in the near future, depend upon militaristic
domination and wild expenditure for unproductive purposes and squeeze.
Without this expense, China would have no great difficulty henceforth
in maintaining a balance in her budget. The retardation of public
education whose advancement--especially in elementary schools--is
China's greatest single need is due to the same cause. So is the
growth in official corruption which is rapidly extending into business
and private life.

In fact, every one of the obstacles to the progress of China is
connected with the rule of military factions and their struggles with
one another for complete mastery. An economic international agreement
among the great powers can be made which would surely reduce and
possibly eliminate the greatest evils of "militarism." Many liberal
Chinese say in private that they would be willing to have a temporary
international receivership for government finance, provided they could
be assured of its nature and the exact date and conditions of its
termination--a proviso which they are sensible enough to recognize
would be extremely difficult of attainment. American leadership in
forming and executing any such scheme would, they feel, afford the
best reassurance as to its nature and terms. Under such circumstances
a plausible case can be made out for proposals which, under the guise
of traditional American friendship for China, would in fact commit us
to a reversal of our historic policy.

There are radicals abroad and at home who think that our entrance into
a Consortium already proves that we have entered upon the road of
reversal and who naturally see in the Pacific Conference the next
logical step. I have previously stated my own belief that our State
Department proposed the Consortium primarily for political ends, as a
means of checking the policy pursued by Japan of making unproductive
loans to China in return for which she was getting an immediate grip
on China's natural resources and preparing the way for direct
administrative and financial control when the day of reckoning and
foreclosure should finally come. I also said that the Consortium was
between two stools, the financial and the political and that up to the
present its chief value had been negative and preventive, and that
jealousy or lack of interest by Japan and Great Britain in any
constructive policy on the part of the Consortium was likely to
maintain the same condition. I have seen no reason t