 The National Broadcasting Company at its affiliated independent stations present the Pacific story. This is the story of the Pacific. The drama of the millions of people who live around this greatest sea, where the United States is now committed to a long-term policy of securing the peace. This is the background story of the events in the Pacific and their meaning to us and to the generations to come. China, the world's biggest customer. Look at these jewels and judge for yourself. Gorge. It is unbelievable. Look at those precious stones. It is fabulous. Rubies and sapphires and diamonds. China is a land of fabulous wealth and picturesque culture. Its wonders surpass the glories of Greece and Arabia and Persia. It is unbelievable these tales do tell a faraway China Marco Polo. But look at the gems he brought back. Priceless jewels. Tell us more of this wondrous land, Marco Polo. It is a land different from any of these eyes ever to be held. It is a land to stir the soul. The people are streamed and they have conjured up cunning inventions. And their customs are fascinating beyond any imagination. Such were the stories brought back by Marco Polo. And on these the western world built its first impressions of China and the Far East. The western world dreamed of trade, of incredible riches to come from dealing with these fabulous lands. And it was to find a shorter way to China and the Indies that Columbus sailed westward more than four and a half centuries ago. His destination was China and to the end of his life he regretted he had never set foot on the shores of the China Sea. China is potentially the greatest market in the world. For centuries westerners have seen its value. The question is how can it be kept? Since the 18th century the fairy tale has waned and the rational economic men of the west has thought of China not so much as a fabulous land but as a down-to-earth country with enormous possibilities. But through all these years the dream of China's development as a world market was still a dream. But today it is closer to reality than ever before. Today China stands as a victor in the greatest war of all time. The Chinese Republic is stronger than ever before. The 450 million Chinese people are moving toward a higher standard of living. Today for the first time in history the China market has a good chance of fulfillment. And that market is going to be primarily a market of American goods and services. China with one-fifth the population of the world needs everything. Machinery, tools, iron and steel, petroleum products, railway equipment, rails, locomotives and cars. She needs trucks, automobiles, telephone equipment, radio equipment, communications of all kinds. She needs wheat and flour and rice and a thousand other things. Sure she needs these things but where is she going to get her purchasing power? This is an old China hand. Listen, I've been out in China 35 years and I know the Chinese situation. What are they going to use for money? That's the point of view of some who have enjoyed special privilege in China under the old extraterritoriality system. Let's face it, China has never been a big market for the product of other nations. The first American who went to China a century and a half ago learned about this. You see Mr. Wang, this is a map of the United States. Here. And you see these are the American colonies over here along the northeast coast. Here. And what is all this territory here to the west of your colony? Oh, that is the undeveloped territory. Frontier country. There are no cities there? Not yet. But it is a very rich land. That is very rich in resources, timber, minerals, fish, game and thousands of square miles of fertile soil. Your country should be a very rich market for our Chinese products. Well, yes. Now what products can you give us in exchange for our silk and tea and cotton and spices? Well, Mr. Wang, that is a matter that we must discuss. You see, we don't get their products. The Chinese saw America as a great market for their goods, but were reluctant about taking the crude American products in exchange. Accordingly, the Americans were hard put to find products that the Chinese would take. Sure, things have been proved in the last 150 years. But listen, in 1936, that was the last year of peace in China, the year before the Japanese attacked. In 1936, China, with its 450 million people, bought less from outside nations than Sweden bought. And Sweden has a population of only 6 million. That is right. But what we must think of China's potential. Sweden is developed probably near her maximum, but China has hardly been touched. For example, there's more tungsten in China than in any country in the world, and tungsten is a must for industry. And she has large deposits of antimony. Matter of fact, she's only second in antimony in the world. And she's one of the richest nations in the world in tin. Besides that, she has mercury and manganese. You know, that meant something to the United States at one time, but the picture has changed. Just after World War I, China produced 80% of the world's antimony, and 85% of the world's tungsten. In 1917, the United States bought 45% of China's production of antimony. But in 1936, we bought only 4%. And before 1936, we used to buy 20% of the world's production of tungsten, mostly from China. But after that, we bought much less. One of the reasons for that was the discovery of tungsten deposits in Idaho. The point is, we don't need China's tungsten and antimony as we used to need it. What is happening with tungsten and antimony is about what happened to China's tea and silk. We don't need China's tea and silk as much as we did, but in the interest of international trade, it may be necessary to work out international agreements on the product of China so that China may have a reasonable share in the world's market. But Chinese are more aware of China's resources today than ever before. China is the preface of tea and mother of silk. We can produce the best tea and the best silk in the world at the cheapest cost. We believe that there is still a great market for China's tea and silk. And we plan to apply science in the tea culture and the silk culture. We will use machinery in the manufacture and processing of tea and silk, and we will standardize the methods of grading and marketing. And above all, China will take an active role in promoting these products throughout the world. Tea and silk are still resources. And in addition to these resources and minerals, China has other resources important to world trade. China already has the beginnings of an enormous textile industry. We had five million spindles when the Japanese drove us from the coastal plains back into the interior. But a lot of those were owned by the Japanese. Yes, nearly half of them were owned by the Japanese. And your textile industry was crippled by the war. Only temporarily. We took our machines back into the interior, and there many more Chinese learned to operate them and learn the textile trade. Now with the Japanese gone, we are in a position to operate the entire textile industry in China. It'll be a long time before you can develop that. Perhaps. It must be remembered that China is the fourth largest producer of cotton in the world. Only the United States and India and Russia produce more cotton than China. Against the textile industry of China, another argument is advanced. Are we going to promote a textile industry in China to compete with the American textile industry? The American textile industry could never compete with the Chinese in Asia. Their market is the hundreds of millions of asiatics who earn only a few cents a day. These asiatics could never afford to buy American textiles. But to develop a textile industry, the Chinese must have machinery. Sure, they're a market for American machinery. But before China can buy from other countries, they've got to expand their own exports. And that means they've got to industrialize in order to make the things to sell. When they have things to sell, they can then develop purchasing power to buy from the United States. But how are they going to do that? The Western nations have for centuries driven to develop the great market in the Orient. Before the first American vessel arrived in China in 1784, the British were already doing business there. And although American seamen played an active role in China's foreign trade in the subsequent years, it was not until 1845, just 100 years ago, that formal trade intercourse began between the United States and China. And a quarter of a century later in 1870, American business had a new awakening to the China market. I see we've got a competitor over on the other side of the world. What do you mean? Suez Canal. Oh, that big ditch. Going to be important to the short cut between Europe and the Orient. Yeah, they're going to be able to compete with this transcontinental railroad of ours. Well, I don't know. Oh, this railroad's already been completed six months. Well, we've been going five or ten years. But that time, those European nations will have the China trade soda. Oh, don't believe a word of it. With this railroad, we'll be able to bring American products clear across the country. Right down here, the shore of the Pacific. And from here, all vessels will carry them across to China. But you'll forget that we've paid almost no attention to the China trade for the past ten years. Ever since the war between the States broke out. Oh, how could we? And during that time, the European nations, especially Britain, have been building up their trade with China. That's why they went in on the Suez Canal, a short cut to the Orient. Well, we traded with China for about fifteen years before the war. Nobody made a fortune out of it. If it's important enough for Britain and France and the other countries to dig a canal for a short cut to the Orient, it ought to be worthwhile for us. Besides, look at what the papers are saying about China being the greatest market in the world. Well, we got our railroad built across the country six months before they got their canal finished. Yes, but it's how we use it that counts. Remember, a new day is here. This is 1870, and the business will go... America took a new interest in the China trade. But so also did Britain and France. Britain feared that the United States would dominate the ports of the coast of China. She looked for a shortcut up through Burma into the backdoor of China. And the French, equally apprehensive, became a rival of both Britain and the United States. And projected a railroad from Indochina into China. Then Japan entered the scramble. The international rivalry portrayed crystallized into a series of dynamic events. 1894, the Japanese have inflicted a crushing defeat on China and have taken Formosa and the Pescadoris Islands. 1898, the Americans have occupied the Philippines. Experts believe the Americans will use the islands as stepping stones to China. 1905, the Japanese have defeated Russia and have moved in an occupied Korea on the mainland of Asia. 1905, the Chinese have started a boycott against American goods. Violent demonstrations are sweeping the coast cities. 1911, the Chinese Revolution has toppled the Manchus from the throne and the Chinese Republic appears in the making. China's hundreds of millions were stirring. At the turn of the century, they had rebelled against the foreigners. Now they rebelled against the Manchus and overthrew them. But the foreigners, they were unable to throw out. The British and the Americans and the French and the Portuguese had established extra territoriality to break down the trade barriers. They had established themselves in special areas. They controlled certain Chinese territory. They'd even brought in their own laws with them and they broke down the trade barriers. Suddenly in 1914, the scene changed. War has broken out in Europe. Britain, France and Russia are now aligned against Germany and Austria-Hungary. Fighting is raging all over the frontier and it seems imminent that all Europe may be drawn into the conflict. Well, Rene, I'm sorry to see you go. You're glad to see us go. I felt that we were just beginning to develop some trade out here. Yes, we were. But I'm afraid I can't stay out here and promote trade while Britain is at war. To be ashamed not to have the competition of you Britishers, that's what made the China trade. I'm sure you Americans will find ways of taking care of it. I was just thinking, it's a little like what happened to American trade out here during our civil war. I'm afraid I don't understand. But while we were fighting our civil war and reconstructing our country after it, you Britishers found ways of taking care of the trade out here. Oh, that. Now perhaps we'll have the same opportunity. Quite. The United States took over most of the China trade. And China, which until this time had been passive, now took an active part in buying and selling. The United States extended its trade with China during the years of World War I. But with the close of that war, extraterritoriality again flourished. These were the revolutionary years in China. Under these conditions, the China market could not be developed. But today China's revolution is nearing its end. Today China is a republic and has a strong central government. Today China is one of the big four nations of the Earth. And today extraterritoriality has been relinquished. China needs so much that even if the United States turned its entire productive capacity to filling its needs, it would take years. Look, a market is only good if it is developed. And only a small part of China is developed. You know that more than a third of all the investments in China is in the city of Shanghai. That is a result of the extraterritorial system. Shanghai was developed into a great port to tap the riches of the great Yangtze Valley, just as Hong Kong became the counter over which most of South China traded. But this concentration of investment in the port cities, although it produced profits for individuals and private companies, did little for the development of the interior of China. And that is the seat of China's great potential. China is essentially an agricultural nation. Before its hundreds of millions of farmers and city workers can be buyers of foreign goods, their own minimum needs must be filled. Before Chinese industry can turn out things to sell to other nations, in order that they may buy from her, the minimum needs of her own people must be met. China's millions need food and clothing and shelter. And they need these things first. The China market has remained a dream because of the low living standard of the Chinese people. So long as the living standard is not raised, the China market cannot be developed. When industrial and agricultural enterprises expand, when the purchasing power of the people is increased, then the dream of the China market becomes possible. But first, attention must be given to the vital problems. We must have access to the vital problems. But first, attention must be given to the vital problems. We must have agrarian reform. This is the opinion of thinking Chinese. Our peasants need help. They need to be helped to raise the output of their farms. Modern Western methods must be introduced. And this will mean a difficult period of education. Many peasants will be suspicious of an effort to change their methods. They will have to be helped to a higher standard of living. For unless they have a higher standard of living, they cannot buy the products of modern industry. This is the gist of creating a Chinese market. The people need everything, but they must first have enough food and adequate clothing and shelter. Therefore, we must have agrarian reform. Our whole agricultural system has two relations between landlord and tenant, as do methods of farming, as do marketing, as do the place of the peasants in village affairs. All this must be reformed. For this is the basic part of the Chinese people. First, to fill their immediate needs, the Chinese will need consumer goods, food stuffs, cotton goods, drugs, the things of everyday life. Then they will need machinery and the materials of industrialization. And as our industry develops, we will need less consumer goods. Gradually, we shall be able to fill more and more of our own needs. But if you're going to be a market for foreign goods, that is a big market, you'll have to expand your exports. That is what we shall do. But how can you do this under the present Paris setup? If the United States expects to sell great quantities of goods to us, some adjustment must be made in the American tariff. That's it. In a sense, the United States would have to scale it up down all along the line in order to trade in a big way with China. Some Chinese products are already duty-free. Yes, I know. Tongue oil is duty-free. In 1937, tongue oil was at the top of the list of the Chinese products bought by the United States. Well, it's not a competitive product in the United States. No. But the promotion of trade must mean the easing up of trade barriers on both sides. America must have a protective tariff. There is another angle to that. Just as America is interested in avoiding importing low-priced Chinese goods to compete with American products in America, we are interested in avoiding paying the high prices of American goods in China. Directly related to this is the matter of competition for the China trade. The Chinese will naturally shop for the best prices. America will need a great deal of machinery for industrialization. If the American machinery produced under expensive American conditions is too high for us, we may have to buy our machinery from the other nations. America will have strong competition in China. The United States should have the inside track. America is the world's largest exporter of capital. And we could play the largest role in the development of the China market. We could supply nearly half of all capital needed by China. But against this, there is the British position. Britain needs more exports now than ever before. We shall need new markets. We shall have to help develop them. We must increase our exports. Britain may be able to offer lower prices than the United States. China may need as much as $2 billion annually for the next five years or a total of $10 billion in the next five years. That's all in the beginning. Exactly how much China will need no one knows for sure just now. But if China develops at the same rate as Japan developed, it will need something like $13 billion in the first 10 years, about $23 billion the second 10 years, about $45 billion the third 10 years, and more than $51 billion the fourth 10 years. Competition for the China market promises to be strong. Two of America's strongest free-war competitors, Germany and Japan, are now out of the running. Before the war, we bought many things from Germany. Tools, electrical equipment, pharmaceuticals and chemicals and things like that. And from Japan, we bought electrical machinery and textile machinery and things like that. We shall need much more of these same things in the years to come. The great nations of the world are now maneuvering for this business. China can take the face of Japan in many things. In textiles, for example, and in the production of trinkets and gadgets, such as novelties, bridge favors, cheap watches, umbrellas, flags and things of that kind. In textiles, America can supply a large part of the machinery she will need. The question is, is it really smart to build up China? If we build up China, we will be helping ourselves. It did not harm us to have Canada change from an agricultural nation to an industrial nation. Our pre-war trade with Canada, which was then an industrial nation, more than doubled what it was when Canada was an agricultural nation. With more trade, the Canadians are able to buy more. Industrialization has given Canada more purchasing power. And purchasing power is what we must develop in China. The difference is that there are 450 million Chinese and their standard of living is far below Canada and ours. If we have mass employment in America, making things for the rest of the world to buy, we will then be able to buy more of the products of foreign nations, such as China. At the same time, we will have less fear of importing their products. And when we buy their products, they will in turn be able to buy our products. It is just as important for China to be prosperous as it is for us to be prosperous if we are to trade with each other. Before the war, the Chinese were making notable strides toward industrialization. Factories had been started in a number of trading centers on or near the coasts. Outstanding were the industries of Shanghai. In the Shanghai area alone, it was estimated that there were more than 100,000 Chinese workers, in factories, but the coastal industries were profoundly affected by the war. The boat is loaded to the top with machinery. Get every piece possible into it. More the boat cannot carry. They push up and start to deliver at once. Yes, sir. Stand by to push off. No! All of you! Start loading the machinery to the next boat. You must get this machinery out of here before the enemy gets here. I'll be now. By river and by highway and by railroad, the Chinese moved all possible machinery into the interior. With it, in many cases, went the workers. And in the hills and in the valleys that had for ages been silent, except for the sound of rain and wind and storm, there was the sound of machinery. In many ways, this is an advantage for China. For while it was difficult for us to set up our machinery out here, it has given our people here the opportunity to hear their first glimpse of machinery and their first understanding of what it can mean to them. How many of these workers came out here with the machinery? About half of them. The others they trained. I see. Many Chinese are now being trained in the small factories like this one. But we must have help in training our Chinese workers in industrial matters. I saw the work done by those Chinese. And many of those workers came out here and saw the work done by those Chinese. And many of those workers had never seen the piece of machinery before that. The first machine they ever saw, they learned to run. But although many were trained in terms of what will be needed for the industrialization of China, only the smallest start has been made. The task of training industrial personnel will fall largely upon foreigners, Americans, Britishers, Frenchmen, and so on. The Chinese recognize this, and that is why China will encourage foreign interests to set up and operate factories in China. That's right. But if China is going to hamstring foreign capital and industry, how is she going to get the industry established and the millions of workers trained? The Chinese have made their position clear on that one. China will encourage foreign participation in industry, but will reserve for state operation the large-scale steel mills and power plants and communication facilities. While fighting a remorseless war against the powerful enemy for the last 14 years, China at the same time has been going through a political and social and industrial revolution. Despite her internal disorders, she has managed to make enormous progress in modernization. Despite the general poverty of her millions, she has advanced. And today, though her great problem of unification is still unsettled, she is moving towards being a democracy and America's greatest market. It was the cause of the unsettled situation in China that extraterritoriality developed as it did. It was the answer to the question of how to do business with China. This is still the point of view of many. But today, more and more are beginning to understand China's great potential and also understand what is going to be necessary to develop that potential. The Chinese themselves, after several years of close cooperation with the Western nations, have a keener understanding of this than ever before. We will need help, tremendous help. But when our 450 million people can live a decent life and contribute their part to world prosperity, the face of the entire world will be changed. After centuries of trying to develop the China market, the enterprising nations of the world are again knocking at China's door. And today, the possibilities of success are greater than ever before. We of the Western nations have learned that we stand to gain much more from a free, industrialized and prosperous China than from the China of yesterday, in which foreigners enjoyed special privileges, but at best could enjoy no more than a limited market. A new progressive and prosperous nation is emerging between the Himalayas and the Pacific. China's 450 million customers will constitute the greatest single market in the entire world. And the Chinese sum up this possibility in the simple words, only by mutual exchange may the nations receive mutual benefit. You have been listening to the Pacific Story, presented by the National Broadcasting Company and its affiliated independent stations as a public service to clarify events in the Pacific and to make understandable across kinds of life in the Pacific Basin. For a reprint of this Pacific Story program, send 10 cents in stamps or coins to University of California Press, Berkeley, California. May I repeat? For a reprint of this Pacific Story program, send 10 cents in stamps or coins to University of California Press, Berkeley, California. The Pacific Story is written and directed by Arnold Marquess. The original musical score was composed and conducted by Thomas Paluso, your narrator, Gane Whitman. Programs in this series of particular interest to servicemen and women are broadcast overseas through the worldwide facilities of the Armed Forces Radio Service. This program came to you from Hollywood. This is the National Broadcasting Company. Thank you.