State-Run Industrial Enterprises in Fengtian, 1920-1931
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State Building, Capitalism, and Development: State-Run Industrial Enterprises in Fengtian, 1920-1931 A DISSERTATION SUBMITTED TO THE FACULTY OF THE GRADUATE SCHOOL OF THE UNIVERSITY OF MINNESOTA BY Yu Jiang IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF DOCTOR OF PHILOSOPHY Liping Wang, Ann Waltner October 2010 © Yu Jiang, 2010 Acknowledgements I am grateful that Department of History at University of Minnesota took a risk with me, somebody with no background in history. I also thank the department for providing a one-semester fellowship for my dissertation research. I am deeply indebted to Minnesota Population Center for hosting me in its IT team for many years – it allowed me, a former software engineer, to keep abreast of the latest developments in computer technology while indulging in historical studies. Thanks are especially due to Steve Ruggles (MPC director) and Pete Clark (IT director) for giving me this great opportunity. The source materials for this dissertation mostly come from Liaoning Provincial Archives, Liaoning Provincial Library, and Meihekou Archives. I thank these institutions for their help. Liaoning Shekeyuan offered both warm reception and administrative help right after I arrived in Shenyang. My archival research in Shenyang also benefited greatly from Chris Isett’s help. Su Chen from East Asian Library at University of Minnesota has been helpful numerous times in locating important documents. My committee members, Mark Anderson, Ted Farmer, M.J. Maynes, Ann Waltner, and Liping Wang provided valuable comments on the draft. M.J. and Ann’s thoughtful comments on a paper based on my dissertation helped improve my work. Liping and Ann, my advisors, patiently guided me through the difficult process of writing a dissertation. I benefited enormously from discussions with Liping on the literature and where my work fits in. I also thank Liping for introducing the subject of railway to me, although we look at railways from different perspectives. i Dedication To Tiffany We start a new life together ii Abstract During the late Qing Dynasty (1644-1911), Western powers and Japan forced China to open its market and flooded the country with goods produced by large-scale industrial enterprises. The Chinese found that with military defeat, they lost not only political sovereignty but also economic interests. The situation was even worse in Northeast China (often called Manchuria in English), where the Russians and the Japanese built railroads and seaports and gained extraterritoriality over large stretches of land. With such advantage, the two imperialist powers, especially the Japanese, dominated the Northeastern economy. For the Chinese, the only way out was to establish native industrial enterprises. The Chinese regional state in the Northeast (known as the Fengtian Clique, 1916-1931) most urgently wanted to develop a modern economy, because it was the only viable way to generate wealth and strengthen the state in the long run. Due to the lack of a full-fledged bourgeoisie, the regional state had to be very hands-on in economic modernization – it established and managed large-scale industrial enterprises. In the process, the state became the largest business owner and the forerunner in capitalist enterprises. In this study, I investigate two industrial enterprises established under the leadership of Fengtian Civil Governor Wang Yongjiang – the Fenghai Railway Company and the Fengtian Textile Mill. These state-run enterprises were joint-stock companies strictly formulated according to the Company Law, which were based on Western laws. The provincial government, as the largest shareholder and the manager, ran the companies rigorously in a rational and profit-oriented way and competed in the iii open market. This phenomenon requires us to re-think capitalism – its existing paradigms and generalizations should be re-examined and new theoretical possibilities explored. I tentatively propose the concept of capitalism embedded in state bureaucracy , as I see in the two state-run companies. To wit, it was capitalism not led by the bourgeois class . The state became a capitalist in its endeavors to develop regional economy and to strengthen itself. For Karl Marx, capitalism was essentially defined by a new mode of production, in which the bourgeoisie own the means of production while the workers are deprived of it. He therefore often referred to the form of society created by capitalist mode of production “bourgeois society.” For Max Weber, the fundamental nature of capitalism is rationality, mainly embodied in “rational capital accounting.” Weber better grasped the essence of capitalism, because his conceptualization stripped it of the unnecessary class- based elements. Through empirical examination of two provincial enterprises in Fengtian, I demonstrate that rationality was indeed the driving force of capitalism. Under certain circumstances, rationality can bring about capitalism, without the sociopolitical and economic preconditions such as private ownership of means of production, highlighted by Marx and even Weber. The capitalism in Northeast China during 1920s is quite different from the conventional, Marxian understandings of Chinese capitalism, which have centered on the bourgeois class. To better understand capitalism, I believe, we have to make a clear distinction between its origins in Western Europe and its replication in other parts of the world – the trajectories are bound to be vastly different. If the gestation of the world’s first capitalism as an economic force was a prolonged process, necessarily iv concomitant with profound social or cultural transitions, as elaborated by Marx and Weber, its replication around the world often takes place more quickly and easily, with only small changes in the sociopolitical context. Through this empirical study, I hope to show that capitalist development can unfold in highly distinctive and localized manners. v Table of Contents List of Maps ………………………………………………… ….…..…………………..vii Introduction…………………………………………………………..……………………1 1. The Northeastern Regional Regime and Its State Building ……………......….....….18 2. The Conception of Railway: Claims, Interests, and Competition in Northeastern Railways…………………………..………………………………………...….…….56 3. Building a Railway, Building a State: The Construction and Administration of the Fenghai Railway……………………………………………..…...…….…..………. 90 4. Capitalism Embedded in State Bureaucracy: Ownership and Management of the Fenghai Railway Company….……………………………………………………...136 5. Shenhai Railway and the Outside World: The Railway Era in Eastern Liaoning……………………………………………………………………...…......173 6. Fenghai’s Cooperation with Other Railways: State Coordination, Economic Nationalism, and International Railway Rivalry…………………………..…….…205 Conclusion: Rupture and Continuity: Railway and Capitalism in China………………243 Bibliography………………….….….……….…………………………………………251 Appendix A: Glossary………………………….….……………………………………263 vi List of Maps Map 2.1 Railways in Northeast China, 1911…………………………………………….57 Map 2.2 Fenghai Railway and counties competing for railway access…………...……..64 Map 3.1 Northeastern regime’s Western Trunk Line (from Dahushan to Keshan)....…..94 vii Introduction The modern state began to emerge in China at the turn of the twentieth century, when the Qing court, still taking refuge in Xi’an after the Boxer fiasco, announced its intention to reform by implementing the New Policies ( xin zheng ).1 These policies, forged and issued between 1900 and 1905, would have fundamental impacts on the structure and function of the Chinese state as well as the development of Chinese economy for decades, although the Qing itself collapsed soon in 1911. The Qing state carried out extensive reforms in administration, military, and education throughout the country, among which, the 1905 abolishment of the age-old civil service examination was probably the best known. 2 To encourage business enterprises and to promote economic development, the state established the Ministry of Commerce (shang bu )3, which was ordered to draft and issue commercial laws. The emphasis given to economic issues was unprecedented. The commercial laws, for the first time in Chinese history, gave private property legal protection and stipulated the registration procedures of companies following the international rules. Mostly drafted by the British-educated lawyer Wu Tingfang, these laws were largely based on Western legal codes, especially those of 1 Interestingly, the New Deal of the Roosevelt Administration, commenced three decades later, was also translated into Chinese as xin zheng . Although the two programs were vastly different, both were government initiatives of drastic reforms and both boosted the state’s presence in the population’s lives. While economic policies constituted the bulk of the American xin zheng , they were only one of many parts of the Chinese program. 2 Actually, the military service examination was abolished four years earlier, as part of the military reform, but it never received much attention. 3 It was reorganized as Ministry of Agriculture, Industry, and Commerce ( nonggongshang bu ) in 1906. 1 Britain and Japan. 4 The Japanese Commercial Code had in turn borrowed liberally from British and German commercial laws. 5 Capitalist in nature, the Chinese commercial laws were aimed at regulating the establishment of companies, promoting commercial activities, and encouraging industrial development.6 Although the Qing’s state building program was indeed promising,