GIFT OF 
 
 President 's Office 
 
III nir, 
 
 
 
 
 ANALYSIS OF THE 
 
 CHINA -JAPANESE 
 
 TREATIES 
 
 Their Bearing on American Interests 
 
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 GEO. BRONSON REA, 
 
 Publisher of 
 ♦' The Far Eastern Review " 
 
 TO THE UNIVEBSITV 
 
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ANALYSIS OF THE 
 
 CHINA-JAPANESE 
 
 TREATIES 
 
 Their Bearing on American Interests 
 
 GEO. BRONSON REA, 
 
 Publisher of 
 " The Far Eastern Review " 
 

 '3("i> 
 
 ^> 
 
 
ANALYSIS OF THE TREATIES. 
 
 Their Bearing on American Interests 
 
 "The difficulty between China and Japan has been peacefully 
 settled, and with the signing of the Treaties and exchange of 
 Notes, the matter ceases to be of immediate public interest. It 
 is a closed incident." This seems to be the concensus of opinion 
 in the United States. The fact remains nevertheless that the 
 real trouble has not yet commenced. By the signing of the 
 Treaties, an issue has been created for the United States, on a 
 par in importance with larger questions affecting our rights aris- 
 ing out of the European war. American rights have again been 
 ignored and swept aside by the application of ]\Iight to a defense- 
 less nation. 
 
 When Japan presented twenty-one demands to the Chinese 
 Government last January, and the facts leaked out, Japan assured 
 the Powers that it was all a mistake, and that only eleven de- 
 mands had been presented, and pointed an accusing finger at 
 
 ^Germany as the author of the libel on her good intentions. 
 Count Okuma cabled reassuring messages to America, that the 
 treaties would not be impaired, and to rely in Japan's honor 
 
 ]not to take any unfair advantage of China. The reports from 
 Peking were strenuously denied, and America invited to believe 
 only the cables from Tokio. 
 
 It was not until May 7th, when the Japanese Government re- 
 leased its official version of the demands and the negotiations 
 leading up to the ultimatum, that the world was given the first 
 authoritative account of the trouble by one of the principals. 
 This statement fully corroborated the reports which had emanated 
 
 313220 
 
1/ 
 
 from Peking, admitting the existence of twenty-one demands, 
 and condemning Japan out of her own mouth. On May 16th, 
 the following Note from the American Government was delivered 
 to the Chinese Government by the American ^Minister at Peking: 
 
 A 
 
 ''In view of the circumstances of the negotiations which 
 have taken place or which are now pending between the 
 Government of China and the Government of Japan and 
 the agreements which have been reached and as a result 
 thereof, the Government of the United States has the honour 
 to notify the Government of the Chinese Republic that it 
 cannot recognize any agreement or undertaking which has 
 been entered into, or which may be entered into between the 
 Governments of China and Japan impairing the treaty rights 
 of the United States and its citizens in China, the political 
 or territorial integrity of the Republic of China, or the inter- 
 national policy, commonly known as the Open Door policy." 
 
 An identical Note was handed to the Japanese Govern- 
 ment through the American Legation at Tokio. 
 
 The thought at once arises; if Japan's demands did not impair 
 American rights under the existing treaties, why should the 
 pacific and friendly American Government feel constrained to 
 issue such an unmistakable warning to both Governments? The 
 terms of the ultimatum with only minor and immaterial changes, 
 were nevertheless embodied almost in their entirety into two treat- 
 ies and several supplementary Notes, and China was compelled 
 to bow to the might of superior force and affix her signature to 
 these impairments of her sovereign rights. But before doing so, 
 the Chinese Government broke the silence imposed on it at the out- 
 \ set of the negotiations by Japan, and laid its case before the world 
 fn an official communique dated May 7th. The concluding para- 
 graph of this simple and dignified statement of facts, should be 
 carefully read, as it outweighs all the arguments and sophistries 
 advanced by Japan to justify her actions. 
 
 'Tt is plain that the Chinese Government proceeded to the 
 fullest extent possible to make concessions. In considering 
 the nature of the course they should take in reference to the 
 ultimatum, the Chinese Government was influenced by its 
 desire to preserve the Chinese people, as well as a large 
 
number of foreign residents in China from unnecessary- 
 suffering, and also to prevent the interests of other friendly 
 Powers from being imperilled." 
 
 For these reasons the Chinese Government was constrained 
 to comply in full with the ultimatum, but in complying, the 
 Chinese Government disclaims any desire to associate itself 
 with any revision which may thus be effected in the various 
 conventions and agreements concluded between other Powers, 
 with respect to the maintenance of China's territorial inde- 
 pendence and integrity, the preservation of the status quo, 
 and the principle of equal opportunity for the commerce and 
 industry of all nations ''in China." 
 The above is^ clear. China accepted humiliation to preserve 
 the lives and properties of the large number of foreigners through- 
 out the country, at a time when their own Governments were 
 powerless to protect them. Reading between the lines of the 
 American Note and the closing words of the Chinese official 
 communique, there can be only one intelligent interpretation of 
 the situation. Recogn izing that its treaty rights were imperilled, 
 and China's political and territorial integrity menaced, the 
 American Government placed itself squarely on record that it 
 could not be a silent witness and a willing accomplice to this 
 Oriental triumph of brute force over right and meekness. The 
 Chinese Government has plainly stated to the world that it was 
 overawed by the superior might of Japan, and compelled under 
 threat of war to comply in full with the latter's behests, and at 
 the same time disclaiming any intention of being a willing associ 
 ate in the impairment of established treaty rights of othe 
 America notified China and Japan of her determination to retain 
 all her rights under these treaties, and China has announced that 
 if these or other rights are impaired, Japan is solely responsible. 
 
 If there is no impairment of previous treaties in the new 
 arrangements between China and Japan, there can be no just 
 reason for criticism, or future interference of other Powers. 
 But, if on analysis these documents bear evidence to the contrary, 
 it would seem that a very clear and decided issue had been cre- 
 ated, which other Powers must take notice of, or, if it is shown 
 that American rights have been infringed or ignored, the day 
 cannot be long deferred before the facts are brought forcibly to 
 the attention of the people and the Government. 
 
China has placed the other Powers under a deep obHgation for 
 her forbearance, and practical acceptance of those principles of 
 meekness so ardently preached by our leading peace and anti- 
 armament advocates. China accepted humiliation in order to 
 preserve the lives of her own peaceful people and the thousands 
 of foreigners who reside within her borders. She has placed 
 her case in the hands of those friendly Powers whose interests 
 she sought to protect. When the time arrives for the settlement 
 of these matters involved in the preservation of the rights and 
 liberties of the smaller and weaker states, the Supreme Court of 
 Civilization will be called upon to give solemn consideration to 
 j the facts of the last four months. If Japan has taken any un- 
 fair advantage of the situation to obtain for herself special privi- 
 leges in China, at a time when the Guarantors of China's integrity 
 /j were powerless to prevent her, the treaties wrung by force from 
 U China, will in justice to others have to be abrogated. 
 
 Have the rights of others been impaired? I shall endeavor to 
 prove that they have, and that a grave issue has been created 
 for America as the result of Japan's indifference to the rights 
 of others. 
 
 INTERNATIONAL ETHICS INVOLVED. 
 
 In analyzing the clauses of the Shantung treaty, it would seem 
 that(if the right of Might and retention of stolen property is an 
 accepted principle of international la\V, then no third party has 
 any claim to concern itself over the transfer of German privileges 
 in Shantung to Japan or any other nation. The Powers made no 
 direct protest against Germany's enjoyment of the fruits of her 
 inglorious raid on China. It would be manifestly unfair there- 
 fore to discriminate and object to Japan's occupancy of Shantung. 
 China's viewpoint is never considered, especially amongst a cer- 
 tain element in America, whenever any discussion arises as what 
 is best for Japan, and in this particular vital matter, it is taken for 
 granted that she ought to be delighted and pleased at Germany's 
 defeat and Japan's inheritance of the latter's rights. China's 
 viewpoint is that her own special interests are best preserved by 
 a continuance of the status quo, in harmony with the declared 
 terms of the Anglo- Japanese Alliance. After her sad experiences 
 in Manchuria, and the indignities heaped upon her by her strong- 
 armed little neighbor, is it unreasonable that China should view 
 
with grave apprehension any further extension of Japan's spheres 
 of special influence? 
 
 Because Germany compelled China by superior might to cede 
 certain territories and special privileges in Shantung, it does not 
 follow that the Chinese accept the perpetuation of this principle 
 by any victorious enemy of Germany, and especially one who has 
 brutally ignored China's rights in the past and compelled her to 
 apologize and pay indemnities on the slightest provocation or 
 pretext. If Germany's policy of the "Mailed Fist" first applied 
 to defenseless China, is open to severe condemnation, it follows 
 as a matter of honest deduction and logic that any Power who 
 aspires to succeed to the fruits of this iniquitous policy, and em- 
 ploys the identical methods to achieve its purpose, places itself 
 on the same level as Germany, and is open to the same severe 
 criticism' and condemnation. China was robbed by Germany, 
 Japan attacked the robber and acquired temporary enjoyment of 
 the spoils, and insists on retaining ownership. Because the right- 
 ful owner remonstrated and requested restitution of the stolen 
 property, in conformity with Japan's promises, the latter pro- 
 fessed to be insulted and employed this pretext to enforce recogni- 
 tion to her possession of the stolen goods. Stripped of all diplo- 
 matic and superfluous verbiage, this simple statement reduces the 
 situation to its lowest terms. 
 
 Germany has been held up to universal execration for the 
 methods employed by her in grabbing Kiaochao from China and 
 emplanting herself in Shantung. Japan refuses to admit that 
 China has any further voice in the disposition of her stolen 
 property, and, by applying the same methods as employed origin- 
 ally by Germany, has compelled defenseless China to recognize 
 the transfer of Germany privileges. It is true that Japan has 
 promised to restore Kiaochao to China, but there is no indication 
 as yet that she has any intention to forego the valuable com- 
 mercial clauses embraced in the lease. It is impossible to apply 
 one code of international ethics to Germany, and another to Japan 
 when the conditions are identical. 
 
 The Japanese are resentful of any American criticism of their 
 present actions, and seek to find therein a special prejudice 
 against their country. They assume that we ought to be glad 
 that Germany has been driven out of Shantung, and feel aggrieved 
 that we should in any way question their honorable motives. 
 
Although no other Power uttered an open protest against 
 Germany's high-handed outrage in 1898, it was this particular 
 event which determined the American Secretary of State to dis- 
 patch the Open Door invitations to the various Powers concerned. 
 While this was not a specific protest against Germany's actions, 
 it placed the American Government firmly on record that it dis- 
 approved of these strong armed seizures of China's territory. If 
 we disapproved at that time and adopted measures to obviate any 
 further infractions of China's sovereign rights and integrity, and 
 have on many subsequent occasions reiterated our adherence to 
 these fundamental principles, it follows that America cannot 
 stultify herself at this time, by making a special dispensation in 
 favor of Japan, and subscribing to the perpetuation of a policy 
 which menaces the future of China and American rights in thalx 
 country. Germany was wrong in 1898, and America refused 
 to condone the wrong. She cannot reverse her attitude in 1915 
 by upholding Japan. 
 
 If this reasoning applies to the situation, and if China's prop- 
 erty is to pay the expenses of Japan's war with Germany, it 
 would again seem reasonable and fair that China as the most 
 interested party should be permitted to nominate a representative 
 to take part in any Peace Negotiations having in view the dis- 
 position of her rights. Due to the intricacies of modern inter- 
 national finance, the questions involved in any transfer of Ger- 
 many's rights in Shantung to Japan, create many new and com- 
 plex problems, and compel the signing of a treaty at the expira- 
 tion of the war between Germany and Japan, quite distinct and 
 apart from any general European settlement. 
 
 j The existence of the Anglo-Japanese Alliance, and the invoca- 
 I tion of its provisions as the justification for Japan's entrance 
 j into the war would appear to make Britain equally responsible 
 I with Japan for China's plight. This in turn would indicate 
 ( that Britain should participate in any final settlement after the 
 I war, and herein lies China's one great hope of eventual justice 
 J being meted out to her. 
 
 These fundamental questions of right and wrong must be 
 grasped before any intelligent analysis of the new treaties can 
 be attempted, and their bearing on American interests explained. 
 We can now proceed to indicate where the very first clause in 
 
the Shantung Treaty conflicts with American ideas of right and 
 wrong, shatters the last hope of a ''square deal" for China, and 
 creates future trade difficulties for our merchants. 
 
 CREATION OF SPHERES OF INFLUENCE. 
 
 How Germany obtained from China in 1898 the 99 year lease 
 of Kiaochao and special privileges in the Province of Shantung, 
 by penalizing China for the murder of two German missionaries, 
 is an old story, always cited as the first application of the "Mailed 
 Fist" policy. In the present state of world opinion, this incident 
 is invariably employed as illustrative of her high-handed methods, 
 but the fact seems to be overlooked that it was inspired by 
 Britain's occupation of Hongkong, the French success in com- 
 mitting China to the non-alienation of Hainan Island in March 
 1897, Britain's erection of a ringed fence around the Yangtsze 
 Valley in February 1898, and Russia's intrigues to secure posses- 
 sion of PorL.Arthur. These dates must be borne in mind, for 
 it was not until March 6th, 1898, that the Kiaochao Convention 
 was signed. Germany's proclaimed intentions in regard to Shan- 
 tung, impelled Britain to demand the non-alienation of the Yang- 
 tsze Valley the month previous. France followed by obtaining 
 a non-alienation declaration covering South China on April 10. 
 Eight days later, Britain already established at Weihaiwei, in- 
 formed Germany that she would respect the latter's rights in 
 Shantung, and the week following Japan staked out her claim 
 to Fukien. On June 9th, Great Britain obtained the extension 
 to her Hongkong Territory, and on July 1st, the; lease of 
 Weihaiwei. It is of special interest to Americans to note that 
 the spoilation of China, occurred at a time when the attention of 
 this country was diverted to our troubles with Spain, and we 
 were powerless to intervene. It is also apparent that it is difficult 
 . to single out any particular Power for special condemnation as 
 they were all equally guilty. It remained however for Germany 
 to claim the inglorious distinction of being the first Power to in- 
 corporate into a treaty the principle of exclusive opportunity in 
 her special preserves. This appears in the clause of the Kiaochao 
 Convention, reading: — 
 
 "The Chinese Government binds itself in all cases where 
 foreign assistance in persons, capital or material may be 
 needed for any purpose whatever in the Province of Shan- 
 
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 tung, to offer the said work or supplying materials in the 
 first instance to German manufacturers and merchants, and 
 only in the event of the latter declining to undertake the 
 performance of such works is China at liberty to act as she 
 pleases." 
 
 This clause created the Province of Shantung as a closed Ger- 
 man preserve, and inspired other Powers to take action in de- 
 fending their own special interests in other sections of China. 
 It was this clause which also influenced the American Secretary 
 of State to send out the invitations to the other Powers to se- 
 cure their adherance to the principle of equal opportunity. Not- 
 withstanding Germany's subscription to this policy, it is undeni- 
 ably true that for some years she adhered to her exclusive privi- 
 leges in Shantung. As time went on though she discovered that 
 the Province was not an Eldorado, and that the clause operated 
 against her equal participation in other more profitable sections 
 of China. She then began to display a desire to relinquish these 
 preferential rights, and tentative conversations were held with the 
 Chinese authorities having this end in view. Although Germany's 
 motives were eminently selfish, the Chinese viewed this tendency 
 as a step in advance towards the recovery of their sovereign 
 rights, and as marking a disposition on the part of Germany 
 to live up to the principles of the Open Door. It is a fact not 
 generally known that in later years Germany was willing to per- 
 mit other nationals to co-operate in the development of the prov- 
 ince. The German Bank invited the official British institution 
 to participate on equal terms in the floating of the loan for the 
 construction of the Chefoo Breakwater, and British engineering 
 firms investigated and submitted estimates for the w^ork. One 
 of the most prominent American engineering concerns was also 
 interested, and stood an .excellent chance of being awarded the 
 contract. Americans also held options on valuable mining prop- 
 erties in this province. I mention these facts merely to accentu- 
 ate the point that if Japan had not carried the war into China 
 and mcide this inoffensive nation pay the costs, there was every 
 * reasonable prospect that the one objectionable clause in the Kiao- 
 chao Convention would have been eliminated with profit to China 
 and the rest of the world. China's soverei^n_xights would have 
 been strengthened, and the precedenT^rorexclusive privilege 
 expunged from the treaties. Japan's succession to Germany's 
 
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 rights destroys the last hope that China will ever be liberated 
 from these provisions, for in the present treaties this principle 
 has been expanded and perpetuated in Mancliuria, and the attempt 
 made to extend them to Fukien and apply to the iron and steel 
 industry in the Yangtsze Valley. The preservation of this ob- 
 noxious doctrine was vital and imperative to the prosecution of 
 Japan's designs on China. 
 
 VIOLATION OF THE "OPEN DOOR." 
 
 fif Japan has demanded and obtained from China exclusive and 
 "preferential rights in Manchuria it is conclusive evidence that 
 she will not feel disposed to consent to any surrender or modifica- 
 tion of these same privileges in Shantung. The principle of 
 exclusive spheres is to be strengthened and perpetuated, and the 
 doctrine of the Open Door relegated to the waste paper basket. 
 It is in this respect that the first clause of the new treaty con- 
 stitutes a menace and disregard for American rights and interests. 
 
 The revival of the "Spheres of Influence" policy by Japan 
 which undermine and subvert the authority of the Chinese Govern- 
 ment, and tend to close the door to others, sounds the death 
 knell to the Open Door doctrine. The American Note to China 
 and Japan states in no uncertain terms, that our Government 
 cannot recognize any impairment of this policy. The issue is 
 created. It exists to day as an actual force, and sooner or later 
 must be faced. The only guide to the future are the events of 
 the past, and as we look back to what has occurred in Korea, 
 Manchuria, and in Shantung since the Japanese assumed control, 
 and then consider what is behind Japan's pretentions in Fukien, 
 there is only one intelligent deduction to make. 
 
 AMERICA'S WEAKNESS INVITES INSULT. 
 
 True to her traditions America has sedulously refrained from 
 claiming any ecoriomic or political advantages in China, and since 
 the adoption of the Open Door agreements in 1900, every country, 
 except Japan, has adhered in principle to. the doctrine of equal 
 opportunity. These countries have however, special interests, 
 bound up within the spheres previously outlined. Important 
 vested interests have been created in these districts, and now that 
 Japan has re-established the "Spheres of Influence" policy, there 
 is grave reason to fear that the other Powers may consider it 
 
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 necessary to follow Japan's example and protect their special and 
 vested interests, by the application of the same doctrine. America 
 would then be completely frozen out of the Republic. If Japan's 
 /precedent holds, then Russia, Great Britain and France may follow 
 \suit, especially if Japan refuses to return to the Open Door. The 
 menace to America's interests behind Japan's actions in China is 
 therefore real, and if the other Powers feel that they are so 
 obligated to Japan for her assistance during this war, and side 
 with her, America would be compelled to meekly accept the humili- 
 ation and bid Good-Bye to dreams of future profits from the use 
 of the Panama Canal through participation in the great unde- 
 veloped markets of Eastern Asia. And if our rights could be so 
 easily taken from us in China, it would not be long before the 
 same tactics would be employed in South America. As the ''Open 
 Door" Doctrine has been swept away by the might of superior 
 force, so would the Monroe Doctrine be put to the test. The in- 
 fluence on our trade with South America arising out of the situa- 
 tion created in China merits special study and examination. 
 
 THE ALMIGHTY DOLLAR VERSUS HONOR. 
 
 There is a marked tendency in certain American circles to 
 concede Japan's right to establish a political and commercial 
 supremacy over China, based on the assumption that our trade 
 with the latter country would be more stimulated and benefitted 
 by co-operating with Japan, using the merchants of this country 
 as our agents or go-betweens. This idea also embraces the finan- 
 cial side of our relations with China, on the argument that Chinese 
 loans .would be safer and more attractive if contracted through 
 Japan, and with her guarantee. This in other words, is the 
 policy advocated by Count Okuma when he assumed office, 
 and which has been insiduously introduced into America by those 
 allies of Japan who receive their inspiration from a common 
 source in Tokio. This argument has been forcibly advanced by 
 the President of the Japan Society, who in his desire to have 
 America withdraw from the Orient and permit Japan a free hand 
 in China, defends his position on the grounds that our trade with 
 Japan is much greater than with China, that we have no spheres of 
 influence in China, and that our natural field for trade expansion 
 lies to the south. This plea for Japan outrages all ideas of honor 
 and asks that our friendly regard for China be sacrificed on the 
 
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 altar of the Almighty Dollar. Because our trade will perhaps 
 benefit as the result of China's decline into a Japanese province, 
 the national life and aspirations of this long sufifering people 
 must be blotted out. The enormity of such a crime against a 
 weak and defenseless nation struggling manfully through a tardy 
 evolution from the darkness of medievalism into the light of 
 modern thought, handicapped with the iron-clad customs and 
 habits of centuries and the aggressions of predatory neighbors, 
 is utterly un-American, and opposed to all those principles on 
 which our own Government is founded. The idea is so sordid 
 and base that it could never have emanated from the mind of 
 any true American, and could only have germinated and found 
 root in a soil far removed from the influences of our thought 
 and culture. This idea of abandoning the principle of equal 
 opportunity in China and giving a free hand to Japan to subju- 
 gate the country, and concentrating our commercial energies in 
 South America, is very attractive and has found many adherents 
 amongst those who value trade and profits higher than principle, 
 and who have given no thought to the disturbance of those world 
 commercial currents caused, as a result of the recent treaties. 
 
 PENALTY OF DEFEATED NATIONS. 
 
 The first clause of the Shantung Treaty is obviously based on 
 the belief that Germany is to be completely eliminated from 
 Shantung, as all German rights in this province whether acquired 
 by treaty or otherzvisc are to be surrendered to. Japan. When 
 the attitude of^ Great Britain in Hongkong in compelling the 
 liquidation of all German firms in the colony, and the general tone 
 of the British press and public utterances of high officials are con- 
 sidered, the great truth is borne home to the mind of the neutral, 
 that the complete elimination of German trade and influence in 
 China must be accepted as one of the cardinal objectives of the v 
 present struggle.''' Japan has already indicated by her actions in 
 Shantung and the South Seas, that temporarily at least, she does 
 not intend to be bound by the principles of international law 
 covering the inviolability of private property, emphasizing her 
 determination to consider as spoils of war all German rights 
 
 V 
 
 \ 
 
 *On June 25th, a British Order in Council prohibiting any further 
 trading with enemy firms in China, Siam, Morocco and Persia. 
 
14 
 
 whether acquired by treaty or individual enterprise. The prin- 
 ciple to be established as foreshadowed by Japan's present policy, 
 is that a defeated nation is to be deprived of the fundamental 
 right of free competition in the markets of a neutral country. 
 This doctrine ruthlessly applied by a victorious Power, constitutes 
 a terrible punishment for any nation who may have the mis- 
 fortune to suffer defeat in any future conflict, and invites atten- 
 tion to the bitterness of that intense struggle for existence and 
 commercial advantage which lies at the root of the world's 
 present troubles. 
 
 MENACE TO AMERICAN TRADE. 
 
 The confiscation of all German commercial and other rights in 
 Shantung, and the declared intention of the Allies to uproot and 
 destroy the source of German influence in China and drive her 
 commerce from this neutral market, while constituting a most 
 praise-worthy and patriotic object for her enemies, points a 
 moral to other nations and should be subjected to close scrutiny 
 to ascertain its ultimate bearing on American trade. Although 
 on its face this does not convey any threat to American interests, 
 yet if brought under examination together with other unmis- 
 takable signs of the times, analysis will determine that American 
 export trade must inevitably suffer. It does not require any 
 expert knowledge of present day commercial currents to grasp 
 the fact that if German trade is uprooted in the great markets 
 of China, and her colonies are absorbed by the victorious Allies, 
 and the home markets of the Allies are to be closed to her in the 
 future, Germany's export activities will be concentrated on those 
 neutral markets open to free competition. If we eliminate China 
 and Tapan, India, Australia and the best part of Africa, and then 
 bear in mind that the home countries of the Allies will be practi- 
 cally barred to Germany for at least another generation, it be- 
 comes evident that the only great field that will remain open to 
 her unrestricted commercial activities will be the neutral markets 
 of North, Central and South America. The logical sequence 
 therefore to Germany's expulsion from the markets of China 
 and those under the control and influence of the Allies, will be 
 to compel the concentration of her remarkable export organiza- 
 tions to the expansion of trade in Mexico, Central and South 
 America in direct competition with the* efforts of the United 
 States. 
 
15 
 
 The operation of the new tariff law compels our manufacturers 
 to get out and seek a larger share of the export business, and 
 the initial steps have already been taken to perfect an organiza- 
 tion for the advancement of our interests in South America. 
 Economic conditions in the United States make imperative this 
 expansion of foreign trade, and when the rush of war orders is 
 over, and conditions become normal, the necessity for markets 
 will be more keenly felt. If American manufacturers will now 
 pause and consider that the recent treaty extracted from China 
 by Japan, closes the door to their future activities in Manchuria 
 and Shantung, and revives the policy of the "Spheres of In- 
 fluence" in China, which if applied by the other Powers, will 
 freeze them completely out of this market, they will begin to see 
 that the effect will be to compel them to concentrate their activi- 
 ties in building up trade with our neighbors to the South. The 
 operation of the same policy will drive Germany to almost ex- 
 clusive activity in the same sphere, so the result of Japan's 
 actions not only deprives America and Germany of equal oppor- 
 tunity in China, but forces them into direct competition in Central 
 and South America. 
 
 No matter what the ultimate outcome of the war in Europe 
 may be, the German people will have to live and operate their 
 industries and factories, and be conceded the right to trade and 
 compete in those neutral markets of the world, not closed to 
 them by the resentment of the Allies. With the full force of 
 German industrialism directed into competition with America 
 for the supply of the South American markets, our manufacturers 
 will be eventually driven from the field, by the application of 
 the same business methods that undermined the trade supremacy 
 of Britain in her own special spheres. The struggle for existence 
 in Germany will be keen, and to provide work for the masses, 
 profits will be reduced to a minimum. Against such a competi- 
 tion American manufacturers will be placed under a great dis- 
 advantage and their export trade must inevitably suffer. It will 
 thus be seen that the very first clause of the Shantung treaty, will 
 tend to increase the trade difficulties of America, and by throwing 
 America and Germany into direct commercial competition, it is 
 certain to create rivalries, jealousies and ultimate friction, if not 
 an open attack on the Monroe Doctrine. From this brief obser- 
 vation of the commercial currents set loose in China, it would 
 
A 
 
 I 
 
 16 
 
 seem that future trouble is in store for America. If we permit 
 Japan to work her will on China, and concentrate our energies 
 on South America, we not only lose our footing in China, but 
 invite disaster nearer home. It goes without saying that if we 
 adopt the policy advocated by the President of the Japan Society, 
 and entrust our interests in China to Japanese Agents, we could 
 never hope for any abandonment of principle, and American 
 goods would again be subjected to discrimination if not actual 
 boycott. 
 
 JAPAN SOLIDIFIES HER CONTROL OF SHANTUNG. 
 
 It has been made clear how the provisions of the new Treaty 
 between China and Japan nullified the principle of the Open 
 Door, re-established the Spheres of Exclusive Influence, in mani- 
 fest disregard to the position of America and also the ultimate 
 effect of the treaty on the trade of America with China and 
 South America. We can now turn the search light of truth on 
 the other clauses of the Shantung treaty, and disclose the real 
 working of that Oriental diplomacy, which has been hidden be- 
 hind a cloud of high sounding phrases of amity and good will 
 to the rest of the world. A peep behind the scenes will disclose 
 that underneath the simple looking demands, are revealed the 
 well laid plans of Japan to solidify her hold on China, and loot 
 the revenues of the Government for the benefit of Japanese 
 interests. 
 
 The first supplementary note to the Shantung treaty, reads : — 
 "Within the Province of Shantung or along its coast no 
 territory or island will be leased or ceded to any foreign 
 Power under any pretext." 
 I This Note is a modification of the original demands that China 
 f should not lease or cede such territories to any third Pozver. 
 Even in this matter it is seen that Japan endeavored to force her 
 way to exclusive rights and privileges. On its face, this clause 
 would seem to be equitable to both parties, always having in view 
 Japan's position. Her argument for presenting and insisting 
 on the adoption of this clause was the usual and generally ac- 
 cepted doctrine of a stronger nation imposing its will on a weaker 
 neighboring country to protect its own national existence, by 
 I obviating any possibility of another Power obtaining a foothold, 
 ^ which might conceivably be transformed into a naval base. This 
 
17 
 
 official explanation of Japan is therefore unchallengeable, and 
 corresponds to similar American policy with reference to the 
 Latin American countries to the south. There is another and 
 more subtle aspect to this clause, which compels a tribute to 
 Japan's astuteness, for analysis will indicate that it simply serves 
 to strengthen her hold on the province, by adhering to well 
 established and accepted precedents of 1898 in delimiting her 
 special preserves. Germany overlooked this re-insurance in 
 drafting the lease of Kiaochao and installing herself in Shantung, 
 and the gate was always open for China to lease or cede another 
 point of vantage in the province to another Power, as evidenced 
 
 feby the lease of Weihaiwei to Great Britain. Japan has skillfully 
 
 I repaired this breach in the ringed fence, that's all. 
 
 It will be remembered that Great Britain, France and Japan 
 extracted from China in 1897 and 1898 the so called Non-Aliena- 
 tion Declarations covering their respective spheres of influence. 
 These engagements definitely delimited these spheres set apart for 
 the special interests of the above Powers, while Russia in turn had 
 marked out Manchuria as her particular "piece of the Chinese pie." 
 These Declarations are still in force and constitute the founda- 
 tion of the British, French and Japanese pretensions to the 
 Yangtsze Valley, South China and Fukien. Viewed in this light, 
 ihe non-alienation supplement to the recent treaty respecting 
 Shantung simply proclaims that Japan is adhering strictly to 
 precedent, and is leaving no loop hole for others to break into 
 her preserves. It is self evident that after her sad experiences / / 
 at the hands of her ''friends," China would never again willingly \ v 
 consent to any further alienation of her territories by lease or | 
 otherwise, and as far as she was concerned this provision in re- ) 
 gard to Shantung was uncalled for and unnecessary. Only by' 
 the application of that brute force employed by other nations in 
 dealing with her, can China be separated from her territories. 
 The only apparent justification for enforcing this additional 
 humiliation on China, rests on the assumption that Germany may 
 at some time in the future compel China to recompense her for 
 the loss of Kiaochao, by the lease of some other port or island 
 off the coast of Shantung, which in turn might be transformed 
 into another naval base. As there are no other ports in the 
 province or islands off its coast suitable for such purpose, it 
 deprives this argument of its force, and reduces the meaning of 
 
 I 
 
 J 
 
18 
 
 the clause, to a set determination on the part of Japan to solidify 
 ^ her hold on what she has acquired. The non-alienation clause 
 • respecting Shantung also rounds out and puts the finishing touch 
 
 on the series of these undertakings, and leaves no corner of 
 j China, which can be alienated. Russia in Mongolia and North 
 I Manchuria, Japan in South Manchuria and Shantung, Great 
 I Britain in Tibet and the Yangtsze Valley, Japan in Fukien, and 
 f France in South and Southwest China and the Island of Hainan, 
 f have parcelled the country between them, and the only place that 
 
 China might of her own free will cede or lease territory without 
 
 coming into conflict with these other Powers, would be in the 
 
 Metropolitan Province of Chihli. 
 
 THE STORY OF LUNGKOW. 
 
 We can now turn to Clause 2 of the treaty which reads: 
 
 'Tn building a railway connecting Chefoo or Lungkow with 
 the Tsingtau-Tsinanfu line, China shall apply to Japanese 
 capitalists for the necessary loan, provided that Germany 
 relinquish her rights regarding the Chefoo-Weihsien Rail- 
 way." 
 When this is considered in connection with Clause 1, it would 
 appear to be superfluous, for if Japan is to fall heir to all of 
 Germany's rights in the Province, why such anxiety concerning 
 an enterprise fully covered by the provisions of that Clause? If 
 Germany, under the provisions of the Kiaochao Convention pos- 
 sessed the preferential right to finance this line, and if Japan 
 is to succeed to these privileges, why was she so anxious to 
 specify this particular concession, and have it super-guaranteed 
 to her in a separate clause in the new treaty? Herein rests a 
 story eloquent of Japan's way with China, and illustrative of the 
 manner in which China is being looted and kept in financial 
 vassalage to other Powers. The story is difficult to understand 
 without the aid of a map of North China and a knowledge of her 
 railway system and traffic problems. 
 
 Dairen is the commercial stronghold of Japan in Manchuria 
 and North China, from here her merchants tap the wealth of the 
 vast hinterland, and distribute their wares. A glance at the map 
 will indicate that Dairen is only 85 miles distant by sea from the 
 port of Chefoo in the Province of Shantung, which permits her 
 
19 
 
 merchants to successfully compete in this sphere against the 
 German entrepot at Tsingtau. An immense junk and light draft 
 steamer traffic was rapidly developed between Dairen and the 
 Shantung coast, and trade established which could not be taken 
 away by Germany. Dairen in time rivalled Tsingtau as a distri- 
 buting point for the trade of the province, in fact the Japanese 
 port was more favorably located than Tsingtau to dominate the 
 richer part of the Province. The shorter and cheaper water borne 
 traffic cut into the more expensive and longer railway haul from 
 Tsingtau to the heart of Shantung. Naturally neither Germany 
 or Japan desired to contribute to the commercial growth of ports 
 outside their control, and the importance of the old international 
 treaty port of Chefoo was thereby impaired. The Japanese 
 especially chafed under the forced necessity of contributing to the 
 enrichment of a port under the jurisdiction of China, where 
 European and American interests had long since secured control 
 of the most profitable and choice business sites. The Japanese 
 determined to get along without Chefoo and build up a port 
 entirely under their own influence. When the breakwater scheme 
 for the harbor of Chefoo became a certainty, and that its 
 cost would be charged on the shipping and trade entering the 
 harbor, the Japanese balked. When it is known that the Japanese 
 flag floats over about 70 per cent, of the shipping which enters 
 and clears from the port and that the great bulk of this shipping 
 is engaged in the Dairen and Port Arthur run, it indicates that 
 the Japanese trade between the Kwangtung Peninsula and Shan- 
 tung would be called upon to pay the lion's share of the proposed 
 harbor improvement. So Japan decided that Chefoo was no 
 place for her, and began to look around for a more suitable base 
 for her trade expansion in Shantung. 
 
 JAPAN'S WAY IN CHINA. 
 
 Seventy-five miles to the west of Chefoo is located the little, 
 obscure junk port of Lungkow. Reference to the map will dis- 
 close that the sea distance betwen Dairen and Chefoo, and Dairen 
 and Lungkow are for all practical purposes the same, while 
 Lungkow possessed the added advantage of being located seventy- 
 five miles nearer the commercial heart of the province. No 
 foreigners were located there, no vested interests had been es- 
 tablished, and its remoteness promised freedom from molestation 
 
 J 
 
'h 
 
 20 
 
 and the prying eyes of foreigners. So here the Japanese decided 
 to estabhsh their sub-base for Dairen and exploit the province 
 in company with the Germans, but safe from the latter's competi- 
 tion. With characteristic Japanese thoroughness they prepared 
 their plans and proceeded to work. A Japanese steamship line 
 to ply between Dairen and Lungkow direct, and a Japanese Bank 
 with headquarters in Dairen and a branch in Lungkow, and both 
 under the same management, were subsidized by the Japanese 
 Government of the Kwangtung Leased Territory and commenced 
 operations in 1912. They were the first in the field, and with 
 the aid of the Bank naturally acquired the choice business and 
 waterfront cites, tapped the trade of Chefoo to and from the 
 heart of the province, and firmly ingratiated themselves with the 
 leading Chinese merchants in the district. They settled down to 
 improve their opportunity and wait for a paternal and watchful 
 Government to further assist them. They had not long to wait 
 for action. In December 1913, the Japanese Minister at Peking 
 brought pressure to bear on China to open certain ports in Inner 
 Mongolia to foreign trade. Included in the list was the little, un- 
 important and hitherto unheard of junk port of Lungkow on the 
 north coast of Shantung. Even the old China ''hands" wondered 
 I what it meant, as no one could see the advantage of opening this 
 J shallow harbor. It was soon realized however that Japan had 
 /I stolen a march on the rest of the world, for by the use of her 
 light-draft subsidized steamers in direct trade with Dairen, the 
 port of Chefoo was isolated, and Japanese products brought 
 seventy-five miles nearer the commercial heart of the Province, 
 thus saving that expense of cart transportation. The commercial 
 advantage of Lungkow to Japan is therefore apparent. It gives 
 her a decided superiority over the traders of other nations 
 established at Chefoo, and if ruthlessly pressed will result in the 
 commercial ruin of Chefoo. 
 
 LUNGKOW'S STRATEGIC IMPORTANCE. 
 
 When the time came for Japan to declare war on Germany 
 and commence operations against Tsingtau, instead of landing 
 her forces within a reasonable distance of the German strong- 
 hold, she startled China and the world, by disembarking her troops 
 at Lungkow, 180 miles away from her objective. This violation 
 of China's neutrality has been strenously defended by Japan and 
 
21 
 
 the press of the Alhes,-on the grounds that Germany had set the 
 lead. Technically the position may be correct, but all the evi- 
 dence goes to strengthen the belief that the violation of China's 
 neutrahty by disembarking troops at Lungkow, was as much a 
 fixed purpose of the Japanese General Staff, as the violation of 
 Belgium was premeditated and formed part of the strategy of 
 the German General Staff. Japan does nothing at hazard. She 
 takes no chances. Her plans are laid long in advance. Lungkow 
 was selected as Japan's base in the event of a war with Germany 
 in 1912, in the same way that future events will disclose that 
 certain Mexican incidents are not without their significance. 
 
 CHEFOO TO BE ISOLATED. 
 
 The construction of a railway between Chefoo and Weihsien 
 is essential for the commercial rehabilitation of this one remain- 
 ing deep water port in the north under the jurisdiction of the | y 
 Chinese Government. The topography of the country compels [/ 
 such a line to follow the coast, and pass within a few miles of 
 Lungkow. It is seen therefore that Lungkow holds the key to 
 Chefoo's future prosperity, and that whoever controls Lungkow, 
 can tap and divert the trade of Chefoo. Naturally, the Japanese 
 desire that the proposed railway should terminate at Lungkow, 
 especially if their money is to be employed in its construction. 
 If Chefoo wants a line to connect with Lungkow and the interior, 
 the Chefoo merchants may find the money themselves, but they can 
 never have any control over the strategic section from Lungkow to 
 Weihsien. In plain words Chefoo is to be left out in the cold. 
 This is the ''Ethiopian gentlemen in the wood-pile" concealed in 
 Clause 2 of the treaty. If China wants a railway in this section 
 Japan will only finance it as far as Lungkow, from there on to 
 Chefoo it must be a separate local line with no participation in 
 me administration of the main section. Not alone does the clause 
 'conceal this attempt against the commercial prosperity of Chefoo, 
 but embraces one of the most barefaced intrigues for the acqui^- 
 tion of revenues now enjoyed by the Chinese Government and j 
 constituting one of its most valuable loan securities. 
 
 LOOTING CHINAS TREASURY. 
 
 A feature of conditions in North China not generally under- 
 stood consists in the scarcity of agricultural labor in Manchuria. 
 Hundreds of thousands of coolies are annually imported in the 
 
 >/ 
 
1 
 
 22 
 
 Spring from the congested province of Shantung and returned to 
 their homes after the harvest. This remarkable passenger traffic 
 
 ('has been one of the principal sources of revenue and profit for 
 the Chinese Government owned Peking- Alukden Railway, one of 
 the greatest revenue earners of the Government as well as one 
 of the most profitable railway enterprises in the world. Since 
 Japan's acquisition of the South Manchuria Railway she has 
 naturally set out to divert and capture as much of this profitable 
 business as possible. To this end the Japanese Government has 
 [subsidized steamers and other vessels to ply between Dairen and 
 the Shantung ports, and act as feeders to the railway. By offer- 
 ing special through rates from Shantung to the fields of Man- 
 /■churia, they were able to divert a fair percentage of this lucrative 
 i trade. Not content with this they want it all. If Japan secures 
 control of the main German Railway from Tsingtau to Tsinan 
 through the heart of the Province, and then dominates the line 
 I from Weihsien to the port of Lungkow, she thus obtains control 
 yof the essential link in a through Japanese transportation system 
 from the heart of Shantung to the uttermost end of South Man- 
 churia. The immense coolie traffic which has heretofore passed 
 over and contributed to the prosperity of the Chinese Govern- 
 ment Railways, will be thus diverted to the Japanese system. In 
 other words, millions of dollars are »transf erred from the treasury 
 of the Chinese Government to the coffers of the Japanese Govern- 
 ent controlled South Manchuria Railway Company, and its allied 
 interests. It constitutes one of the most callous exhibitions of 
 diplomatic brigandage on record. The loss of this great revenue 
 l)y the Chinese Government line will impair the value of a security 
 pledged as the guarantee of important loans largely held in Great 
 Britain, in addition to depriving the Government from the enjoy- 
 ment of its legitimate sources of revenue. There is only one 
 I equitable solution to this, and that is for the Chinese Government 
 j to have full control of the Shantung railways with authority to 
 I impose such rates, as will protect its interests in other quarters. 
 I Otherwise if Japan insists on the right to finance the line and 
 I compel its termination at Lungkow, it is equivalent to forcing 
 I the Chinese Government to borrow $5,000,(XX) gold at 85 at 5 
 \ per cent, interest, and other perquisites, in order to create the 
 ^ machinery to loot her treasury of at least $2,000,000 per year. 
 
23 
 
 THE MANCHURIAN TREATY. 
 
 The second treaty entered into between China and Japan con- 
 sisted of nine clauses relating to Manchuria, the first clause of 
 which reads : — 
 
 When Russia obtained the concession in 1896 for the Chinese 
 Eastern Railway, provision was made for the reversion of the 
 property to China after eighty-five years, without payment, and 
 tTie right of purchase at the expiration of thirty-six years after 
 completion. As the line was open to traffic in 1902 this placed 
 the date when China would have the right to pufdrase the line, 
 in 1938, or twenty three years hence. On March 27, 1898, 
 Russia further obtained from China the lease of the Kwangtung 
 Peninsula for twenty-five years and the right to construct the 
 South Manchuria Railway under the same terms as the Chinese 
 Eastern line. Japan's victory over Russia brought with it succes- 
 sion to the rights of the South Manchuria Railway and the lease 
 of the Kwantung Peninsula. It will be seen therefore that the 
 lease expired in 1923 or less than eight years hence, while the 
 right to controrthe railway extended to 1938. The administra- 
 tion of the railway is of no political and little commercial ad- 
 vantage to Japan, without an extension of the lease in which the 
 political control has its basis. How to obtain China's free con- 
 sent to its extension before its expiration has been one of the 
 most difficult political problems confronting Japanese statesmen 
 for the last few years. It was recognized that if a stable Govern- 
 ment was established in China and the country regained its finan- 
 cial feet, and created a modern army and navy, she would never 
 willingly consent to an extension of the lease without some com- 
 pensating advantages. As long as other Powers were loaning 
 money to China, and standing sponsor for her independence and 
 integrity, and urging her to purchase arms and ammunition, war 
 ships and other implements of defense, this problem became a 
 nightmare to Japan from the political viewpoint alone, as her 
 only chance to maintain her hold in Manchuria, meant that she 
 would have to fight for it. The question of the extension of the 
 lease also seriously interfered with Japan's economic program in 
 Manchuria, for after the first few loans secured on the railway, 
 she found it increasingly difficult to persuade financiers to ad- 
 vance further funds, because of the short unexpired time of the 
 lease. This point reached a climax five years ago, when her 
 
 1/ 
 
24 
 
 overtures for a large loan secured on the railway was turned 
 down in the international money markets. In fact the value of 
 the railway as a security for further loans has ceased to exist 
 owing to the short unexpired terms of the lease. 
 
 JAPAN'S OVERWHELMING NECESSITY. 
 
 It will be clearly seen that Japan's entire future in Manchuria 
 was at stake and hinged on her being able to secure China's con- 
 sent to the extension of the lease, not at its expiration in 1923, 
 but immediately. Those familiar with the vital importance of 
 the situation have been waiting to see just how Japan would 
 act, in view of her oft repeated assurances of friendship for China, 
 and the attitude of the other Powers towards the preservation of 
 China's sovereignty. It has been clear to all competent observers 
 that it was far from Japan's intentions to deal honorably with 
 China and offer her some quid pro quo for the promise to ex- 
 tend the lease. Coercion was to be applied, whenever a suitable 
 
 retext could be found or manufactured. The necessity of al- 
 ways having some outstanding qtiestions with China, and the 
 wisdom of constantly creating new sources of trouble, with an 
 eye to the extension of the lease was therefore forced on Japan 
 
 s part of her policy towards her weaker neighbor. This in part 
 accounts for her past unreasonable attitude. Japan was simply 
 building up a case that would serve as the pretext for her 
 demands when the opportune hour arrived. Time after time has 
 China been forced to apologize and pay indemnities to Japan on 
 the flimsiest pretexts, and various trifling questions have been 
 deliberately left unsettled so as to form the basis of "strong" ac- 
 tion when the time became appropriate. The danger confronting 
 China was fully appreciated by the Chinese Government, and 
 their readiness to comply at once with Japan's outrageous de- 
 mands in these minor troubles, is explained by the menace which 
 was always hidden in the background. The war in Europe swept 
 away all these contemptible issues that Japan had sedulously 
 created to justify her coercion of China. The big opportunity 
 to force Germany out was presented, and to use the 99 year lease 
 of Kiaochao as the lever for obtaining China's consent to the 
 extension of the Kwantung lease. This was undoubtedly Japan's 
 purpose when she announced at the outset of the war with Ger- 
 many that Kiaochao would eventually be restored to China. Her 
 
25 
 
 first intentions were evidently honest, but the temptation to take 
 an unfair advantage, was too great to resist, and the Government 
 was swept away by the wave of jingoism which surged over the 
 Empire after the occupation of Tsihgtau. 
 
 Germany's lease of Kiaochao, Britain's lease of the Kowloon 
 Extension, and France's lease of Kwang-chow Bay, were stipu- 
 lated at 99 years, while Russia modestly asked for only 25 years 
 in Port Arthur and Dalny. This of course constituted a gross 
 violation of equal opportunity and a discrimination against Japan, 
 which became unbearable when carried to the extreme of acting 
 as an impediment to the raising of funds for the exploitation of 
 the territory, when China could so readily have made it all right 
 by an immediate consent to the extension of the lease. 
 
 JAPAN'S "BENIGN" POLICY. 
 
 There has been so much praise in America of Japan's benign 
 policies in China, by those unfamiliar with the real trend of 
 political currents in the Orient, and ignorant of the fundamental 
 issues, that I desire to emphasize, at the' risk of tiresome reitera- 
 tion, the imperative economic necessity of Japan in forcing 
 China's immediate consent to the extension of the lease of the 
 Kwarrgtung Peninsula. If the European war had not provided 
 the opportunity, the issue would have been forced on China as 
 the outcome of the many so-called outstanding "troublesome 
 questions" deliberately created and allowed to hang over by Japan 
 so as to provide the necessary face saving pretext for the grand 
 coup. If real friendship for China existed in Japan, or any 
 desire to be just, a way would have been found to approach China 
 openly and honorably with some offer of compensating advantages 
 in exchange for the valuable privileges embraced in the extension 
 of the lease. The Chinese Government although reluctant to 
 perpetuate these symbols of her impotence, would have met Japan 
 half way in any friendly overtures based on a recognition of her 
 sovereign rights and the laws of equity and justice. 
 
 Japan's financial position was desperate. The country was 
 overburdened with debt. She had no remaining domestic assets 
 to serve as the security for further large loans. Her rich Man- 
 churian properties were valueless for raising funds because of 
 the short term of the lease. True, the railway would have re- 
 
 X 
 
 ¥ 
 
26 
 
 mained under her control until 1938, but its commercial value 
 would have been greatly impaired without political control of 
 the deep water terminals at Dairen and the fortress of Port 
 Arthur. China would never have meekly consented beforehand 
 to the extension of the lease without some reciprocal advantage, 
 and as Japan's policy never contemplated any such honorable 
 offer, the coveted concession was to be extracted by force. 
 
 Is this action on a par zuith Germany's much censured and con- 
 demned application of the Mailed Fist at Kiaochao, or does it 
 stand apart as a glowing tribute to Japan s altruism and expres- 
 sion of good will and honorable intentions towards China? 
 
27 
 
 JAPAN'S OFFICIAL COMMUNIQUE 
 
 Issued by the Japanese Government from Tokio on May 7 and 
 Circulated by Reuter's Telegraph Agency 
 
 The Imperial Government have, in the demands lately pre- 
 sented to the CTiTnese Government, made it the main object to 
 adjust matters to meet the new situation created by the war 
 between Japan and Germany and to bring closer the friendly 
 relations subsisting between Japan and China and thus ensure 
 the permanent peace of the Far East. In formulating these de- 
 mands, they have taken sj)ecial care t^avoid those which might 
 have been deemed to conflict with tlie~"pnnciples of territorial 
 integrity, equal opportunity andThe open door, which Japan has, 
 from time to time, declared to the Powers in regard to China. 
 Accordingly these demands include among others those relating 
 to the disposition of German rights in Shantung, those relating 
 to the recognition of the special position and interests of Japan 
 in South Manchuria and Eastern Inner Mongolia, and those re- 
 lating to the solution of various questions which for many years, 
 have been pending between the Japanese and Chinese Govern- 
 ments. 
 
 Group I. Contains- demands relating to the Province of Shan- 
 tung. 
 
 The first article demands an engagement on the part of China 
 to consent to all matters which may be agreed upon between the 
 Japanese Government and the German Government with regard 
 to the disposition of all rights, interests and concessions which 
 in virtue of treaties or otherwise Germany possesses in relation 
 to the Province of Shantung. 
 
 The second article demands an engagement on the part of 
 China not to alienate or lease to another Power the Province of 
 Shantung or any portion of it or any island lying near the coast 
 of the said Province. 
 
 Article 3. China shall grant to Japan the right of construc- 
 tion of a railway connecting Chefoo or Lungkou with the 
 Tsinanfu-Kiaochau Railway. 
 
28 
 
 Article 4. The Chinese Government shall open the principal 
 cities of the province of Shantung for the residence and trade of 
 foreigners. 
 
 Group II. Contains demands relating to South Manchuria and 
 Eastern Inner Mongolia. The first article demands the extension 
 of the terms of lease of Port Arthur and of the South Manchuria 
 and Antung-Mukden Railways to a period of ninety-nine years. 
 The second article demands that Japanese subjects shall be per- 
 mitted to lease or own land necessary either for erecting buildings 
 of various kinds for commercial and industrial uses or for agri- 
 cultural purposes. The third article demands that Japanese sub- 
 jects shall be permitted to reside, travel and carry on business 
 of various kinds, commercial, industrial or otherwise. The fourth 
 article demands that Japanese subjects shall be granted the min- 
 ing rights of certain specified mines. The fifth article demands 
 that the consent of the Japanese Government shall be obtained in 
 advance when China proposed to grant a railway concession to 
 subjects of a third power or to procure a supply of capital from 
 a third power for the construction of a railway or to raise a loan 
 from such power on the security of duties or taxes. The sixth 
 article demands that the Japanese Government shall be consulted 
 before the engaging of advisers or instructors regarding political, 
 financial or military matters. Article seven demands that the 
 management and control of the Kirin-Changchun Railway shall 
 be transferred to Japan for the term of ninety-nine years. 
 
 Group III. Contains demands relating to the Hanyehping 
 Company. The first article demands that having regard to the 
 close relations between Japanese capitalists and this Company, 
 the Chinese Government shall agree to the placing of the Com- 
 pany under joint Japanese and Chinese management and not to 
 dispose or permit the Company to dispose, without the consent 
 of Japan, any rights or property belonging to the Company. The 
 second article demands that owing to the necessity for the pro- 
 tection of the interests of Japanese capitalists, the Chinese 
 Government shall engage not to permit, without the consent of 
 the Company, any one other than the Company to work mines 
 situated in the neighborhood of those belonging to the Company 
 and also to obtain previous consent in case it is proposed to take 
 measures which may be deemed to aflfect the Company directly 
 or in(^irectly. 
 
29 
 
 Group IV. Contains demands relating to the non-alienation of 
 the coast of China or islands off the coast. The Chinese Govern- 
 ment shall engage not to alienate or lease to a third Power any 
 ports or bays on, or islands off, the coast of China. 
 
 Group V. Propositions relating to the solution of pending 
 questions and others. 
 
 Article 1. The Central Chinese Government must engage in- 
 fluential Japanese as political, financial and military advisers. 
 
 Article 2. The Chinese Government must recognise the right 
 of Japanese to land fdr building Japanese hospitals, temples and 
 schools in the interior of China. 
 
 Article 3. The police in localities where such arrangements 
 are necessary must be placed under joint Japanese and Chinese 
 administration, or else Japanese must be employed as police 
 officers in such localities. 
 
 Article 4. China must obtain from Japan a supply of a certain 
 quantity of arms, or else must establish arsenals in China, under 
 joint Japanese and Chinese management, and these must be 
 supplied with experts and material from Japan. 
 
 Article 5. Japan must be given the right to construct a rail- 
 way connecting Wuchang with the Kiukiang-Nanchang line and 
 with the Nanchang-Hangchow railways. 
 
 Article 6. In view of the relations between the province of 
 Fukien and Formosa and the agreement respecting the non- 
 alienation of Fukien, Japan must be consulted whenever foreign 
 capital is needed in connection with railways, mines and harbor 
 works, including dockyards. 
 
 Article 7. The Chinese Government must recognise the right 
 of preaching by the Japanese in China. 
 
 With regard to the province of Shantung, China absolutely 
 lacks, it is clear, in her present condition, the power to prevent 
 Germany from recovering her influence in that province and 
 from becoming in future again a source of disturbance in the 
 Far East. It is, therefore, natural that Japan, who has at great 
 sacrifice driven Germany out of Shantung, should present the 
 above-mentioned demands, in order to consider how the rights 
 possessed by Germany should be disposed of, and to take meas- 
 ures to prevent the recrudescence of German influence. 
 
 Japan's relations with Manchuria have always been especially 
 
30 
 
 close geographically, politically and from the point of view of 
 commercial and industrial interests. Since those relations have 
 been strengthened by two successive wars the predominant posi- 
 tion of Japan in that region has been recognised both at home 
 and abroad. 
 
 The case is almost similar in regard to Eastern Inner ^longolia. 
 Further for the advancement of the intimate relations existing 
 between Japan and China, no effort should be spared to solve 
 definitely on this occasion all pending questions which are likely 
 to lead to difficulties with China and at the same time to make 
 an agreement with a view to prevent future misunderstandings. 
 The Japanese Government, fully expecting that the Chinese 
 Government would value the friendly sentiments existing between 
 the two countries and willingly accede to the Japanese proposals, 
 urged them to carry these matters into effect, whereas, in other 
 matters China's consent was demanded by reason of treaty and 
 other rights. 
 
 With regard to the demands, which were formulated after care- 
 ful and mature consideration, on the basis of the principles above 
 referred to, the Chinese Government, in disregard of the under- 
 standing which was made at the commencement of the negotia- 
 tions to keep the proceedings of the conferences strictly secret, 
 made public the Japanese proposals, in various exaggerated forms 
 and endeavored to stir up the feelings of the Powers against 
 Japan. They caused the matters discussed at the conferences to 
 be published invariably in the newspapers, wnth a view to hinder- 
 ing the progress of the negotiations ; by fabricating news detri- 
 mental to Japan and they attempted to shake the confidence 
 placed by her ally in Japan. They even demanded the tmcondi- 
 tional retrocession of Kiaochow and an indemnity for the damage 
 caused by the war between Japan and Germany, and thus they 
 showed from the first a lack of a sincere desire for a satisfactory 
 conclusion of the negotiations. Moreover, although the Japanese 
 Government fully showed its sincerity by repeatedly explaining 
 the motives of the demands and endeavored to hear China's un- 
 reserved views on the matter, it is an undeniable fact that the 
 Chinese authorities failed to appreciate the friendly attitude of 
 Japan and persisted in protracting the negotiations. Twenty-five 
 conferences were held in all, extending over more than three 
 months and throughout these conferences the Japanese Govern- 
 
31 
 
 ment exhausted every means of arriving at a satisfactory solution, 
 but the Chinese Government, although they showed a disposition 
 to agree to the demands relating to the province of Shantung, 
 yet with regard to South Manchuria put various restrictions upon 
 the most important demands, namely those relating to the rights 
 regarding land tenure and objected to those relating to Eastern 
 Inner Alongolia and various questions enumerated under Group 
 V. on the ground that they were derogatory to the sovereign 
 rights of China or conflicted with treaties with other Powers and, 
 although the Japanese ^Minister explained that such was not the 
 case, they refused to listen. But, recognising that a satisfactory 
 conclusion of the negotiations was most important for the main- 
 tenance of peace of the Far East, the Japanese Government 
 treated the Chinese contentions with every consideration, making 
 very great concessions. In a spirit of conciliation they amended^ 
 their proposals and presented their revised draft to the Chinese 
 Government on April 26. In the revised draft the contentions 
 put forward by the Chinese Government were taken into con- 
 sideration. In this draft, as regards Eastern Inner Mongolia, 
 the demands were confined, for the present, to absolutely neces- 
 sary matters ; those relating to the Hanyehping Company were 
 confined to matters which had been admitted by the Chinese 
 Government at the conferences. As regards the demand re- 
 specting the non-alienation of the coast, the form desired by the 
 Chinese was accepted. The proposals relating to advisers, owner- 
 ship of land for schools and hospitals, and the position of the 
 province of Fukien were all altered in accordance with the views 
 expressed by the Chinese representatives at the conferences. As 
 regards South China railways, the relations with third parties 
 esoecially were respected and alterations were made accordingly. 
 The question of the right of preaching was reserved for future 
 negotiations. Those relating to police and the ownership of sites 
 for temples were withdrawn. 
 
 More Articles Added in Revised Draft 
 
 The revised draft is therefore practically as follows : — 
 Group II. Eastern Inner ^Mongolia is excluded from the pro- 
 posals respecting South Manchuria and Eastern Inner Mongolia 
 and the second and third articles are amended as follows : 
 
 Article 2. Japanese subjects shall be permitted in the region 
 
32 
 
 of South Manchuria to lease or buy land necessary for erecting 
 buildings, of various kinds for commercial and industrial uses 
 or for agricultural purposes. 
 
 Article 3. Japanese subjects shall have liberty to enter, travel 
 and reside in the region of South Manchuria and carry on busi- 
 ness of various kinds, commercial, and industrial, and otherwise. 
 
 The fourth article, referring to the preceding two provisions, 
 says that Japanese subjects shall produce before the Chinese 
 local authorities passports duly issued and registered by the said 
 authorities. They shall also observe Chinese police laws or regu- 
 lations approved by the Japanese consuls and pay to the Chinese 
 authorities taxes approved by the Japanese consuls. In civil, 
 original suits the Japanese consul, where a Japanese subject is 
 defendant, and a Chinese official, where a Chinese is defendant, 
 shall respectively try and decide the case, both the Japanese consul 
 and the Chinese official being permitted each to send an authorized 
 agent to attend the trial and watch proceedings, provided that in 
 a civil suit concerning land between Japanese and Chinese the 
 case shall be examined and decided jointly by the Japanese consul 
 and a Chinese official according to the laws and local customs of 
 China, provided further that in future when the judicial system 
 in the said region shall be completely reformed all civil and crimi- 
 nal suits involving Japanese subjects shall be wholly tried and 
 decided by Chinese courts. 
 
 Proposals relating to Eastern Inner Mongolia: — 
 
 The first article demands that China shall permit joint enter- 
 prises of Japanese and Chinese in agricultural and auxiliary in- 
 dustries, the second that China shall consult Japan first in case 
 China contemplates contracting either railway loans or secured 
 by taxes, and the third that China shall increase the number of 
 open markets. 
 
 Group III. As regards the Hanyehping Company the Chinese 
 Government shall engage to approve of an agreement that may be 
 concluded in future between the Company and Japanese capital- 
 ists for a joint undertaking, and agrees not to confiscate it nor 
 to nationalise it without the consent of interested Japanese capital- 
 ists and not to permit it to contract any foreign loan with other 
 than Japanese. 
 
33 
 
 Group IV. As regards the non-alienation of Chinese coasts, 
 the Japanese Government will be satisfied with the declaration 
 as suggested by the Chinese Government. 
 
 Group V. As to the other points the following shall be kept 
 on record : 
 
 Article 1. That the Chinese Government will in case of neces- 
 sity in future employ Japanese advisers. 
 
 Article 2. In case Japanese subjects desire to lease or pur- 
 chase land for the purpose of building schools or hospitals in the 
 interior, the Chinese Government will permit them to do so. 
 
 Article 3. The Chinese Government will some day in the 
 future send military officers to Japan in order to make arrange- 
 ments directly with the Japanese military authorities either for 
 the purchase of arms from Japan or for establishing an arsenal 
 f ? arsenals] in China under Sino- Japanese management. 
 
 Article 4. The Chinese Government will grant Japan her de- 
 sired railway concession in South China in case it becomes clear 
 that there is no objection in this respect on the part of any other 
 Power, or that the Chinese Government will refrain from enter- 
 ing into any agreement with any other party concerning the rail- 
 way lines in question until Japan may, independently of the pres- 
 ent negotiations with China, reach an agreement with the party 
 whose interests, in the opinion of the Chinese Government, are 
 opposed to the proposed lines. 
 
 Article 5. The question of freedom for preaching by Japanese 
 missionaries will be left over for future discussion. 
 
 The proposal for joint administration of police is withdrawn. 
 
 As to Fukien province the Chinese Government must engage in 
 some form that they will not grant to any other power the right 
 to build a shipyard, coaling or naval stations, or any other military 
 establishment on or along the coast of Fukien province, and 
 further, that the Chinese Government will not allow any such 
 establishment to be built with any foreign capital on the coast of 
 the said province. 
 
34 
 
 At the same time as the presentation of the revised draft, the 
 Japanese Government declared to the Chinese Government that 
 if, at any peace conference upon the conchision of the present 
 war, Japan should be given the free disposal of Kiaochow which 
 she acquired at enormous sacrifice, she would return it to China 
 subject to certain conditions, of which the principal ones were 
 as follows : 
 
 The opening of Kiaochow Bay as a commercial port. 
 The establishment of a Japanese concession in a locality desig- 
 nated by the Japanese. 
 
 The establishment, if required by the Powers, of an inter- 
 national settlement and arrangements between the Japanese and 
 Chinese Governments regarding the disposal of the German 
 public structures and properties. 
 
 Germany having after many years labour and heavy expenditure 
 of money converted Kiaochow into an important military and com- 
 mercial port, as the basis of her expansion in the East, German 
 influence in this part of China grew with the development of 
 Kiaochow and became so firmly established that it was utterly 
 hopeless for China, singlehanded, to regain possession of the 
 leased territory. Japan, desiring to remove this source of danger, 
 which might in future again disturb the peace of the Far East, 
 captured it at no small cost of life and money, and now that it 
 is in her hands, she is almost at liberty to dispose of it at will. 
 She is certainly under no obligation to return it to China, but 
 she offered of her own will to return Kiaochow because she was 
 anxious to promote friendly relations with China and to maintain 
 the general peace of the Far East. The Chinese Government 
 have, however, failed to reciprocate Japan's sentiment of accom- 
 modation and conciliation, and on May 1, presented a counter- 
 draft which they declared to be their final answer. 
 
 In this counter-draft, the Chinese Government recognise with 
 regard to South Manchuria the right of residence, trade and leas- 
 ing land by Japanese subjects in the interior, but refuse to grant 
 long leases. 
 
 The Chinese Government also demand that Japanese subjects 
 shall submit to Chinese police laws and regulations, be liable to 
 
35 
 
 the same taxes and duties as Chinese, and all actions arising out 
 of land disputes, whether between Japanese and Chinese, or be- 
 tween Japanese themselves, shall come under the jurisdiction of 
 Chinese courts. 
 
 As regards Eastern Inner Mongolia, they put limitations on 
 the extent of that region and refuse to permit the main point of 
 the Japanese demand, which is the joint enterprise of Japanese 
 and Chinese in agriculture and auxiliary industries. 
 
 Further they demand at the same time the unconditional sur- 
 render of the leased territory at Kiaochow, and the recognition 
 of the right of the Chinese Government to participate in the com- 
 ing peace negotiations between Japan and Germany. 
 
 Indemnification by Japan for all losses suffered by China in con- 
 sequence of the Japan-German war. 
 
 The immediate removal of various military establishments of the 
 Japanese army and the prompt evacuation of occupied territory. 
 
 They also refused all the proposals contained in Group V. of 
 the Japanese amended project except that relating to Fukien. In 
 this counter-draft the Chinese Government, still further in dis- 
 regard of responsible statements made by their representatives 
 at the conferences, revived in some cases articles which had al- 
 ready been withdrawn and in others made alterations in matters 
 which were agreed to. Moreover, they make demands to which 
 it is clearly imposssible for Japan to accede, such as those for 
 the unconditional surrender of Kiaochow and indemnification for 
 losses incurred through the Japan-German " war. Furthermore, 
 the Chinese Government declare that their counter-draft formu- 
 lates their final decision. Accordingly, so long as Japan, refuses 
 to accede to these demands whatever agreement may have been 
 arrived at on other points must ultimately be abortive and the 
 terms offered by China prove illusory. The Japanese Govern- 
 ment deeply regret to perceive from the attitude of the Chinese 
 Government that it is no longer any use to continue the present 
 negotiations. Nevertheless, being desirous, with a view to the 
 maintenance of peace in the Far East, to make every effort to 
 bring the negotiations to a satisfactory conclusion and thus to 
 avoid complications in the situation, the Japanese Government, 
 taking fully into account the wishes of the Chinese Government, 
 
36 
 
 decided with great forbearance, to leave out of the present 
 negotiations and reserve for future discussion all items spec- 
 ified in Group V. of the amended draft, except that relating to 
 Fukien, about which an agreement has been reached. The 
 Japanese Government instructed their Minister at Peking on 
 May 6th that, in conveying this decision to the Chinese Gov- 
 ernment he should earnestly advise them to give due regard to 
 Japan's sentiment of accommodation and conciliation and ex- 
 press after careful consideration their assent without delay to 
 the Japanese amended draft and at the same time announce 
 that the Japanese Government expect from the Chinese Gov- 
 ernment a satisfactory response to this advice not later than 
 six p. m. on 9th May. 
 
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 MAR 9 193I1 
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