pressure by the government to keep the bankers in line. Success depended
as well on the willingness of the European powers, secure in their own con-
cessions, to make room for the Americans.
Ironically, the same administration that brought suit against industrial
combinations at home used consolidation and concentration of banking
houses in pursuit of diplomatic objectives. Knox and Straight persuaded
Morgan, Schiff, and two large New York banks to form an “American
group,” headed by Morgan, through which the government planned to im-
plement its Chinese policies. Straight was hired to serve as the group’s rep-
resentative, and he, like the State Department, encouraged the bankers to
push American demands aggressively. Under close and ongoing surveil-
lance by the State Department the group handled American negotiations
throughout Taft’s administration.^105
Although the bankers acceded to the government’s pressure, they re-
sented Knox’s interference and his saddling them with “dangerous and am-
biguous responsibilities.” It was one thing to enjoy the government’s pro-
tection but quite another to permit the government to set business
policies. Preferring not to alienate their business associates abroad, the
group well understood European hostility to attempts by Americans to
pressure their way into arrangements already concluded. Schiff told Cassel
that the American bankers were willing to compromise with the Euro-
peans but that the State Department would not permit them to accept any-
thing but an equal share. Given the obstacles, negotiations were pro-
tracted. For example, American participation in the Hukuang railroad loan
for the construction of railways in southern and central China began in
1909, but the loan was not finalized until 1911. The more complicated
“neutralization” plan, which aimed at international support of the Chinese
purchase of Manchurian railways, was never implemented. In that instance
the bankers thought that the State Department had bungled. Since many
variables were involved—the political problems of China, the aims of Eu-
ropean governments and bankers, shifting lineups in the diplomatic
arena—specific projects like railroad and currency reform loans and a re-
organization loan to postrevolutionary China were also doomed. Conflict-
ing views among the bankers occasionally surfaced within the American
group. Kuhn, Loeb, for example, was displeased by Russian participation
in the banking consortium of the United States, England, France, and
Germany.^106
Morgan’s offices in New York and London represented the American
group in negotiations with their European counterparts, but Schiff was not
a passive spectator. Both before and after the group was formed, he con-
sulted informally with important contacts—Straight in Washington, Cassel
in London, Takahashi in Tokyo. In that fashion he served as a source of in-
formation, free of political and diplomatic jargon, for the interested parties.
The Making of a Leader 37