ise 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