an guan, ed., Chen Jitang, 137. 75 SCMP, 26 August, 1935, 13. 76 NCDN, 2 December 1935, 10. 77 Wright, China’s Struggle, 53-54; Susan Mann, Local Merchants and the Chinese Bureaucracy, 1750-1950 (Stanford, CA: Stanford University Press, 1987), 122-23.

264 Notes to pages 86-88

78 Wright, China’s Struggle, 372-74. 79 Ibid., 381-82. 80 Imports fell from a peak of about 2 million to 1 million metric tons from 1933 to 1934. See Guangdongsheng mishuchu [Guangdong provincial secretariat], ed., Guangdong jingji nianjian [Guangdong Economic Yearbook] (Guangdong: Lianxian, 1940), 50-54. 81 Guangdong shengli Zhongshan tushuguan, Minguo Guangdong, 506. 82 SCMP, 31 December 1935, 14. 83 Shiroyama, China during the Great Depression, 153-56; Young, China’s Nation-Building, 205-15. 84 Hu, “Zuijin bensheng,” Table 20. 85 Chen Han-seng, Landlord and Peasant in China: A Study of the Agarian Crisis in South China (New York: International Publishers, 1936), 97-103, 133. 86 Feng Rui, “Feng Rui zizhuan,” 4. 87 Chen Zhaoyu, Guangdong, 10-11. Xiao Zili also stated that imports were cut in half; see Xiao, Chen Jitang, 337-38. See also Jiang Zuyuan, ed., Jianming Guangdongshi [A concise history of Guangdong] (Guangzhou: Guangdong renmin chubanshe, 1987), 718-19. 88 Guangdong’s regular rice deficit dated back to the seventeenth century. See Robert Marks, Tigers, Rice, Silk, and Silt: Environment and Economy in Late Imperial South China (New York: Cambridge University Press, 1998), 130-31, 259-66, 294. 89 For China as a whole, the value of rice imports declined by 56 percent from 1933, and the volume was reduced by 40 percent. See China Maritime Customs Administration, The Trade of China, 1934, 50. 90 Fitzgerald, “Increased Disunity,” 767, citing Huazi ribao (HZ) [Chinese Mail] reports of June 1936. 91 NCDN, 22 September 1933, 6; 27 September 1933, 6. 92 NCDN, 11 October 1933, 6. 93 Report for August 1935, CRC/1935.800. By far the largest share of the total revenue was collected in Guangzhou, with collections in Shantou, valued at G$350,000, coming a distant second. According to Li Jiezhi, the tax earned G$500,000 monthly for Chen Jitang’s government; see Li, “Guanyu Guangdong,” 41. Chen Zhaoyu stated that Feng Rui’s advice helped the Guangdong government earn G$5 million annually in import taxes on rice. Chen, Guangdong tangye, 18. 94 The process is described in Qin Qingjun, “Minguo shiqi Guangdong caizheng shiliao, 1911-1949” [Historical materials on Guangdong’s fiscal systems during the Republican Period, 1911-1949], Guangzhou wenshi ziliao [Materials on the culture and history of Guangzhou] 29 (1983): 47-48. 95 Kwok, “Study of Chen,” 27-28. 96 Ibid., 85n10. 97 SB, 28 July 1936, sheet 1, 3. Huo Zhiting was identified as responsible for the rice tax in a consular report; see Report for October, CRC/1933.866.16. 98 Consular dispatch, 10 May 1934, CRC/1934 893.51; letter from Hong Kong to London, 21 December 1933, Hong Kong Shanghai Bank Group Archives (HSBG), SHG 736.4. 99 Guangdong shengli Zhongshan tushuguan, ed., Minguo Guangdong, 483. 100 Wu Xiangheng, “Wo suo zhidaode Huo Zhiting” [My memories of Huo Zhiting], in Nantian suiyue: Chen Jitang zhu Yue shiqi jianwen shilu [Era of the Southern Empire: Eyewitness accounts of the period of Chen Jitang’s Rule in Guangdong], ed. Guangzhoushi zhengxie wenshi ziliao yanjiu weiyuanhui [Committee for sources in historical research of the Guangzhou branch of the Chinese People’s Political Consultative Conference], 325-30 (Guangzhou: Guangdong renmin chubanshe, 1987).

Notes to pages 89-92 265

101 Guangdong shengli Zhongshan tushuguan, ed., Minguo Guangdong, 499; Deng Xianbin, “Chen Jitang kaizheng meiyou yingye shui” [Chen Jitang’s exaction of the kerosene operations tax], Guangzhou wenshi ziliao [Materials on the culture and history of Guangzhou] 16 (1965): 42-48. 102 The shortages are described in Guangdongsheng difang shizhi bianzuan weiyuanhui, ed., Guangdong shengzhi, 73. 103 Report for 1-15 March 1936, 1, MCA 679/32416. 104 Guangdongsheng zhengfu gongbao, no.333 (10 June 1936), 76, and idem., no. 335 (30 June 1936), 147; Report for 1-15 June 1936, 1, MCA 679/32416. 105 Customs officials believed that some of the rice brought in at half the regular tax rates under special arrangements in July and up until 10 August 1936 was shipped to other provinces. See Telegram from Guangzhou to Nanjing, 25 August 1936, 1-2, MCA 679/20041. 106 Saigon to Nanjing, 5 January 1935, 1-2, AD, series A, folder 23-A. 107 French consular records note an increase from 1.4 million dan to 4.3 million dan in 193435, or a value increase from 7.3 to 16.6 million Customs gold units. Commercial report, 1 May 1935, 19, AD, Shanghai series A, no. 44. On increased imports into Guangdong from Vietnam over 1934, see Qunsheng bao (QS) [Popular Voice], 3 November 1935, sheet 3, 3. 108 Report on agricultural conditions, 29 July 1935, 5, CRC/1935.861, v.22; Guangdongsheng zhengfu gongbao, 30 April 1934, 62. 109 QS, 13 December 1935, sheet 2, 2. 110 QS, 14 December 1935, sheet 2, 2. 111 Wright, China’s Struggle, 657. 112 SB, 17 October, sheet 3, 1; DG, 23 October 1933, sheet 7, 2; NCDN, 18 October 1933, 6, and 19 October 1933, 6. 113 Brief mentions of this business are found in Chen Han-seng, “Japanese Penetration in Southernmost China,” Far Eastern Survey 5.22 (4 November 1936): 235; and F. Hinke, “Business Conditions and Probable Trade Trends in the Swatow Consular District,” 24 September 1934, 23, Consular Records, Swatow (CRS) 693.001/332, box 3586. 114 NCDN, 29 July 1936, 11. 115 Letter from Lin to Kong, 1-2, Guoshiguan (Academia Sinica), Taipei, 0800.10/2790/01. 116 HZ, 29 July 1936, sheet 2, 1. 117 HZ, 28 July 1936, sheet 2, 1. 118 HZ, 27 June 1936, sheet 2, 1. 119 QS, 9 August 1936, sheet 1, 3. 120 Susan Mann, “Brokers as Entrepreneurs in Presocialist China,” Comparative Studies in Society and History 26.4 (October 1984): 614-36; for government policies during the 1930s, see 630-31. 121 Duties had been assessed on large stocks contrary to the grain dealers’ expectations. The guild leader was imprisoned for several months and fined heavily for organizing a protest against the provincial rice tax. See Huang Yongyu, et al., “Kaizheng yangmi shui shimo” [The story of the tax on foreign rice], in Nantian suiyue, ed. Guangzhoushi zhengxie wenshi ziliao yanjiu weiyuanhui, 303-5. 122 Letter from Guangzhou to Shanghai, 22 September 1936, 2, MCA 679/32396. 123 Report for 1-15 September 1936, 2, MCA 679/32416. 124 HZ, 28 July 1936, sheet 2, 1. 125 QS, 30 July 1936, sheet 2, 3. 126 QS, 8 August 1936, sheet 1, 3. 127 QS, 10 August 1936, sheet 1, 2-3. 128 Letter from Guangzhou to Shanghai, 12 August 1936, 1, MCA 679/20041.

266 Notes to pages 93-100

129 HZ, 29 July 1936, sheet 2, 1. 130 SB, 20 September 1936, sheet 2, 3. 131 According to Seong-joon, “National Rice,” the problem was largely a matter of taste, as consumers in Guangdong disliked Hunanese rice. 132 Report for 1-15 December 1936, 1, MCA 679/32416. 133 SB, 7 March 1937, sheet 4, 1. 134 “Huanan Miye Gufen Youxian Gongsi wenjian” [Documents of the South China Rice Trading Corporation], March 1937, 1-47, Shanghai Municipal Archives (SMA), Q65/3-217. 135 Ibid., 111-13. 136 On the involvement of Song Ziliang, also a shareholder in the South China Rice Trading Corporation, in Guangdong’s rice trade, see letters between Hong Kong and Shanghai, April 1937, HSBG, 743.2/1937. 137 Song Ziwen monopolized Guangdong’s rice imports through the new enterprise, according to Guangdong shengli Zhongshan tushuguan, ed., Minguo Guangdong, 470. 138 Guowen zhoubao [National Weekly News] 13.48 (December 1936): 1. 139 NCDN, 19 July 1936, 10. 140 Xiao, Chen Jitang, 446-51. 141 QS, 14 July 1936, sheet 1, 3. 142 See a speculative article that appeared soon after Feng’s death in CWR (26 September 1936), 120. 143 Chen, Guangdong tangye, 11. Chapter 4: White Sugar 1 “Industrial Phases of the Kuangtung Three-Year Plan,” Chinese Economic Journal 16.1 (January 1935): 61; Qin Jun, “Chen Jitang ban gongye zhenxiang” [The true story of Chen Jitang’s promotion of industry], Guangzhou wenshi ziliao [Sources on the culture and history of Guangzhou culture and history] 16 (1965): 102. 2 Guangdongsheng difang shizhi bianzuan weiyuanhui [Guangdong provincial historical gazetteer compilation committee], ed., Guangdong shengzhi: Nongye zhi [Guangdong provincial gazetteer: Agriculture] (Guangzhou: Guangdong renmin chubanshe, 2002), 161. 3 In theorists’ terms, he created social capital by bridging a structural hole or gap between separate social networks. See Ronald S. Burt, Brokerage and Closure: An Introduction to Social Capital (New York: Oxford University Press, 2005), 24, 164. Burt adapts the concept of structural hole from Charles Tilly, Durable Inequality (Berkeley, CA: University of California Press, 1998). Elsewhere, Burt discusses and tests an “intrepid broker” hypothesis; see R.S Burt, Neighbor Networks: Competitive Advantage Local and Personal (Oxford University Press, 2010), 221-80. 4 Christian Daniels, Agro-Industries: Sugarcane Technology, vol. 6.3 of Joseph Needham, ed., Science and Civilization in China (New York: Cambridge University Press, 1996), 87125; Sucheta Mazumdar, Sugar and Society in China: Peasants, Technology, and the World Market. (Cambridge, MA: Asia Center Publications, Harvard University, 1998), 260-337. 5 Mazumdar, Sugar and Society, 384-85; Daniels, Agro-Industries, 115-16. 6 Feng Rui, “Fuxing Guangdong tangye zhi xianzai ji jianglai” [The present and future of the revival of the Guangdong sugar industry], Xiandai shengchan zazhi [Modern Production Magazine] 1.2 (February 1935): 1-2. 7 Honolulu Iron Works, “Possibilities of Sugar Production in Kwangtung Province,” draft prospectus, 1933, 4, Bishop Museum Archives (BMA), Davies Papers (Manuscript Group 239), box 18, folder 22 (239/18:22).

Notes to pages 100-4 267

8 Feng Rui, “Jieshi bensheng fuxing tangye jihua zhi yaozhi” [An explanation of the principles of the Guangdong Sugar Industry Revival Plan], Nongye tuiguang [Agricultural Extension] 3-4 (April 1934), 2. 9 Albert and Graves, “Introduction,” 21. 10 Arthur N. Young, China’s Nation-Building Effort, 1927-1937: The Financial and Economic Record (Palo Alto: Stanford University Press), 4, 50-51. 11 Mo Yinggui, “Yingshang Taigu yanghang jinbainian zai Huanan yewu huodong yu Mo jiazude guanxi” [Activities of the British merchant firm Butterfield and Swire in South China and relations with the Mo family during the past century] (1965), Guangdong wenshi ziliao [Sources for the culture and history of Guangdong] 44 (1985): 123. 12 Produced in a centrifugal process, “plantation white” sugar grades, near-white in colour, were not as highly processed as “refined” sugar. On milling and refining techniques of the period, see Francis Maxwell, “On the Manufacture of White Sugar,” in Economic Aspects of Cane Sugar Production, 119-30 (London: Norman Rodgers, 1927). 13 Bill Albert and Adrian Graves, “Introduction,” in The World Sugar Economy in War and Depression, 1914-1940, 8-9 (London: Routledge, 1983). 14 B.C. Swerling, International Control of Sugar, 1918-1941 (Stanford, CA: Stanford University Press, 1949), 40-60. See also V. Gutierrez, The World Sugar Problem, 1926-1935 (London: Norman Rodgers, 1935), 5-6. 15 Miriam S. Farley, “Sugar: A Commodity in Chaos,” Far Eastern Survey 4.22 (6 November 1935), 172-73. 16 United Nations Food and Agriculture Organization, The World Sugar Economy in Figures, 1880-1959 (Rome: United Nations Food and Agriculture Organization, 1960), 114. 17 Albert and Graves, “Introduction,” 21. 18 Letter from John J. Ehrhardt to Julean Arnold, 19 July 1935, 2, enclosure in Horace H. Smith, Conditions in the South China Sugar Industry of Interest in Connection with Possible Exports of American Machinery and Capital, voluntary report by United States consul, Guangzhou, 1935, Consular Records, Canton (CRC)/1935.869.11. 19 Farley, “Sugar,” 173. 20 Feng Rui, “Fuxingzhong zhi Guangdong zhetang shiye”[Guangdong’s sugarcane industry in revival], Zhongguo jianshe [China’s Reconstruction] 13.1 (January 1936): 87-88. 21 Feng Rui, “A Program of Chinese Agriculture” (PhD diss., School of Agriculture, Cornell University, 1924), 82, 205. 22 Feng Rui, “Fuxing Guangdong tangzhe shiye jihua” [Plan for the revival of sugar and sugarcane production in Guangdong], Guanggdong jianshe yuekan [Guangdong Reconstruction Monthly], special issue on agriculture and forestry, 1.8 (30 June 1933): 130. 23 Albert and Graves, “Introduction,” 14. 24 HIW originated in 1851 with the invention of the centrifugal sugar mill in Honolulu. Skoda Works, which still exists today, had not been in the cane sugar business before the 1930s. HIW records describe contacts with Feng Rui. A few details on Feng’s dealings with Skoda personnel were provided by Feng Puyu in a personal communication, June 2009. 25 Albert and Graves, “Introduction,” 17. On contract terms and the competition for contracts, see Xian Zi’en, “Guangdong shengying Shitou tangchang” [The Guangdong provincial sugar mill at Shitou], Guangdong wenshi ziliao 56 (1988): 127-49. 26 Xian Zi’en, “Ban tangchang jingguo jiqi zhenxiang” [The process of operating sugar mills and the true situation], in Nantian suiyue: Chen Jitang zhu Yue shiqi jianwen shilu [Era of the Southern Empire: Eyewitness historical accounts of the period of Chen Jitang’s Rule in Guangdong], ed. Guangzhoushi zhengxie wenshi ziliao yanjiu weiyuanhui, 247

268 Notes to pages 104-11

27 28 29

30 31 32 33 34 35

36 37 38 39 40 41 42

43 44 45 46 47 48 49 50 51

52 53 54

(Guangzhou: Guangdong renmin chubanshe, 1987). Xian’s date for the visit is a month early. Chen Zhaoyu, Guangdong tangye yu Feng Rui [The Guangdong sugar industry and Feng Rui] (Hong Kong: Chen Zhaoyu, 1937), 21. In a note to G.W. Groff dated 5 July 1933, Feng mentioned that he would depart for the Philippines later that day. Guangdong Provincial Archives (GPA) 38 (4) 214. “A Study of the Sugar Industry in China,” Chinese Economic Journal 1.9 (1927): 866-83, and 1.11 (1927): 963-79. The two-part article opens with the statement that sugar-processing methods had scarcely improved since an emperor of the seventh century sent students to India to study sugar making. Feng Rui, undated lecture, quoted in Chen, Guangdong tangye, 22. A figure of sixty mills, each with a daily milling capacity of 1,000 tons, was cited by Shen Chennan, “The Sugar Tariff,” Chinese Economic Journal 6.1 (January 1930): 44. Feng Rui, “Fuxing Guangdong,” 133-34. Feng, “Jieshi bensheng,” 1. Feng, “Fuxing Guangdong,” 130-31. Letter from Feng Rui to Jimmy Yen, 6 January 1933, 2, GPA 38 (4) 203: 95. For more details on how soldiers would be deployed to increase grain supplies, and an organizational chart on the military farming scheme, see Feng Rui, “Liangguang liangshi jiejue banfa” [Methods of solving the grain problem in Guangdong and Guangxi], Guangdong Jianshe Yuekan 1.1-3 (January 1933): 15-17. C.J. Henderson report to Honolulu, 12 January 1934, 12, BMA 239/18:22. Honolulu Iron Works, “Possibilities of Sugar Production,” 5. Chen, Guangdong tangye, 22-23. Ibid., 23. Chen, Guangdong tangye, 23-24. Ibid., 24. Ibid, 22. In 1930 just 259,030 of a total 372 million hectares of cultivated land was used for sugarcane. See C. Cruz, “Population and Land Utilization in the Philippines,” in Problems of the Pacific, Proceedings of the Fifth Conference of the Institute of Pacific Relations, Hangchow and Shanghai, China, 1933, ed. B. Lasker and W.L. Holland, 383-95 (Chicago: University of Chicago Press, 1934). Chen, Guangdong tangye, 25-26. Ibid. Letter from Manila to Honolulu, 12 January 1934, 1-2, BMA 239/18:22. Hall’s appointment was reported in China Weekly Review (CWR), 30 September 1933, 204. Ibid. Letter from Hall to C.J. Henderson in Manila, 8 December 1934, 1, BMA 239/130:4. Honolulu Iron Works, “Possibilities of Sugar Production,” 5. Hall to Henderson, 22 March 1933, BMA 239/18:22. Dispatch from Guangzhou to Washington, 25 May 1932, 1-2, CRC/1932.861. For instance, the American advisor to Guangdong’s sugarcane program provided Feng Rui’s residential telephone number to an HIW manager who was heading to Guangzhou from Manila, with instructions to call Feng from Hong Kong. See King to Henderson, 23 December 1933, 1, BMA 239/18:22. See, for example, page 12 of the letter by John J. Ehrhardt cited at note 18. Henderson report to Honolulu, 12 January 1934, 11, BMA 239/18:22. Honolulu Iron Works, “Possibilities of Sugar Production,” 1-5.

Notes to pages 111-16 269

55 Feng Rui, “Guangdong tangye fuxing yu jingji jianshe” [Revival of the Guangdong sugar industry and economic reconstruction], Nanda jingji [Lingnan University Economic Studies] 3.1-2 (January 1934): 6. 56 Honolulu Iron Works, “Possibilities of Sugar Production,” 7. 57 Feng Rui, “Guangdong tangye shiye sannian jihua” [Three-year plan for the Guangdong Sugar Industry] Guangdong jianshe 2.2 (31 March 1934): 93-95. 58 Honolulu Iron Works, “Possibilities of Sugar Production,” 6-7. 59 Feng Rui, A Brief Report on Modern Sugar Industry Development in Kwangtung (Guangzhou: Department of Reconstruction, November 1934), 3-4. 60 King to Henderson, 23 December 1933, 1, BMA 239/18:22; King’s contract and related correspondence are in GPA 6 (3) 148: 1-5, 10-12. 61 Letter from Hong Kong to Bangkok, 5 October 1934, 2, BMA 239/130:4. 62 Draft regulations and correspondence between Feng Rui and Lin Yungai, AugustSeptember 1933, GPA 1 (1) 15: 1-71. 63 Letter from Manila to Bangkok, 5 October 1934, 2, BMA 239/130:4. 64 Feng, “Fuxing Guangdong tangye,” 2; Feng, “Fuxingzhong zhi Guangdong zhetang,” 89. 65 Feng Rui, “Fuxing Guangdong tangye,” 2. 66 On the perils of optimism based on potential market size, see Carl Crow, Four Hundred Million Customers: The Experiences, Some Happy, Some Sad, of an American in China, and What They Taught Him (New York: Harper, 1937). 67 Feng Rui, “Guangdong tangye shiye sannian jihua” [Three-year plan for the Guangdong sugar industry], Guangdong jianshe yuekan 2.2 (March 1934): 83-95. This outline may be compared to an earlier article in the same journal; see Feng Rui, “Fuxing Guangdong tangzhe shiye jihua” [Plan for the revival of sugar and sugarcane production in Guangdong], Guanggdong jianshe yuekan, 1.8 (30 June 1933): 129-34. 68 Xian discovered the HIW document in Feng’s former office at the Shitou mill. See Xian, “Ban tangchang jingguo,” 247. Likewise, a prospectus by Weng Shiliang is similar to HIW’s prospectus. See Weng Shiliang, Tangye baogao shu [Report on the Sugar Industry] (undated). BMA 239/18:22. 69 Henderson report to Honolulu, 12 January 1934, 11-12, BMA 239/18:22. 70 Letter from Hall in Guangzhou to Henderson in Manila, 1, BMA 239/18:22. 71 Report by Henderson to Honolulu, 12 January 1934, 7-10, BMA 239/18:22. 72 Ibid., 9-10. 73 Ibid., 24. 74 Letters from Manila to Hong Kong and Hong Kong to Manila, 14 February 1935 and 26 March 1935, BMA 239/130:4. On the Export-Import Bank Agency, see Charles Kindleberger, The World in Depression, 1929-1935 (Berkeley, CA: University of California Press, 1986), 280-81. 75 Letter from Manila to Honolulu, 27 November 1933, BMA 239/18:22. 76 Chen Zhaoyu, Guangdong tangye, 10-11. 77 Ibid., 25. 78 Xian, “Guangdong shengying,” 147-49. Working as a teacher in northern China during the period of the Cultural Revolution, Feng Rui’s younger daughter endured harsh denunciations because her father allegedly must have accepted large sums of money from foreign firms. Personal communication from Feng Puzheng, November 2003. 79 Letter from Manila to Hong Kong, 27 November 1933, 3, BMA 239/18:22, and letter from Hong Kong to Manila, 27 March, 1935, 2, BMA 239/130:4. 80 Hong Kong to London, 20 April 1934, 2, Hong Kong Shanghai Bank Group Archives, London (HSBG), SHG 736.4.

270 Notes to pages 116-25

81 Chen Zhaoyu addressed charges that her husband received kickbacks, claiming that the signatures on documents in her possession showed that he was not a main party to the agreements to purchase milling equipment. See Chen, Guangdong tangye, 31. 82 Xian Zi’en, “Chen Jitang ban tangchang jingguo” [The story of Chen Jitang’s investment in sugar milling], Guangdong wenshi ziliao [Materials on the culture and history of Guangdong] 11 (1963): 107-30. 83 Ibid., 110. Experienced workers from the Dutch East Indies also found jobs in Guangdong’s new mills. See Knight, “Exogenous Colonialism: Java Sugar between Nippon and Taikoo before and during the Interwar Depression, c. 1920-1940,” Modern Asian Studies 44.3 (May 2010): 498. 84 Zhou Dayao was another expert lured from Shanghai. Zhou had served as the Customs’ sugar chemist before joining the sugar-milling program in Guangdong as a factory manager. 85 Letter from Hong Kong to Honolulu, 27 March 1935, 1, BMA 239/130:4. 86 Letter from Feng to Henderson, 20 December 1933, 1, BMA 239/18:22. 87 Letter from Henderson to Manila, 28 December 1933, 1-2, BMA 239/130:4. 88 Henderson to Manila, 29 December 1933, 2, BMA 239/130:2. 89 Letter from Hong Kong to Honolulu, 27 March 1935, 1, BMA 239/130:4. 90 Letter from Ehrhardt to the Bank of Guangdong, 15 May 1935, 1-2, BMA 239/130:4. 91 Letter from Hall to T.H. Davies in Manila, 20 June 1935, 1-2, BMA 239/130:4. 92 Letter from Hong Kong to Manila, 27 March 1935, 1-2, BMA 239:130/4. 93 Letter from Hong Kong to Manila, 1 July 1935, 1-3, BMA 239/130:2. 94 Letter from Davies to Manila, 12 March 1935, 3, BMA 239/130:4. 95 Telegram from Hong Kong to Manila, 20 June 1935, BMA 239/130:4. 96 Letter from Hong Kong to Manila, 28 June 1935, 1, BMA 239/130:4. 97 Feng Rui report of 14 March 1936, GPA 4 (5) 83: 37-38. 98 Letter from Davies in Honolulu to Henderson in Manila, 8 July 1935, 1, BMA 239/130:2. 99 Arnold, “Market in South China,” 10-11. 100 Letter from Guangzhou to Shanghai, 30 November 1936, GPA, Customs papers, folder 1825, 19. 101 Report for 1-15 March 1936, 1-2, MCA 679/32416. 102 Ibid. 103 Qunsheng bao (QS), 27 July 1936, sheet 2, 2. 104 New York Times (NYT), 28 June 1933, 36; and 3 January 1936, 39. Chapter 5: Bitter Experiences with Sugarcane, 1934-36 1 Huazi ribao (HZ) [Chinese Mail], 10 September 1936, sheet 2, 2. 2 Qunsheng bao (QS) [Popular Voice], 8 December 1935, sheet 2, 2. 3 Criticisms of such tendencies appeared earlier as well, for instance in Zhongyang ribao (ZY), 20 May 1936, sheet 2 page 2. 4 Feng Rui, “Fuxing Guangdong tangzhe shiye jihua” [Plan for the revival of sugar and sugarcane production in Guangdong], Guanggdong jianshe yuekan [Guangdong Reconstruction Monthly], special issue on agriculture and forestry, 1.8 (30 June 1933): 131-33. 5 James E. Boyle, Agricultural Economics (Philadelphia: J.B. Lippincott, 1921), 130-37. 6 Xian Zi’en, “Ban tangchang jingguo jiqi zhenxiang” [The process of operating sugar mills and the true situation], in Nantian suiyue: Chen Jitang zhu Yue shiqi jianwen shilu [Era of the Southern Empire: Eyewitness historical accounts of the period of Chen Jitang’s Rule in Guangdong], ed. Guangzhoushi zhengxie wenshi ziliao yanjiu weiyuanhui [Committee for historical research materials of the Guangzhou branch of the Chinese People’s Political

Notes to pages 125-30 271

7 8

9

10 11

12

13 14 15

16 17

18 19 20 21 22

23

Consultative Conference], 257 (Guangzhou: Guangdong renmin chubanshe, 1987); Francis Maxwell, Economic Aspects of Cane Sugar Production (London: Norman Rodgers, 1927), ch. 2. Liu Guangding, “Ganzhe zhitangde jiantao” [Review of sugarcane milling], handwritten essay, n.d., Guangdong Provincial Archives (GPA) 19(3) 140: 102. Robert L. Pendleton, “A Reconnaissance Soil Survey of a Portion of Kwangtung Province (China),” Soil Bulletin 6 (Nanjing: The National Geological Survey of China, 1933): 1-4. Pendleton returned to the United States with 499 photographs taken in Guangdong, collected in “A Reconnaissance Soil Survey of Kwangtung Province,” manuscript with photographs, 1933, US National Agricultural Library, Maryland. Guangdong minzhengting [Guangdong Department of Civil Affairs], ed., Guangdong difang jiyao [Essentials of local conditions in Guangdong], 3 vols. (Guangzhou: Department of Civil Affairs, 1934). Ideal conditions are described by F.S. Earle, Sugar Cane and Its Culture (London: John Wiley and Sons, 1928), 191-92. Deng Zhiyi, ed., Panyu, Zengcheng, Dongguan, Xiangshan tangye diaocha baogaoshu [Report on a survey of sugar production in Panyu, Zengcheng, Dongguan, and Xiangshan Counties] (Guangzhou: National Zhongshan University, 1923), 3-4. Tan Yingbin, “Tangye tongzhi zhi guanjie” [Key points about the sugar monopoly], in Zhetang zhuankan [Special publication on cane sugar], ed. Guangdong shengying zhetang yingyunshang lianhe banshichu [Joint office of the Guangdong provincial sugar distribution merchants], 10-13 (Guangzhou: Guangdong jiansheting, December 1934). Feng Rui, A Brief Report on Modern Sugar Industry Development in Kwangtung (Guangzhou: Department of Reconstruction, November 1934), 2. Honolulu Iron Works, “Possibilities of Sugar Production in Kwangtung Province,” draft prospectus, 1933, 3, Bishop Museum Archives (BMA), 239/18:22. Li Hui-lin, trans., Nan-fang ts’ao-mu [Fourth century flora of Southeast Asia] (Hong Kong: Chinese University Press, 1979), 55-59; Sucheta Mazumdar, Sugar and Society in China: Peasants, Technology, and the World Market (Cambridge, MA: Asia Center Publications, Harvard University, 1998), 107-8, 357. “A Study of the Sugar Industry in China,” Chinese Economic Journal (CEJ) 1.9 (1927): 86683; and 1.11 (1927): 963-79. “Fruit Cultivation in Guangdong,” CEJ 18.5 (May 1936): 716-25; Guangdongsheng difang shizhi bianzuan weiyuanhui [Guangdong provincial historical gazetteer compilation committee], ed., Guangdong shengzhi: Nongye zhi [Guangdong provincial gazetteer: Agriculture] (Guangzhou: Guangdong renmin chubanshe, 2002), 170-71; Christian Daniels, Agro-Industries: Sugarcane Technology, vol. 6.3 of Joseph Needham, ed., Science and Civilization in China (New York: Cambridge University Press, 1996), 53-59. Feng Rui, A Brief Report, 6. Ibid., 3. “Sugar Manufacturing Enterprises in Guangdong,” Chinese Economic Bulletin 27.16 (October 1935): 237. Feng, “Fuxing Guangdong,” 130. Feng Rui, “Guangdong tangye shiye sannian jihua” [Guangdong’s three-year plan for the development of the sugar industry], Guangdong jianshe yuekan [Guangdong Reconstruction Monthly] 2.2 (March 1934): 84-85. Quoted in Julean Arnold, “Market in South China for American Sugar Machinery,” 26 June 1935, enclosure to Horace H. Smith, Conditions in the South China Sugar Industry of Interest in Connection with Possible Exports of American Machinery and Capital, voluntary

272 Notes to pages 130-34

24

25

26 27

28 29

30 31 32 33 34

35 36 37 38 39 40 41 42 43 44

report by United States consul, Guangzhou, 1935, 9, 13, Consular Records, Canton (CRC)/1935.869.11. Feng, “Fuxing Guangdong,” 2. It was rumoured that in 1934 a boatload of smuggled sugarcane cuttings en route from Taiwan to Guangdong was sunk by a Japanese destroyer. See Julean Arnold, “Market in South China,” 20; Chen Zhaoyu, Guangdong tangye yu Feng Rui [Guangdong’s sugar industry and Feng Rui], 24 (Hong Kong: Chen Zhaoyu, 1937). Feng, “Fuxing Guangdong,” 3. He also reported the development of new varieties in Feng Rui, “Fuxingzhongde Guangdong tangye” (Guangdong’s Sugar Industry in Revival), Jianshe 1 (January 1936): 93-97. The soil requirements of cane varieties vary greatly, with potential for great increases in yields through careful selection; see Earle, Sugar Cane, 193-97. Feng, “Fuxing Guangdong,” 4. Feng Rui, “Qianyan” [Preface], in Guangzhou sanjiaozhou zhi ganzhe caipei [Sugarcane cultivation in the Guangzhou delta region], no editor, 2-3 (Guangzhou: Guangdongsheng zhengfu, 1935). A critical article appeared in Minguo ribao (MG) [Nationalist Daily], Guangzhou edition 23 May 1934, sheet 2, 3. Feng Rui, “Jieshi bensheng fuxing tangye jihua zhi yaozhi” [An explanation of the principles of the Guangdong Sugar Industry Revival Plan], Nongye tuiguang [Agricultural Extension] 3-4 (April 1934): 1-2. Miriam S. Farley, “Sugar: A Commodity in Chaos,” Far Eastern Survey 4.22 (6 November 1935): 173. Feng Rui, “Fuxingzhong zhi Guangdong zhetang shiye” [Guangdong’s sugarcane industry in revival] Zhongguo jianshe [China’s Reconstruction] 13.1 (January 1936): 87. Chen, Guangdong tangye, 37; Letter from the Jieyang factory manager to a seedling supplier, 13 February 1936, GPA 19(3) 99: 106. Earle, Sugar Cane, 17-28. The crop improvement program at Yong’an Yuan introduced high-yielding and disease resistant sugarcane varieties developed in the Dutch East Indies, called Proefstation Oost Java (POJ) 2878 and 2883, which became the most important of the varieties cultivated in Guangdong after 1949. Credit for introducing these is given to Feng Rui by Xian, “Ban tangchang jingguo,” 257. Nathaniel Jackendoff, “The Development of the Philippines Sugar Industry” (MA thesis, Department of Economics, University of Illinois, 1939), 34-35. Herbert S. Walker, The Sugar Industry in the Island of Negros (Manila: Bureau of Science, Philippines Department of the Interior 1910), 126. Report of 8 June 1935, 15, CRC/1935.893.00. Feng, “Fuxing Guangdong,” 134. Feng Rui, “Guangdong tangzhe shiye,” 93. John A. Larkin, Sugar and the Origins of Modern Philippine Society (Berkeley, CA: University of California Press, 1993), 147-200. The text of the regulations governing the contracts is included in Chen, Guangdong tangye, 47-51. Xian, “Ban tangchang jingguo,” 259. Copies survive in the Guangdong Provincial Archives. See GPA 19(3) 44: 313-29. The G$90 was reported by D.C. Dunham, “The Influence of American Education in South China,” 1935, 28, CRC/1935.842/850.1. In another place, however, Feng gives this same figure for the market value of 100 or more dan, not as net earnings for the cane grower; see Feng, “Fuxing Guangdong,” 5.

Notes to pages 134-39 273

45 46 47 48

49

50

51

52 53

54 55 56 57

58

59

60

61 62 63

64

Xian, “Ban tangchang jingguo,” 259. Chen, Guangdong tangye, letters section, 9 (undated). On the five contract-related problems, see ibid., 45-47. Xian, “Ban tangchang jingguo,” 259. This fits with the analysis of the cooperative movement in John Fitzgerald, “Warlords, Bullies, and State-Building in Nationalist China: The Guangdong Cooperative Movement, 1932-1936,” Modern China 23.4 (1997): 420-58. Xian Zi’en, “Chen Jitang ban tangchang jingguo” [The story of Chen Jitang’s investment in sugar milling], Guangzhou wenshi ziliao [Materials on the culture and history of Guangzhou ] 16 (1965), 188. Ms. Ling’s descendants do not know her given name. Feng’s survey conducted with Yung Ping-hang in 1925 described female moneylenders as typical in the area. See Feng Rui and Yung Ping-hang, “A General Descriptive Survey of the Honan Island Village Community,” Lingnan Science Journal 10.2-3 (1931): 162. Feng Rui, Guangdong nonglin jianshe zhengce ji yinianlai shishi zhi zhuangkuang [Guangdong’s policies of reconstruction in agriculture and forestry and their implementation during the past year] (Guangzhou: Guangdong nonglinju, 1933), 11. Feng emphasized cooperative efforts in sugarcane to Donald C. Dunham. See Dunham, “Influence of American Education,” 23. Fitzgerald, “Warlords, Bullies, and State-Building,” 448-51; “Notes on the Rural Cooperatives by an Ex-Magistrate” and “The Experiences of a District Director of Cooperatives,” both Institute of Pacific Relations, Agrarian China: Selected Source Materials from Chinese Authors, 207-11 and 211-16 (Chicago: University of Chicago Press, 1938). Feng Rui, quoted in Chen, Guangdong tangye, 26. Feng, “Fuxing Guangdong,” 132. North China Daily News (NCDN), May 1, 1935, 5. Frederick Hinke, “Business Conditions and Probable Trade Trends in the Swatow Consular District,” 24 September 1934, 11. United States Consular Records, Swatow [Shantou] (CRS) 693.001/332, box 3586. Feng Rui, “Mianjiu woguo nongcun jingji bengkui zhi juti banfa” [Concrete measures to rescue China’s collapsed village economy], Nanda jingji [Lingnan University Economic Studies] 2.2 (June 1933): 6. Chen Jitang, “Xinli gaizao” [On converting attitudes], speech of July 1934, in Chen Jitang yanjiu shiliao, 1928-1936 [Historical materials on Chen Jitang, 1928-1936], ed. Guangdongsheng dang’anguan [Guangdong provincial archives], 245 (Guangzhou: Guangdongsheng dang’anguan, 1985). Feng, “Jieshi bensheng,” 1-2; Feng Rui, “Yi bensheng fuxing tangye zhi yaozhi” [Essential points in discussion of Guangdong’s sugar industry revival], in Zhetang zhuankan [Special publication on cane sugar], ed. Guangdong shengying zhetang yingyunshang lianhe banshichu, 5-9 (Guangzhou: Guangdong jiansheting, December 1934). Arnold, “Market in South China,” 14. Xian, “Ban tangchang jingguo,” 259-60. Li Jiezhi, “Guanyu Guangdong tangye qiyejia Feng Rui zhi si” [On the death of Feng Rui, Guangdong’s sugar industrialist], in Li Jiezhi zhi wencun [Manuscripts by Li Jiezhi], vol. 2, ed. Xingning County Historical Committee, 40 (Guangzhou: Xingning County Historical Committee, 1990). Qunsheng bao (QS) [Popular Voice], 25 September 1936, sheet 2, 2. Chen Zhaoyu also mentioned the brother-in-law, stating that Feng planned to replace him; see Chen, Guangdong tangye, letters section, 8 (undated).

274 Notes to pages 140-46

65 Feng Rui, “Guangdong fuxing tangye zhi jingguo shulue” [Discussion of the revival of the sugar industry in Guangdong], Xianggang Huashang zonghui yuekan [Hong Kong Chinese Chamber of Commerce Monthly] 1.5 (January 1935): 5. 66 Ibid., 4. 67 For illustrations of the old mills, see R. Hommel, China at Work (1937; reprint, Cambridge, MA: MIT Press, 1969), 113-14. For details on their production processes, see Sucheta Mazumdar, Sugar and Society, 177-91, 381-82. 68 Liu, “Ganzhe zhitangde jiantao,” 93. 69 Feng Rui, “Fuxingzhongde Guangdong tangye,” 99. 70 Feng, “Fuxing Guangdong,” 129. 71 Frederick Hinke, “Business Conditions and Probable Trade Trends in the Swatow Consular District,” 24 September 1934, 19, CRS/693.001/332, box 3586. Hinke attributed the phenomenon to abundant supplies of smuggled imports in the area. 72 “Tutang canshou yayi” [Local sugar under disastrous pressure], Shenbao (SB), 23 December 1934, 10. 73 By comparison, the per-capita sugar consumption in the United States at the time was 104 pounds a year. See United States Department of Agriculture, Yearbook of the United States Department of Agriculture, 1923 (Washington, DC: US Government Printing Office, 1924), 800-7. 74 Letter from Ehrhardt to Horace Smith, 19 July 1935, 6, enclosure in Smith, Conditions, 6. For an illuminating discussion of sugar in Chinese diets, see Daniels, 51-87. 75 Chen, Guangdong tangye, 24. 76 Larkin, Sugar and the Origins, 57-58. 77 Y. Nagano, “The Oligopolistic Structure of the Philippine Sugar Industry during the Great Depression,” in The World Sugar Economy in War and Depression, 1914-1940, ed. Bill Albert and Adrian Graves, 179-81 (London: Routledge, 1983). 78 Records were kept on payments by the Jieyang mill for leased land. See GPA 19(3) 82. The mill’s sugarcane department made efforts in March 1936 to expand the land area under control of the mill, sending letters to county heads in the surrounding area enquiring about land for sale. GPA 19(3) 74. 79 QS, 25 September 1936, sheet 2, 2. 80 Report from Jieyang to Guangzhou, GPA 19(3) 74: 116-21. 81 Ibid., 139-40. 82 Letter from the Jieyang mill to the Jieyang county head, 11 October 1935, GPA 19(3) 55: 49-50. 83 Chen, Guangdong tangye, 33-34. 84 Rubie Watson, Inequality among Brothers: Class and Kinship in South China (Cambridge, UK: Cambridge University Press, 1985), 56-59. 85 Letter from the Jieyang county head to the Jieyang mill, 18 May 1935, GPA 19(3) 55: 67-68. 86 Letter from Guangzhou to Jieyang, GPA 19(3) 55: 42-43. 87 Letter from the Jieyang mill to Guangzhou, GPA 19(3) 74: 155. 88 GPA 19(3) 74: 170. 89 Chen, Guangdong tangye, “Feng Rui yimo” [The letters of Feng Rui] letters section, 8-9 (undated). 90 HZ, 10 September 1936, sheet 2, 2. 91 Chen, Guangdong tangye, letters section, 8-9 (undated). 92 Chen Jitang, “Dui xian zhengzhi zhi ganxiang” [Thoughts on current political affairs], in Chen Jitang yanjiu shiliao, 332-35.

Notes to pages 147-54 275

93 Personal communications from Xian Zi’en and managers at the Shitou and Dongguan mills, 1992. 94 QS, 10 September 1936, sheet 1, 3. Chapter 6: Brokers, Smugglers, and the Official Sugar Monopoly, 1934-36 1 Guangdong shengzhengfu gongbao [Guangdong Government Gazette], no. 261 (10 June 1934): 123-27; Shenbao (SB), 5 June 1934, sheet 2, 3. For the regulations, see “Gongpai” [Public Announcements], in Zhetang zhuankan [Special publication on cane sugar], ed. Guangdong shengying zhetang yingyunshang lianhe banshichu [Joint office of the Guangdong provincial sugar distribution merchants], 19 (Guangzhou: Guangdong jiansheting, December 1934). 2 Charles Drage, Taikoo (London: Constable, 1970), 68; G. Roger Knight, “Exogenous Colonialism: Java Sugar between Nippon and Taikoo before and during the Interwar Depression, c. 1920-1940,” Modern Asian Studies 44.3 (May 2010): 508-10. 3 “Huiyi lu” [Minutes of meetings] section, in Guangdong shengying zhetang yingyunshang lianhe banshichu, ed., Zhetang zhuankan, 1-57. 4 Feng Rui, “Yi bensheng fuxing tangye zhi yaozhi” [Essential points in discussion of Guangdong’s sugar industry revival], in “Lunwen” [Essays] section, ed. Guangdong shengying zhetang yingyunshang lianhe banshichu, Zhetang zhuankan, 5-6. 5 Feng Rui, “Jieshi bensheng fuxing tangye jihua zhi yaozhi” [An explanation of the principles of the Guangdong Sugar Industry Revival Plan], Nongye tuiguang [Agricultural Extension] 3-4 (April 1934): 3; Feng Rui, “Guangdong tangye fuxing yu jingji jianshe” [Revival of the Guangdong sugar industry and economic reconstruction], Nanda jingji [Lingnan University Economic Studies] 3.1 (January 1934): 5. 6 Chen Zhaoyu, Guangdong tangye yu Feng Rui [Guangdong’s sugar industry and Feng Rui] (Hong Kong: Chen Zhaoyu, 1937), 55-57. 7 Report for 16-31 July 1934, 1, Maritime Customs Archive (MCA) 679/32416. 8 Report for 1-15 June 1934, 2, MCA 679/32416. 9 “Huiyi lu,” section in Guangdong shengying zhetang yingyunshang lianhe banshichu, ed., Zhetang zhuankan, 45-48. 10 Report for 1-15 May 1935, 1-2, MCA 679/32416. 11 “Gongpai” section, in Guangdong shengying zhetang yingyunshang lianhe banshichu, ed., Zhetang zhuankan, 28-31. 12 “Tongxun” [Correspondence], in ibid., 148-54. 13 Ibid., 135, 138-39. 14 “Tutang canshou yayi” [Local sugar under disastrous pressure], SB, 23 December 1934, sheet 3, 2. 15 Feng Rui, “Guangdong fuxing tangye zhi jingguo shulue” [Discussion of the revival of the sugar industry in Guangdong], Xianggang Huashang zonghui yuekan [Hong Kong Chinese Chamber of Commerce Monthly] (January 1935): 4-5. 16 “Gongpai” section, in Guangdong shengying zhetang yingyunshang lianhe banshichu, ed., Zhetang zhuankan (21 June 1934): 47-48. Feng Rui mentioned the death penalty for government officials guilty of smuggling to Donald Dunham; see D.C. Dunham, “The Influence of American Education in South China,” 1935, 27, CRC/1935.842/850.1. 17 “Gongpai” in Guangdong shengying zhetang yingyunshang lianhe banshichu, ed., Zhetang zhuankan, 1-2. 18 Ibid., 44-48. 19 “Gongpai,” in Guangdong shengying zhetang yingyunshang lianhe banshichu, ed., Zhetang zhuankan, 12-14.

276 Notes to pages 154-58

20 “Gongpai” [Public Announcements], in Guangdong shengying zhetang yingyunshang lianhe banshichu, ed., Zhetang zhuankan (instructions of 25 October 1934), 115. 21 Lian Bingsang, “Wo zai Shiqi jihuo sitang jingguo” [How I seized smuggled sugar at Shiqi], Guangzhou wenshi ziliao [Sources on the culture and history of Guangzhou] 16 (1965): 140-41. 22 Feng Rui, “Guangdong fuxing tangye, 4-5. 23 Ibid,” 4. 24 “Up-Country Selling Organization, 1924-1929,” School of Oriental and African Studies Archives, Swire Papers, Taikoo Sugar Refinery (TSR) folder JSSV/6. On the refinery’s marketing system, see also Drage, Taikoo, 197. 25 Mo Yinggui, “Yingshang Taigu yanghang jinbainian zai Huanan yewu huodong yu Moshi jiazu de guanxi” [Activities of the British merchant firm Butterfield and Swire in South China and relations with the Mo Family during the past century] (1965), Guangdong wenshi ziliao [Materials on the culture and history of Guangdong] 44 (1985): 77-181. 26 Ibid, 130-42. 27 Zheng Shougen, “Juanguan juanshang huotong keshou yu lezha” [Harsh demands and extortion by official and merchant tax collectors in collusion], Guangzhou wenshi ziliao [Materials on the culture and history of Guangzhou] 16 (1965): 126-32. 28 Ibid., 131. 29 Mo, “Yingshang Taigu,” 134-35. 30 Ibid., 133-35. According to Qin Qingjun, Yuan Dai was a former bandit; see Qin Qingjun, “Minguo shiqi Guangdong caizheng shiliao, 1911-1949” [Historical materials on Guangdong’s fiscal systems during the Republican period, 1911-1949], Guangzhou wenshi ziliao 29 (1983): 48-49. He is referred to as a “local boss” in Helen Siu, “The Grounding of Cosmopolitans: Merchants and Local Culture in Guangdong,” in Becoming Chinese: Passages to Modernity and Beyond, ed. Yeh Wen-hsin, 211 (Berkeley, CA: University of California Press, 2000). 31 Mo, “Yingshang Taigu,” 135-36. 32 Ibid., 123. 33 Ibid., 120. 34 Mo Yinggui, “Xuyan” [Supplementary words], in ZT, 1-2. 35 Frederick Maze, “Preface,” in China’s Customs Revenue since the Revolution of 1911, 3rd ed., Stanley F. Wright, iv (Shanghai: Inspectorate General of Customs, 1935). 36 North China Daily News (NCDN), 19 October 1933, 9; Stanley F. Wright, China’s Struggle for Tariff Autonomy (Shanghai: China Maritime Customs, 1938), 671-72; Mo, “Yingshang Taigu,” 137. 37 Frederick Maze, inspector general of the MCA, commented optimistically on Chen Jitang’s “desire to stop the smuggling”; in a letter to Little, 30 September 1933, MCA 679/2773. 38 On Chen Ce, see Ye Yunsheng and Ye Baiheng, eds., Guangdong difang mingren lu [Directory of Well-Known Persons in Guangdong], 8 (Guangzhou: Guangdong xinwen chubanshe, 1948); Xiao Zili, Chen Jitang (Guangzhou: Guangdong renmin chubanshe, 2001), 58, 121-25. 39 “Stupendous Expenditures for Military Purposes,” China Weekly Review (CWR), 7 October 1933, 256-57. 40 SB, 5 September 1936, sheet 4, 2; Zhongyang ribao (ZY) [Central Daily News], 28 July 1936, sheet 3, 1. 41 Dispatch 142, 21 September 1932, 16. CRC/800, Political Reports, 1932. 42 SB, 20 June 1934, sheet 3, 1.

Notes to pages 158-66 277

43 Letter from Little to Maze, 21 February 1936, 2, MCA 679/32396. 44 Chen Boren et al., “Caizheng he shuijuan” [Government revenue and taxes], in Nantian suiyue: Chen Jitang zhu Yue shiqi jianwen shilu [Era of the Southern Empire: Eyewitness accounts of Chen Jitang’s Rule in Guangdong], ed. Guangzhoushi zhengxie wenshi ziliao yanjiu weiyuanhui [Committee for historical research materials of the Guangzhou branch of the Chinese People’s Political Consultative Conference], 294-305 (Guangzhou: Guangzhou wenshi ziliao yanjiu weiyuanhui, 1987). 45 Memo from Jiangmen to Shanghai, 28 December 1933, MCA 679/27773. 46 Wright, China’s Struggle, 671. 47 NCDN, 31 December 1934, 5, 7. The incident was not reported earlier or in other papers. 48 At this time the Maritime Customs Administration was a bureau under the Ministry of Finance, and the inspector general was its chief executive. See Stanley F. Wright, China’s Struggle for Tariff Autonomy (Shanghai: China Maritime Customs), 493-94. 49 Letter from Lawford to Guangzhou, 30 November 1934, MCA 679/28072. 50 Memo from the Preventive Service, 10 January 1935, 1, MCA 679/28072. 51 Letter from Lawford to Guangzhou, 30 November 1934, 1-2, MCA 679/29072; Telegram from Lawford to Guangzhou, 1 December 1934, MCA 679/29072. 52 Letter from Lawford to Guangzhou, 30 November 1934, 2, MCA 679/29072. 53 Mo, “Yingshang Taigu,” 137. 54 Ibid., 120. 55 Zheng, “Juanguan juanshang,” 129. 56 TSR managers knew that some of the sugar delivered to the Huangpu harbour, below Guangzhou, was then sent to Shantou; letter from Hong Kong to London, 20 July 1934, TSR box 25(a), no. 16. 57 Mo, “Yingshang Taigu,” 136-37. 58 “Guize” [Regulations] section, Guangdong shengying zhetang yingyunshang lianhe banshichu, ed., Zhetang zhuankan, 47-48. 59 Mo, “Yingshang Taigu,” 137. 60 According to the US Consul in Guangzhou, Guangdong’s Commissioner of Finance was a “henchman” of Chen Weizhou. Dispatch 142, 21 September 1932, 16. CRC/800, Political Reports, 1932. 61 Report for 1-15 May 1935, 1, MCA 679/32416. 62 Report for 1-15 March 1935, 2, MCA 679/32416. 63 Report from Guangzhou to Shanghai, 19 May 1934, 1-2, MCA 679/28345. 64 Ibid., 3. 65 Feng Rui, A Brief Report on Modern Sugar Industry Development in Kwangtung (Guangzhou: Department of Reconstruction, November 1934), 8. 66 Report from Guangzhou to Hong Kong, 10 March 1934, 2, TSR box 25, no. 69a. 67 Letter from Hong Kong to London, 14 March 1934, 2, TSR box 25, no. 69a. 68 Ibid., 2 69 Ibid., 1. 70 Letter from Hong Kong to London, 27 April 1934, 1, TSR box 25, no. 66. 71 Political report for August 1934, 9, CRC/1934.893.00. 72 Report for 1-15 March 1936, 1-2, MCA 679/32416. 73 Mo, “Yingshang Taigu,” 137. 74 Letter from Hong Kong to London, 30 July 1934, 1-2, TSR box 25(a), no. 16. 75 Letter from Hong Kong to London, 30 July 1934, 1-2, and 3 August 1934, 1, TSR box 25(a), nos. 16-17.

278 Notes to pages 166-72

76 Copy of a letter from Mitchell to Maze, 29 May 1935, 1, in “Sugar,” Correspondence of the Commercial Counsellor’s Office, British Consulate, Shanghai. Foreign Office Records (FO), F0 371/19324. 77 “Sugar Memorandum,” 24 May 1935, 1, enclosure to dispatch from the Commercial Counsellor’s office, British Consulate, Shanghai, to Beiping. FO 371/19324. 78 Mo, “Yingshang Taigu,” 120. 79 Ibid., 120. 80 Report for 1-15 September 1934, 2, MCA 679/32416. 81 Mo, “Yingshang Taigu,” 122. 82 Letter from Manila to Hong Kong, 10 April 1934, 2, T.H. Davies Papers, Bishop Museum Archives (BMA) 239/130:4. 83 Around this time, TSR representatives in Japan reported rumours about Guangdong’s purchases of Cuban sugar. See Memo from Yokahama to Hong Kong, 9 March 1934, 3, TSR box 25(a), no. 31. 84 Letter from Manila to Honolulu, 18 January 1935, 1, BMA, 239/130:4. 85 Tariff secretary’s comments on the arrangements, circulated 4 January 1936, 1-2, MCA 679/18138. 86 Earlier in 1934, Lawford recommended abolition of the interport duties given the high cost of collection and because Guangdong was likely to stop paying them on the grounds that they harmed domestic industry and commerce. See Zhonghua minguoshi dang’an ziliao huibian [Compiled archival materials on the history of Republican China], vol. 5, no 1, part 2, ed. Zhongguo di’er dang’anguan [Second National Archives, China] (Nanjing: Jiangsu guji chubanshe, 1985), 105-8. 87 Guangzhou to Shanghai, 27 October 1934, 1-3, MCA 679/18138. 88 Shanghai to Guangzhou, 11 February 1935, 2, MCA 679/32396; Qunsheng bao (QS) [Popular voice], 12 December 1935, sheet 2, 2. 89 Guangzhou to Shanghai, 20 February 1935, 1, MCA 679/32395. 90 Letter from Hong Kong to Shanghai, 4 April 1934, TSR box 25(a), 14. 91 Kowloon to Shanghai, 8 July 1935, 3-4, MCA 679/32430. 92 Telegram from Guangzhou to Shanghai, 25 May 1935, MCA 679/18138. 93 Tariff secretary’s comments, circulated 4 January 1936, 5, MCA 679/18138. 94 Maze to Little, 29 October 1935, 1-2, MCA 679/32395. 95 Little to Maze, 10 September 1935, 2, MCA 679/32395. Based in Java, the Dutch organization was also known as “NIVAS,” short for Nederlandse Indische Vereniging tot Afzet van Suiker. 96 Tariff secretary’s comments, circulated 4 January 1936, 6, MCA 679/18138. 97 Letter from Little to Maze, 3 August 1935, 4, MCA 679/32395. 98 Letter from Little to Maze, 5 December 1935, 3, MCA 679/32395. 99 QS, 9 December 1935, sheet 2, 1. 100 The topic of a national sugar monopoly will be discussed in Chapter 7. 101 The position of superindendent at a Customs station was at the same level as a commissioner and was always held by a Chinese official. The superintendent mediated between Customs staff and other parts of the government. See Stanley F. Wright, Hart and the Chinese Customs (Belfast: Wm. Mullan, 1950), 264-66. 102 Tang is described as Song Ziwen’s “confidential agent” in “Political Report for August 1935,” 9 September 1935, 11, US Consulate, Guangzhou (CRC) CRC/893.00.92. 103 Little to Maze, 20 August 1935, 2, MCA 679/32395. 104 The photo appeared in Shishi yuebao [Monthly Affairs, Guangzhou] 13.4 (October 1935): 1, and also in Minjian zhoubao [Popular Weekly, Shanghai] 126 (September 1935): 1.

Notes to pages 172-79 279

105 Qunsheng bao (QS) [Popular Voice], 13 September 1936, sheet 3, 2; South China Morning Post (SCMP), 15 September 1936, 12. 106 HZ, 20 June 1936, sheet 4, 1; SB, 3 July 1936, sheet 3, 2. 107 Report for August, 10 September 1935, 18-19, CRC/1936.893; New York Times (NYT), 30 August 1935, 8. 108 Tariff secretary’s comments, circulated 4 January 1936, 3-4, MCA 679/18138. 109 SB, 30 January 1936; sheet 3, 11; 1 March 1936, sheet 3, 12; 16 March 1936, sheet 4, 14; 31 March 1936, sheet 3, 9; 28 April 1936, sheet 3, 11; 22 July 1936, sheet 3, 11. The report of 31 March described Feng Rui and the work of his Bureau of Agriculture and Forestry in favourable terms. 110 T.S. Young, “Feng Rui’s Appeal to the King of Hades,” China Weekly Review, 3 October 1936, 166. 111 Zhongyang ribao (ZY) [Central Daily News] 17 June 1936, sheet 3, 1. 112 Guo Tingyi, ed., Zhonghua minguoshi rizhi [Chronology of the history of Republican China, 1931-37], vol. 3 (Taipei: Academia Sinica, 1984), 594. 113 Chen, Guangdong tangye, letters section, 3 (undated). 114 Telegram from Nanjing to Guangzhou, 19 June 1936, CRC/1936.800. 115 Letter from Shanghai to Guangzhou, 27 February 1933, 1-2. MCA 679/27888. 116 In June 1934, an advisor to Song Ziwen approached representatives of the TSR requesting an estimate of the total volume of sugar smuggled into China annually. TSR staff then gathered data from official and intra-industry sources. The information in Table 6.6 was presented to Song on 21 June 1934. Letter from Hong Kong to Shanghai, 20 June 1934, 1-3, TSR box 25, no. 96. 117 Qunsheng bao (QS) [Popular Voice], 28 July 1936, sheet 2, 2. 118 HZ, 30 July 1936, sheet 2, 4. 119 Minguo ribao [Nationalist Daily], Guangzhou ed., 2 August 1936, sheet 1, 2. 120 QS, 4 August 1936, sheet 2, 2; 5 August 1936, sheet 1, 3; 7 August 1936, sheet 2, 2; 9 August 1936, sheet 1, 2. 121 On Huang Musong (1884-1937), see Xu Youchu, ed., Minguo Renwu Dacidian [Biographical dictionary of Republican China], vol. 2 (Shijiazhuang: Hebei renmin dacidian, 2007), 1618. 122 ZY, 18 August 1936, sheet 1, 3. 123 Chiang was quoted in Guowen zhoubao [National Weekly News] 13.34 (September 1936): 4. 124 NCDN, 31 August 1936, 5. 125 QS, 2 August 1936, sheet 2, 2; Translation of “Summarized account of the measures adopted to reform the financial and budgetary systems of Kwangtung Province and the enforcement of these measures (prepared by T.L.Soong),” Report for August, 1936, CRC/1936.851. 126 QS, 5 September 1936, sheet 1, 2; SB, 9 September 1936, sheet 2, 3. 127 (HZ) [Chinese Mail], 8 September 1936, sheet 3, 4. 128 ZY, 13 September 1936, 13. Chapter 7: National Reunification and the Punishment of Feng Rui 1 Personal communication from Feng Puyu, June 2004. 2 According to Chen Zhaoyu, he returned because of his strong sense of responsibility. Chen Zhaoyu, Guangdong tangye yu Feng Rui [The Guangdong sugar industry and Feng Rui] (Hong Kong: Chen Zhaoyu, 1937), 15. 3 Gongshang ribao (GS) [Industry and Commerce Daily], 12 August 1936, sheet 2, 3. 4 GS, 12 August 1936, sheet 2, 3. 5 Qunsheng bao (QS) [Popular voice], 13 September 1936, sheet 2, 2; South China Morning Post (SCMP), 15 September 1936, 12.

280 Notes to pages 179-84

6 QS, 11 August 1936, sheet 2, 2. 7 Mentioned in Chapter 2, Ling Daoyang (1889-1964) was appointed to replace Feng Rui as director of the Bureau of Agriculture and Forestry. Also educated in the United States, Ling was a prominent forestry expert. Huazi ribao (HZ) [Chinese Mail], 12 August 1936, sheet 4, 1; South China Morning Post (SCMP), 2 September 1936, 13. 8 Minguo ribao [Nationalist Daily], Guangzhou edition, 28 July 1936, sheet 2, 2; 29 July 1936, sheet 2, 2. 9 Report in English, Kuo Min News Agency, newsheet, 27 July 1936, 12-13. The names of the other directors were listed, including Chen Yuanying, director of Guangdong’s Native Products Sales Bureau. 10 On Yang, see Xu Youchun, ed. Minguo Renwu Dacidian [Biographical Dictionary of Republican China], vol. 2 (Shijiazhuang: Hebei renmin chubanshe, 2007), 2135. 11 QS, editorial, 11 September 1936, sheet 2, 1; Feng Ping, “Chen Jitang gouji Meidi yu longduan tangye” [Chen Jitang’s collusion with American imperialism and his monopoly of the sugar industry], Guangzhou wenshi ziliao [Materials on the culture and history of Guangzhou] 2 (1961): 80-81. 12 Chen, Guangdong tangye, 83. 13 William S.H. Hung, Outlines of Modern Chinese Law (1934; reprint, University Publications of America, 1976), 6, Appendix 1. 14 Zhongyang Ribao (ZY) [Central Daily News], 28 September 1936, sheet 2, 3. Chiang’s arrivals to Guangzhou were on 11 August (he then stayed until 23 August) and 5 September 1936. Between these dates he was in Nanchang and Kuling, Jiangxi. 15 QS, 12 August 1936, sheet 1, 2. 16 Li Jiezhi, “Guanyu Feng Rui zhi si, 133.” 17 There were five approaches according to Fan Songfu, “Guanyu Jiang Jieshi jinjun liangguang de huiyi” [Recollections of how Chiang Kaishek moved troops into Guangdong and Guangxi], Guangdong wenshi ziliao [Materials on the culture and history of Guangdong] 73 (1993): 118. The total number of troops was reported in the Japanese newspaper, Asahi Shimbun [Morning News], 3 June 1936, 2. 18 Shenbao (SB), 7 September 1936, sheet 1, 3. K.B. Vaidya, Reflections on the Recent Canton Revolt and After (Guangzhou: National Publishers, 1936), 31. On Chen Bulei’s work, see Daphon Ho, “Night Thoughts of a Hungry Ghost Writer: Chen Bulei and the Life of Service in Republican China,” Modern Chinese Literature and Culture 19.1 (Spring 2007): 1-59. 19 The Central News Agency’s version of the speech appeared in two parts in SB, 10 September 1936, sheet 1, 3; and 11 September 1936, sheet 3, 1. For a brief summary, see Dagongbao (DG) 10 September 1936, 1. 20 North-China Herald, 12 October 1934, 113. 21 Julean Arnold, “Market in South China for American Sugar Machinery,” 26 June 1935, included in Horace H. Smith, Conditions in the South China Sugar Industry of Interest in Connection with Possible Exports of American Machinery and Capital, voluntary report by United States consul, Guangzhou, 1935, 11, Consular Records, Canton (CRC)/1935.869.11. 22 Stanley Wright, China’s Struggle for Tariff Autonomy (Shanghai: China Maritime Customs, 1938), 683-87. 23 The fullest treatment of the topic is Son Juk Sik, Zhanqian Riben zai Huabeide zousi huodong [Japan’s Smuggling Activities in North China before the War] (Taipei: Academia Historica, 1997). 24 For example, the Japanese Minister of Foreign Affairs claimed on 9 June 1936 that the situation in southern China was proof that the smuggling was caused by internal problems; Shenbao (SB), 10 June 1936, sheet 2, 4.

Notes to pages 184-89 281

25 Son Juk Sik, Zhanqian Riben, 92. 26 M.S. Farley, “Sugar: A Commodity in Chaos,” Far Eastern Survey 4.22 (6 November 1935): 174. 27 On Japanese interests in sugar production and the Asian sugar trade, see G.R. Knight, “Exogenous Colonialism: Java Sugar between Nippon and Taikoo before and during the Interwar Depression, c. 1920-1940,” Modern Asian Studies 44.3 (May 2010): 484-93. 28 Chang Chi-hsien, ed., The Chinese Year Book, 1937 (Nanjing: Council of International Affairs, 1937), 680-85; “Chinese death penalty for smuggling,” Times, 22 May 1936, 13. 29 Report from Guangzhou to Shanghai, 19 May 1934, 2. China Maritime Customs Archive (MCA) 679/28345. 30 Chang, ed., Chinese Year Book, 681. 31 NYT, 20 July 1936, 1; K.B. Vaidya, Reflections on the Recent Canton Revolt and After (Guangzhou: National Publishers, 1936), 41. 32 According to a news report after Feng’s execution, however, Yu Hanmou received Chiang’s approval of a death sentence on 3 August 1936, before Feng Rui was arrested. ZY, 14 September 1936, sheet 4, 3. 33 See, for example, “Guangdong zheng fubai: Feng Rui zuo qiangsi” [Guangdong Prosecutes Corruption: Feng Rui Shot Yesterday], DG, 10 September 1936, sheet 2, 1. 34 Li Jiezhi, “Guanyu Feng Rui zhi si” [On the death of Feng Rui]: 130-34; and Li, “Guanyu Guangdong tangye qiyejia Feng Rui zhi si” [On the death of Feng Rui, Guangdong’s sugar industrialist], in Li Jiezhi wencun [Manuscripts by Li Jiezhi], vol. 2, ed. Xingning County Historical Committee, 39-43 (Guangzhou: Xingning County Historical Committee, 1990). 35 See, for example, “On Jinmen,” one of the selections from Mao Dun’s volume included in “X’s sugar, matches and gasoline have poured into Jinmen in large volume.” One Day in China also demonstrates popular associations between the term hanjian and Japan in 1936. 36 The following five paragraphs are based on “Chu¯goku sato¯” [sugar in China], in Kakkoku senbai kankei zakken [Miscellaneous files on relations with monopolies in various countries], January to June 1935, Diplomatic Record Office, Ministry of Foreign Affairs, E100/1-3-2. 37 On Huang (Oie Kan Tjawn), see Knight, “Exogenous Imperialism,” 491-92 and 498. His rivals at the Taikoo Sugar Refinery (TSR) considered Huang likely to attempt to monopolize the importations of white sugar into southern China. Letter from Hong Kong to London, 30 July 1934, 2-3, Swire Papers, TSR box 25(b), no. 16. 38 Reports appeared in SB, 26 May 1935, sheet 3, 4; and North-China Daily News (NCDN), 28 May 1935, 10. For a clipping on the plan from Shanghai xinwen bao [Shanghai Evening News], 5 May 1935, see Chen Zhaoyu, Guangdong tangye yu Feng Rui [Guangdong’s sugar industry and Feng Rui] (Hong Kong: Chen Zhaoyu, 1937), 56. 39 On Chen Gongbo’s policies, see Margherita Zanasi, Saving the Nation: Economic Modernity in Republican China (Chicago: University of Chicago Press, 2005), 76-77, 84. For Chen’s views on regional economic control, see his “Geju tongzhi jingji” [Separatist economic control], in Minzu [The Nation] 2.9 (1934): 1285-91. Chen left office in February 1936. 40 Letter to Chen Gongbo from the Jincheng Bank, 1935, 1, Shanghai Municipal Archives(SMA) digital document, Q264-1-1345.18. 41 Kuo Min News Agency, newsheet, 27 July 1936, 12-13. The names of the other directors were listed, including Chen Yuanying, director of Guangdong’s Native Products Sales Bureau. 42 NCDN, 29 July 1936, 10.

282 Notes to pages 189-94

43 44 45 46 47 48 49 50 51 52 53 54 55 56 57

58 59 60

61 62 63 64

65 66

67

HZ, 27 June 1936, sheet 2, 1. GS, 3 July 1936, sheet 2, 2. QS, 8 August 1936, sheet 2, 2. “Zai qing chexiao Yuesheng tangye tongzhi” [Hong Kong merchants’ petition again for abolition of the Guangdong sugar monopoly], HZ, 12 August 1936, sheet 3, 2. “Protest of Southwest Aviation Corp. against Award of Canton-Hanoi Air Line Franchise to China National Aviation Corporation,” 27 April 1936, 1-2, CRC/1936.879.6. Political report for April and March, 1-2, CRC/1936.893. Consular report on taxation in Guangdong, 16-17, CRC.1935.851.2. Edward R. Slack Jr., Opium, State, and Society: China’s Narco-Economy and the Guomindang, 1924-1937 (Honolulu: University of Hawaii Press, 2001), 142-46. Report for 1-15 May 1935, 1, and Report for 16-31 May 1935, 1, MCA 679/32416. Ibid., 134. Xiao Zili, Chen Jitang, 163. Telegrams from Guangzhou to Washington, 19 June and 3 July 1936, CRC/1936.800. For details, see Xiao Zili, Chen Jitang, 442-51. SCMP, 15 September 1936, 12. Zheng Shougen, “Juanguan juanshang huotong keshou yu lezha” [Harsh demands and extortion by official and merchant tax collectors in collusion], Guangzhou wenshi ziliao [Materials on the culture and history of Guangzhou] 16 (1965): 127, 131. Dispatches of 20 November and 21 November 1936, CRC/1936.869.2-11. Translation of “Amended Regulations Concerning the System of Official Control of the Sugar Industry in Guangdong,” November 1936, 1-4, CRC/1936.860.2. “Agricultural Conditions during September 1936,” 10 October 1936, 4, CRC/1936.861. The firm is called Kang Wang in this report. For confirmation of the leases by Kian Gwan, see Knight, “Exogenous Imperialism,” 498. Chen, Guangdong tangye, 79-82. “Feng Rui Made Fortune in Rice and Sugar, but Wolfram Deal Angered Warlord, Spelled Doom,” China Weekly Review, 26 September 1936, 120. William C. Kirby, Germany and Republican China (Stanford, CA: Stanford University Press, 1984), 131-32. Wu Jianwu, “Gannan wukuang zai fandong tongzhi shiqi yige cangcan shi” [The Bleak history of tungsten mining in southern Jiangxi during the period of reactionary monopoly control], Guangzhou wenshi ziliao [Materials on the literature and history of Guangzhou] 16 (1965): 81-93. On rising prices and sales of tungsten through Guangzhou to Germany, see Kirby, Germany and Republican China, 127-33. “Report for 1935,” 10 February 1936, 4, Guangdong Provincial Archives (GPA), Customs folders, folder 94 (1) 2214. On competition over tungsten, see also Xiao Zili, “Minguo zhengfu wusha tongzhide changshi yu queli” [The Republican government’s attempted and successful establishment of a tungsten monopoly], Lishi yanjiu [Historical Research] 1 (2008): 107-25; and reports on the Ministry of Industry’s attempts to control tungsten mining in Jiangxi, Hunan, and Guangdong, in Zhonghua minguoshi dang’an ziliao huibian [Edited collection of archival materials on the history of the Republic of China], 5.1, part 6, ed. Zhongguo di’er lishi dang’an guan [China Second National Historical Archives] (Nanjing: Guji chubanshe, 2000), 719-31. “Boom in Arms Trade Aids China’s Tungsten Mines,” New York Times (NYT), 19 April 1935, 11.

Notes to pages 194-97 283

68 Xiao Zili, “Minguo shiqi wusha zousi xianxiang tanxi” [On the phenomenon of tungstenore smuggling during the republican period], Jindaishi yanjiu [Modern History Research] 2005.4: 148-86. 69 Frederick Hinke, “Business Conditions and Probable Trade Trends in the Swatow Consular District,” 24 September 1934, 16, 26, NARA, Consular Records from Swatow (CRS) 693.001/332, box 3586. 70 “Tongxun” [Correspondence] section, Zhetang zhuankan [Special publication on cane sugar], ed. Guangdong shengying zhetang yingyunshang lianhe banshichu, [Joint office of the Guangdong provincial sugar distribution merchants], (Guangzhou: Guangdongsheng jiansheting, December 1934), 119-28. 71 Shaoguanshi dang’anguan[Shaoguan Municipal Archives], ed., Shaoguan da shiji [Record of major events in Shaoguan], vol. 1 (Shaoguan: Shaoguanshi dang’an guan, 1992), 74. 72 According to a report on the discovery of an illicit shipment of tungsten sent from Shaoguan to Guangzhou, tungsten could be purchased for $HK20 per dan in Shaoguan and sold for $HK42 per dan in Hong Kong, SCMP, 21 May 1935, 15. 73 Report for 1-15 May 1935, 2, MCA 679/32416. 74 Report for August 1934, 283, National Archives, UK, FO 61/18048. 75 SCMP, 24 August 1935, 12; QS, 23 September 1935, sheet 2, 4. 76 QS, 14 September 1935, sheet 2, 2. Revised monopoly regulations delegating the control of tungsten purchases and transport to local commanders, were published in Guangzhou shizhengfu gongbao [Guangzhou Government Gazette], 10 June 1935, 25-30. 77 As part of the financial reorganization in Guangdong, Nanjing’s Ministry of Finance appointed a new manager to unify the tungsten business. He assumed his post in the Tungsten Control Branch Office in Guangzhou on 7 September 1936. See SCMP, 9 September 1936, 11. 78 Chen’s departure on 30 August is described in SCMP, 1 September 1936, 12. 79 The encounter possibly occurred on 27 July 1936, when Feng, Tang, and Song were all briefly in Hong Kong, HZ, 27 July 1936, sheet 2, 3. Tang and Song arrived in Hong Kong on 27 July, see SCMP, 29 July 1936, 14. 80 Personal communications from Feng Puzheng and Feng Puyu, November 2003 and September 2005. 81 Xiao Zili, Chen Jitang, 440. 82 Guangdong shengli Zhongshan tushuguan, ed., Minguo Guangdong dashiji [Major events in Guangdong during the Republican era] (Guangzhou: Yangcheng wanbao, 2002), 491. See also an anonymous pamphlet denouncing Chen Jitang and his allies in Guangxi, Liangguang panluan neimu [The inside story of the revolt of Guandong and Guangxi], pamphlet (Guangzhou: n.p., 13 June 1936); NYT, 4 June 1936, 15 and 17 July 1936, 8. 83 Dispatch from Shanghai to Tokyo by attaché Takefuji, 18 March 1936, 117-21. Honpo¯ chihou seihu kyu¯ kojin shakkan kankei sakkan: kanton sho¯bu [Files on Japanese loans to local governments and individuals: Guangdong], National Diet Library, Tokyo, microfilm S.5.1.60, no. 25. 84 Guangdong shengli Zhongshan tushuguan, ed., Minguo Guangdong, 490; Report for 1-15 March 1935, 1, MCA 679/32416: “No details concerning the recent visit to South China of Colonel Doihara ... were divulged by official circles.” 85 Dispatch by Takefuji, Honpo¯ chihou, 119. 86 A Hong Kong news report on Feng’s arrest might contain a hint of the arrangement in a statement that Feng Rui aroused popular resentment by establishing a sugar monopoly in an agreement with foreigners after arranging the construction of sugar mills in Guangdong. GS, 12 August 1936, sheet 2, 3.

284 Notes to pages 197-203

87 Several of Mitsui Bussan’s quarterly reports for 1935 and 1936 mention plans to expand sales in China. Mitsui Bunko (Mitsui Company Archives), Tokyo. 88 Letter from Hong Kong to London, 30 July 1934, 1-2. TSR box 25(a), no. 16. 89 Dispatch by Takefuji, Honpo¯ chihou, 120. 90 QS, 17 September 1935, sheet 2, 1; SB, 19 September 1935, sheet 2, 4; Guangdong shengli Zhongshan tushuguan, ed., Minguo Guangdong, 508. 91 Arnold, “Market in South China,” 20. 92 HZ, 9 August 1936, sheet 2, 2. 93 Report from Hong Kong, 22 July 1936, 1-2, CRC/1936.800. A Chinese banker stated that a vacant house next to Chen Jitang’s quarters on MacDonnell Road was suddenly rented by a Japanese enterprise manager who insisted that he must really move in despite the unready state of the house and the fact that he still had six months left on his lease elsewhere. 94 GS, 11 September 1936, sheet 1, 1. 95 GS, 11 August 1936, sheet 2, 3. Similiarly, an article in SB, 16 September 1936, 3, stated that Japanese smugglers gained most of the benefits of sugar imports through Shantou, linking the sugar-smuggling problem to Feng Rui and the rest of the ousted Guangdong government. 96 GS, 27 July 1936, sheet 1, 1. 97 On these reactions, see Parks C. Coble, Facing Japan: Chinese Politics and Japanese Imperialism, 1931-1937 (Cambridge, MA: Harvard University Press, 1991). 98 Dispatch by Takefuji, 18 March 1936, 68-69. 99 Guangdong shengli Zhongshan tushuguan, ed., Minguo Guangdong, 495. 100 Chen Jitang had earlier agreed to a secret barter agreement with a group of Germans with military connections in which he would exchange tungsten for German assistance in constructing munitions factories. When the arrangements became known in Nanjing and Berlin in the fall of 1934, both governments prohibited the arrangement. See Kirby, Germany and Republican China, 130-31. It was around this time that Chen began to seek Japanese buyers for tungsten. 101 Chang, ed., Chinese Year Book, 681, and Times, 22 May 1936, 13. 102 Kirby, Germany and Republican China, 133. 103 Remarks by Minnesota agriculture professor Wm. A. Riley in a letter to a fellow Lingnan University trustee, 22 September 1936, Harvard Yenching Library, Lingnan University Archives, box 68. Earlier, Riley had praised Feng Rui’s work at Lingnan. See a letter of 30 November 1932, 2. Guangdong Provincial Archives (GPA) 38(4) 203: 82. 104 Li Jiezhi, “Guanyu Feng Rui zhi si,” 132-33. 105 QS, 3 September, 1936, sheet 3, 2. 106 QS, 10 September 1936, sheet 1, 3. 107 Li held official positions after 1949 as well. See Xu Youchun, ed., Minguo Renwu Dacidian [Biographical dictionary of Republican China], vol. 1 (Shijiazhuang: Hebei renmin dacidian, 2007), 557. 108 Li, “Guanyu Feng Rui,” 133. 109 QS, 12 September 1936, sheet 2, 2; ZY, 16 September 1936, sheet 2, 2. 110 According to Charles Hayford, a former colleague of James Yen recounted that because he had divorced his wife and remarried, Yen stopped talking to him permanently. Personal communication from Hayford, February 1994. Yen was rather disparaging about Feng Rui to Hayford, describing him as “a short, peppery Cantonese.” Actually, Feng was about 5’10” in height. See Charles W. Hayford, To the People: James Yen and Village China (New York: Columbia University Press, 1989), 88.

Notes to pages 204-10 285

111 Personal communications from Feng Puzheng, November 2003, and Feng Puyu, June 2008. 112 For a brief but virulent attack on Feng’s sexual morality, see “Feng Rui weihe shibai?” [Why did Feng Rui fail?], Pingmin yuekan [People’s Magazine] 12.11 (November 1936): 17. 113 Li, “Guanyu Feng Rui,” 133-34; QS, 10 September 1936, sheet 1, 3. 114 QS, 10 September 1936, sheet 1, 3; HZ, 10 September 1936, sheet 2, 2. 115 Personal communication from Feng Puyu, June 2004. Chapter 8: Provincial Sugar Industry Programs, 1945-58 1 Five-Year Reconstruction Plan Drafting Committee, ed., Guangdongsheng wunian jianshe jihua [Guangdong provincial Five-Year Reconstruction Plan] (Guangzhou: Department of Reconstruction, 1947), 17-18. 2 Ibid., 18. 3 Ibid., 19. 4 Xian Zi’en, “Song Ziwen longduan Guangdongsheng tangye jihua yu wo canjia shengying tangchang jihua” [Song Ziwen’s plan to monopolize the Guangdong sugar industry and my participation in planning for the provincial mills], Guangdong wenshi ziliao (GDWZ) [Materials on the culture and history of Guangdong] 62 (1990): 205-25. 5 Guangdong shengying zhitang gongsi (Guangdong Provincial Paper and Sugar Corporation), Guangdongsheng zhitang gongye jingji jishu ziliao [Economic and technical records on the Guangdong provincial paper and sugar industries] (Guangzhou: Guangdongsheng tongjiju, 1964), 81. 6 Huang Shuiguang, “Zhujiang sanjiaozhou zhi ganzhe” [Sugarcane in the Pearl River Delta area], Nanfang ribao (NF) [Southern Daily], 17 July 1950, 2. 7 NF, 20 January 1950, 8. 8 Xingdao ribao (XD) [Star Island Daily], 5 December 1950, 7, translated in United States Consulate, Review of Hong Kong Chinese Press, 252/50, 2. 9 Ibid. 10 NF, 27 February 1950, 1. 11 For a report on the resolutions of a nine-day meeting of Guangdong’s Department of Provincial Industry with representatives of the province’s public enterprises, see NF, 24 March 1950, 1. 12 Liu Shao’an, et al., Guangdongsheng Shitou ganzhe huagongchang zhi [The Guangdong provincial sugar factory at Shitou] (Guangzhou: Shitou ganzhe huagongchang, 1991), 24. 13 Guangdong shengying zhitang gongsi, Guangdongsheng zhitang, 81. 14 Ibid., 104. 15 Guangdongsheng tongjiju (Guangdong Bureau of Statistics), Guangdongsheng guomin jingji he shehui fazhan tongji ziliao, 1950-1989 [Statistical materials on the economic and social expansion of Guandong, 1950-1989] (Guangzhou: Guangdongsheng tongjiju, 1990), 137. 16 On grain policy, see Kenneth R. Walker, Food Grain Procurement and Consumption in China (New York: Cambridge University Press, 1984), 77-95. 17 See Guangdongsheng tongjiju, ed., Guangdongsheng guomin jingji tongji jiyao, 1949-1980 [Essential statistics on the public economy of Guangdong province, 1949-1980] (Guangzhou: Guangdongsheng tongjiju, 1981), 14-15, 128-29. Information found in this source contradicts K. Walker’s observations (compiled from NF reports) that Guangdong transferred large amounts of grain to other provinces until 1955 and then stopped doing so completely. 18 Guangdongsheng renkou pucha bangongshi, ed., Guangdong Sheng renkou tongji ziliao huibian, 1949-1985 [Compiled statistical materials on the population of Guangdong, 19491985], vol. 1 (Guangzhou: Guangdongsheng tongjiju, 1987), 23. Another source records

286 Notes to pages 211-18

19

20

21

22 23 24 25 26 27 28 29 30

31 32 33

34 35 36 37

38 39 40 41 42 43

total provincial revenue in 1956 as 959 million yuan; the comparison of sugar industry earnings to this figure is similar. See Guangdongsheng tongjiju, ed., Qianjinzhong de Guangdongsheng: 1949-1988 nian shehui jingji fazhan qingkuang [Guangdong province in progress: Social and economic expansion 1949-1988] (Hong Kong: Dadao wenhua youxian gongsi, 1989), 48. NF, 9 January 1957, 1; XD reported that the number of smugglers travelling on the KowloonCanton Railway per day had been reduced through official efforts from 1,000 to 500 during 1950, translated in United States Consulate, Review of the Hong Kong Chinese Press 13/51 (17 January 1951): 3; New York Times (NYT), 22 December 1950, 20. Xinsheng wanbao [New Life Evening Post], 12 September 1950, translated in United States Consulate, Review of Hong Kong Chinese Press 13/51 (17 January 1951): 2. See also Ba Dun, Yuegong Zousi zhenxiang [The truth about the Communists’ smuggling in Guangdong] (Hong Kong: Ziyou chubanshe, 1951). In the case of tungsten, this was true of exports as well. See XD, 4 July 1951, 4, translated in United States Consulate, Review of the Hong Kong Chinese Press 13/51 (17 July 1951): 4, and Ba, Yuegong zousi zhenxiang, 33-35. XD, 18 January 1951, 4. NF, 8 May 1950, 2. Ibid., 2. Gu Fan, “Guangdong ganzhe shengchan” [Guangdong’s sugarcane production], NF, 10 April 1950, 4. Huang, “Zhujiang sanjiaozhou,” 2. NF, 23 April 1950, 4. NF, 3 April 1950, 4. Gu Fan, “Guangdong ganzhe,” 4. These complaints were made with official encouragement as part of the local “five-antis” campaign, reported by XD, 18 April 1952, 4, translated in United States Consulate, Review of the Hong Kong Chinese Press, 77/52 (24 April 1952): 2. NF, 4 April 1950, 4. Huang, “Zhujiang sanjiaozhou,” 2. Huang Shuiguang reported that the Dongguan mill received sugarcane delivered from Zhongshan County; see ibid. According to a personal communication in October 1992 from Chen Yi of the Shitou Sugar Factory, the factory continued to receive part of its raw material from Panyu County. Liu Shao’an, et al., Guangdongsheng Shitou, 23-24. NF, 24 March 1950, 1. This information on the factory’s location was provided in October 1992 in personal communications from senior staff members of the Dongguan Sugar Mill. Dong Panwen, “Humen yaosai silingbu yu Chen Weizhou zouside chongtu” [A clash between the Humen garrison and smuggling by Chen Weizhou], Guangzhou wenshi ziliao [Sources on the culture and history of Guangzhou] 16 (1965): 141. GS, 18 August 1950, sheet 2, 1, translated in United States Consulate, Review of the Hong Kong Chinese Press 158/50 (22 August 1950), 3. NF, 6 April 1950, 4. NF, 1 February 1950, 1. GS, 18 August 1950, sheet 2, 1. Carl Riskin, China’s Political Economy: The Quest for Development since 1949 (New York: Oxford University Press, 1987), 69-71, 242-47. Audrey G. Donnithorne, China’s Economic System (London: Allen and Unwin, 1967), 371.

Notes to pages 218-28 287

44 Ibid., 373. On state revenue from light industry and sugar in particular during the Mao period, see also Barry M. Richman, Industrial Society in Communist China: A Firsthand Study of Chinese Economic Development and Management (New York: Random House, 1969), 502-5. 45 See Kwok Hung-wai, A Study of Chen Jitang’s (1890-1954) fiscal reform. (Unpublished MA diss, Department of History, University of Hong Kong, 1989), ch. 3. 46 Personal communications from Xian Zi’en, retired engineer, and from Chen Yi and Liu Shao’an, managers of the Shitou Sugar Mill, October 1992. 47 See Donnithorne, China’s Economic System; and Thomas P. Lyons, Economic Integration and Planning in Maoist China (New York: Columbia University Press, 1987). 48 Ezra Vogel, in contrast, described Guangdong’s rapid growth during the 1980s with an emphasis on the consequences of market forces set loose from official regulation. See Ezra Vogel, One Step ahead in China: Guangdong under Reform (Cambridge, MA: Harvard University Press, 1989). 49 An exception is Donald G. Gillin, Warlord: Yen Hsishan in Shansi Province, 1911-1949 (Princeton University Press: Princeton University Press, 1967). 50 On the investment trend, see Ramon H. Myers, “The World Depression and the Chinese Economy, 1930-36,” in The Economies of Africa and Asia in the Inter-War Depression, ed. Ian Brown, 253-78 (London: Routledge, 1989). 51 Lyons, Economic Integration. 52 David Granick, Chinese State Enterprises: A Regional Property Rights Analysis (Chicago: University of Chicago Press, 1990). 53 Granick clearly had post-1949 history in mind; see ibid., 44, 243. 54 In an earlier study, Audrey Donnithorne stressed the importance of provinces as key units in China’s political economy, which she characterized as “cellular.” See Donnithorne, China’s Economic System, 148-57, 504-7. 55 William C. Kirby, “The Internationalization of China,” in Reappraising Republican China, ed. Frederic Wakeman Jr. and Richard Louis Edmonds, 203 (New York: Oxford University Press, 2000). 56 Guangdong provincial revenue has been shared with the central government throughout the PRC period. On nation-building at the regional level, see Hans J. van de Ven, “The Military in the Republic,” in Ibid., 106. 57 For a review of research revealing these patterns, see Zheng Yongnian, “Institutional Economics and Central-Local Relations in China: Evolving Research,” China: An International Journal 3.2 (September 2005): 240-69. On changing central-provincial relations in Guangdong since the 1990s, see Zheng Yongnian, De Facto Federalism in China: Reform and Dynamics of Central-Local Relations (New Jersey: World Scientific, 2007), ch. 6. 58 Zheng, De Facto Federalism, x. Conclusion Epigraph: Chen Zhaoyu, Guangdong tangye yu Feng Rui [The Guangdong sugar industry and Feng Rui] (Hong Kong: Chen Zhaoyu, 1937), 14. 1 Lloyd E. Eastman, “Nationalist China during the Nanking Decade, 1927-1937,” in The Cambridge History of Modern China, vol. 13. Republican China, Part 2, ed. J.K. Fairbank and Albert Feuerwerker, 155 (New York, Cambridge University Press, 1986). 2 Arthur Young, China’s Nation-Building Effort (1971), 159. 3 For example, “agriculture, which is the mainstay of China’s existence, is always bungling and primitive, yielding a minimum return for a maximum of toil.” Rodney Gilbert, What’s Wrong with China? (New York: Frederick A. Stokes, 1934), 21.

288 Notes to pages 229-34

4 Chen, Guangdong tangye, 14. Chen noted that Feng made this statement with reference to the problem of Japanese-backed smuggling in northern China. 5 For instance, see an editorial in Dagongbao (DG), 28 June 1935, sheet 2, 1; and a speech by Chen Gongbo, published as “Wo duiyu yinong liguo de yijian” [My view on the idea of China as an agrarian nation] Fangzhi zhoukan 26 (May 1935): 609-12. 6 Xiao Zili, Chen Jitang, 2002), 472; Howard L. Boorman and Richard C. Howard, eds., “Ch’en Chi-t’ang,” Biographical Dictionary of Republican China, vol. 1 (New York: Columbia University Press, 1967), 163. 7 Chen Zhaoyu, Guangdong tangye yu Feng Rui [The Guangdong sugar industry and Feng Rui], 19. 8 William C. Kirby, “Engineering China: Growth of the Developmental State: 1927-1937,” in Becoming Chinese: Passages to Modernity and Beyond, ed. Wen-hsin Yeh, 137-60 (Berkeley, 2000). 9 Kate Mitchell, “Revitalizing British Interests in China,” Far Eastern Survey 6.13 (June 12, 1936): 141-42. 10 Prasenjit Duara, Rescuing History from the Nation (Chicago, 1995), 193-204. 11 The Origins of the Chinese State (Stanford University Press, 2000), 132-33. 12 W.W. Willoughby, The Sino-Japanese Controversy and the League of Nations (Johns Hopkins University Press, 1935), 245-49, 499; William Beasley, The Rise of Modern Japan (New York: St. Martin’s Press, 2000), 74-75. 13 See Ilona Ralf Sues, Sharks’ Fins and Millet (Boston: Little, Brown, 1944), 33-42. 14 Parks Coble, “Chiang Kai-shek and the Anti-Japanese Movement in China: Tsou T’ao-fen and the National Salvation Association, 1931-1937,” Journal of Asian Studies 44.2 (February 1985): 297. 15 For vignettes of the Nationalist censorship regime, see Stephen R. Mackinnon and Oris Friesen, China Reporting: An Oral History of American Journalism in the 1930s and 1940s (Berkeley: University of California Press, 1987). 16 See Parks Coble, Facing Japan: Chinese Politics and Japanese Imperialism, 1931-1937 (Cambridge, MA: Harvard University Press, 1991). 17 Hans J. van de Ven, War and Nationalism in China 1925-1945 (London: RoutledgeCurzon, 2003), 151-67. 18 See Lloyd Eastman’s discussion of Chen’s fall in a similar mode in The Abortive Revolution: China under Nationalist Rule, 1928-1937 (Cambridge, MA: Harvard, 1974), 257-60. 19 One author who states that there can be no doubt of this is Zang Yungu, Qiqi shibian qiande Riben duiHua zhengce [Japanese policy toward China before the Marco Polo Bridge Incident], (Beijing: Shehui kexue wenxian, 2000), 55-56. See also Donald Jordan, “The Place of Chinese Disunity in Japanese Army Strategy during 1931,” China Quarterly 109 (March 1987): 42-63. 20 NYT, 19 July 1936, 1. Guangdong and Guangxi could field a combined force of 190,000 soldiers, according to Asahi, 3 June 1936, 2. 21 The Times, 22 July 1936, 17. According to the The New York Times also on 22 July 1936, 1: “The defeat of the Southern forces has greatly strengthened the Central government.” 22 For instance, Asahi, Japan’s major daily newspaper, reported that Chiang’s victory over the Southwest would greatly strengthen his “autocratic rule” and have a negative impact on Sino-Japanese relations; 22 July 1936, 2. 23 Eastman discusses the “new mood” in “Nationalist China during the Nanking Decade, 1927-1937,” 160-63. 24 Parks Coble, Facing Japan, 309-33; Zhang Qun, Wo yu Riben, 70 nian [Japan and I, 70 years] (Taipei: Zhongri guanxi yanjiu hui, 1990), 57-80.

Notes to pages 236-41 289

25 Owen Lattimore, Inner Asian Frontiers of China (New York: American Geographical Society, 1940), 551. 26 Hugh R. Clark, “Frontier Discourse and China’s Maritime Frontier: China’s Frontiers and Encounter with the Sea through Early Imperial History,” Journal of World History 20.1 (2009): 33. 27 Lattimore, Inner Asian Frontiers, 542. 28 Akira Iriye, “Introduction,” in The Chinese and the Japanese: Essays in Political and Cultural Interactions, ed. A. Iriye, 4 (Princeton, NJ: Princeton University Press, 1980). 29 Peter Duus, Ramon H. Myers, and Mark R. Peattie, eds., The Japanese Informal Empire in China (Princeton, NJ: Princeton University Press, 1989). 30 Joshua A. Fogel, The Teleology of the Modern Nation-State: Japan and China (Philadelphia: University of Pennsylvania Press, 2005). 31 Prasenjit Duara, Sovereignty and Authenticity: Manchukuo and the East Asian Modern (Lanham, MD: Rowman and Littlefield, 2003). 32 Chih-yu Shih, Navigating Sovereignty: World Politics Lost in China (New York: Palgrave Macmillan, 2003), 9-14, 91-100. 33 Manu Goswami, Producing India: From Colonial Economy to National Space (Chicago: University of Chicago Press, 2004), 209-41. 34 Charles Tilly, The Politics of Collective Violence (New York: Cambridge University Press, 2002), 21. 35 Chen Zhaoyu, Guangdong tangye, letters section, 2-3 (undated). 36 GS, 12 August, sheet 2, 2. 37 QS, 8 September, 1936, sheet 1, 3. 38 Letter from Shanghai to Guangzhou, 15 July 1936, 2, MCA 679/32396. 39 See Youli Sun, China and the Origins of the Pacific War, 1931-1941 (New York, St. Martin’s Press, 1993), especially, “Politics of Unity and Diplomacy, 1936-1937,” 63-86. 40 Donna K. Flynn, “‘We are the Border’: Identity, Exchange and the State along the BéninNigerian Border,” American Ethnologist 24.2 (May 1997): 325. 41 Frederic Wakeman Jr., “Hanjian (Traitor)!: Collaboration and Retribution in Wartime Shanghai,” in Becoming Chinese, ed. Wen-hsin Yeh, 298-99 (Berkeley: UC Press, 2000).

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Index

Note: “(f)” after a number indicates a figure; “(t)” after a number indicates a table agricultural development: rice tax and, 71-72, 76-83; rural credit program and, 132-33, 133-34, 134-35, 137, 211-12 agricultural economics, 24, 26, 27, 30, 54, 123-24 agricultural evangelism, 23-24, 40-41, 249n28 agricultural reform. See rural reconstruction agriculture: and economic reconstruction, 52-53, 56; and industry, 15, 30, 46, 56-62; and national economy, 227-29; rational management, 31-32; as vocation, 22-33, 32-33 anti-capitalism, 13, 84, 230 anti-Communism, 191; embargo, 210-11 anti-imperialism, 84, 237 anti-Japanese salvationism, 14, 191, 199, 233, 234-35 Anti-Japanese War, 13 arbitrage, 7, 173, 237, 244n33 Arnold, Julean, 197-98, 246n50, 267n18 Asahi Shimbun, 288n20, 288n22 Ballantine, Joseph, 110-11 Bank of China, 93, 171, 212 Bank of Guangdong, 93, 171 Bank of Taiwan, 64 benefit agriculture tax (linong zhuanshui). See taxation (Guangdong) borders: and brokerage, 10-12, 235-37; vs. frontier, 246n59; redrawn, 237-38, 241; as a resource, 11, 235-37; and violence, 237 Boxer Indemnity fund, 27, 34 Boyle, James E., 28, 33, 43 brokerage: broker role, 10-11, 237-38, 246nn55-56; and China’s borders, 10-12, 235-37; risks, 11, 119, 120, 146-47, 169-71,

172-78, 190-92; and tax collection, 88, 91-92, 154, 155-57 Buck, John Lossing, 24, 25, 27, 249n36 Bureau of Agriculture and Forestry: Agricultural Economics Department, 54, 136; annual budget, 62-70, 63(t), 258n89; directorship, 47-50, 53-56, 57-58, 254n11; expanded, 53-54; experimental farm, 112, 130, 131(f), 132, 133, 272n34; funding, 62-70, 78, 91, 95-96, 107-9; policy planning, 17-18, 52-53, 68, 75-83, 87, 104, 113-14, 260n127; reorganization, 47-48, 54; views of, 279n109 Burt, Ronald S., 246n55, 266n3 Butterfield and Swire, 148, 155, 188. See also Taikoo Sugar Refinery (TSR) cement industry, 64-70, 163(t) centralism. See monopoly economy, and economic control Chadbourne Agreement (1931), 102 Chen, Eugene, 84 Chen Bulei, 182 Chen Ce, 158 Chen Gongbo, 82, 188, 281n39, 281n40 Chen Hanguang, 162 Chen Jitang: and CCP, 51; control of smuggling, 157-59, 161; departure, 89, 94, 179; and Feng Rui, 48, 82-83, 173-74; and Japanese interests, 196, 198, 199, 235, 284n93; legacy, 222, 223; and military, 9, 106-7, 114, 175; in Nanjing, 229; vs. Nanjing, 4, 51, 85, 263n71; power, 8-9, 17, 49-51, 50, 191; promotion of agriculture, 78, 258n89; promotion of industry, 56-57, 60, 64, 106-7, 114, 146, 172, 256n57, 256n59, 259n125; and tungsten, 195, 284n100; writings, 255n26 Chen Mingshu, 48

Index 311

Chen Weiqing, 6(f), 99(f) Chen Weizhou, 158-59, 161, 163, 177, 192, 216 Chen Yi, 216 Chen Yuanying, 63, 66, 167, 194, 258n92, 280n9, 281n41 Chen Zhaoyu, 241(f); on agricultural credit program, 134, 144; education, 251n78; and Feng Rui, 37-38, 202-4, 24142; on Feng’s critics, 95, 149; on Feng’s fate, 2-3, 181, 193; on Feng’s fundraising, 104, 107-8, 115-16; on Feng’s illness, 47; on Feng’s work, 68, 82, 87, 247n83, 260n127; on sugar and defence, 225, 229 Chiang Kaishek: approval of execution, 202, 239-40, 281n32; autocratic rule, 233-34, 288n22; control of Guangdong, 234; control of opium, 191; denunciation of Feng Rui, 181-83, 280n14; and Feng Rui, 71, 78-79, 95, 174-75; and Nationalist government, 8; and popular opinion, 232-33; and Southwest, 4, 9, 19, 50-51, 71, 84, 94, 176-77, 280n17; state-building, 9; and tungsten, 200, 240 Chien, T.H., 27, 249n36 China: agrarian nature, 15, 29-30, 52, 287n3; balance of trade, 32-33; Deng Xiaoping era, 223; Maoist period, 19, 218, 222; Nanjing decade, 180, 226, 229; peasantry, 46, 138, 146-47; political economy, 287n54; political realignments, 199; relations with Japan, 183-84, 186, 236-37, 288n22; tariff autonomy, 84, 100-1, 151; as unitary state, 12; village society, 24. See also People’s Republic of China (PRC); Republic of China China League for the Protection of Civil Rights, 180 Chinese Communist Party (CCP), 51, 218-20, 227, 228-29 Chinese National Sugar Production and Marketing Cooperation Association, 189, 190 Cochran, Sherman, 246n56 compradors, 155 cooperativism: advocacy of, 42; vs. capitalism/socialism, 44-45; in marketing, 26; rural movement, 33; in sugar industry, 143-44; views of, 43-45

Cornell University College of Agriculture, 28 credit: and local control, 79-80; for sugar mills, 109-10, 115 Criminal Code of China, 181 Criminal Code of Guangdong, 184 crop-improvement projects: cotton, 25-26, 39; rice, 81-82; silk, 249n36; sugarcane, 57-58, 58-60, 106, 112-13, 129-32, 212-13, 272n34, 272nn24-25 Cuba, 59, 77, 100-2, 127, 278n83 Cunzhi (Village Government), 24, 42 customs revenue: declining, 183-84; and GSM, 154-55; and international crisis, 83-84; and national budget, 79, 262n41; and regionalism, 190-92; and statebuilding, 9. See also tariffs (national) Dali Company, 156 Davies, Theodore, 119 Dayu, 193 Deng Yanhua, 48 Denmark, 44, 53, 66 Department of Reconstruction: and Bureau, 48-49, 61, 62; and cement factories, 65-66; partnership with HIW, 113-16; reorganization, 180; smuggling prevention agency, 153; and sugar industry, 98, 110-11, 112(t), 120, 132, 148, 153(t), 168 (see also Guangdong Sugar Monopoly [GSM]); sugar mills, 122; tungsten monopoly, 194 Ding County, 36, 38-39, 44-48, 107-8, 203 Doihara Kenji, 196-97 Dongfang zazhi (Eastern Miscellany), 28 Dongguan sugar mill, 98(t), 99(f), 122, 165, 193, 207, 209, 211-12, 214-16, 214(t), 217 Doushan, 154 dumping (qingxiao), 56, 60, 77, 90, 208; sugar, 100 Dunham, Donald C., 54, 80, 82, 275n16 Dutch East Indies, 188 Eastman, Lloyd, 227, 234, 245n47 economic warfare, 28 Ehrhardt, John.J., 117, 129 export/import platforms, 70 exports: silk, 59; sugar, 59, 127; sugarcane, 100; tungsten, 193-96

312 Index

Fan Yuanlian, 38 Feng Baqing, 176 Feng Rui, x, 201(f); betrayed, 195-96, 238, 283n79; character, 41, 54, 229-30; charges against, 1, 69, 181, 185-86, 198; daughters, 38, 201(f), 203, 204-5; death, 1, 4-5, 122, 179-81, 192, 204-5, 235; death, significance of, 3-4, 238-41; denounced, 18183; distrusted, 167, 188; education, 16-17, 22-33, 53; hostility against, 122-24, 135, 139; incarceration, 1, 3, 21, 179-81, 198, 203; influence on Chen Jitang, 255n28; legacy, 17, 218-20, 222, 223-24, 225-27, 228, 235-36; lung disease, 47; marriages, 35, 37-38, 251nn65-66; mother, 135-36, 139, 204; personal life, 202-4; reputation, 242; scapegoat, 180-81, 198-99, 232; and sugar mills, 210; as threat, 195-96, 198200, 240; trial/sentence, 1, 2-3, 4, 180, 185-86, 190, 202, 479. See also Feng Rui, career of; Feng Rui, publications/ writings of Feng Rui, career of, 37(f), 131(f); academic, 49-50, 62, 80-81; broker, 10-12, 82-83, 95, 97-98, 109-11, 114-21, 173, 231, 237-38, 268n51; and Chinese economy, 15; coordinator of operations, 145-46; and the Customs, 159-61, 168-69, 170-71; delegation to Philippines, 107-9, 130; director of Bureau of Agriculture and Forestry, 47-50, 53-56, 57-58, 254n11; fundraising, 62-70, 63-64, 78, 107-9; Hainan survey, 94; middleman, 104; personal connections and, 48-49, 179; policy planning, 17-18, 52-53, 68, 75-83, 87, 104, 113-14, 260n127; prominence, 2-3, 15-16, 38, 43-44, 49, 254n7; public face of government, 91-92, 105, 111, 149, 154-55, 173-74, 175, 189-90; after reorganization, 179-80, 189-90, 192; research, 81-82, 130, 272n34; and rural reconstruction, 33-45, 48-50; and smokeless sugar, 163-66, 183-86, 197-99, 283n86; supervising management, 122-23, 148-49, 220; tension between roles, 95, 146-47, 172-78, 174-75, 190-91 Feng Rui, publications/writings of: on agriculture, 39, 44; autobiography, 22, 26, 34, 35, 41, 53, 252n84; on cooperativ-

ism, 33, 42-43; dissertation, 29-30, 3233, 53, 59, 61, 71-72, 103; on national economic system, 28, 41, 43, 230, 253n99; to Nongmin, 252n91; on rural education, 38-39, 39-40; rural social survey, 34-35, 38; on sugar industry, 59, 60, 105; on Three-Year Plan, 52-53, 57-58; on trade, 32, 76-77, 77-78 fertilizer, 18, 57, 67-70, 80, 91, 95, 134, 137, 163(t), 212, 214-15, 217-18, 228 Five Rams brand, 1; cement, 65, 66; sugar, 165, 168-69, 170, 172 Ford, Henry, 30, 46 French Indochina, 7; cement, 259n109 frontier: vs. border, 246n59; internal, 11-12, 14, 230 Fu Baochen, 36, 39 Fugh, Paul. See Fu Baochen Gamble, Sidney, 36, 38 Gerth, Carl, 14 Gongshang ribao (Industry and Commerce Daily), 199 Granick, David, 223 Great Depression: impact, 13, 55, 98, 100. See also dumping (qingxiao) Griffing, J.B., 25, 26, 39 Groff, George Weidman, 23-24, 27, 49, 77 Gu Guifen (Koo Kwai-fan), 61, 94 Guangdong, 6(f), 99(f); agricultural map, 217; business practices, 116, 117, 139, 154, 162; economic development, 15, 246n52; fiscal reform, 90-93; fiscal separatism, 79, 84; grain deficit, 73-74, 75-83, 264n88; grain exports, 285n17; industrial expansion, 223-24; and Japan, 196-200; legacy, 222; in Maoist period, 287n48; vs. Nanjing, 11; population, 261n17; in PRC period, 287n56; revenue systems, 83-86; rural crisis, 55-56; sugar production, 218-19. See also sugar industry; sugar mills Guangdong government: autonomous, 4-5, 7-10, 218, 223, 234, 245n40; bonds, 64; Communist leaders, 208-11; Feng Rui effect, 51-52; and Northern Expedition, 84-85, 192; relations with Nanjing, 74-75, 90-93, 190-92; reorganized, 19, 94, 176-78, 179-80, 181-83, 192,

Index 313

283n77; Three-Year Plan, 51-53, 52-53, 56-57, 58(t) Guangdong government agencies: Agricultural Commodities Tax Bureau, 67, 80, 89, 159; Agricultural Economics Department, 63; Agricultural and Industrial Bank, 78; Department of Provincial Industry, 208, 212, 215-16; First Army Group, 193, 195; Foreign Agricultural Products Special Tax Bureau, 91; Grain Regulation Commission, 78, 262n36; Irrigation and Reclamation Banking Corporation, 78; National Products Sales Office, 66-67; Native Products Sales Office, 162-63, 167, 172, 193; Office of Product Examination and Testing, 64-65; Preventive Service (see Guangdong Headquarters for Smuggling Prevention); Rural Rehabilitation Commission, 180; Sugar Industry Management Office, 113; Sugar Management Bureau, 212, 214. See also Department of Reconstruction Guangdong Headquarters for Smuggling Prevention, 157-58, 177; antismuggling fleet, 66, 156, 158, 159, 161, 163, 164; and official smuggling, 162-63 Guangdong jianshe yuekan (Guangdong Reconstruction Monthly), 60, 63, 64-65 Guangdong Provincial Council, 114 Guangdong Sugar Monopoly (GSM): abolished, 192; and central authority, 172, 173; licensing fees, 154; and official smuggling, 163, 196-97; problems, 148, 149-51, 161-63, 188-89; protests against, 176-77, 240; regulations, 148-49, 150, 15253, 162, 193; sugar purchases, 164-66, 167, 196, 197-98; and Taiwan Sugar Company, 196, 197-98; tax farming, 154, 155-57 Guangdong Tungsten Monopoly, 194, 195, 199, 283n77 Guangdong-Guangxi Revolt (LiangGuang fanpan). See Southwest Incident (Xinan shibian) Guangdongsheng zhengfu gongbao (Guangdong Government Gazette), 89 Guangxi, 8, 219(t) Guangzhou, 34-35, 185

Guangzhou Grain Dealers’ Guild, 91-92, 265n121 Guangzhou Industrial Vocational School, 105 Guangzhou-Hankou Railway, 93, 217 Guo Bingwen, 34 Guomindang. See Nationalist party Haiwei, 158, 161 Haiying, 159, 163, 164 Haizhou, 66, 158, 161 Hall, G. William, 109-10, 114-15 He Jian, 191 He Lili, 3, 203, 204 He Qili, 180 He Zhongming, 65 Henan, 22, 65 Henderson, Charles J., 114-15, 117-18 Hobsbawm, Eric, 13-14 Hong Kong: cement, 66; and China, 7, 244n30, 244n32; economy, 244n33; sugar exports, 152(t), 153(t) Hong Kong Shanghai Bank, 116 Honolulu Iron Works (HIW), 98(t), 267n24; contracts, 104, 107; and Guangdong, 109-12, 113-16, 116-21; and official smuggling, 167-68; projections for sugar industry, 112-13, 220 Hu Guangbiao, 36, 40 Hu Hanmin, 50, 75 Hu Jixian (Wu Kai-yin), 49, 74, 180, 254n11 Hu Shi, 44 Huang Jiangquan, 167, 187-88, 193, 281n37 Huang Musong, 177, 192 Huang Shuiguang, 214 Huizhou sugar mill, 98(t), 99(f), 107, 114, 117-19, 122, 164, 165; Mineral Products Receiving Office, 195; problems, 119-20 Hunan, 93, 191, 194-95, 266n131; sugar mills sales quota, 194-95 Huo Zhiting, 88, 93, 264n97 import taxes. See tariffs (national); taxation (Guangdong) import-substitution programs, 1, 183; cement, 17-18, 62, 69-70; sugar industry, 100, 101 imports: as capitalist invasion, 55-56, 62; cash crops and, 74; and economic

314 Index

health, 72; value of, 58, 59, 72-73, 87, 156, 189, 264n89, 265n107 imports, products: cement, 64-65, 259n109; fertilizer, 67-68, 217; rice, 71, 72-75, 75-83, 86-90, 92, 159, 264n93, 265n105, 265n107; sugar, 58, 59, 151, 152(t), 153(t), 156, 168-71, 172-74, 176(t), 189, 257n68; wheat, 260n12 industrial sector, 9-10, 13, 124-25, 223-24 industrialization: funding, 62-70; importsubstitution, 1, 17-18, 62, 69-70, 100-1; need for, 29; and rural reconstruction, 220-24, 227-28 Institute of Pacific Relations, 44 intellectuals, 42, 72, 226 international economic competition, 55 international treaty system, 13-14 investment: in agricultural development, 17-18; in industrial development, 9-10, 18-19, 67, 68, 246n52, 246n54, 259n121; in manufacturing, 52, 56-57, 64-66; Nationalist, 9-10; of profits, 67; in sugar industry, 97, 106-12, 112(t), 120, 206-7, 208, 210, 256n59 Iriye, Akira, 236 Japan: and Asian sugar trade, 184; expansionism, 14-15, 234; and smuggling, 5, 7, 66; threat of, 182, 199 Java, 59, 127, 188 Jiangxi, 194-95 Jiaoyu zazhi (Education Magazine), 39 Jieyang sugar mill, 98(t), 99(f), 118, 137, 140(t), 164, 172, 207-8, 274n78; problems, 143-44, 145 Jincheng Bank, 188 Kian Gwan, 167, 187, 193, 282n60 King, Rex, 112, 130 King of the South (Nantian Wang). See Chen Jitang Kirby, William, 223, 245n47, 282n63, 288n8 Kong Xiangxi, 63-64, 79 Koo Kwai-fan. See Gu Guifen (Koo Kwai-fan) Kowloon-Canton Railway, 6(f), 153, 211 Kuhn, Philip, 232

labour, 111, 270n83; costs, 136-39, 138; productivity, 138, 139-41, 228 land ownership, 143-44, 213-14 land reclamation, 58(t), 63 Lary, Diana, 245n43, 255n30 Lattimore, Owen, 11, 236 Lawford, L.H., 159-61, 164, 168, 278n86 Layman’s Foreign Missions, 40, 252n94 Li Hanhun, 195, 197, 284n107 Li Jiezhi: and Chen Weizhou, 216; on Feng Rui’s case, 3, 5, 71, 186, 198, 202-3; on Feng Rui’s death, 239; on rice tax, 72, 174, 264n93; on sugar industry, 67, 256n59 Li Jinghan, 38 Liang Shuming, 42, 43 Liao Zongzhen, 257n68 Lin Dingsheng, 144 Lin Yikai, 144, 254n9 Lin Yungai: and development program, 52, 61, 64, 68, 126; and Nanjing, 85, 90, 94; patron of Feng Rui, 47, 48-49, 174-75, 179; and sugar, 104-5, 109, 110-11, 113, 116, 118 Ling Daoyang, 68, 280n7 Lingnan College, 22-24, 248n9 Lingnan University, 80, 111, 138; College of Agriculture, 34, 49; Liu Jiwen, 94 Love, Harry H., 27, 28, 49 Lu Zuolu, 189 Lyons, Thomas, 223 Mai Dingtai, 216 Mao Dun, 186 Mao Zedong, 34-35, 251n63 march/marchland, 8-9, 15 Maritime Customs Administration, 277n48; antismuggling fleet, 157; authority, 7, 173; imperialist, 84, 237, 244n34, 248n7; intelligence reports, 175; overwhelmed, 184; Preventive Service, 157, 159-61, 163-64; and rice imports, 79; and sugar, 150(t), 168; superintendent, 278n101; supervision of sugar milling, 168-70; view of import taxes, 68-69 Mass Education Movement (MEM), 36-37, 39, 40-41; Agricultural Extension College, 36

Index 315

May Thirtieth Movement, 34 middlemen, 123-24, 138-39, 145, 149, 213 Military Reclamation Bureau: and HIW, 116-21; sugar mills, 98, 106-7, 122, 193 (see also Dongguan sugar mill; Huizhou sugar mill); and sugar smuggling, 16566; in Tanzhou, 120; and tungsten, 195 Mitchell, G.E., 166 Mitsui Bussan, 196-97, 198, 199, 283n87 Mo Yinggui: on Feng Rui, 167, 174; and Japanese interests, 198; position, 148, 150; on sugar industry, 152(t), 161-62, 165, 167, 187; in tax farming, 155-57 molasses, 109, 167 monopoly economy (tongzhi jingji), 13, 113, 167, 211-16; and economic control, 229-33; national, 187-90; sugar, 148-55 Nanchang conference, 79 Nanfang ribao (Southern Daily), 210 Nanyang Brothers Tobacco Company, 88 national economy (minzu jingji), 218; and British hegemony, 237; capitalism and, 56; and comprehensive planning, 220, 222-23; construction of, 12-16; role of agriculture, 227-29 National Geological Survey, 60-61 National Revolutionary Army, 17, 50; Northern Expedition, 84-85 National Southeastern University (NSE): College of Agriculture, 33-34 nationalism, 12-14; economic, 55-56 Nationalist government, 244n36; accomplishments, 12-13; concessions to Guangdong, 67, 79, 160, 169, 172-74, 191-92; control of Guangdong, 179-81; debt to Guangdong, 84-85; and GSM, 176-77; international recognition, 245n39; investment in Guangdong, 63, 64; and Japan, 232-33, 233-35; judged, 227; Ministry of Industries, 187-88; National Sugar Production and Marketing Cooperation Association, 180; relations with Southwest, 5, 50, 78-79, 115, 175; seats of, 7-8, 83-84, 210-11 Nationalist party: ideology, 13; mobilization, 34-35; nation-building, 12-13; partification movement, 34

Ningbo Merchants’ Guild of Shanghai, 90 Nongmin (The Farmer), 39, 252n91 official smuggling. See smuggling, official Ou Fangpu, 79-80, 89 Panyu County Agricultural Bank, 132-33 Pearl River Delta, 74, 132, 151, 160, 212-14, 220 Pendleton, Robert, 60-61, 107, 125-26 People’s Food Supplies meeting, 73, 261n14 People’s Republic of China (PRC): economic system, 222-23; Five-Year Reconstruction Plan, 206-7; industrial sector, 19, 223-24; Native Products Company, 217; People’s Liberation Army, 216; provincial plans, 206-8 Philippines, 59; crop improvement, 132; sugar industry, 107-9, 143 poverty, rural, 26, 45 Proefstation Oost Java (POJ), 272n34 protectionism: and grain production, 87; Guangdong, 56, 66-67, 68; justification, 17-18, 80-81; in PRC, 206; and statebuilding, 12-14, 13-14, 15, 56, 105; and sugar prices, 210 Qin Jun, 67 Qunsheng bao (Popular Voice), 4-5, 92, 181, 202, 204 Reclamation Banking Corporation, 78 reconstruction (jianshe): economic, 47-50, 56; financing, 62-70; targets, 52. See also rural reconstruction regionalism, 4-5, 7-10, 190-92; and economic development, 19, 222-23, 230 Regulations Governing Punishment for Participation in Smuggling, 185 Republic of China, 8, 83-84. See also Nationalist government return commission, 116, 167, 269n78, 270n81 returned students, 54, 248n10, 254n9, 256n48, 280n7 rice: cultivation, 81-82; deficit, 73-74, 75-83, 264n88; imports, 71, 72-75, 75-83, 86-90, 87, 92, 159, 264n80, 264n87,

316 Index

264n89, 264n93, 265n105, 265n107, 266n131; merchants, 89, 90, 93, 265n121, 266n137; tariff (see tariffs [national], on grain) Roosevelt, Franklin D., 31-32 rural education, 42, 248n7; Ding County model, 254n7; extension programs, 45. See also Mass Education Movement (MEM) rural reconstruction: Feng Rui’s role, 226, 228; financing, 82-83; government role, 41, 48-50; models, 42-45; and modernization, 21-22, 29-30; sugar milling and, 60, 61-62. See also agricultural development rural sociology, 30-31, 34-35; surveys, 34, 36, 38-39, 126 Sanderson, E. Dwight, 28 self-sufficiency: national, 71-72, 82; PRC policy, 217; and rural economy, 75-76, 77, 209-10; in sugar production, 103-4 separatism: fiscal, 79, 84; southern, 5, 8, 14-15, 94, 232, 233-34 sericulture, 27, 55, 249n36, 257n68 Shanghai: banks, 63, 258n92; investment in Guangdong, 63-64, 93 Shantou, 89, 100, 137, 142, 158, 162, 194, 197, 217, 264n93, 277n56; sugar sales, 150-51 Shitou sugar mill, 98(t), 99(f), 172, 208, 215-16, 221(f); crushing season, 140(t) Shunde sugar mill, 98(t), 99(f), 172, 209, 212, 213, 214-15, 214(t), 217; crushing season, 140(t) Sichuan, 59, 127 Skoda Works, 98(t), 104, 115, 116, 117, 118, 267n24 smokeless: cement, 66, 69; medicines, 259n125; sugar, 1, 67, 163-72, 229-30, 277n56 smugglers, as traitors (hanjian), 182 smuggling: incentives, 151, 162; inward, 7-8; Japanese, 15, 182, 183-84, 284n95; and national revenue, 151; official, 5, 18, 196, 275n16; official, cement, 64-65, 66; official, sugar, 158-59, 161-63, 163-72, 183-84; political disunity and, 183-84, 186, 280n24; restricted, 210-11; rice, 89-90; sugar, 151-54, 279n116

smuggling prevention: agencies, 153, 156, 157-63; on Kowloon-Canton Railway, 286n19; regulations/penalties, 151-53, 181, 184-86, 275n16; spheres of control, 159-60 sociology. See rural sociology Soldiers’ Colonization Centres, 107. See also Military Reclamation Bureau Song Ziliang (T.L. Soong), 90, 92, 93, 177-78, 195-96, 240, 283n79 Song Ziwen (T.V. Soong): vs. Feng Rui, 77; in Guangdong government, 206-7, 231; in Nationalist government, 73, 74-75, 77, 175, 231; and PRC industrialization, 206-7; and rice tariffs, 73, 74-75; and rice trading, 93, 266n137; and sugar, 175, 206-7, 279n116; and Tang Hai’an, 172, 278n102 Soong, T.L. See Song Ziliang (T.L. Soong) Soong, T.V. See Song Ziwen (T.V. Soong) South China Morning Post, 1 South China Rice Trading Corporation, 93, 266n137 Southwest Incident (Xinan shibian), 4, 68-69, 233-34 Southwest Military Branch Council, 50 Southwest Political Council: armed forces, 50, 234, 288nn20-22; authority, 8-9, 169, 245n44; dissolved, 181; era of, 50-52; vs. Nanjing, 75; weakened, 191 sovereignty, 3, 182, 231, 237; economic, 230, 237; regional, 232 state-building, 9, 13-14, 231 sugar: consumption, 102-4, 274n73; extra-provincial trade, 216-18; grades, 100-1, 267n12; and grain, 209-10; imports, 58, 59, 151, 152(t), 153(t), 156, 168-71, 176(t), 189, 257n68; market preferences, 103, 141-42, 197; polarization, 100, 101; prices, 102, 149; processing, 164, 268n29 (see also sugar mills); production target, 208; smokeless, 1, 67, 163-72, 277n56; smuggled, 151-54, 153(t); and tungsten, 194-95 Sugar Dealers’ Association (Shanghai), 187-88 Sugar Distribution Commission, 187-88, 189

Index 317

Sugar Distribution Merchants’ Association, 148, 150; and smuggling, 153-54, 161-63 sugar industry: centrals, 106, 108, 136; complaints, 130; contracts, 145-46; land problems, 142-44; in Maoist period, 147; market regulation, 112-13; marketing, 66-67, 162-63, 167, 172, 193, 258n94; national, 180, 247n80; Philippine model, 104-12, 132, 133, 136; plantation model, 146-47, 211-16; PRC revival, 206-8, 208-11, 217; rural credit program, 124, 211-12; three-year plan (see Sugar Industry Revival Plan) Sugar Industry Revival Plan: implementation, 122-23, 126, 127, 139-42, 145-46; monopoly, 148-55 (see also Guangdong Sugar Monopoly [GSM]); objectives, 104, 106-7, 228; opposition, 146, 149. See also smuggling, official, sugar; sugar, smokeless sugar mills, 99(f); capacity, 97, 98(t), 120, 125, 128; construction, 98, 105, 107, 109-10, 113-14, 114-16; costs, 104, 129, 130, 138; crushing season, 140(t); financing, 67, 114-15; and Guangdong army (see Military Reclamation Bureau, sugar mills); importance, 57, 246n54; need for monoculture, 137-38; and official smuggling, 18, 163-65, 197-98; private (liao), 113, 139-42; small vs. large mills, 61-62; and state revenue, 125, 218-20; sugarcane supply, 124-29, 125(t). See also specific sugar mills sugar traders: commissions, 157; contracts, 156-57; distribution quotas, 150(t); and GSM, 148, 149; Japanese, 188, 196-98; and national monopoly, 187-90; protests, 177; responsibilities, 152-53, 154, 194; Shanghai, 187-88, 189 sugarcane, 221(f); crushing season, 140(t); prices, 140, 207-8, 213; strains, 130, 132, 133-34; supplies, 206-7, 211-16, 286n33 sugarcane cultivation: cooperativization, 136, 144; financing, 132-33; history, 100; plantation model, 137-38, 220; requirements for, 111, 126-27, 128, 130, 214(t), 268n42; Western science and, 107-9; yields, 123, 124, 127, 128(t), 134, 215(t)

sugarcane producers: contracts, 133, 137, 138-39; counties, 217; foreign, 100-2, 104; and government, 122; as plantation workers, 211-16; profits, 139-42; rural credit program, 133-34, 134-35 Sun Yatsen (Sun Yixian), 7-8, 52, 83-84, 182, 229, 231-32 Taikoo Sugar Refinery (TSR), 117, 148, 164, 165-66, 167, 197, 279n116, 281n37; marketing system, 155 Taishan, 154 Taiwan, 59, 126, 184, 196-97, 208 Taiwan Sugar Company, 196, 197-98 Tan Yingbin, 126 Tang Hai’an (H.O. Tong), 172, 179, 19596, 283n79; and Song Ziwen, 195-96, 278n102 tariffs (national): collections, 83; evasion (see smuggling); on grain, 72-74, 75, 90, 93; and Guangdong, 83-86; increases, 7; opposition, 5, 92; on salt, 158; on sugar, 98, 100-1, 100-4, 170-71; vs. taxes, 79, 88-89, 92, 260n4. See also customs revenue tax farming, 88, 91-92, 154, 155-57 taxation (Guangdong): on agricultural commodities, 71, 75-83, 86-90, 151, 159, 259n121, 264n93, 265n105; on agriculture, 218, 220; allocation of revenue, 67-68, 69, 78, 91; on cement, 65, 159; collection, 88, 91-92, 154, 155-57, 260n127; and international agreements, 85-86; lijin system, 85-86; under Nanjing control, 90-93; as national subsidy, 190-91; on opium transit, 158-59, 191; opposition, 82, 87-88, 265n121; regional tariffs, 18, 247n79 (see also taxation [Guangdong]); regularized, 177-78 Tong H.O. See Tang Hai’an (H.O. Tong) Tongxing Company, 155, 156, 161, 192 traitorous merchants (jianshang), 90 traitors (hanjian), 182 Tsinghua University, 27 tungsten, 193-96, 199; sales, 282n65, 283n72 tungsten-sugar barter-trade agreement, 194-95, 199-200, 240

318 Index

unemployment, 62, 137, 261n20 United States (US): agricultural history, 31-32; Consulate, 165; Department of Agriculture, 29, 30, 43, 54; ExportImport Bank Agency, 115; importsubstitution industrialization, 70; influence in education, 54; investment in agriculture, 31-32; loans and imports, 74-75, 77, 79, 261n21; model of progress, 30 United States Silver Purchase Act (1934), 87 University of Nanjing, 22-23; School of Agriculture, 24-25 value: cement industry, 64-65, 163(t), 259n102; cotton sales, 163(t); of émigré remittances, 74, 261n19; fertilizer sales, 163(t); gambling tax, 178; GSM licensing fee, 193; Huizhou losses, 119; Huizhou profits, 120; Jieyang losses, 207; molasses sales, 163(t); of Northern Expedition debt, 84-85; opium taxes, 191; of owed customs revenue, 79; rice imports, 72-73, 87, 264n89; rice tariff/ tax, 75, 76(t), 87-88, 89, 264n93; salt tax, 158, 159, 263n71; silver, 72, 87; of sugar consumption, 113; sugar exports/ imports, 100, 156, 189; sugar industry, 67, 112(t), 163(t), 165, 210, 219(t); sugar prices, 141-42; of sugarcane, 125(t), 129, 134; of taxation, 155, 156, 285n18; of tungsten, 163(t), 283n72; Vietnamese rice, 265n107; of withheld tariffs, 184 Vietnam, 74, 80, 89, 211, 265n107 village life: and émigré remittances, 74; psychology of, 39-40; scholars in, 36-37; social relations, 35 Weng Shiliang, 107, 110, 114-15, 116, 118, 119

World Agriculture Society, 40-41 Wu Kai-yin. See Hu Jixian (Wu Kai-yin) Xian Zi’en: on agricultural credit program, 135, 139; education, 248n10; on Feng Rui, 22-23, 48, 104-5, 116, 248n8; on sugar mills, 98(t), 104-5, 113, 117, 140(t), 248n8, 269n68 Xiao Zili, 258n89, 264n87 Xicun: industries, 67 Xicun Cement Factory, 65-66 Xinzao mill, 98(t), 99(f), 109-10, 117, 140(t), 163-65, 169, 210 Yan Yangchu. See Yen, James Y.C. (Yan Yangchu) Yang Dezhao, 174-75 Yang Quan, 180 Ye Daxia, 162 Yeh, Wen-hsin, 14, 245n66, 247n75, 250n59 Yen, James Y.C. (Yan Yangchu), 35-37, 38, 43, 203, 284n110 Yong’an Yuan, 130, 131(f), 132, 272n34 Yu Hanmou: and Japanese interests, 198-99; judgment of Feng Rui, 4, 179, 181, 185, 196, 202, 203-4, 239-40; and sugar, 90, 192-93; and tungsten, 193-96 Yu Jixian, 192 Yuan Dai, 156, 161-62 Yuan Liang, 189 Zanasi, Margherita, 12-13, 13-14 Zhang Duangui, 162 Zheng Shougen, 155, 161, 192 Zhongguode Yiri (One Day in China), 186 Zhongshan, 154 Zhou Dayao, 143-45, 270n81, 270n84 Zou Lin, 90 Zou Minbang, 79 Zou Minchu, 155, 156

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