by it pro rata between the Residuary Participation by it and the amount issued by such party on its own account." It shall "use its best endeavors to obtain a quotation on its own market for the total amount issued by it." Mutual agreement of the parties making the request and those requested is necessary to any issue of Residuary Participation.

Each party enjoys exclusive control of its own market as far as the issuance of the bonds is concerned. No participation can be given to any outside its own market (Article 7).

The duration of the New Consortium is fixed at five years that is, 1920 to 1925-but subject to this condition, that the majority of the parties can determine its duration at any time by giving twelve months' notice in writing to the other parties concerned, which means that the majority of the parties can terminate, or shorten, or lengthen, the period of duration at will (Article 8).

Such being the Constitution of the New Consortium, let us now observe its dealings with the Chinese Government so far as they have been made known to the public. On September 28, 1920, before the Conference in New York City in October, 1920, the American, British, French and Japanese Legations at Peking despatched a joint note to the Chinese Foreign Office, informing the latter of the formation of the New Consortium, setting forth its purposes, scope, and the amount of diplomatic support the respective Governments are pledged to give, together with a collection of documents dealing with the negotiations for the formation of the New Consortium, and ending with the wish, "for the early consummation of a united Government in China so that the New Consortium may eventually be enabled to give practical expression to the desires of the four Governments con

cerned to assist in the future development of this country."

On receipt of this note, informal conferences took place at the Chinese Ministry of Finance. Expressing the view of the Chinese people, although the note took the form of a personal opinion, Mr. Chow Tsu-chi, Chinese Minister of Finance, communicated to the representatives of the Consortium Banks on November 26, 1920, as follows: *

"In pursuance of our conversation at the Ministry of Finance on November 23, I deem it expedient, in order to remove any misunderstanding as to my personal attitude with regard to the Consortium, to set down the following points:

"1. It is necessary that the Government of China should at this juncture secure financial aid for constructive purposes.

"2. If the Government is compelled to resort to foreign loans for this purpose (a) I personally cannot advise that any agreement embodying conditions calculated to establish a financial monopoly should be signed with any bank or group of banks; nor (b) can I advise that any loan agreement be negotiated where the Land Tax of China should be set down as security and placed under foreign jurisdiction.

"The Consortium has been formed with the object of assisting China in her reorganization. China, particularly myself, heartily welcomes such evidence of good will on the part of foreign financiers, but expects that it will be manifested in a manner that will leave no doubt in the minds of the people of China as to the motives which animate the foreign bankers and which will correct the impression now prevailing that their national freedom is being mortgaged.'

In reply, the representatives of the Banking Groups expressed their views as follows:

"At your Excellency's request the general scheme of the Consortium for a comprehensive constructive loan

to China for productive purposes, such as the construction of railways, was described, and the reasons for this policy, as well as for the fact that our instructions did not include the consideration of a loan for purely administrative purposes, were clearly explained. At the same time we communicated the conditions which in the opinion of the Consortium were absolutely necessary for the successful issue of any loan for China on the foreign markets, viz.: (1) the recognition of all German Bonds and Coupons of existing Chinese Government Railway Loans, and (2) the provision of a separate security in the case of future railway loans. We further answered Your Excellency's inquiries regarding the present position of the Pacific Development Corporation Contract, and the views of the Consortium on the question of taking over this agreement. It is therefore necessary to state as clearly as possible_that_not only was no proposal mooted on behalf of the Consortium which included 'conditions calculated to establish a financial monopoly,' but also that during the interview no mention was made on either side of the Land Tax of China as a possible security for any loan to be made..

"If, as stated by Your Excellency, it is possible that China can herself presently find the money necessary for her reorganization, the groups will learn with the greatest satisfaction of the success of her efforts in this direction, and we are certain that she will have not only the entire sympathy, but, as far as possible, the coöperation of the Consortium in her endeavors to achieve that end."

In view of this protest, Mr. Chow Tsu-Chi made a polite retreat and answered that inasmuch as the New Consortium entertained no motive or intention of establishing a financial monopoly or of obtaining the Land Tax as security, he was much gratified at the assurance. On January 13, 1921, the American, British, French and Japanese Legations sent another joint note to the

Chinese Foreign Office informing the latter of the signing of the Consortium Agreement on October 15, 1920, and of the full approval of the New International Association by the four Powers interested.5

The significance of the New Consortium cannot be over-estimated. It is the physical embodiment of the policy of the Powers-the policy of international coloperation and control. It will be remembered that, with the realization of the evil consequences of cut-throat competition, the Powers have, since the Chinese Revolution of 1911, adopted the policy of international cooperation and control. In consequence, the old consortium was formed and contracted the loans for the Hukuang Railway and the Currency Reform of 1911, and the Reorganization Loan of 1913. Interrupted partly by the withdrawal of the American Group resulting in the loss of a moral leader within the Old Consortium, but largely by the interposition of the World War, which withdrew the struggling Powers from "their happy hunting ground" of the Far East to the ghastly arena of the European battlefields, this common policy was temporarily laid aside. As soon, however, as the World War was over, the Great Powers resumed the old policy, and hence the formation of the New Consortium. It can therefore be said that the New Consortium embodies and represents the policy of International Coöperation and Control during the present period of China's history.

Further, the New Consortium is a practical assertion of the Open Door Doctrine on the part of the United States. While respecting vested interests, it proposes, as far as possible, to demolish the walls of spheres of interest or influence. By pooling all existing options. in which no substantial progress has been made and all future options, administrative, industrial or otherwise, and by offering to public tender the execution of engi

neering contracts and the purchase of materials, it establishes a condition of true equality of trade which did not obtain under the old régime of international struggle for concessions, or under the doctrine of Closed Spheres. By mitigating the evils of spheres of interest or influence, and by requiring the submission of all agreements to the approval of the Governments concerned, particularly the Department of State of the United States, it tends to maintain the political independence and the sovereignty of China. Hence it is the incarnation of the Open Door Doctrine.

Moreover, the New Consortium aims to put into operation the new policy of the internationalization of Chinese railways. Asserting as it does the Open Door Doctrine which, as we recall, with respect to railways, must either adopt the principle of internationalization, or exclude them entirely from the scope of its application, because of the monopolistic nature of railways, it cannot enter into the field of Chinese investment except in the path of the internationalization of these concessions. With the existing railways, already in operation or under construction, or in which substantial progress has been made, it does not aim to interfere, except in so far as the Chinese Government or the Provinces desire to make an international loan to redeem the foreign railways, which, however, is conditioned upon the the consent of the New Consortium to assume the burden and upon the willing coöperation of the Powers owning and operating these railways. With existing railway concessions, in which little or no substantial progress has been made, and with all future railway concessions and other public and basic undertakings, such as Hukuang, Second Reorganization, Currency Reform, Pukow-Sinyang, Nanking-Hunan, JeholTaonan, Tsinan-Shunteh, Kaomi-Hsuchow, Siems-Carey, Grand Canal, and so forth, it proposes to apply the policy of internationalization. Thus, what Secretary