Herbert Hoover's Story on the Kaiping Mines

Herbert Hoover's story on the Kaiping mines appears to have been that he was lied to by his bosses--with whom he remained on excellent terms, however.

From Walter Liggett (1932), The Rise of Herbert Hoover (New York: H.K. Fly), p. 111 ff.:

The action between Chang Yen-mao and the Chinese Engineering and Mining Company of Tientsin, plaintiffs, versus Charles Algernon Moreing, Bewick, Moreing, and Company, and the Chinese Engineering and Mining Company, Limited, of London, defendants, was brought to trial on January 18, 1905, before Justice Joyce in the Chancery Division.... On March 1, 1905, Justice Joyce delivered from the bench a long verbal decision in favor of the plaintiffs....

[...]

Chang [Yen-mao] described the circumstances under which he signed the deed.... He said he repeatedly refused to sign... its terms did not agree... with his agreement with [Herbert] Hoover. Upon being told by Hoover that the deed was merely meant for the purpose of registration in England, and that the memorandum would be the ruling instrument, he eventually signed... with reluctance....

Chang told in detail of... threats... by Hoover... that the mines would be confiscated by the [European] Allied governments and that he and the Chinese stockholders would get nothing [if he did not agree to the terms]....

[...]

In opening the defense, Counsellor Hughes made a long speech in which he protested against charges of fraud or misrepresentation.... Hughes defended the issuance of 625,000 shares of promoters' stock and added, "Mr. Moreing did not profess to go to China as a philanthropist."...

Mr. Hoover took the stand.... He said that Detring told him that the deed of July 30, 1900, had been approved by Chang. (Both Detring and Chang denied this.)... Hoover declared he had always considered the memorandum binding, and always had insisted that it be carried out. On cross-examination he said that he did not know... that the memorandum's provisions had not been incorporated into the articles of association. He also disclaimed knowledge of the financing.... Under cross-examination he said that he had told Chang and Detring that the provisions of the memorandum were incorporated in the articles of association, and that he had not known differently until he returned to London. He admitted the whole of his negotiations with Chang and Detring when he returned to China had been on an "incorrect basis."...

Counsellor Levitt produced a letter written by Hoover... [in which] he had said that "the China board would have in itself the entire management of the company's property in China, and that H[is] E[xcellency] Chang would be director-general [of the mines] for life." Hoover admitted the statements were not true, but explained that when he wrote the letter he thought them true. Hoover said he... had tried to carry out the terms of the memorandum and as long as he was in China thought he had succeeded. Then he was shown a letter... by himself.. which stated that the changes which he had inaugurated... [were to give] the new manager "complete control immediately upon arrival" in order that "the future administration [of the mine] might be preserved from any interference by the Chinese board."...

[Hoover] admitted reading a letter which de Wouters had written to the board of directors in London.... Hoover admitted that he had not asked de Wouters to alter the letter, or not to send it, but insisted nevertheless tht he was not in accord with de Wouters on this point and that the letter did not correctly represent the situation...

The Memorandum. The Pall Mall Gazette, February 2, 1903

Comments

[Hal]

I am very very tired of being upset by Iraq and our neo-colonialism in the Middle East. I would much rather worry about Herbert Hoover. Much more important right now, that.

[P.M.Lawrence]

But, but, but...

Just how significant is all this? US behaviour in financial matters had been low for at least the previous two generations, judging by Trollope's many passing mentions in his "North America" and Bertrand Russell's late 19th century observations of how enterprises were managed into nominal bankruptcy to avoid paying (largely European, as it happens) shareholders. And there's the well-documented history of "railroad reorganisation", with income bonds and similar devices. US repudiation was a chronic and serious sovereign risk, de facto if not nominal (hence the highly misleading claim that the US has "never" defaulted - all such things were done at arms' length). In fact I've heard it said that Europe involuntarily contributed more capital to the USA by such means than Marshall Aid later returned voluntarily - and it did so earlier, too.

Anyhow, with all that going on, how is Hoover's behaviour distinguished by anything but the curious fact that it fell under another jusrisdiction than was usual?

[WalkingtheLine]

The mines were not an imperial undertaking, although Li's close connections with the Empress were exploited for such ends as securing permission for a company railroad. Corporate profits were dependent on local consumption (including state consumption), and the firm had no real need for foreign investment.

When you put the facts in perspective, Hoover is pretty much in the clear. The Chinese wanted a quick payoff while passing their liabilities to others. This necessitated working with British/American partners and was an invitation to be fleeced. But blaming Hoover for the shearing is not fair. He played an intermediary role between two avaricious parties.