Given good government, a large amount of State enterprise would be desirable in Chinese industry.  There are many arguments for State Socialism, or rather what Lenin calls State Capitalism, in any country which is economically but not culturally backward.  In the first place, it is easier for the State to borrow than for a private person; in the second place, it is easier for the State to engage and employ the foreign experts who are likely to be needed for some time to come; in the third place, it is easier for the State to make sure that vital industries do not come under the control of foreign Powers.  What is perhaps more important than any of these considerations is that, by undertaking industrial enterprise from the first, the State can prevent the growth of many of the evils of private capitalism.  If China can acquire a vigorous and honest State, it will be possible to develop Chinese industry without, at the same time, developing the overweening power of private capitalists by which the Western nations are now both oppressed and misled.

But if this is to be done successfully, it will require a great change in Chinese morals, a development of public spirit in place of the family ethic, a transference to the public service of that honesty which already exists in private business, and a degree of energy which is at present rare.  I believe that Young China is capable of fulfilling these requisites, spurred on by patriotism; but it is important to realize that they are requisites, and that, without them, any system of State Socialism must fail.

For industrial development, it is important that the Chinese should learn to become technical experts and also to become skilled workers.  I think more has been done towards the former of these needs than towards the latter.  For the latter purpose, it would probably be wise to import skilled workmen—­say from Germany—­and cause them to give instruction to Chinese workmen in any new branch of industrial work that it might be desired to develop.

3. Education.—­If China is to become a democracy, as most progressive Chinese hope, universal education is imperative.  Where the bulk of the population cannot read, true democracy is impossible.  Education is a good in itself, but is also essential for developing political consciousness, of which at present there is almost none in rural China.  The Chinese themselves are well aware of this, but in the present state of the finances it is impossible to establish universal elementary education.  Until it has been established for some time, China must be, in fact, if not in form, an oligarchy, because the uneducated masses cannot have any effective political opinion.  Even given good government, it is doubtful whether the immense expense of educating such a vast population could be borne by the nation without a considerable industrial development.  Such industrial development as already exists is mainly in the hands of foreigners, and its profits provide warships for the Japanese, or mansions and dinners for British and American millionaires.  If its profits are to provide the funds for Chinese education, industry must be in Chinese hands.  This is another reason why industrial development must probably precede any complete scheme of education.