Legation of the United States of America

Peking, March 17, 1919.

Dr. Sun Yat Sen,
29 Rue MoliÈre,
Shanghai, Kiangsu.

Dear Dr. Sun:

I have read with great interest your sketch project for the international development of China as embodied in your letter of February first to me. I congratulate you upon the broad and statesmanlike attitude with which you treat this very important subject. Your suggestion of united international participation in the development of China's resources deserves the support of all friends of China. It would be unfortunate indeed if the old rÉgime of spheres of influence, struggles for concessions and activities flavoring of selfish exploitation should not, with the conclusion of the war, be relegated to the past. You are right in recognizing the necessity of a substitute for the old order and your proposal of a unified policy under international organization with Chinese participation for the larger development in China, naturally assuming that the inalienable rights of the Chinese people are to be amply safeguarded, meets this demand admirably.

We are hopeful that conditions in China may become such that the Chinese people themselves may be encouraged to put their money into productive enterprise and participate in the larger developments. We are hopeful that the day is not far distant when the Chinese Government may be able actively to interest itself in the encouragement of native industry to the end that native capital of which there is a very considerable quantity, may be induced to lend itself to productive enterprises, because of a Confidence in constructive policy on the part of the government.

If you will permit a suggestion, I would be inclined to reduce your admirable program to one which would be in closer keeping with the limits of the present world's resources in capital. As we all know devastated Europe is calling for capital for rehabilitation and other nations want capital for development programs of considerable proportions. Thus it would seem that China's program of development must of necessity take cognizance of her most immediate and most pressing needs. We are all united in that transportation occupies a prominent place in such a program. 50,000 miles of railway and 100,000 miles of good roads would seem to be sufficient to engage our attention for any plans for the immediate future. This would allow ample opportunity to penetrate the great rich unoccupied regions in the North and West, which should be opened to colonization and development as soon as possible in order to relieve the economic pressure of over population in sections along the coasts and waterways, and to accord opportunities to bring the rich regions of West China into contact with the trade of the rest of China and the world at large.

Along with transportation, China needs to develop its resources in iron and coal, the two great essentials to modern industrialism. Arrangements should be made whereby foreign capital can come to China's assistance in these two important industries, but care should be exercised so as to preserve to China the iron and coal necessary for its own uses, and prevent China's steel industry being mortgaged to foreign interests, in a way so as to jeopardize China's future in this important industry.

The reform of the currency and reforms in internal tax administrations are questions of immediate importance to China's economic and industrial development.

One of the greatest fields of potentiality in the immediate demands of the New China, is agriculture. The country depends in its final analysis upon the prosperity of its agriculture. At present probably as much as 80% of China's population is agricultural. China's greatest problem is the proper feeding and clothing of its vast population. Improved conditions in agriculture, opening of new lands to cultivation, irrigation and conservancy works, the encouragement of the cattle and sheep industries, the development of the cotton industry and the improvement of tea, silk and the seed crops of China, are timely subjects in any program of developments. There is a vast work to be done in agriculture in China, which will lead to prosperity generally, and make possible developments with native capital in other fields of activity, whereas if agricultural improvements are neglected, it will be difficult to insure prosperity in other directions.

Thus for the present, I hope the main thought may be centered on improvements in transportation, in currency and tax administrations, in the development of coal and iron industries, and in agriculture. Many of the suggested activities included in your very extensive program will follow as a corollary to the above.

In thinking of all these developments, I believe that we should always give thought to the fact that we are not dealing with a new country but with one in which social arrangements are exceedingly intricate and in which a long-tested system of agricultural and industrial organization exists. It is to my mind most important that the transition to new methods of industry and labor should not be sudden but that the old abilities and values should be gradually transmuted. It is important that the artistic ability existing in the silk and porcelain manufacture, etc. should be maintained and fostered, and not superseded by cheaper processes. It is also highly important that no export of food should be permitted, except as to clearly ascertained surpluses of production. It would produce enormous suffering were the food prices in China suddenly to be raised to the world market level. The one factor in modern organization which the Chinese must learn better to understand is the corporation, and the fiduciary relationship which the officers of the corporation ought to occupy with respect to the stockholders. If the Chinese cannot learn to use the corporation properly, the organization of the national credit cannot be effected. Here, too, it is necessary that the capital of personal honesty which was accumulated under the old system should not be lost but transferred to the new methods of doing business. So at every point where we are planning for a better and more efficient organization, it seems necessary to hold on to the values created in the past and not to disturb the entire balance of society by too sudden changes.

I wish again to congratulate you upon the statesmanlike view with which you consider the whole question of the development of your country, and the very timely suggestions you have to make in regard to a united policy of international participation in these developments. I am glad to note that the minds of the leaders among the Chinese people today are being centered more and more upon the constructive needs of the country and efforts are being made to meet these needs, in full appreciation of China's relations with the people of other nations, to the end that China's developments in the future may work in harmony with the world developments generally. I should be glad to hear from you further and more in detail concerning development plans.

Believe me, with the highest regard,

Sincerely yours,
(Signed)
Paul S. Reinsch.