CO129-362 - Public Offices - 1909 — Page 790

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stations; if this is conceded it means, as I have already pointed out, that goods may pass freely along the South Manchurian line and be stored in the railway settlements without any payment whatever.

Further, if such goods are retailed in the railway settlements it will become) matter of exceeding difficulty for the Chinese Government to collect any duty upon

them.

I understand this question has been referred by Mr. Bowra to the inspectorate- general.

I have sent a copy of this despatch to His Majesty's vice-consul at Tairen, and have asked him for his observations on the subject.

[This Document is the Property of His Britannic Majesty's Government 1

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AFFAIRS OF CHINA.

CONFIDENTIAL.

C. O.

5

RECE

[October 11.]

SECTION 7.

RECE 3 NOV 09

788

!

Sir,

Inclosure 2 in No. 1.

I have, &c.

ROBERT WILLIS.

Vice-Consul Gordon to Acting Consul-General Willis.

Dalny, September 7, 1909. I HAVE the honour to acknowledge the receipt of your despatch of the 2nd instant. As a result of a few tentative enquiries made here, I fear I must confirm the suspicions held at Mukden that wholesale smuggling of goods must have been carried on from the leased territory into the interior during 1908. Even allowing for the large stocks held here, it is impossible that there should be such a great difference between the amount of goods imported and that sent into the interior.

At the same time I strongly doubt whether it is the fault of the railway company. The Chinese Customs here have sub-stations both

at the passenger station, the town goods station, and at the wharves. If their work is properly and efficiently performed it should be impossible for goods to go into the interior illegally. Consequently it would appear that a strict departmental investigation should be made into the working of the customs. It has always seemed to me that a mistake has been made in allowing the staff to be composed wholly of Japanese, and it would appear advisable that a European or American should be appointed to this port. The present acting commissioner has several times applied for such a member, preferably a British subject, but his application has invariably been refused, so far as I can understand, on sentimental grounds.

I am in full agreement with your opinion that the levying of li-kin and inland dues on goods unaccompanied by exemption certificates would be inefficacious. Even the establishmont of a customs station at Pulantien would not prove an absolute bar to smuggling, and would be objectionable as causing a certain restraint to trade, and a trade in which foreign merchants and the Chinese themselves are rapidly becoming as interested as the Japanese themselves. The distance to Pulantien is so short that this district falls into a different category from the vast regions in the north. I believe, indeed, that nothing will please the Japanese trade better than the removal of the customs station to Pulantien. I should imagine that no serious difficulty ought to arise in the conclusion of an agreement between the Customs and the South Manchurian Railway Company, whereby the latter would undertake not to forward goods into the interior without an exemption certificate.

It is also true that there is every prospect of this district becoming an important manufacturing centré. The cement factory was opened this spring, and the number of bean mills is yearly increasing. A Japanese capitalist is shortly to build a silk factory on the method discovered in the Government laboratory here, and should his venture prove a success the silk trade will be transferred from Chefoo to this place. Still it would be the export trade and not the land trade that would bring in the greatest profits, and people establishing industrial concerns would concentrate their attention chiefly on the markets in Japan and foreign countries. I have, &c.

E. L. S. GORDON,

[37589]

(No. 344.) Sir,

No. 1.

Sir J. Jordan to Sir Edward Grey.--(Received October 11.)

Peking, September 21, 1909. I HAVE the honour to transmit to you herewith, in translation, copies of telegrams which passed between several of the high provincial authorities and the Wai-wu Pu regarding the recent Manchurian negotiations with Japan. These documents, the authenticity of which is not doubted, were published in two of the metropolitan newspapers whose indiscretion was promptly punished by their suppres- sion. They show very clearly that the Chinese authorities were fully alive to the strategic importance of the concession for the extension of the railway from Kirin to the borders of Corea, which, as is justly remarked, completes the network of railways which encloses within a Japanese ring fence the whole of South Manchuria and Corea. One has only to follow on the map the course of the South Manchurian Railway from Port Arthur to Ch'angch'un (Kuanch'engtzu), and trace the projected railway from that place to Kirin and thence to the Corean frontier and the sea to realise the hold which Japan has acquired over the mainland of Asia facing her coast. This and the veto which she claims to exercise over railway construction east of the Liao River converts the whole of Manchuria south of latitude 44° into a

Japanese preserve where “ open door" theories will yield more and more to material

facts.

I take this opportunity of enclosing an official communiqué which the Chinese Government recently issued with the view of removing some misapprehensions which are alleged to have arisen regarding the existence of a secret agreement between China and Japan on the Manchurian question.

I have, &c.

Inclosure I in No. 1.

J. N. JORDAN,

Extract from the "Kuo Pad of September 14, 1909.

Manchurian Negotiations: Telegrams exchanged between the Viceroy of Manchuria, the Wai-wu Pu, and the Governor of Kirin.

(Translation.)

(1.)

Viceroy to his Excellency Na-t'ung.

I HAVE just been informed that Mr. Koike, when discussing the Yen-chi (boundary) question at the Bureau of Foreign Affairs, stated that a settlement would shortly be arrived at, but that in the course of conversation he let slip references to the opening of ports and the construction of railways. There was formerly some talk of their wishing to build a line from Hui-ning to Kirin, and another from Yen-chi to Ninguta, but I do not know whether any demands have now been advanced with regard to these lines. The railway question is of the most pressing importance, and if we allow them to build a line from Yen-chi to Kirin, even if the line is managed by us, or we borrow the funds for its construction from them, then the two provinces of Feugtien and Kirin will be completely hemmed in by Japanese railways, and there will not be a single way of escape. It is also to be apprehended that the Russians will make it a pretext for advancing claims. I am watching these negotiations from a distance, and no doubt the Wai-wu Pu and your Excellency have no need of my

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