It is really remarkable what a tremendous lot of moral support and enthusiastic sympathy China was getting in the United States in the closing days of 1918 while she was spending the $10,000,000 which she had flimflammed out of the Japanese banking group. And the harsh and downright condemnation which a large part of the American public opinion was heaping on the devoted head of Japan for robbing poor, helpless China right and left, just about the same time, is still more remarkable.

The preliminary agreement for loans to build the socalled Four Railways of Manchuria was signed on September 28th, 1918, between China and a group of Japanese banking interests represented by the Industrial Bank of Japan (Appendix 28).

The prospective lines mentioned in the preliminary agreement were: Jehol-Taonan line, which is said to be about 470 miles; Kirin-Kaiyuan by way of Hailungcheng of about 230 miles; Changchun-Taonan of about 180 miles; and another line starting from a point on the Jehol-Taonan line and ending at an unnamed seaport, presumably on the Gulf of Liaotung. Just when these important lines will be built or even started is about as uncertain as the Peking politics of the day. Certainly, there is no prophet bold enough to venture even a guess on it.

Meanwhile the Japanese policy in continental Asia has changed, and changed much since the days of Okuma and Terauchi. For some years, now, she has been concentrating her efforts on a constructive program. In Manchuria, she is working out her own economic and industrial salvation as well as that of Manchuria, through the activities of the great South Manchuria Railway. In this way, the story of the S. M. R. takes on a new meaning.

CHAPTER VI

THE SOUTH MANCHURIA RAILWAY

RUNNING across the front porch and entrance hall of continental Asia is a line of railway. It advertises American locomotives, American Pullman sleepers, American passenger and freight cars and other railway equipment as nothing else does in the whole of Asia. It is the one outstanding, ever-operating show window for American railway products.

The line is 686 miles long. It is run by a company capitalized at 440,000,000 yen-which is a trifle less than $220,000,000 in the much-appreciated American money when the exchange rate is anything like normal. Its actual assets are valued at more than 1,400,000,000 yen. Among them are the coal deposit of the Fushun mines, estimated at more than 1,200,000,000 tons, and the iron-ore deposit at Anshan, which is more than 200,000,000 tons. Its gross revenue for the financial year ending March 31, 1924, was 185,698,324 yen, and the net profit was 34,795,592 yen. This railroad company employs about 45,000 people.

The line was not built by American engineers: it is not an American railway. That is the thing which makes it all the more remarkable. For on it, this very day, are running more than 300 American-built locomotives and more than 1,500 freight cars of American design. built in American shops by American mechanics. Its famous through expresses are made up of the familiar Pullman sleepers. Monster steam shovels, dredges, and cranes, playing the Titan at its Fushun mines and along

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its line, bear such legends as "South Milwaukee, Wis." on their side plates. More than 89,000 tons of American steel rails from the great U. S. Steel Corporation plants are on its road beds. It has recently spent more than 6,000,000 yen for American machinery and American materials.

This American-equipped line is called the South Manchuria Railway.

Of course, and naturally, 110,000,000 out of 110,000,000 American friends of ours are utterly ignorant of the very existence of the S. M. R. That does not seem to trouble it at all. It stands out there on the jumping-off edge of the world as the one outstanding advertisement of American genius in the manufacture of railroad equipment. And oddly enough it is the reviled and much-discriminated-against Japanese who put it there. There is a story about the funds with which Japan bought all this American equipment-a story which throws an interesting side light on the troubled theme of how Japan feels toward America.

Japan did not have the ready cash. No doubt she should have gone to Wall Street for funds. But the Wall Street of those days was not the Wall Street of to-day. Perhaps, at the time, it did not have money to loan to a railway out in Manchuria. Anyway, Japan raised the funds on the London market: 12,000,000 pounds sterling in two loans. And Japan spent no less than two-thirds of that sum-not in England for British machinery and railway equipment, but in the United States for American products.

It was not altogether pro-American sentiment that brought this about, to be sure. Certainly it was not because the Japanese were hostile to the idea of British goods or ungrateful for British financial accommodation. The South Manchuria Railway Company, at the time, needed locomotives, rails, cars, and materials quickly.