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accepted the nomination of one Japanese as engineer and of another as accountant, but these officials had no executive power in the administration of the new line, and the result has been what can be imagined a pretty rotten railway. Many of the bridges are of wood-the line goes over and round hills that it ought to have pierced. "Penny wise and pound foolish" sums it up. Funds ran short before the line was finished and the Chinese had to raise more money. The Japanese were of course disgusted with the whole business. Then the war broke out, and Japan took the opportunity to present the famous twenty-one demands.
No. 7 of Group II ran as follows:-
"The Chinese Government agrees that the control and management of the Kirin-Changchun Railway shall be handed over to the Japanese Government for a term of ninety-nine years, dating from the signing of this agreement.'
The subject of the twenty-one demands is one upon which there is scope for infinite enlargement, but there is small profit in criticising a single item of comparatively minor importance. It was the Japanese policy to make a certain advance in Manchuria, and if there is to be any criticism it should apply to the whole policy, for the steps are details. It must be admitted that the demand to control the Kirin-Changchun Railway was obnoxious from the Chinese point of view, but it was an inevitable corollary of Japanese ambition in all this region.
Finally, in article 7 of the treaty respecting South Manchuria and Easter! Inner Mongolia
"The Chinese Government agrees speedily to make a fundamental revision of the Kicin-Changchun Railway Loan Agreement, taking as a standard the provisions in railway loan agreemente made heretofore between China and foreign financiera."
Thus, on the 25th May, 1915, the Chinese gave away all there was to give away of this railway, and the present agreement merely embodies what was then conceded.
The
The Japanese thereafter drafted an agreement based as to terms on the agreement relating to the Changting-Taiyuan-fu Railway--the stiffest of all the railway agree- ments, for it mortgages the line and its revenues and vests the lenders with control. Chinese negotiators, after long discussion, agreed to Japanese control, and to make the loan repayable in forty years, whereafter the line would lapse to China. Parliament, however, kicked at the forty years and wanted joint control, and sent the agreement back for revision. Since then the Chinese and Japanese have outsat each other at endless conferences leading to nothing at all, and it says something for the pacific attitude of the Japanese Government that they did not hurry China to give what she promised to give speedily" over two years before.
The agreement now signed is practically the same as presented to Parliament, except that, in deference to Chinese face, the period is reduced from forty to thirty years a reduction hardly to the advantage of China, for if the railway earnings are not sufficient to pay the annual interest and amortisation the Board of Communications will have to make up the deficit. That, however. is a small matter, for the annual charges of six and a half millions are a comparative trifle.
As regards the proceeds of the loan, the Chinese Government gets nothing in cash. The amount owing to the South Manchuria Railway-originally 2,150,000 yen, now a little less, owing to annual repayments will be deducted, and the balance of some 4,000,000 yen will be deposited in a Japanese bank, to be used exclusively for the improvement of the railway in the shape of iron bridges, tunnels, and so forth. Managenient is vested in the South Manchuria Railway Company, which will nominate a chief engineer, chief accountant, and traffic superintendent to manage the line. Administration will be nominally only in the hauds of a Chinese director-general a merely face-saving device. This official, however, will have his uses, for he will be able, in Chinese interests, to watch the expenditure of the four million unexpended balance of the loan. At the end of the thirty years' duration of the Loan Agreement the debt will be liquidated, and the railway will pass back automatically into Chinese hands- provided a lot of other things do not happen in the meantime. During this period the South Manchuria Railway Company will get 20 per cent, of whatever net profits there may be, a reasonable provision to be found in other foreign loan agreements, including the Shanghai-Nanking Railway Agreement.
As regards cost to China, she originally spent 2,150,000 yen on the line, plas a
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few hundreds of thousands subsequently. This, added to the present loan, makes a grand total of about 9,000,000 yen.
The Japanese, for their own strategic and commercial purposes, are safe to make a good job of the improvements, so that China hereafter will or ought to inherit a first-class property. Eighty miles for 9,000,000 yen is about 12,000L per mile, not Obviously a very expensive rate for railway construction as things go in China. the total cost would have been much less if the capital originally provided had been advantageously expended.
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