The creation of the Chamber in 1915 arose naturally from political and economic forces that trace back to the mid 19th century.
The American Chamber of Commerce in Shanghai looks very different today from the organization founded 100 years ago. From 45 members we have grown to nearly 4,000. What was essentially an all-male, all-American membership has diversified to include women and individuals of many nationalities. Even our name has changed. We started as the American Chamber of Commerce in China but adapted our current name in 1922. Despite all these changes, our core mission has remained constant – to promote the success of our members and to support healthy commercial ties between the United States and China. In commemoration of our centennial birthday on June 9, this article outlines the history of AmCham Shanghai’s early years, 1915-1950. A separate story in this edition of Insight looks at the revival of the Chamber in 1987.
The establishment of AmCham Shanghai in 1915 was the natural consequence of economic and political forces that had shaped U.S.-China relations for decades. American clipper ships first sailed to China in the late 18th century and Shanghai opened up to foreign trade following China’s defeat by the British in the Opium War of 1840-1842. The first American missionaries arrived in 1845, merchants soon followed, and the U.S. Consulate opened in 1846 with a leading businessman as the first acting Consul.
Meanwhile, the United States was expanding westward toward the Pacific. As America’s industrial power grew in the post-Civil War era, so did the need for raw materials. When Cuba rebelled against Spain in 1894, seeking its independence, the United States eventually came to its aid and defeated Spain in a matter of months in 1898. The United States was now a world power and inherited Spanish colonies in the Pacific – the Philippines and Guam – and annexed Hawaii that same year. American activity in the Pacific increased, leading to a more active role in the affairs of both China and Japan. In the case of China, the United States demanded equal trading rights for all foreign nations throughout China – the “open door policy.” In 1903, President Theodore Roosevelt announced a plan to build a canal across Panama, an indication of the growing strategic importance of easy access to the Pacific Ocean. The canal was completed in 1914.
That is the historical backdrop to our story. As the 20th century dawned, the United States was anindustrial powerhouse and a new world power. By 1910, Shanghai’s American population of 984 represented around 10 percent of Shanghai’s foreign community. But of the 643 foreign enterprises in Shanghai in 1911, only 59 were American and 258 were British. Americans participated in the British club and went to British churches, but had no institutions of their own.
The Chamber is born
On June 9, 1915, 45 American businessmen gathered at Shanghai’s Palace Hotel (today’s Swatch Art Peace Hotel) to discuss creating a business association that would promote the interests of American commerce in China. U.S. Consul General T. Sammons attended and J.H. McMichael of Frazar & Co, a trading company, chaired the meeting. The assembled executives decided to establish “The American Chamber of Commerce of China” and appointed a provisional committee of ten individuals to write a constitution and bylaws. The front page of the North-China Daily News carried news of the meeting the next day. The new chamber’s provisional committee included representatives from American Steel, Standard Oil, British-American Tobacco, R.H. Macy & Co., Singer Sewing and Dollar Shipping.
The Chamber elected its first officers and established bylaws on August 18, operating out of offices at 5 Jinkee Road (today’s Dianchi Road). J.H. McMichael was the Chamber’s first president and J.W. Gallagher of United States Steel was elected vice president. Membership, at an annual fee of US$50.00, was open to “all American mercantile firms and persons engaged or interested in American commerce or shipping in China.” The Chamber’s mission was clearly defined in Article X of its first Bylaws and Rules:
“The object of the Chamber shall be to watch over and protect the general interests of American commerce, to collect information on all matters of interest to the American mercantile community, and to use every means within its power for the removal of evil, the redress of grievance, and the promotion of the common good; to communicate with the authorities and others thereupon; to receive references and to arbitrate between disputants, the decisions to be recorded for future guidance.”
Behind the scenes
The Chamber’s creation reflects the cumulative impact of three forces. First, by 1915, Shanghai had nearly 1,500 Americans. As the American community reached critical mass, there was a burst of institution building: Shanghai American School (1912), the first Commerce Department office (1915), Shanghai American Club (1917), Columbia Country Club (1917) and the Shanghai Community Church (1917). Our Chamber was part of this dynamic.
The second factor was differing policies by Washington and London with respect to China. America’s Open Door policy included an emphasis on maintaining China’s independence, supporting self-determination, and protecting the sovereignty of weaker states. As U.S. commercial interests in China expanded, those policy perspectives acquired greater significance. At the same time, the growing number of U.S. corporations with offices in Shanghai – National City Bank, DuPont, General Electric, Ford, Westinghouse Electric, Standard Oil – wanted their own voice.
The final factor was America’s late entry into World War I. Until then, Americans had participated in the existing British institutions in Shanghai. But America’s hesitancy until 1917 to join the war created tensions between the two communities. For example, there were complaints of British interference with American mail being carried on British ships. Some records suggest Americans were actually banned from British organizations and were thus forced to establish their own. This was another catalyst behind the rapid American institution building of that era.
What was originally known as the American Chamber of Commerce of China was born during a turbulent decade in China’s modern history, as revolutionaries toppled the Qing dynasty and struggled to establish a more democratic Republic of China with Sun Yat-sen as its first president. In those early days, the Chamber hosted a weekly tiffin luncheon, as some 50-100 American businessmen gathered every Wednesday, joined by the U.S. Consul General, to listen to a talk.
The issue that preoccupied Chamber members most in those early days was difficulties with shipping, since most freight was carried on British or Japanese vessels. American neutrality in the early period of World War I meant American firms were sometimes blacklisted or subjected to intrusive inspections by British shipping companies and Japanese ships often refused shipments from other nationalities. By March 1916, the organization had 32 corporate members and 26 individual members. The Chamber initially had no full-time professional staff, and the first annual report included an appeal from the board president that members make the board secretary a full-time Chamber position with salary.
By 1919, Chamber membership had grown to 200 members and the organization’s attention to Washington politics had grown as well. In August 1920, Shanghai hosted a Congressional Delegation of 53 members, perhaps the first of its kind. The same year, the Chamber leadership asked J.B. Powell, a noted journalist, to promote passage of a “China Trade Act” that would provide special tax incentives to U.S. firms engaged in trade with China by providing Federal incorporation for American companies doing business in the Far East. As part of his lobbying effort, Powell secured an appointment with President-elect Harding, who pledged his support. Powell discovered this to be a tough assignment, but eventually succeeded in 1922. Powell’s effort can be considered the Chamber’s first Washington, DC “doorknock,” a tradition that lives on to this day.
Shanghai in the 1920s was one of the most prosperous cities in East Asia and famous for its stunning architecture, lavish entertainment and decadent nightlife. The Chamber President’s Annual Reports of June 1923 and April 1925 offer excellent snapshots of the Chamber’s emphasis during those early years. At the top of the list was anxiety about banditry and disorder and the safety of shipping on the Yangtze River. For years, the Chamber agitated for the U.S. Navy to provide vessels that could patrol the Yangtze River, an effort that finally succeeded in 1925 when Congress appropriated US$4 million for a Yangtze Patrol Force.
Harold Dollar (Dollar Shipping) and V.G. Lyman (Standard Oil) led the Chamber from 1922-25, as President and Vice President, a period of consolidation for the organization. The Chamber moved into permanent offices in the Dollar Building on Canton Road and finally hired a full-time director. Of the Chamber’s 88 corporate members, many were household names – American Express, Eastman Kodak, General Edison, Du Pont, Ingersoll-Rand, Singer Sewing, Standard Oil, Sun-Maid Raisins, U.S. Steel, Westinghouse – as well as many smaller traders, shipping companies and professional service providers.
As other AmChams were established in Beijing, Tianjin, Hankou and Harbin, the Shanghai Chamber changed its name on October 19, 1922 to “American Chamber of Commerce (Shanghai)” and established an umbrella organization based in Shanghai to coordinate the work of the multiple chambers called the “Associated American Chambers of Commerce in China.” AmCham Shanghai already had 13 committees, most of which were industry-based, but which also included committees unique to that era, such as a committee on extraterritoriality and one on “Soochow Creek Improvement” given the waterway’s heavy pollution. The Chamber supported revocation of extraterritoriality in principle, but opposed any change “until there has been a vast change in the personnel of those in control of the destinies of China, and they have become imbued with the idea of justice in the modern Western sense…”
Warlordism, invasion, civil war
As the 1930s began, China’s Nationalist government was making progress against warlordism, but the Kuomintang government based in Nanking remained weak. Chiang Kai-shek sought the annihilation of the Chinese Communists, but faced aggression from Japan as early as 1931 when Japan occupied several cities in Manchuria and then went onto overrun all of Manchuria. In January 1932, the Japanese open a second front in Shanghai, occupying today’s Zhabei district, to the alarm of AmCham Shanghai. Fred French, the Chamber’s president, issued a statement calling for the continuation of trade and commerce and the maintenance of law and order, noting that the American business community maintained a “strict neutrality of attitude between the Japanese and Chinese over the local situation.” The 1932 incident marked the beginning of the end of Shanghai’s heyday, as the Japanese actions damaged Shanghai’s industrial base and undermined business confidence.
By that time, U.S. commercial interests in Shanghai had increased dramatically. Commercial aviation between the United States and China began in 1928, the United States had become China’s largest trading partner by 1929, and direct wireless communications commenced in 1930. Between 1910 and 1930, U.S.-China trade grew faster (270 percent) than between any two other countries, notwithstanding the Great Depression in the United States and its impact on trade. The top three U.S. exports to China were silver, cotton and tobacco and the top three imports from China were raw silk, wood oil and sheep wool for carpets. According to one U.S. government estimate, there were 4,000 Americans in Shanghai by 1930, around 400 American firms and a cumulative investment of US$135 million. Fifty percent of all American business interests were centered in Shanghai. This included many iconic American brands, such as Buick (their first sales office in Shanghai opened in 1929) and Coca-Cola (introduced in 1927). In addition to products, American jazz, dance and film were all popular. Indeed, the British novelist, J.G. Ballard, who was a child in Shanghai at this time, described the city as “90 percent Chinese and 100 percent Americanized.” As of 1930, the Chamber had 111 corporate members and 43 individual members.
A commercial handbook published by the Chamber in 1932 noted that American motion pictures helped “sell America to China.” American films dominated the foreign film market in Shanghai, a city renowned for its grand cinema houses. That same publication highlighted the need to protect trademarks, patents and copyrights and praised the philanthropy of U.S. organizations to establish schools and hospitals in China. The Chamber’s handbook offered a description of Shanghai that still rings true today: “Shanghai occupies the most strategic position, economically, of any city in China…It is China’s commercial and industrial capital. It is the neck of the bottle through which the bulk of modernizing influences come into China. Forty percent of the country’s foreign trade passes through this port. It may be termed the New York, London and Paris of the Chinese Republic. It is the most cosmopolitan city of the Far East.”
Despite the sinister backdrop of civil war, warlordism, and growing global tensions, the 1920s and 1930s were Shanghai’s defining age, a period of hitherto unforeseen wealth, glamour, adventure and overindulgence. The city was rich, had a unique international allure and a roaring nightlife. The foreign concessions added a special dimension and provided a haven of sorts that in its own way contributed to Shanghai’s development. By 1934, Shanghai was the sixth largest city in the world and the financial and commercial center of Asia. Only London, New York, Tokyo, Berlin and Chicago were larger. Alas, this glamorous period was not to last.
When Japan attacked Shanghai in August 1937, Americans and other foreigners in the International Settlement began to evacuate, especially those living north of Suzhou Creek close to the Chinese and Japanese battle lines. The neutral sanctity of the foreign settlements ended and the Chamber sent an urgent cable to the U.S. Chamber of Commerce in Washington, DC, urging it to put pressure on the State Department to make representations to Japan to withdraw its warships from Shanghai Harbor: “The presence of these ships here constitutes a deadly menace to neutral interests.” Washington was reluctant to authorize military action and President Roosevelt, in response to a Chamber call for armed intervention, said that all Americans who stayed in China, after being urged by the government to get out, did so at their own risk.
Shanghai was plunged into chaos as the Battle of Shanghai continued until November. Chinese citizens sought refuge in the foreign settlements and thousands of foreigners – particularly women, children and Japanese – left China. Half of the American population left within a month. A New York Times report noted that the U.S. Marines called out every available man to strengthen their guard of 1,050 men and the U.S. Navy Pacific Command flagship eventually arrived in port to provide added protection.
During the period between Japan’s 1937 military actions in China and before the United States declared war on Japan in December 1941, the Chamber continued to operate. One new advocacy issue for the Chamber was to counter trade restrictions imposed by Japan against American trade with China, an example of “Japan’s continued aggression against American rights and interests in China.” But archive materials suggest that many functions continued uninterrupted: on July 2, the Chamber sent motor car stickers to all members and encouraged them to display the U.S. flag on July 4; the Chamber hosted an essay competition for Shanghai American School with the theme, “The Importance of America’s Trade in China”; the Chamber launched new Chinese language classes; and the Chamber fielded numerous trade queries from American companies in the United States.
At the same time, the Chamber assumed some new tasks that reflected growing anxiety about war. It arranged for half-price rates from a shipping company for those Chamber members who wished to ship their household effects to the United States. The Chamber also lobbied the U.S. government to treat evacuation as a national emergency measure and ensure adequate vessels and reasonable prices. U.S. passenger liners had stopped calling on Shanghai after Japanese warplanes bombed a U.S. liner in August 1937.
As of 1940, the Chamber had a permanent staff of five and 18 special committees, which were mostly industry-based, but also included a new “War Loss Committee.” The Chamber’s financial situation came under strain due to fluctuating exchange rates and ran at a substantial deficit. This resulted in a membership fee increase, the decision to fix the rate in U.S. dollars and the sale of debentures from the Chamber’s reserve fund.
In November 1941, as the situation in China further deteriorated and Washington prepared for a possible war with Japan, President Roosevelt ordered all U.S. river gunboats and the 1,200 men of the U.S. Fourth Marine regiment to leave China for the Philippines. Britain had already removed its forces from China in August 1940 and the departure of the American troops only increased anxieties. By this time, the Japanese controlled the International Settlement’s governing council. The departure of the river gunboats brought to a conclusion what had been one of the Chamber’s earliest, and most successful, lobbying initiatives with Washington, DC.
With the U.S. declaration of war on Japan following Pearl Harbor, Japanese forces occupied Shanghai’s international settlement and declared Americans, along with 15 other nationalities, their enemies. A Japanese census taken in January 1942 put the number of Americans at 1,369. The Chamber offices in the American Club were seized by the Japanese army on December 10, and all Chamber activities came to a halt. All Americans (and British nationals) were required to register with the Japanese military high command by December 13.
Internment of enemy aliens was not immediate. Initially, Americans and citizens of other Allied countries enjoyed some freedom of movement within the International Settlement. Americans were required to wear an armband with the letter “A.” The Japanese agreed to the repatriation of 639 Americans in March 1942, including some from elsewhere in China and a portion of the Shanghai-based Americans. One year later, beginning in December 1942, the Japanese started to detain potential troublemakers – including the journalist J.B. Powell, a prominent AmCham member and vocal critic of Japan – and the internment of Americans on a larger scale began in January 1943.
Following Japan’s defeat and the conclusion of World War II, the American business community was quick to return to Shanghai. By August 1945, there were 4,000 Americans in Shanghai, but it was a different Shanghai. The economy was in shambles, and with the end of extraterritoriality, the city was fully under Chinese control and subject to Chinese law, about which there was much uncertainty. But there was still great optimism among Americans about the future market. Once again, the air was filled with “Shanghai Madness,” an unrestrained attitude of recaptured freedom, false gaiety and reckless spending. Before long, the American community institutions and clubs that existed before the war were back in business.
The U.S. role in China’s economy was now substantial. In 1946, some 57 percent of China’s imports – or US$574 million – came from the United States, a significant jump from the 20 percent share typical ten years earlier. AmCham Shanghai soon had 110 members, close to the pre-war norm of 128, and most member companies indicated that their staff size quickly returned to pre-war levels.
The optimism did not last long, however as the corruption and inefficiency of the Nanjing government became readily apparent. The American business community was intensely critical of the Nationalist government and opposed U.S. government loans to China. Economic problems also began to interfere with commerce. China suffered from an adverse balance of trade and dwindling foreign exchange, and this led the Nationalists to set a fixed exchange rate and implement a comprehensive system of import controls that required a license for all imports as well as a ban on imports of all luxury goods and many semi-luxury items. There were complaints from the American business community about unfair distribution of these licenses, and companies started to close up and go home. Interestingly, some companies also chose to take in Chinese partners and localize as a way to qualify for import licenses. The principal imports at the time were liquid fuel, rice, wheat and cotton.
There is limited information about the Chamber for this period, but enough archival material to indicate that the Chamber remained active. The Chamber’s constitution was reissued both in 1946 and 1948. The language of the mission statement was different from that used in 1915, but the overall objectives were the same: promote bilateral trade, support U.S. companies in China, collect and disseminate useful commercial information, and promote American interests in China. Membership was limited to U.S. citizens and there were four categories: voting, individual, associate and honorary. The Chamber had a Board of 15 members and four officers: President, Vice President, Treasurer and Secretary. The U.S. Consul General and commercial attaché were honorary Board members, a practice that lives on to this day. Correspondence to members in the years 1946-1948 gives some sense of the issues facing the Chamber during this time of civil war: how to deal with pre-war contracts, concerns over intellectual property rights, but also such mundane matters as suggesting to Chamber members that local staff receive their annual bonus at Chinese New Year, not Christmas, as was past practice.
In early 1949, Chamber membership was still strong at 148 members, but companies had little activity and operated with skeleton staffs. Chamber members began to consider the possibility of a Communist victory in the Chinese civil war. Some believed that business conditions could not be worse under the Communists, despite their anti-American propaganda, and believed they should still “have a try” even if Shanghai fell under “Red administration.” The U.S. government developed an evacuation plan for those Americans still in Shanghai, but took care not to suggest that key Americans in commercial enterprises abandon those interests. As of April 1949, some 2,000 Americans were still in Shanghai. By the time Chinese Communist troops occupied the city on May 27, 1949, that number was down to 1,200, mostly businesspeople.
We have no Chamber records from 1949 and do not know what immediate impact the Communist takeover of Shanghai had on the organization. We do know, however, that an American business presence remained in the city. A New York Times article from December 4, 1949, even notes that the Chinese Communists were eager to deal with the United States and that business with the United States was expanding, resulting in growing sentiment among American businessmen for diplomatic recognition of the People’s Republic of China. Those views notwithstanding, the business community was aware that U.S. government policy would determine the fate of American business in China, given the possibility of a ban on commerce with the PRC.
In the early days after the Communist takeover, strikes and labor disturbances hit commercial concerns, including U.S. ones. There were demands for large wage increases and the new Communist authorities continued the policy of the Nationalist government of prohibiting the closing of businesses. In June 1949, the Military Control Commission froze all bank accounts and sealed all warehouses, including those belonging to foreign companies. The Chamber concluded “that the time to liquidate and leave China is overdue,” and called on parent companies in the United States to repatriate their foreign staff as soon as possible.
The year 1950 signaled the end of the U.S. commercial and diplomatic presence in Shanghai. On April 22, Chase National Bank closed its Shanghai affiliate. The U.S. Consulate General closed its doors on April 25. On April 27, a special train evacuated 1,000 Americans and other foreigners from Shanghai to Tianjin where they boarded a waiting passenger liner for onward travel to San Francisco. The Americans could not leave directly from Shanghai because the Nationalist Chinese had mined the Yangtze estuary. When the evacuees reached San Francisco, they described Shanghai as a “dying city” and said that “business is dead.”
America’s relations with China’s new Communist leadership continued to deteriorate. In December 1950, in response to Washington’s seizure of Chinese assets in the United States and a ban on U.S. ships from calling on Chinese mainland ports, the new government in Beijing ordered the seizure of all U.S. property and all U.S. public and private bank deposits. The U.S. Commerce Department estimated their value at US$100 million, most of which had already been seized.
Thus, by the end of 1950, not only did AmCham Shanghai temporarily end its operations, but the American business presence in China also came to an end. With the arrival of the Korean War, the United States and China engaged in direct conflict and anti-American sentiment rose in China. This brought to a close the first chapter of the Chamber’s history. It would be 37 years before the Chamber formally resumed its activities, a story explained in the accompanying article in this edition of Insight.