consular courts and not to the Chinese courts; (g) missionary activity to be permitted throughout the country.  In addition to this, the commercial treaty was revised, the opium trade was permitted once more, and a war indemnity was to be paid by China.  In the eyes of Europe, Britain had now succeeded in turning China not actually into a colony, but at all events into a semi-colony; China must be expected soon to share the fate of India.  China, however, with her very different conceptions of intercourse between states, did not realize the full import of these terms; some of them were regarded as concessions on unimportant points, which there was no harm in granting to the trading “barbarians”, as had been done in the past; some were regarded as simple injustices, which at a given moment could be swept away by administrative action.

But the result of this European penetration was that China’s balance of trade was adverse, and became more and more so, as under the commercial treaties she could neither stop the importation of European goods nor set a duty on them; and on the other hand she could not compel foreigners to buy Chinese goods.  The efflux of silver brought general impoverishment to China, widespread financial stringency to the state, and continuous financial crises and inflation.  China had never had much liquid capital, and she was soon compelled to take up foreign loans in order to pay her debts.  At that time internal loans were out of the question (the first internal loan was floated in 1894):  the population did not even know what a state loan meant; consequently the loans had to be issued abroad.  This, however, entailed the giving of securities, generally in the form of economic privileges.  Under the Most Favoured Nation clause, however, these privileges had then to be granted to other states which had made no loans to China.  Clearly a vicious spiral, which in the end could only bring disaster.

The only exception to the general impoverishment, in which not only the peasants but the old upper classes were involved, was a certain section of the trading community and the middle class, which had grown rich through its dealings with the Europeans.  These people now accumulated capital, became Europeanized with their staffs, acquired land from the impoverished gentry, and sent their sons abroad to foreign universities.  They founded the first industrial undertakings, and learned European capitalist methods.  This class was, of course, to be found mainly in the treaty ports in the south and in their environs.  The south, as far north as Shanghai, became more modern and more advanced; the north made no advance.  In the south, European ways of thought were learnt, and Chinese and European theories were compared.  Criticism began.  The first revolutionary societies were formed in this atmosphere in the south.

8 Risings in Turkestan and within China:  the T’ai P’ing Rebellion

But the emperor Hsuean Tsung (reign name Tao-kuang), a man in poor health though not without ability, had much graver anxieties than those caused by the Europeans.  He did not yet fully realize the seriousness of the European peril.