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which they acquired when they were Chinese subjects. They cannot be dispossessed of their lands and property because they have become Japanese subjects. And they are entitled, if they claim it, to Japanese consular protection until such time as extra- territoriality is abolished in China, as it has been abolished in Japan and is now being abolished in Siam.
An analogous case to that of Ch'ientao exists in the Shan States of Northern Siam, where a large proportion of the people are British subjects, natives of Burmah, and entitled to British consular protection. The establishment of the mixed court in Chiengmai in 1883 has worked admirably. Its establishment directly led to the recent treaties by which England has recognised Siamese jurisdiction over British subjects. These British subjects were more numerous and held more land and forests in the Siamese Shan States than Corcan subjects hold in Ch'ientao territory.
It seems to me unwise to strain this dispute, because the addition of more Coreans to the 70,000 Coreans resident in Manchuria and under the undisputed jurisdiction of the Japanese is not to be compared in importance with the recovery of the territory and the final determination of the boundary.
Besides, there is another consideration that cannot be overlooked. Chinese have an immense vitality-an immense power of peaceful expansion. Their business methods are so much superior that Coreans and Japanese cannot under equal conditions hold their own against them. Put into competition in trade and agriculture, the Chinese will drive out the Japanese and Coreans. It is a well-known phenomenon. Just look at the case of Mukden. Three years ago the road from the railway station to the outer mud wall of the city was lined with Japanese houses, while from the mud wall to the centre of the city there were scattered many Japanese houses all along the route. At present the immense majority of these houses are either empty or are occupied by Chinese. And what is witnessed here will be witnessed in Ch'ientao when it is restored to China. Although Coreans there now largely outnumber the Chinese, this is a temporary condition only, and as the Chinese race expands its surplus population will quickly people the territory with Chinese.
2. The Fakumen Railway.-There can be no doubt that, while Japan has some technical right on her side, her exercise of that right is in conflict with assurances given by her to the world at the Portsmouth Treaty.
The Japanese inform me that they are prepared to consent to the extension by China of the Hsinmin-fu Railway to Fakumen, provided two conditions are agreed to: first, that China will consent not to extend the railway beyond Fakumen without previously consulting Japan; and second, provided that the South Manchurian Railway can build a railway joining Fakumen and Tichling. Japan cannot insist upon this latter condition. Friendly negotiations ought to be able to arrange that the South Manchurian Railway would be permitted to build a short line to connect Tiehling with the eastern bank of the river, the bridge across the river and the extension from the river to Fakumen being built by the Chinese Government.
It is certain that Japan, if pressed to do so, will give a reply to the question addressed her by China last June, namely, to define what is the area meant by the words "parallel to or in the neighbourhood of the South Manchurian Railway." Japan may be induced to define this area in a reasonable spirit. Once she has done so China would be free to build railways in the rich and fertile territory outside the competitive area.
3. The Fushun Collieries.-The chief people who will benefit by the development and exploitation of these mines are the Chinese in Manchuria; the chief people to view with alarm the development of these collieries are the Japanese coal-miners in Japan. The Fushun collieries will be a serious competitor of Japanese collieries. Japan exports some 20,000 tons of coal per day. The Fushun collieries will be able to produce 10,000 tons of coal per day, and the fear of this competition is creating considerable apprehension in Japan.
Even if the Japanese company make the profits they expect of the Fushun collieries, it is after all the Chinese who will mainly profit. Cheap coal supplied to the Chinese in Manchuria will enormously develop all manner of industries. It will benefit the people. The mines will give employment to a great number of Chinese.
It seems to me that the settlement of the dispute as to the rights of private owners in these mines can be effected without great difficulty. The Japanese declare to me that they are willing to arrange for the just and adequate compensation of the private individuals who had ownership with the Russians in these mines, and to pay China a royalty on all coal extracted from the mines. This seems to me to be an easy basis for agreement.
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Other small cases I have not referred to, for I fear that I have already made my
letter of too great length. But the net result of the impressions 1 have formed is :-
1. Japan desires to come to terms.
2. England, the ally of Japan, desires the settlement of the disputes, and will render assistance as a friend of both countries.
3. That it is au opportune time to come to terms.
4. That if after negotiation it is found impossible to come to terms, China will
be in a position to state her case to the world, and claim to submit the dispute to the Permanent Court of Arbitration at The Hague, which has been specially created to "deal with international disputes which it has not been possible to settle by diplomacy."
Peking, June 24, 1909.
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