246
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The crucial point is likely to be satisfactorily eliminated by the Japanese Government agreeing that China shall undertake the entire working of the forests of the Hun River Basin. Since, however, as already indicated in my Report accompanying my despatch No. 2, a Company exploiting the rest of the Yalu could not hope to compete with a Company exploiting the Hun River on level terms, it is proposed that Japan shall have the right of pre-emption of all the timber of the Hun River, thereby giving her a hold on the market, and rendering possible the profitable concurrent exploitation of the forests of the Yalu Valley proper by the Joint Company. It is understood that this arrangement is recommended by Major-General Kojima, who sees no other end to the deadlock which has arisen.
By this settlement Japan will have her timber supply assured, and will be able to apply her improved methods of forestry to the forests of the Yalu, though taking the Yalu River forests as equal to the Hun River forests so far as working profits are concerned, Japan will only enjoy a half share of the former or one-fourth of the whole.
The solution of this question practically guarantees the speedy completion of the negotiations.
The other main points at issue are likely to be dealt with as follows:--
The term of operations will in all probability be fixed at twenty-five years. The joint capital of the Company is to be 3,000,000 gold yen, whereof 1,500,000 is to be raised by each of the countries engaged in the enterprise. It is believed that the Chinese capital will be raised by the issue of debentures.
Regarding officials, there is it appears to be a Chinese President and two Managers, one Chinese and one Japanese.
The Chinese claim that all the coolies employed shall be Chinese, but the Japanese contend that for the districts above the rapids, which exist in the upper reaches of the Yalu, Japanese coolies should be employed, as the Chinese do not understand the construction of rafts suitable for shooting rapids.
Mr. Okumura informed me yesterday that news had just reached the Timber Bureau of a serious attack made by Chinese and Coreans, in combination, on the Japanese engaged in the forestry, and that there had been several casualties. As a consequence of this, the Japanese wood cutters were showing a strong reluctance to carry on their work.
To-day the first anniversary of the establishment of the Japanese Timber Bureau in Corea is being celebrated here.
I have, &c.
(Signed) W. P. M. RUSSELL.
Inclosure 2 in No. 1.
(Translation.)
Agreement between Japanese Minister and Wai-wu Pu.
BARON HAYASHI GONSUKE, Envoy Extraordinary and Minister Plenipotentiary of His Majesty the Emperor of Japan, and Na Tung, Minister of the Imperial Chinese Board of Foreign Affairs, having been severally appointed by their respective Governments to draw up terms for the formation of a Joint-stock Lumber Company under the provisions of Article 19 of the Supplementary Agreement between Japan and China relating to Manchuria of the 22nd December, 1905, have now agreed as follows:-
1. The boundary shall be 60 Chinese li from mid-stream of the Yalu River, on the right bank, and extending from Mao Ehr Shan to Erb-Shih-Ssu-Tao-Kou (? the twenty-fourth creek), and shall be delimited by delegates to be appointed by the Fengtien provincial authorities of Japan.
Within this area the lumber industry will be developed by a combination of Chinese and Japanese capital, and at the commencement, while the Company is being organized, the two Powers will appoint Delegates to establish an office and start operations. After one year, when all arrangements have been made satisfactorily, the two Powers will invite capitalists to undertake the work.
2. The Chino-Japanese Joint-stock Lumber Company shall be entitled the Yalu Forestry Company.
3. The capital of the Company shall be 3,000,000 dollars (? yen) (say 300,000l), and shall be subscribed in equal shares by Chinese and Japanese,
If the Company
4. The principal office of the Company shall be at Antung. should consider it necessary they may, by application to the Chief Director, establish branch offices wherever required.
5. The Company engages to respect existing industries of Chinese. The lumber industry, except within the area defined in Article 1, where the Company have the right of cutting lumber, shall for the rest, outside this area and in the forests of the Huuchiang, still remain in the hands of the Chinese already operating there. The capital required for cutting lumber shall be advanced by the Company, and all the lumber produced, except that acquired by the Kiangsu-Chekiang Railway Company and that used by the inhabitants along the river, which will be purchased direct from the timber fellers, shall be bought exclusively by the Company, and the Company will be required to place it on the market at current prices, and may not utilize their position to enhance the price unreasonably.
6. Any lumber felled or bought by the Company which is required by the Chinese Government or any Chinese official establishment will be purchased under "huchao" or special pass, and must be charged for at actual cost price, and may not be highly priced.
7. The term of the Company's Charter shall be twenty-five years. At the expiry of this period, if the Chinese Government considers that the Company has worked satisfactorily, the Company may apply to the Chinese Government to extend the term.
8. There shall be a Chief Director of the Company, who will be the Taotai of the eastern circuit, appointed by the Viceroy and Governor at Mukden to be also Superintendent of the Company's affairs. There will further be two Managers, one Japanese and one Chinese, severally appointed by their respective Governments to manage all the Company's business. The remaining sub-Managers will be appointed by the Managers in consultation together. If within the defined area it is considered necessary to employ labour of any other nationality in the lumber cutting, the Managers must first apply to the Chief Director for permission.
9. The Company will prepare a Report and accounts at the end of each year of all their business for submission to the proper authorities of the two Powers.
10. All the revenues of the Company, after payment of working expenses, shall be subject to a royalty to the Chinese Government of 5 per cent. on the net profits. After this royalty has been deducted, all the residuary profits shall be equally divided between the Chinese and Japanese shareholders. The working expenses of the Company must not be unreasonably written up, and must be estimated periodically in advance, showing the wages of employés of the Company and all other expenses for submission to the Chief Director.
11. The detailed arrangements for establishing the Company shall be made within one month after this General Agreement has been determined on by Delegates to be appointed by the Viceroy and Governor at Mukden and the Japanese Consul-General at that place. When these detailed arrangements have been drawn up they will be intrusted to the Company to discharge, and a time limit of three months will be fixed for the commencement of operations. Any future arrangements which the Company may desire to make shall be submitted to the Chief Director for approval.
12. When the Delegates of the two Powers meet at Mukden to draw up the detailed Regulations, the customs dues payable by the Company on lumber will be arranged by examining the rules hitherto enforced and by application to the local authorities to consider reductions in the tariffs. But the Company's machinery and tools for cutting lumber shall be admitted free of all customs and transit dues.
13. When the Company has started operations the Japanese Government agrees to remove entirely the existing timber yards on the Yalu River.
(Signed)
Baron HAYASHI GONSUKE, His Imperial Japanese Majesty's Envoy Extraordinary and Minister Plenipotentiary.
NA TUNG, Minister of the Imperial Chinese Board of Foreign Affairs.
Done at Peking.
Meiji, 41st year, 5th month, 14th day (Kuang-hsü, 31st year, 4th month, 15th day; 10th May, 1908).
246
i
2
The crucial point is likely to be satisfactorily eliminated by the Japanese Govern- ment agreeing that China shall undertake the entire working of the forests of the Hun River Basin. Since, however, as already indicated in my Report accompanying my despatch No. 2, a Company exploiting the rest of the Yalu could not bhope to compete with a Company exploiting the Hun River on level terms, it is proposed that Japan shall have the right of pre-emption of all the timber of the Hun River, thereby giving her a bold on the market, and rendering possible the profitable concurrent exploitation of the forests of the Yalu Valley proper by the Joint Company. It is understood that this arrangement is recommended by Major-General Kojima, who sees no other end to the deadlock which has arisen.
By this settlement Japan will have her timber supply assured, and will be able to apply her improved methods of forestry to the forests of the Yalu, though taking the Yaln River forests as equal to the Hun River forests so far as working profits are concerned, Japan will only enjoy a half share of the former or one-fourth of the whole.
The solution of this question practically guarantees the speedy completion of the negotiations.
The other main points at issue are likely to be dealt with as follows:--
The term of operations will in all probability be fixed at twenty-five years. The joint capital of the Company is to be 3,000,000 gold yen, whereof 1,500,000 is to be raised by each of the countries engaged in the enterprise. It is believed that the Chinese capital will be raised by the issue of debentures.
Regarding officials, there is it appears to be a Chinese President and two Managers, one Chinese and one Japanese.
The Chinese claim that all the coolies employed shall be Chinese, but the Japanese contend that for the districts above the rapids, which exist in the upper reaches of the Yalu, Japanese coolies should be employed, as the Chinese do not understand the construction of rafts suitable for shooting rapids.
Mr. Okumura informed me yesterday that news had just reached the Timber Bureau of a serious attack made by Chinese and Coreans, in combination, on the Japanese engaged in the forestry, and that there had been several casualties. As a consequence of this, the Japanese wood cutters were showing a strong reluctance to carry on their work.
To-day the first anniversary of the establishment of the Japanese Timber Bureau in Corea is being celebrated here.
I have, &c.
(Translation.)
(Signed)
Inclosure 2 in No. 1.
W. P. M. RUSSELL.
Agreement between Japanese Minister and Wai-wu Pu.
BARON HAYASHI GONSUKE, Envoy Extraordinary and Minister Plenipoten- tiary of His Majesty the Emperor of Japan, and Na Tung, Minister of the Imperial Chinese Board of Foreign Affairs, having been severally appointed by their respective Governments to draw up terms for the formation of a Joint-stock Lumber Company under the provisions of Article 19 of the Supplementary Agreement between Japan and China relating to Manchuria of the 22nd December, 1905, have now agreed as follows:-
1. The boundary shall be 60 Chinese li from mid-stream of the Yalu River, on the right bauk, and extending from Mao Ehr Shan to Erb-Shih-Ssu-Tao-Kou (? the twenty- fourth creek), and shall be delimited by delegates to be appointed by the Fengtien provincial authorities of Japan.
Within this area the lumber industry will be developed by a combination of Chinese and Japanese capital, and at the commencement, while the Company is being organized, the two Powers will appoint Delegates to establish an office and start operations. After one year, when all arrangements have been made satisfactorily, the two Powers will invite capitalists to undertake the work.
2. The Chino-Japanese Joint-stock Lumber Company shall be entitled the Yalu Forestry Company.
3. The capital of the Company shall be 3,000,000 dollars (? yen) (say 300,0004), and shall be subscribed in equal shares by Chinese and Japanese,
If the Company
4. The principal office of the Company shall be at Antung. should consider it necessary they may, by application to the Chief Director, establish branch offices wherever required.
5. The Company engages to respect existing industries of Chinese. The lumber industry, except within the area defined in Article 1, where the Company have the right of cutting lumber, shall for the rest, outside this area and in the forests of the Huuchiang, still remain in the hands of the Chinese already operating there. The capital required for cutting lumber shall be advanced by the Company, and all the lumber produced, except that acquired by the Kiangsu-Chekiang Railway Company and that used by the inhabitants along the river, which will be purchased direct from the timber fellers, shall be bought exclusively by the Company, and the Company will be required to place it on the market at current prices, and may not utilize their position to enhance the price unreasonably.
6. Any lumber felled or bought by the Company which is required by the Chinese Government or any Chinese official establishment will be purchased under "huchao" or special pass, and must be charged for at actual cost price, and may not be highly priced.
7. The term of the Company's Charter shall be twenty-five years. of this period, if the Chinese Government considers that the Company has worked At the expiry satisfactorily, the Company may apply to the Chinese Government to extend the term.
8. There shall be a Chief Director of the Company, who will be the Taotai of the eastern circuit, appointed by the Viceroy and Governor at Mukden to be also Super- intendent of the Company's affairs. There will further be two Managers, one Japanesc and one Chinese, severally appointed by their respective Governments to manage all the Company's business. The remaining sub-Managers will be appointed by the Managers in consultation together. If within the defined area it is considered necessary to employ labour of any other nationality in the lumber cutting, the Managers must first apply to the Chief Director for permission,
9. The Company will prepare a Report and accounts at the end of each year of all their business for submission to the proper authorities of the two Powers.
10. All the revenues of the Company, after payment of working expenses, shall be subject to a royalty to the Chinese Government of 5 per cent, on the net profits. After this royalty has been deducted, all the residuary profits shall be equally divided the Chinese and Japanese shareholders. The working expenses of the Company must among not be unreasonably written up, and must be estimated periodically in advance, showing the wages of employés of the Company and all other expenses for submission to the Chief Director.
11. The detailed arrangements for establishing the Company shall be made within one month after this General Agreement has been determined on by Delegates to be appointed by the Viceroy and Governor at Mukden and the Japanese Consul-General at that place. When these detailed arrangements have been drawn up they will be intrusted to the Company to discharge, and a time limit of three months will be fixed for the commencement of operations. Any future arrangements which the Company may desire to make shall be submitted to the Chief Director for approval.
12. When the Delegates of the two Powers meet at Mukden to draw up the detailed Regulations, the customs daes payable by the Company oa lumber will be arranged by examining the rules hitherto enforced and by application to the local authorities to consider reductions in the tariffs. But the Company's machinery and tools for cutting lumber shall be admitted free of all customs and transit dues.
13. When the Company has started operations the Japanese Government agrees to remove entirely the existing timber yards on the Yalu River.
(Signed)
(Signed)
Baron HAYASHI GONSUKE, His Imperial Japanese Majesty's Envoy Extraordinary and Minister Plenipotentiary.
NA TUNG, Minister of the Imperial Chinese
Board of Foreign Affairs.
Meiji, 41st year, 5th month, 14th day (Kuang-hsü, 31th 10th May, 1908).
Donc at Peking.
year, 4th month, 15th day;
ľ
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