A Ride on a Tiger

He who rides the tiger Finds it difficult to dismount

Ever since 1949, U.S. businessmen trying to operate in--or get out of--Red China have learned the bitter truth of this ancient Chinese proverb. Under the guise of smiling cooperation, the Communists have systematically stripped businesses while holding their managers virtual prisoners. Last week the last of hundreds of U.S. businessmen, who once did a $1 billion business in China, was safely in Hong Kong with a tale of seven years of subtle commercial torture. His name: Charles S. Miner, 49, manager of a big auto, newspaper, real-estate and insurance business in China for Manhattan's C. V.Starr and Co. His company's losses totaled nearly $5,000,000 before the Reds were satisfied. Said Miner: "Our companies were wrung dry like dishrags until we had lost everything."

Promotion & Profit. If any Western company could have hidden Red China's tiger successfully, it was C. V. Starr and Co., which directs a network of worldwide (69 nations) insurance companies. Its chairman is Cornelius V. Starr, an old China hand and more recently a U.S. skiing fan. (He has turned Stowe, Vt. into one of the top U.S. ski resorts.) Starting in China in 1919, Starr's group built its American-Asiatic Underwriters into Asia's biggest insurance operation, with more than half of China's total business; it accumulated large real-estate holdings, opened Studebaker and Buick-Vauxhall agencies, published Shanghai's English-language Evening Post & Mercury. When Charles S. Miner took over in 1948, the company was doing a highly successful business and hoped it could continue under the. Communists. Starr's Evening Post even fell for the line that the Reds were really "agrarian democrats" without binding ties to Moscow, went so far as to welcome Mao Tse-tung's army as the beginning of a "true liberation." It was a foolish hope.

Red censorship throttled the Evening Post so effectively that it was soon forced to shut down, sell its equipment at junk prices. The auto agencies next went under. But despite heavy taxes, Starr's insurance business prospered, and the land company, Metropolitan Land Co., was allowed to manage its properties.

On the Treadmill. In 1950, when Red China entered the Korean war, all pretending stopped. In quick succession, the Communists piled on enormous claims for back wages, charged fantastic tax assessments, added on phony claims for payment of insurance debts actually paid years before to the Nationalists. Starr's land company lost all its undeveloped land to nationalization, was stripped of 200 rented houses in one grab on the pretext that the titles were invalid. As business foundered, each dismissed employee had to be paid off in U.S. dollars; once Manager Miner was jailed for ten days when U.S. currency restrictions held up the necessary cash. To top it off, the Communists calculated interest on unpaid claims at 1 1/2%, compounded daily.

When Miner tried to liquidate the rest of the company holdings, the government rejected the buyers, instead "introduced" him to "approved" buyers, e.g., government agents, who prodded him to make them an offer. "That would have been suicide," says Miner. "If we had set a price, they would simply have used it to compound their claims and get more out of us." In desperation, Miner repeatedly asked the Reds to "'tell us what the ransom is and we will pay it,' but they would never give us a figure."

Three months ago, the cat tiring of the mouse, the Communists set their final ransom price for Miner's release: $85,000 to clear the Starr company's remaining "debts" and liquidate the business. They even agreed to make it contingent on his safe journey out of China, with his Chinese wife. Said Miner: "To all intents and purposes this was the swan song of American business in China."

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