CO129-352 - Public Offices - 1908 — Page 393

CO129 Colonial Office Hong Kong Records 理藩院香港檔案 All AI Reviewed

Equally inadmissible is the Japanese Government's contention that "the policy of open door does not prevent railway exploitation." Here again everything depends on the meaning of the terms used, but there can be no question that the exclusive privileges claimed by Japan in connection with her ownership of the South Manchurian Railway are a complete repudiation of the open-door policy. Railways may be, and are, built on Chinese territory as financial and industrial enterprises in which foreign Powers are interested, and this without violation of the open door so long as the enterprises in question are for the benefit and under the direction of the Imperial Chinese Government, affording equal commercial opportunities to all-comers; but it were futile to assert that the doctrine of equal opportunities is compatible with such privileges and such control as Japan is now endeavouring to exercise over Manchuria by virtue of her acquisition of the South Manchurian Railway. If proof of this statement be needed by those unacquainted with the situation, it is to be found in the fact that the Municipal Regulations recently promulgated in the name of the Russian railway authorities at Harbin—Regulations which ignored the Treaty rights of the subjects of all other Powers—received the diplomatic approval and support of the Japanese Government on the understanding that similar conditions would be recognized by Russia as applicable to the Japanese Railway Settlements in Southern Manchuria. It is useless to deny the fact that the South Manchuria Railway, won by Japan's victorious arms, is an instrument in the hands of the Japanese Government for the promotion of exclusive Japanese interests. The situation is sufficiently recognized, diplomatic convention notwithstanding, by the Powers, and the forces of "geographical gravitation," which must inevitably tend to the advancement of Japan's interests to the east of the Liao River, are generally understood. But the question which is raised by the Fakumen Railway scheme is whether, and how far, those forces of "geographical gravitation" are to be extended westwards, to the serious prejudice of vested British interests in that region, the detriment of international commerce, and the limitation of China's sovereignty?

In view of the essential and wider aspects of this question, it is almost superfluous to examine the technical reasons and economic precedents whereby the Japanese Government seeks to justify its veto of a "parallel" line. Nevertheless, as great stress has been laid upon the existence of a similar restrictive clause in the railway agreements made with China by other nationalities, and as the argument may appear forcible to the uninitiated, it is expedient to explain its inapplicability. The Agreement to which the Japanese Government particularly refers, viz., the American contract for the Hankow-Canton Railway, and the British contract for the line from Canton to Kowloon, were purely financial and industrial Agreements made between the Chinese Government and private Companies, for the construction of Chinese Government railways under Chinese control; and the lines being mortgaged as first security for the repayment of the necessary loans, the inclusion of the restrictive condition in regard to parallel lines was obviously beneficial to all concerned, since it facilitated the raising of capital abroad. Nevertheless, as the history of railway construction in China clearly proves, this condition was never intended to be (nor could it be) arbitrarily interpreted by the representatives of the foreign bondholders to restrict the Chinese Government from constructing other railways parallel to these lines, the evident and only intention of the condition being to reassure investors that the Chinese Government would not (presumably at the instance of another Power) do anything to injure property which is mortgaged for security of foreign loans. No such argument can, however, be applicable in the case of the South Manchurian Railway, which is not a Chinese railway, for which China has incurred no liabilities and in which she is not even financially interested.

Finally, referring to the Newchwang Chamber's contention that in no country in the world could the vested interests of a railway preclude the construction of another line within a distance of 35 miles," the Japanese Government cites what it alleges to be "at least one instance in direct contradiction of that statement," and thereupon proceeds to quote the engagement given to the Peking Syndicate's Shansi Agreement, whereby, to avoid undesirable competition with the Chengting-Taiyuen Railway, the Syndicate undertook not to construct any railway within 100 li on either side of it. We can only presume that the Tokio authorities are unaware that 100 li are, for practical purposes, the equivalent of 35 miles; for it is inconceivable that, if they were informed of the fact, they should cite as argument on the Japanese side of the case a precedent which completely justifies the construction of the Fakumen Railway. (According to Mr. Kinder's report on that scheme, the actual distance between Mukden and Isinmintun is 37 miles.)

These, however, are side issues, which serve merely to detract attention from essentials. If the question be considered simply in the light of Japan's definite and undeniable obligation to recognize and maintain China's unimpaired sovereignty in Manchuria, and to promote the development of China's commerce and industries in that region, then assuredly (and because the greater includes the less) the Peking Agreement of 1905 and its supplementary clauses must be interpreted in the light of the declared principles and objects of the Anglo-Japanese alliance. For, if otherwise interpreted, it is evident that the Japanese Government failed to observe that clause of the Treaty of Alliance, which, having for its object the mutual protection of the established interests of both Powers, provides that neither of the Contracting Parties will, without consultation with the other, enter into separate arrangements with another Power to the prejudice of the interests described in the Agreement.

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It can scarcely be seriously believed in Tokio that the veto imposed by the Japanese Government in regard to the Fakumen Railway is regarded by any intelligent person as consistent with a policy "intended to safeguard effectively the interests already acquired by the two Powers on the common ground." Equally inadmissible is the Japanese Government's contention that "the policy of open door does not prevent railway exploitation." Here again everything depends on the meaning of the terms used, but there can be no question that the exclusive privileges claimed by Japan in connection with her ownership of the South Manchurian Railway are a complete repudiation of the open-door policy. Railways may be, and are, built on Chinese territory as financial and industrial enterprises in which foreign Powers are interested, and this without violation of the open door so long as the enterprises in question are for the benefit and under the direction of the Imperial Chinese Government, affording equal commercial opportunities to all-comers; but it were futile to assert that the doctrine of equal opportunities is compatible with such privileges and such control as Japan is now endeavouring to exercise over Manchuria by virtue of her acquisition of the South Manchurian Railway. If proof of this statement be needed by those unacquainted with the situation, it is to be found in the fact that the Municipal Regulations recently promulgated in the name of the Russian railway authorities at Harbin—Regulations which ignored the Treaty rights of the subjects of all other Powers—received the diplomatic approval and support of the Japanese Government on the understanding that similar conditions would be recognized by Russia as applicable to the Japanese Railway Settlements in Southern Manchuria. It is useless to deny the fact that the South Manchuria Railway, won by Japan's victorious arms, is an instrument in the hands of the Japanese Government for the promotion of exclusive Japanese interests. The situation is sufficiently recognized, diplomatic convention notwithstanding, by the Powers, and the forces of "geographical gravitation," which must inevitably tend to the advancement of Japan's interests to the east of the Liao River, are generally understood. But the question which is raised by the Fakumen Railway scheme is whether, and how far, those forces of "geographical gravitation" are to be extended westwards, to the serious prejudice of vested British interests in that region, the detriment of international commerce, and the limitation of China's sovereignty? In view of the essential and wider aspects of this question, it is almost superfluous to examine the technical reasons and economic precedents whereby the Japanese Government seeks to justify its veto of a "parallel" line. Nevertheless, as great stress has been laid upon the existence of a similar restrictive clause in the railway agreements made with China by other nationalities, and as the argument may appear forcible to the uninitiated, it is expedient to explain its inapplicability. The Agreement to which the Japanese Government particularly refers, viz., the American contract for the Hankow-Canton Railway, and the British contract for the line from Canton to Kowloon, were purely financial and industrial Agreements made between the Chinese Government and private Companies, for the construction of Chinese Government railways under Chinese control; and the lines being mortgaged as first security for the repayment of the necessary loans, the inclusion of the restrictive condition in regard to parallel lines was obviously beneficial to all concerned, since it facilitated the raising of capital abroad. Nevertheless, as the history of railway construction in China clearly proves, this condition was never intended to be (nor could it be) arbitrarily interpreted by the representatives of the foreign bondholders to restrict the Chinese Government from constructing other railways parallel to these lines, the evident and only intention of the condition being to reassure investors that the Chinese Government would not (presumably at the instance of another Power) do anything to injure property which is mortgaged for security of foreign loans. No such argument can, however, be applicable in the case of the South Manchurian Railway, which is not a Chinese railway, for which China has incurred no liabilities and in which she is not even financially interested. Finally, referring to the Newchwang Chamber's contention that in no country in the world could the vested interests of a railway preclude the construction of another line within a distance of 35 miles," the Japanese Government cites what it alleges to be "at least one instance in direct contradiction of that statement," and thereupon proceeds to quote the engagement given to the Peking Syndicate's Shansi Agreement, whereby, to avoid undesirable competition with the Chengting-Taiyuen Railway, the Syndicate undertook not to construct any railway within 100 li on either side of it. We can only presume that the Tokio authorities are unaware that 100 li are, for practical purposes, the equivalent of 35 miles; for it is inconceivable that, if they were informed of the fact, they should cite as argument on the Japanese side of the case a precedent which completely justifies the construction of the Fakumen Railway. (According to Mr. Kinder's report on that scheme, the actual distance between Mukden and Isinmintun is 37 miles.) These, however, are side issues, which serve merely to detract attention from essentials. If the question be considered simply in the light of Japan's definite and undeniable obligation to recognize and maintain China's unimpaired sovereignty in Manchuria, and to promote the development of China's commerce and industries in that region, then assuredly (and because the greater includes the less) the Peking Agreement of 1905 and its supplementary clauses must be interpreted in the light of the declared principles and objects of the Anglo-Japanese alliance. For, if otherwise interpreted, it is evident that the Japanese Government failed to observe that clause of the Treaty of Alliance, which, having for its object the mutual protection of the established interests of both Powers, provides that neither of the Contracting Parties will, without consultation with the other, enter into separate arrangements with another Power to the prejudice of the interests described in the Agreement. Page 390

Baseline (Original)

金 It can scarcely be seriously believed in Tokio that the veto imposed by th Japanese Government in regard to the Fakumen Railway is regarded by any intelligen. person as consistent with a policy "intended to safeguard effectively the interests already acquired by the two Powers on the common ground." the open Equally inadmissible is the Japanese Government's contention that "the policy of door does not prevent railway exploitation." Here again everything depends on the meaning of the terms used, but there can be no question that the exclusive privileges claimed by Japan in connection with her ownership of the South Manchurian Railway are a complete repudiation of the open-door policy. Railways may be, and are, built on Chinese territory as financial and industrial enterprises in which foreign Powers are interested, and this without violation of the open door so long as the enterprises in question are for the benefit and under the direction of the Imperial Chinese Government, affording equal commercial opportunities to all-comers; but it were futile to assert that the doctrine of equal opportunities is compatible with such privileges and such control as Japan is now endeavouring to exercise over Manchuria by virtue of her acquisition of the South Manchurian Railway. If proof of this statement be needed by those macquainted with the situation, it is to be found in the fact that the Municipal Regulations recently promulgated in the name of the Russian railway authorities at Harbin-Regulations which ignored the Treaty rights of the subjects of all other Powers-received the diplomatic approval and support of the Japanese Government on the understanding that similar conditions would be recognized by Russia as applicable to the Japanese Railway Settlements in Southern Manchuria. It is useless to deny the fact that the South Manchuria Railway, won by Japan's victorious arms, is an instrument in the hands of the Japanese Government for the promotion of exclusive Japanese interests. The situation is sufficiently recognized, diplomatic convention notwithstanding, by the Powers, and the forces of "geographical gravi. tation," which must inevitably tend to the advancement of Japan's interests to the east of the Liao River, are generally understood. But the question which is raised by the Fakumen Railway scheme is whether, and how far, those forces of " geographical gravitation" are to be extended westwards, to the serious prejudice of vested British interests in that region, the detriment of international commerce, and the limitation of China's sovereignty? In view of the essential and wider aspects of this question, it is almost superfluous to examine the technical reasons and economic precedents whereby the Japanese Government seeks to justify its veto of a "parallel" line. Nevertheless, as great stress has been laid upon the existence of a similar restrictive clause in the railway agree- ments made with China by other nationalities, and as the argument may appear forcible to the uninitiated, it is expedient to explain its inapplicability. The Agreement to which the Japanese Government particularly refers, viz., the American contract for the Hankow-Canton Railway, and the British contract for the line from Canton to Kowloon, were purely financial and industrial Agreements made between the Chinese Government and private Companies, for the construction of Chinese Government railways under Chinese control; and the lines being mortgaged as first security for the repayment of the necessary loans, the inclusion of the restrictive condition in regard to parallel lines was obviously beneficial to all concerned, since it facilitated the raising of capital abroad. Nevertheless, as the history of railway construction in China clearly proves, this condition was never intended to be (nor could it be) arbitrarily interpreted by the representatives of the foreign bondholders to restrict the Chinese Government from constructing other railways parallel to these lines, the evident and only intention of the condition being to reassure investors that the Chinese Government would not (presum- ably at the instance of another Power) do anything to injure property which is mortgaged for security of foreign loans. No such argument can, however, be applicable in the case of the South Manchurian Railway, which is not a Chinese railway, for which China has incurred no liabilities and in which she is not even tinancially interested. Finally, referring to the Newchwang Chamber's contention that in no country in the world could the vested interests of a railway preclude the construction of another line within a distance of 35 miles," the Japanese Government cites what it alleges to be "at least one instance in direct contradiction of that statement," and thereupon proceeds to quote the engagement given to the Peking Syndicate's Shansi Agreement, whereby, to avoid undesirable competition with the Chengting-Taiyuen Railway, the Syndicate undertook not to construct any railway within 100 ti on either side of it. We can only presume that the Tokio authorities are unaware that 100 li are, for practical purposes, the equivalent of 35 miles; for it is inconceivable that, if they were informed of the fact, they should cite as argument on the Japanese side of the case a precedent Ď which completely justifies the construction of the Fakumen Railway. (According to Mr. Kinder's report on that scheme, the actual distance between Mukden and Isinmintun is 37 miles.) These, however, are side issues, which serve merely to detract attention from essentials. If the question be considered simply in the light of Japan's definite and undeniable obligation to recognize and maintain China's unimpaired sovereignty in Manchuria, and to promote the development of China's commerce and industries in that region, then assuredly (and because the greater includes the less) the Pexing Agree- ment of 1995 and its supplementary clauses must be interpreted in the light of the declared principles and objects of the Anglo-Japanese alliance. For, if otherwise interpreted, it is evident that the Japanese Government failed to observe that clause of the Treaty of Alliance, which, having for its object the mutual protection of the established interests of both Powers, provides that neither of the Contracting Parties will, without consultation with the other, enter into separate arrangements with another Power to the prejudice of the interests described in the Agreement." 0 390

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金

It can scarcely be seriously believed in Tokio that the veto imposed by th Japanese Government in regard to the Fakumen Railway is regarded by any intelligen. person as consistent with a policy "intended to safeguard effectively the interests already acquired by the two Powers on the common ground."

the

open

Equally inadmissible is the Japanese Government's contention that "the policy of door does not prevent railway exploitation." Here again everything depends on the meaning of the terms used, but there can be no question that the exclusive privileges claimed by Japan in connection with her ownership of the South Manchurian Railway are a complete repudiation of the open-door policy. Railways may be, and are, built on Chinese territory as financial and industrial enterprises in which foreign Powers are interested, and this without violation of the open door so long as the enterprises in question are for the benefit and under the direction of the Imperial Chinese Government, affording equal commercial opportunities to all-comers; but it were futile to assert that the doctrine of equal opportunities is compatible with such privileges and such control as Japan is now endeavouring to exercise over Manchuria by virtue of her acquisition of the South Manchurian Railway. If proof of this statement be needed by those macquainted with the situation, it is to be found in the fact that the Municipal Regulations recently promulgated in the name of the Russian railway authorities at Harbin-Regulations which ignored the Treaty rights of the subjects of all other Powers-received the diplomatic approval and support of the Japanese Government on the understanding that similar conditions would be recognized by Russia as applicable to the Japanese Railway Settlements in Southern Manchuria. It is useless to deny the fact that the South Manchuria Railway, won by Japan's victorious arms, is an instrument in the hands of the Japanese Government for the promotion of exclusive Japanese interests. The situation is sufficiently recognized, diplomatic convention notwithstanding, by the Powers, and the forces of "geographical gravi. tation," which must inevitably tend to the advancement of Japan's interests to the east of the Liao River, are generally understood. But the question which is raised by the Fakumen Railway scheme is whether, and how far, those forces of " geographical gravitation" are to be extended westwards, to the serious prejudice of vested British interests in that region, the detriment of international commerce, and the limitation of China's sovereignty?

In view of the essential and wider aspects of this question, it is almost superfluous to examine the technical reasons and economic precedents whereby the Japanese Government seeks to justify its veto of a "parallel" line. Nevertheless, as great stress has been laid upon the existence of a similar restrictive clause in the railway agree- ments made with China by other nationalities, and as the argument may appear forcible to the uninitiated, it is expedient to explain its inapplicability. The Agreement to which the Japanese Government particularly refers, viz., the American contract for the Hankow-Canton Railway, and the British contract for the line from Canton to Kowloon, were purely financial and industrial Agreements made between the Chinese Government and private Companies, for the construction of Chinese Government railways under Chinese control; and the lines being mortgaged as first security for the repayment of the necessary loans, the inclusion of the restrictive condition in regard to parallel lines was obviously beneficial to all concerned, since it facilitated the raising of capital abroad. Nevertheless, as the history of railway construction in China clearly proves, this condition was never intended to be (nor could it be) arbitrarily interpreted by the representatives of the foreign bondholders to restrict the Chinese Government from constructing other railways parallel to these lines, the evident and only intention of the condition being to reassure investors that the Chinese Government would not (presum- ably at the instance of another Power) do anything to injure property which is mortgaged for security of foreign loans. No such argument can, however, be applicable in the case of the South Manchurian Railway, which is not a Chinese railway, for which China has incurred no liabilities and in which she is not even tinancially interested.

Finally, referring to the Newchwang Chamber's contention that in no country in the world could the vested interests of a railway preclude the construction of another line within a distance of 35 miles," the Japanese Government cites what it alleges to be "at least one instance in direct contradiction of that statement," and thereupon proceeds to quote the engagement given to the Peking Syndicate's Shansi Agreement, whereby, to avoid undesirable competition with the Chengting-Taiyuen Railway, the Syndicate undertook not to construct any railway within 100 ti on either side of it. We can only presume that the Tokio authorities are unaware that 100 li are, for practical purposes, the equivalent of 35 miles; for it is inconceivable that, if they were informed of the fact, they should cite as argument on the Japanese side of the case a precedent

which completely justifies the construction of the Fakumen Railway. (According to Mr. Kinder's report on that scheme, the actual distance between Mukden and Isinmintun is 37 miles.)

These, however, are side issues, which serve merely to detract attention from essentials. If the question be considered simply in the light of Japan's definite and undeniable obligation to recognize and maintain China's unimpaired sovereignty in Manchuria, and to promote the development of China's commerce and industries in that region, then assuredly (and because the greater includes the less) the Pexing Agree- ment of 1995 and its supplementary clauses must be interpreted in the light of the declared principles and objects of the Anglo-Japanese alliance. For, if otherwise interpreted, it is evident that the Japanese Government failed to observe that clause of the Treaty of Alliance, which, having for its object the mutual protection of the established interests of both Powers, provides that neither of the Contracting Parties will, without consultation with the other, enter into separate arrangements with another Power to the prejudice of the interests described in the Agreement."

CO129-352 - Public Offices - 1908 — Page 393

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