He openly described the tension between the group and the State Depart-
ment, and he told Harriman and others that “there was more patriotism,
than money, in Chinese business.” Nevertheless, “I feel it but right for
those who, like you and me and Morgans, who occupy prominent posi-
tions, [to] do something to vouchsafe American preponderance and influ-
ence in the Far East.”^107
Collective action by the group notwithstanding, Schiff guarded the
interests of Kuhn, Loeb. He asked Straight quite candidly to remember
“our own readiness to deal with Manchurian and Chinese matters.” When
the group met with European representatives on the Hukuang railroad
loan, he secured permission for his partner, Otto Kahn, to participate in
the deliberations. The purpose was simple: “in order not to make a Mor-
gan group of the affair and to protect our own position and prestige.”^108
An important part of Schiff’s self-assumed activity was to maintain
friendly relations with Japan while the American group operated. He could
thereby prove his importance to both Japan and the State Department. Be-
fore Knox took up the idea of neutralization (which in fact originated with
Straight at a meeting with Schiff), Schiff sounded out Takahashi. Assuring
the latter that the Americans desired only what was satisfactory to Japan,
he urged Japan to sell its railroad interests in Manchuria. When he learned
that Japan refused, he was impelled to advise that the plan be dropped.^109
Takahashi believed, correctly, that Schiff was alienated by Japan’s refu-
sal. Schiff was primarily enraged, however, by the Russo-Japanese entente
(1910) on Manchuria. He had financed Japan’s successful war in 1904–5,
and the temerity of Japan to join Russia was tantamount to rank ingrati-
tude, if not betrayal. Informing Takahashi that Americans were amazed by
the entente, he proceeded to attack Japan publicly: “I was greatly mor-
tified,” he said in a speech to the Republican Club, “to learn that Japan had
joined hands with Russia—Russia the enemy of all mankind” for the pur-
pose of keeping China “in a state of vasselage.” Endorsed by England,
“perfidious Albion,” the alliance presaged “a mighty war,” which would in-
volve the United States. The story made the headlines, and in a lengthy ed-
itorial in support of the Open Door and neutralization the New York Times
reported that Japan had reacted with “surprise.”
At this point Schiff backed down, and he rushed to explain to Takahashi
that his remarks had been distorted by the press. He had not prophesied
war but rather commercial rivalry; his aim was to protest the effect of the
Russo-Japanese alliance on Manchuria and China; his warm attachment to
the Japanese prompted his warning that their action would in the end
prove disadvantageous. Takahashi accepted the explanation, and Schiff
showed his goodwill by supporting Japan’s demand for inclusion in the
international banking consortium on a loan to China.^110
While Schiff worked out his private differences with Japan, the American
38 Jacob H. Schiff