also endeavour to keep the handling of them in their own hands, and this is evidently what Mr. Wright is complaining of.
The Japanese, as buyers of three-fourths of the output of the beans, are no doubt exerting, by monetary advances and forward contracts, a controlling influence over the bean brokers up-country. They can therefore more or less dictate whether the beans shall go to Newchwang or to Tairen. They thus induce most of the beans to go to Tairen. Perhaps the railway rebates, which apply to freights exceeding 100,000 yen per annum, induce the Japanese to try to carry all the beans under their own name. Once at Tairen, the beans go either to Japan or to South China in the proportions above mentioned. To judge from Mr. Wright's language, a steamer to Japan will be served first from the warehouses (which belong to the Railway Company), and the foreign steamers, wishing to get their beans for South China, must await the convenience of the Railway Company, or else employ Japanese to do the work for them, thus realizing Mr. Wright's apprehensions that the bean trade is being forced into Japanese hands. By harassing the Chinese buyers as well, the Japanese may induce them to ship in Japanese boats, of which several have recently gone to South China, or even try to get them in time to buy their beancake from Japanese firms at the ports of consumption.
This position is the result, not so much of an active policy to ruin Newchwang, but rather due to a number of negative situations owing to a want of Chinese initiative. Premising the fact that the bean trade and Newchwang are mutually dependent on each other, as about 72 per cent. of Newchwang's exports are bean products, a decline of the one will entail a decline of the other.
The negative situations are, briefly stated, firstly, the want of independence of the Chinese producers in so largely placing themselves in Japanese hands, a position perhaps induced by their dependency on a Japanese railway and the want of a competing line such as the proposed Fakumen extension would have supplied. The second difficulty is the absence of any attempt to improve the navigation of the Liao River, which at present is to a great extent too shallow, especially after a dry season, to allow fully-laden bean boats to come down from Tiebling in their thousands as they used to do formerly. Half-laden boats do not pay, and many are being broken up.
This Liao River improvement question, though much discussed, has too strong an opposition to materialize. The active opposition would come from the Japanese Railway, and the Chairman of the Chinese Chamber of Commerce, who is supposed to be pro-Japanese, recently stated that the agitation for the Liao River improvement would come to nothing. The passive opposition would come from the Chinese Railway through official obstruction, for purely selfish reasons. The want of a strong central and independent policy, unhampered by petty mercenary self-interests, is particularly felt here, where improvements of this natural highway would do much to restore Chinese independence from Japanese hegemony.
A third difficulty is the absence at either railway terminus of warehousing facilities with proper jetties and wharves. With the Japanese railway, it is natural that there should be no urgent desire to improve this defect. But, with its earnings, it should be the policy of the Chinese railway to improve its terminus, and adopt every means in its power to develop on modern lines a system of wharves, jetties, and warehouses, so as to be able to compete successfully for the bean trade.
The impression of Japan's supposed designs on Newchwang's premier position are to some extent due to a want of appreciation of the fact that, up to within the last two years, Newchwang had the monopoly of the export trade of the bean products of Manchuria. Tairen, under Russian régime, and during the war, did not compete. It is only natural, therefore, that, with Tairen now taking an active interest in the Manchurian export trade, the volume of the Newchwang exports should decline until Newchwang finds its level. And the time required to reach such level will depend on China's future commercial policy.
* I have, &c. (Signed)
R. T. TEBBITT.
P.S.-A letter on the subject from B. and S.'s agent is inclosed herewith.
R. T. T.
Inclosure 2 in No. 1.
Mr. Harley to Acting Consul Tebbitt.
Dear Tebbitt,
Newchwang, May 25, 1908. I RETURN herewith the extract you left with me on the 22nd instant.
It is difficult to supply any concrete and specific complaint against the Japanese on the point you raise, they are so wily and "gradual" in their modus operandi; but their general aim appears to me to be to divert the major portion of Manchurian exports to Dalny by means of railway and wharf and storage facilities, and, once this is accomplished, they will by degrees force it into Japanese hands throughout, from place of production in the interior to place of consumption in Central and South China. This is my purely personal impression, and I do not here refer to exports to Japan, which have always been more or less in their hands for some time past.
They could so delay the loading of our steamers, for instance, and place so many difficulties in the way of those using them, as to disgust our Swatow constituents and other supporters and drive them to ship by Japanese steamers, and ultimately give up sending buying agents up here from the south to buy and ship for them, and let the Japanese do the whole thing. What object but one such as this can have induced the South Manchuria Railway to include in its projects the application of a sum of 10,000,000 yen for the "capitalization of its marine transport service"?
I consider that 30 per cent, at least of cargo shipped to South China from Newchwang last year is now going viâ Dalny--it may quite possibly be 40 per cent.; and of Newchwang's total exports for 1907, China must have had the lion's share in value by a long way, as the 30 per cent, which has been deviated means a lot.
Yours truly, (Signed) W. F. HARLEY.
(Confidential.)
Inclosure 3 in No. 1,
Memorandum respecting Manchuria.
Military Policy.
THE Japanese policy in Manchuria is guided by two distinct influences, one military and one civil, and this must be borne in mind in any endeavour to fathom that policy.
The military policy, the policy of the party in power in Japan, requires such steps to be taken in Manchuria as will strengthen Japan's strategic position vis-à-vis the Russians in the north, and therefore to prepare everything for the eventuality of another war.
The civil policy, on the other hand, is guided by an endeavour to either modify the military policy so as not to conflict with the various Treaty obligations entered into by Japan or else to assist it diplomatically by asking for Concessions or making Agreements-by a policy of bluff or of give-and-take.
The possibility of another war is always at hand. The proposed doubling of the Siberian track, the projected Amur Railway, together with the administrative claims of the Chinese Eastern Railway, all show that Russia's Far Eastern policy is not necessarily one of retrenchment.
Japan, on the other hand, by the absorption of Korea, had extended her boundaries and thus made herself more vulnerable, and the question of their defence is vital to the nation. To strengthen her position, Japan must regard the South Manchuria Railway as primarily strategical, in the same way as the Russian lines are regarded by Russia. She has therefore to enlarge her holdings at the various stations en route for the purposes of military necessities. This policy is being carried out along the whole route, and the inherited areas are said to have increased by over 100 per cent. by purchase or encroachment.
Such parts of the railway Settlements as are not set aside by the army for barracks, warehouses, or drill grounds will be sublet to civilians for the purposes of encouraging Japanese emigration into Manchuria. As the settlers are not being attracted, further inducements, according to Baron Goto's speech, will be offered by the building of houses for them, and, if even this does not work, it has been decided to invite Chinese to settle there, subject to Japanese railway regulations.