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broad iden of the lines upon which the administration is conducted. It remains to consider the position now occupied by foreigners in the municipality, and the possi- bility of devising some scheme by means of which the present anomalous situation may be ameliorated or rectified.
At the present moment, Chinese and Japanese residents are paying taxes-- British, French, American, and German subjects are not, with the sole exception of one German firm, Messrs. Valdeker and Peppel. The attitude of foreigners towards the municipal administration has of late received some attention in the local press, and was the subject of a somewhat protracted discussion at a meeting of the assembly of delegates held on the 10th May last. I append, in translation, copy of a report of this meeting and of articles appearing in the "Nova Zizn" of the 27th April, and in the "Harbinski Viestnik" of the following day, and of the 10th May (Annexes 7-10). It is possible that the discussion held at the meeting of delegates and the three press articles, were all partly inspired; but it is to be remarked that--speaking generally-though there is some exaggeration, a strong sense of injustice goes hand in hand with a lack of full appreciation or clear understanding of the political considera- tions which are mainly responsible for the state of affairs now existing. These and other important factors apart, few, I think, will be found to hold that, as a matter of principle, it is either just or proper for a small portion of the community to bear no part of the municipal burden whilst sharing largely in the benefits provided at the expense of the remainder. The position, it has long since been recognised, is one of no little difficulty, and a solution has yet to be found. There are various conflicting interests, and some observations thereon will not be out of place.
Russian Interests.---The plan of the railway area which is annexed to this report will show more clearly than any written description the extent of the country over which the Russians hold sway. Harbin is no ordinary treaty port. The new town and Pristan niake together a Russiau town of very considerable extent, and, from the point of view of Russia at least, it is intelligible that the proposal to internationalise a place of this nature-which owes its being to Russian initiative and a lavish expenditure of Russian money-is not regarded with favour. It is not easy to think that the Russians, if they can possibly avoid it, will be willing to forego in their cutirety the special privileges to which they consider that they are justly entitled.
Chinese Interests.-By the May agreement of last year the Chinese Government sought to establish its claim to the recognition of Chinese sovereignty over the railway area. No steps have, as previously stated, been taken towards the elaboration of the detailed regulatious contemplated by this agreement, and the agreement itself is (if my Russian colleague is to be believed) regarded by his legation as already lapsed. It would, at all events, not appear that the agreement has had any practical effect locally beyond the appointment of the three representatives of the Chinese chamber of commerce to assist in the municipal administration.
A few words as to the meaning and effect of China's "sovereign rights," with particular reference to the matter now in point, may be permitted. The general purpose of the assertion of these rights, if I may be allowed to express my own opinion, is one and one only: it is to withdraw and curtail to the greatest possible extent the privileges accorded to foreigners under treaty, and to use every effort to withhold from them the grant of further concessions. Into the rights and wrongs of this policy it would be out of place here to enter, but it may be interesting to adduce a few instances to show the manner in which Chinese amour-propre can in this matter be satisfied. The system under which foreigners ordinarily acquire land in China is one of perpetual lease; this satisfies the fiction that the soil of China is the Emperor's, and cannot be alienated by sale to a foreigner. In the agreement concluded between Japan and China for the working by the former of the Fushun and Yentai coal mines China's sovereign rights" are considered adequately safeguarded by the payment of a tax on the output of coal, and the same may be said of the agreement made with Russia for the development by her of coal mines lying along the Chinese Eastern Railway, copy of which was sent to you in Mr. Willis's despatch No. 24 of the 7th March, 1908. The last clause in this agreement is particularly noticeable, since it denies the Chinese police the right of entry, except under Russian escort, within the limits of the mining properties. Coming now to the case of Harbin, the Chinese Government protests against the interpretation put by Russia upon article 6 of the Chinese Eastern Railway Agreement of 1896, and maintains that it was never its intention to forego its administrative rights within the railway areas. I would venture
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on this point to invite a reference to articles 2 and 5 of the agreement for the purchase of land in Heilungcbiang by the railway company, copy of which was forwarded to you in the acting consul-general at Mukden's Confidential despatch No. 23 of the 7th March, 1908. Article 2 states that the land will be administered in accordance with the original agreement for the construction of the railway. Article 5 provides that at time of demarcation of the railway settlements a piece of ground in the vicinity of the railway station and commercially convenient shall be set aside for the use of Chinese merchants, such land to be administered by Chinese officials and merchants. The question suggests itself why, if China possesses the right of administration within the railway areas, is it necessary to establish special reservations of land of the nature and under the conditions described ?
From the consideration of China's sovereign rights in so far as they affect the railway areas at Harbin and other places, it is but a step to an appreciation of her other action in declaring in the Sino-Japanese Treaty of 1905 that Harbin would be opened by China herself as a place of international trade and residence. As stated
in my despatch No. 9 of the 30th April on the subject of the negotiations in connection with the Sungari regulations, on the one hand, the Chinese authorities deny that Fu-chia Tien, the Chinese town in the vicinity of the railway area and the only populated quarter in which Chinese authority does reign supreme, is part of the open port. On the other, they contest the rights claimed by Russia in the town of New Harbin; the official centre, Pristan, the commercial quarter and other places which together form the foreign or railway area comprehensively called Hachin. To the question "What or where is the open port of Harbin ?" nobody can give even a passably satisfactory answer.
Foreign Interests.-It is well known that the American Government and its agents on the spot were foremost in contesting the special position and rights which Russia has claimed in Harbin. I have, however, been led to believe from informal conversations with my American colleague that his Government might he prepared to recede from the strongly antagonistic attitude hitherto adopted, and reccnt issues of the local Russian newspapers published a telegram dated Washington, the 10th June, to the effect that Mr. Secretary Knox had informed the Russian Ambassador that the United States' consul in Harbin had received instructions that Americans should pay taxes on equal terms with Russians and Chinese. My American colleagues has not, he informs me, received any instructions to that effect, but he seems to think that the report is not without foundation. According, also, to information received from another and confidential source, the railway administration has, in fact, received a telegram from the Russian Minister for Foreign Affairs stating that the American Government has agreed to the temporary payment of taxes by American subjects pending a final settlement of the whole question. As far as I can gather, the German authorities favour a scheme of internationalisation; there are no French or Austrian consuls resident in Harbin, but the Austrian attitude would appear, from such information us it is possible to obtain locally, to be somewhat indecisive. Thus, there is reason to think that some of their subjects, such as restaurant keepers, cannot evade the payment of taxes, even if they would. As regards the Japanese, it may be taken for granted that they will not oppose the Russians. Sir John Jordan, in his despatch to the Foreign Office No. 454 of the 8th December last, stated that the Japanese had always encouraged the Russians in their opposition to any compromise on the question of the status of the railway settlements, and had viewed the agreement of May last with little favour. Excluding the Japanese, it is not improbable that in several instances the authorities concerned are waiting upon events. It remains to consider British interests. His Majesty's Minister, in his despatch to the Foreign Office
No. 461, Confidential, of the 16th December last, suggested that if, as Mr. Willis stated in his despatch No. 60 of the 29th November, 1909, British subjects were willing to accept the Russian municipal regulations provided they could obtain a guarantee that they would be fairly taxed and not subjected to annoyance at the hands of the Russian police, it might be better to obtain safeguards on these points thau risk the conclusion of an understanding between Russia and Japan on the lines described earlier in his despatch. Conversations which I have had with representa- tive British firms in Harbin confirms Mr. Willis's statement that they would not object to paying taxes of an equitable and proper nature, and, as regards their being subjected to annoyance at the hands of the Russian police, the possibility of such an occurrence is, even now, not great. The principle of exterritoriality, as far as foreign subjects who have their own representatives in Harbin are concerned, is at the present moment recognised by the Russian authorities. There are, however, certain features
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