practice adumbrated, as mentioned in Sir John Jordan's despatch No. 97 of the 2nd March of this year, by M. Pokotilow when the Chinese Eastern Railway's pretensions were being discussed. My own experience at Dairen has been that in the assessment of these very taxes and charges which the railway claims the right to levy inside its zone the natural and almost unconscious tendency of the local authorities is to impose on the alien a differential and unfavourable tariff, for the simple reason that he is an alien, and must therefore undoubtedly be a richer man than a Japanese. These attempts to differentiate may here as a rule be opposed with success by referring the question to the higher governing authorities, but I doubt greatly if this will be the case when we deal with a Company ostensibly private and practically responsible only to itself.
I am also of opinion that our grounds for dissatisfaction will not rest there, but that we shall find the Railway Company taking advantage of its position, already sufficiently strong without the acquisition of administrative rights, to push in covert ways the interests of Japanese merchants at the expense of those of foreign. It must be borne in mind when considering this and kindred questions that the present constitution of the Railway Board militates against impartial treatment. I have on more than one occasion pointed out in my despatches that there is some subtle relationship between the railway and the Mitsui Bussan Kaisha, which cannot but fill one with distrust.
There is no secret about it. Both Mr. Kusakabe, the Head of the Foreign Affairs Bureau in the Governor-General's office, and Mr. Chikaraishi, the local Administrator at Dairen, have in private conversation spoken to me with considerable frankness on the subject. The former, in fact, went so far as to say that the Railway Company was really a Mitsui Bussan Kaisha concern; while the latter openly confessed that the Governor-General went in awe of the Company and was afraid to try a fall with it.
The reason given by Mr. Chikaraishi for this singular enunciation was the presence of Baron Goto. I need scarcely allude to the past history or services of this gentleman. From the Japanese point of view, he has been a very distinguished Civil servant, but I doubt if there exists any foreign official or merchant who looks back with satisfaction to his relations with the ex-Administrator of Formosa. Among his own countrymen, the President of the Railway has the reputation of being not only arbitrary, but inordinately ambitious and dictatorial. We should, therefore, I think, be prepared, so long as he directs the fortunes of the Company, for a policy of aggression.
His power for the moment is such that, as Mr. Chikaraishi says, no one can hope to oppose him with success. Already in the leased territory collisions have taken place between the regularly constituted authorities and those of the railway on those very questions which are engaging attention further north. There is one system of administration for the general public, another for the Company and its employés, and the regulations and taxes which are in force up to the borders of the railway Settlements may not be applied inside, their place being taken by other rules and charges of the Company's own making.
It is not difficult to understand the umbrage which this imperium in imperio gives the regular Government officials, who see their own Administration replaced inside the charmed circle by another evolved by a corporation consisting of persons who, for the most part, have never been members of the official hierarchy. These are not the complaints of one person only. They were echoed by every Japanese Consular officer I met on my journey, the universal prediction being that, with the development of the Settlements along the line, friction between the two authorities would be increasingly frequent and acute. Thus, even among the Japanese this assumption by the Railway Company of administrative authority is not viewed with perfect equanimity.
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Japanese Trade-Prospects of.
I found in Manchuria a tendency among Japanese officials to take rather a pessimistic view of the future for Japanese trade. Vice-Consul informed me that business in his district was very poor, and that, in his opinion, it was doubtful if it would ever be really good. Both Japanese and foreigners had, he said, over-estimated the prospects of South Manchuria, to their present mutual disappointment. (This is the view expressed by Sir John Jordan in his despatch to the Foreign Office of the 21st November last.)
It had been suggested that farming prospects would be improved if wheat were substituted for "kaoliang" as a crop; but the advocates of this change forgot that "kaoliang" was not merely a foodstuff, but in a Chinese household fulfilled almost every useful purpose save that of clothing. Its stalks were used as fodder, as fuel, for roofing, matting, the manufacture of fans, and for building purposes generally. This was by no means the case with wheat.
The same official asserted that unless the South Manchuria Railway Company lowered its freight charges considerably it would never be able thoroughly to overcome the competition of the cart traffic to and from Newchwang. His explanation was that in the winter months, when the earth was frozen and the farmers unable to employ their cattle for agricultural purposes, they preferred to use them in carting produce to and from Newchwang, even at ruinously cheap rates, to having the animals idle in their stables.
Further, with regard to the often expressed surprise of the traveller at the poverty of the Manchurian farmer in comparison with the richness of the land he tills, it should be remembered that this was mainly due to the fact that throughout the country the field labourer was not a native of the soil. Holdings were big, the inhabitants few, and farming implements primitive; the inevitable result was that labour must be imported from abroad.
So with each spring there drifted up, like birds of passage, hordes of farm-hands from Shantung and other parts of China. These men remained throughout the summer, but as soon as the crops were gathered in and the first cold of winter felt, they disappeared with their earnings to their own homes. Thus the wealth of Manchuria was scattered over China, and for the farmer himself there was left but sufficient to help him over the period of idleness which must last till the coming of spring.
A further cause for pessimism in Japanese official circles was apparently the scarcity among the tide of immigrants of responsible merchants. Everywhere I heard it asserted that, if the troops and the hundreds of labourers and mechanics now employed in the railway shops or on the construction works along the line were removed, the Japanese Colonies would shrink almost into nothingness, for it was on those two classes that the latter lived.
In other words, the bulk of Japanese trade in Manchuria is paid for out of Japanese pockets. These views are in their way correct; but personally I do not think that the position is so unpromising as the Japanese themselves assert. I doubt very much, too, if they entirely believe it themselves. They are, in my opinion, in too great a hurry to see immediate and favourable results, forgetting that the present state of depression is not confined to Manchuria alone.
This is a vast province of untold possibilities, and though the prospects of development in South Manchuria have been over-rated, there still remains a huge and infinitely more fertile area in the north, which, with the multiplication of the channels of communication, must inevitably in the future become a great market for the goods not only of Japan, but, it is to be hoped, of other nations.
Japan is aware of this, and it is north and north-east that the tide of immigration is slowly setting. The direction will become more noticeable when the contemplated railway between Changchun and Kirin is completed and the fertile districts round the latter are brought into closer touch with the outer world.
As an agriculturist the Japanese cannot compete with the native; but he should—because Japan is so near at hand with her large supplies of cheap goods, to which, for a time at all events, the new markets will be limited—be able to secure the major share of trade.
There is also the milling of the grain produced in the great North Manchurian wheat-belt, to which reference is made in Captain Salmond's Report. For the moment, thanks to the mismanagement of the Russian mill-owners at Kharbin and to the fact that their trade was a war trade only, the prospect is unpromising; but this will not always be so.
I am one with Captain Salmond in thinking that there is a very great future for Manchurian flour, and that, given energetic and careful management, there is absolutely no reason why the produce of the Manchurian mills should not completely drive out of Manchuria and Japan at least the American-made article. It is simply in my opinion a matter of time. Manchurian flour is in so advantageous a position compared with American that the market must eventually fall into its possession.
The Japanese are aware of this. Mr. Kawakami, the Consul-General at Kharbin, confessed to me that he had already considered the possibility of Japanese merchants acquiring those empty bankrupt mills which line the banks of the Sungari in Kharbin-Pristan, but that his nationals were too suspicious of Russia and Russian merchants to wish to sink capital in enterprises so far from home.
It would be well worth the while of British capitalists to devote some attention to the opportunity for successful investment which appears to me to offer in this direction. It is true that, apart from the present cost of production, there is a certain aversion among the Chinese to Manchurian flour because of its somewhat dark colour, but this should easily be overcome.
Of the demand for British goods I cannot speak with any authority; but I
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