lot has been set on foot by British and American philanthropists, no mention of child labour has yet been made in any of the numerous demands put forward for the settlement of the strike by the labour unions and student organisations, nor has it ever been referred to by any Chinese party as an evil which China has suffered at the hands of the foreigners. It is not at all certain, in fact, that the introduction of municipal legislation restricting the employment of child workers would not be regarded by the agitators as a further instance of foreign interference with Chinese rights."

Though there are a few-a very few-Chinese factories which form an honourable exception to the rule, all the evidence points to the fact that conditions in foreign, and especially British, factories in China, though naturally in some respects not equal to European standards, are, in fact, far superior to the conditions in the vast majority of Chinese factories.

Though industrial unrest has been increasing in China in recent years and economic strikes have been of frequent occurrence in most forms of industry, it is significant that the three cotton mills in Shanghai owned and managed by Messrs. Jardine Matheson and Co. have never had a strike until the beginning of June 1925 (just after the shooting incident in the Nanking Road), and then only because the work people were intimidated by the political agitators who were responsible for the anti-foreign disturbances. If, as seems inevitable, China is to be industrialised, it is of the highest importance that she should recognise the terrible social evils inherent in the old-fashioned domestic industry system and learn. by the experience of the industrial revolution in Europe how to prevent the extension of these evils to the factory system, where they would have the potentiality of being greatly intensified. The foreigner has therefore rendered a great service, which it is to be hoped will one day be appreciated, by setting in foreign factories a higher standard of labour conditions for the Chinese industrialist to copy and by rousing public opinion to a sense of the dangers which lie ahead.

Serious misapprehensions exist both as to the extent to which China has been industrialised and the extent to which foreign capital has been invested in industries in China. Misstatements have unfortunately found their way even into the Blue Book on the subject published in 1925 ("China No. 1 (1925)," (Cmd. 2442)). In a vast country like China, where the machinery of administration, in the European sense, hardly exists, accurate statistics as to factories, amount of capital, numbers of workmen, &c., are unobtainable. It is possible, however, to quote a few figures which are indicative of the facts. Thus, China, with an area of 4,300,000 square miles (larger than Europe) and one-quarter of the population of the world, has

(1.) 7,700 miles of railway.

(2.) 14 blast furnaces, producing 500,000 tons of pig iron per

annum.

(3.) 400 electric light plants, with an aggregate capacity of 250,000 kilowatts.

(4.) 160 flour mills, with an aggregate daily capacity of 120,000 barrels.

(5.) 128 cotton mills, with 3,537,400 spindles and 19,900 looms. (Of these, only four mills, with 217,282 spindles and 2,612 looms, are British. Of the total spindles, 54 per cent. are Chinese and 40 per cent. are Japanese-owned.

These few figures will show that the industrialisation of China has barely commenced. The British share in this industrialisation is very small indeed. There is no British capital invested in Chinese factories, whereas in British factories the capital is generally largely subscribed by Chinese. As has been shown above, only four cotton mills out of 128 are British. Of these, three belong to Ewo Cotton Mills (Limited), in which the capital is 38 per cent. Chinese, and the fourth belongs to the Oriental Cotton Spinning and Weaving Company, in which the capital is 54 per cent. Chinese. The only places in China where foreigners may own factories are at the treaty ports, but the consular reports show that it is only at a few of the largest ports which happen also to be industrial centres, such as Shanghai, Nanking, Hankow, Tien-tsin and Harbin, that British factories are to be found. With regard to all the other ports, the conditions at Canton may be regarded as typical. Here His Majesty's consul-general enumerates some seventy native factories, but there is only one small British aerated water factory, catering no doubt for the restricted foreign demand.

With regard to Shanghai, it is unfortunate that the Blue Book "China No. 1 (1925)," (Cmd. 2442), is somewhat misleading. The list given at p. 94 is misleading because some of the companies there named are not really British, and many of them are not employers of labour in factories. Moreover, Appendix I of the report of the Child Labour Commission gave a list of 273 factories in the whole industrial area of Shanghai, and it was quite erroneously stated that, of these, 87 were foreign and 28 were British factories. This error, which was due, as the report itself explains, to the complete absence of all reliable statistics, is repeated at p. 102 of the Blue Book and again at p. 105, where the additional error is made of stating that these 273 factories are in the municipal area, whereas a large proportion of them are outside the International Settlement and therefore outside the range of settlement legislation or control. Though it is not possible to state how many British factories there. are in Shanghai, it is evident that the number is very small.

This lack of accurate information is the cause of many unfounded charges that are brought in this country against the British employer of labour in China. It is said that the British have gone to China in order to fasten the yoke of capitalistic exploitation of labour upon the Chinese; that the British export credit to China and use that credit to erect factories and exploit cheap labour; that the products of this cheap labour are exported

into other countries, such as India, where they compete with English manufactures and thus injure the British working man; that the authorities of foreign concessions refuse to apply Chinese factory legislation in the concessions; that the Child Labour Byelaw for the International Settlement at Shanghai was defeated by means of a deliberately organised boycott which prevented a quorum being secured.

To some extent these misstatements arise out of honest ignorance of a very complicated and little-known subject. They can, however, be refuted in a few brief paragraphs summarising the facts set forth in the preceding memorandum :

1. China having barely begun to emerge from the stage of domestic industry, the total amount of all capital invested in factories is insignificant. Nearly the whole of this capital is Chinese, only a small percentage being British. The interests of the British in China are therefore overwhelmingly those of the trader and only to a very insignificant extent those of the capitalist or employer of labour.

2. The development of a factory system in China is, and must continue to be, the work not of foreign capitalists but of the Chinese themselves. The influence of foreign capitalists, both British and Japanese, inasmuch as it has set up higher standards and introduced humanitarian ideas, has been entirely beneficent.

3. China has not yet become to any serious extent an exporter of manufactures, but she may be expected to do so in future, and thus to compete with our own manufactures. That is not a development which we can object to or should endeavour to check. We should, on the contrary, welcome any development tending to increase the wealth of China.

4. The evil conditions of labour in Chinese factories are due primarily to the low standards of living that prevail generally in China and to the total absence of effective legislation. The disappearance of the concessions and of extra-territoriality will probably militate against improvement in labour conditions; on the other hand, growth in the power and influence of the Nationalist party, which has (on paper, at least) adopted a labour policy, may promote such improvement.

5. Conditions in foreign factories, particularly British and Japanese, are better than in Chinese factories. A high proportion of the few British factories challenge comparison with any in the world.

6. The movement for securing better conditions for labour was initiated, and has been led, by foreigners, both missionaries and capitalists. The Chinese, with a few brilliant exceptions, have been generally apathetic, and Chinese labour organisations, so far as they have not been led astray into politics, have been interested only in the question of wages.

7. There is no Chinese legislation which can be applied in foreign concessions. The Provisional Factory Regulations of 1923 are unsuitable and exist only on paper.

8. The Child Labour Byelaw for the International Settlement at Shanghai failed in 1925 because under the Settlement Regulations one-third of the ratepayers must attend before a new byelaw can be passed. A similar rule would block similar legislation in the most enlightened country in the world. Nevertheless, a quorum would have been secured if it had not been for the Chinese opposition and the occurrence of serious riots on the day of the meeting. A larger percentage of British ratepayers than of any other nationality attended the meetings. It is probable that the Chinese, while still failing to enforce legislation of their own, would resent any further attempt to legislate in the International Settlement as an invasion of their sovereign rights.

Foreign Office, February 25, 1927.

J. T. PRATT.

Sir,

ANNEX.

Consul-General Barton to Sir Austen Chamberlain.

H.B.M. Consulate-General, Shanghai,
August 27, 1925.

I HAVE the honour to acknowledge the receipt of your despatch of the 25th June last directing me to furnish a full report, containing the latest available statistics, on the subject of the employment of children in mills and factories owned or managed by British subjects in Shanghai.

2. As stated in my telegram of the 20th ultimo, there are, at the present time, only four mills in Shanghai which are really British owned. These are the Ewo, Yangtzepoo and Kung Yik mills, owned by the Ewo Cotton Mills (Limited), and the Oriental Cotton Mill, owned by the Oriental Cotton Spinning and Weaving Company (Limited).

3. The Ewo Cotton Mills (Limited) is a company, incorporated under the Hong Kong Ordinances, of which Messrs. Jardine, Matheson and Co. (Limited) are the managers. There are five British directors and four Chinese, and of the paid-up capital of 5,400,000 taels (say £860,625), 38 per cent. has been subscribed by Chinese shareholders. The Oriental Cotton Spinning and Weaving Company (Limited) is also incorporated under the Hong Kong Ordinances. The managers are the British firm of Messrs. Arnhold and Co. (Limited), and the directors are all British. The total paid-up capital is 1,452,000 taels (say £231,412), of which 54 per cent. has been subscribed by Chinese.

4. In addition to the above-mentioned cotton mills there are two factories belonging to the British American Tobacco Company (Limited), which employ a limited number of children, and the Ewo silk filature, owned and managed by Jardine, Matheson and Co. (Limited). There is also the Zoong Sing Cotton Mill, which was

founded a few years ago by a rich Chinese. He subsequently turned it into a Hong Kong China company, of which he and other Chinese own 90 per cent. of the shares. The British Indian firm of R. D. Tata and Co. are managers and agents, but the recruitment, control and supervision of the labour is still left entirely in the hands of the Chinese. The mill is evidently regarded as a native one by the labour unions, who have left it alone during the recent troubles, and there has been no strike of its workpeople. I am informed that it employs no children under the age of 12, and about 500 between the ages of 12 and 16. One or two mills belong to companies such as Wing On Company (Limited) and Sincere (Limited), which, though incorporated in Hong Kong, are composed almost entirely of Chinese directors and shareholders. To all intents and purposes, therefore, their factories are Chinese and do not come within the scope of this report. The Laou Kung Mow Cotton Mill, formerly owned by the British firm of Ilbert and Co. (Limited), has recently been sold to Japanese.

5. Appendix 1 to the report of the Child Labour Commission, enclosed in my despatch of the 26th July, 1924, contains a list of mills and factories in the Shanghai district which purports to give the nationality of each. A number of silk filatures employing child labour are therein listed as British. This, however, is entirely incorrect and, so far as I have been able to ascertain, no silk filature in Shanghai, with the exception of the Ewo filature mentioned above, is in any way owned or managed by British subjects. The information given in the appendix was supplied by the municipal police, who have explained to me that the only reason for listing these concerns as British was that they had appointed British firms as agents for the sale of their products. A copy of a letter on this subject from the commissioner of police is enclosed.*

6. As regards the numbers of children employed in the British mills and factories, their hours of work and conditions of labour, I have the honour to enclose copies of a report by the Ewo Cotton Mills (Limited) and letters from Messrs. Arnhold and Co. (Limited) and the British American Tobacco Company (Limited) giving detailed information regarding the establishments under their control. These were replies to a questionnaire, which requested information under the following heads :

(1.) The number of children employed, and the age limit below which they were not accepted.

(2.) Method of recruitment.

(3.) Hours of work and rest, and arrangements for feeding.

(4.) Wages.

(5.) Safeguards against injury; and fire protection, sanitation,

ventilation, &c.

(6.) Any other points which might be considered of interest, together with a statement under each heading as to how the conditions described compared with those obtaining in similar institutions controlled by Chinese.

*Not printed.