under the provisions of several articles is granted 6 per cent dividends, and in June, 1914, a revision of the articles of association permitted the payment of an additional 2 per cent if 2 per cent was paid on the Government shares. At least one-twentieth of the net profits are to be set aside as a reserve fund until this has reached one-quarter of the authorized capital, and dividends on the Government shares are limited to 5 per cent per annum. Instead of paying this amount it appears to be the general policy to retain an amount equal to the dividend paid on Government shares, usually 2 per cent, in the form of a special reserve. In addition, the Imperial Government of Japan guarantees interest on debentures, of which there are now outstanding £12,000,000 ($58,398,000 gold), one-half paying 5 per cent interest and the other half 4 per cent. The articles of association limit the amount of debentures that may be issued to double the authorized outstanding capital shares, including those held by the Government.

The board of directors was originally composed of a president, vice president, and at least four directors, with from three to five auditors, but the recent reorganization, now in effect, provided for a board of directors with a director in chief and four directors at Dairen and one director at Tokyo, as shown by the directory given on page 270. The president and vice president formerly were, and the director in chief now is, appointed by Imperial sanction. The directors are appointed by the Government from among the shareholders and the auditors are elected by the shareholders.

Baron Y. Goto was appointed president, Mr. Z. Nakamura vice president, and Mr. S. Kunisawa leading director in November, 1906. In July, 1908, when Baron Goto was appointed Minister of Communications, Mr. Nakamura was raised to the presidency and Mr. Kunisawa promoted to the vice presidency, both of them remaining in office until December, 1913, when they were succeeded by Dr. Nomura as president and Mr. D. Ito as vice president. They in turn retained office until July, 1915, when they were succeeded by Lieut. Gen. Baron Y. Nakamura as president and Dr. Kunisawa as vice president. This arrangement continued until the reorganization and consolidation with the Korean railways; at that time Baron Nakamura retired and Dr. Kunisawa is now director in chief.

On July 31, 1917, the administration of the Korean railways was consolidated with that of the South Manchuria Railway Co., but since that time the organization has been modified in several ways until it is now as indicated by the directory (see p. 270); it is complete for handling not only the railway operations but all the outside undertakings as well. The administration of the Korean railways is known as the "Korean section."

The working of this entire arrangement seems to be very satisfactory, and, in view of the growing financial success from year to year, it would certainly appear that the organization methods of the South Manchuria Railway Co. can be studied with much benefit in relation to their bearing on other similar situations in the Far East. While this organization conforms to the departmental system characteristic of government railways, and there is not a distinct commercial department, there is nevertheless a close and thorough study of the traffic, including the means of meeting developing conditions. This last is a special feature of the selling of transportation in any part

of the world, but is the one most frequently lacking in the government operation of railways.

OPERATING METHODS.

The method of train running conforms strictly to the station-master system already referred to in connection with the Japanese railways. All signaling is along the lines of the British Board of Trade practice and is all very limited, both for signals and interlocking. The same remarks concerning modern methods of signaling and selective telephone apparatus for central control apply here as in connection with the Imperial Government Railways of Japan.

CONSTRUCTION COSTS AND CAPITAL INVESTMENT.

The tables on page 194 show the general statistics for the main line and branches as one group and for the Mukden-Antung line as another group, with a summary for the whole, for the year ended March 31, 1916. In the column "Capital investment' the item of $49,850,000 represents the valuation put on the property taken over from the Russian Government at the end of the Russo-Japanese War, and in this is included all the other property rights and concessions as well as the railway, which had been changed from the Russian 5-foot gauge to the Japanese 3-foot 6-inch gauge during the war. This also included the 2-foot 6-inch gauge military railway, which has since been reconstructed into the Mukden-Antung line. There apparently has been no effort to allocate to the different undertakings the division of this valuation of the original property.

The other items in this column show the capital expenditures on the various undertakings. The railway expenditures include the expenses incurred in changing the main line and branches from 3-foot 6-inch to 4-foot 8-inch gauge and the reconstruction of the MukdenAntung line into the present standardized gauge, which involved the practical rebuilding of this entire line, mostly on new location. Without attempting to allocate the original property the capital investment of the main line averages $47,505 per mile of line and of the Antung line $71,630, or $53,460 per mile of line for the entire system. Outside of the Dairen and Port Arthur harbors and towns there was not a great deal of actual property other than that of the railway, and while the mining concessions were of great value there was very little actual plant when the Japanese acquired the property. The mining plant at the Fushun coal mines is modern and up-todate in every respect and has been installed entirely by the South Manchuria Railway Co. These same remarks apply to the other undertakings of this most excellently equipped property, especially the Shakako workshops and the Dairen tramways and electric light and gas plants.

TRAFFIC AND RATES.

The South Manchuria Railway is one of the exceptions in this part of the world to the rule that passenger earnings at the start exceed freight earnings. The freight earnings of the South Manchuria Railway have always largely exceeded the passenger earnings.

The performance statistics show passenger earnings per mile as less than 0.9 cent and average earnings per ton mile of freight as less than 0.7 cent, with the very low rate of 0.625 cent on the Antung

line-this latter condition probably being due largely to the preferential rates for freight via the Korean Railway and this line on shipments between Japan and China, in connection with which there is a reduction of one-third of the usual Chinese customs duties when the goods enter Manchuria at Antung.

Passenger fares, while called first, second, and third class, were in reality, first, third, and fourth class, and the rates formerly were 6, 2.7, and 1.8 sen per mile, but in October, 1917, these were changed to 5, 3.5, and 2.8 sen for first, second, and third class passengers, and there was established what is the equivalent of the coolie fare on some of the Chinese railways.

While the freight handled is very varied, coal constitutes the largest single item, amounting to about 2,500,000 tons from the Fushun and Yentai mines and about 300,000 tons from the Penchihu mines. The next largest and most important item for the country as a whole is the soya bean and its products.

One feature that is being worked out with particular care is the warehousing of goods, both imports and exports. This feature was taken in hand under orders from the Japanese Government in October, 1908, and while it was fairly well handled at Dairen it was not well provided for at the other stations along the line. Improvements, however, were made from time to time. In September, 1911, regular warehouses were established at Dairen, and since then 25 or more subordinate warehouses have been established along the line and an arrangement has been instituted for insuring the stored goods. This has had a very beneficial effect on the general commercial business of this entire region.

EARNINGS, EXPENSES, AND PROFITS.

The table on page 195 shows that, with an increase of about onethird in the mileage (almost entirely on account of the opening of the Antung line), the earnings have almost doubled during the nine-year period from 1907 to 1915, inclusive. During this same period the operating ratio was reduced from 41.2 to 34.2 per cent, profits from the railway operation more than doubled, and the results from all sources increased nearly five times; at the same time increased amounts were set aside for special revenues. The detailed results for 1916 are not available, but for that year the amount retained for discount of debentures was double that for the previous year, and an 8 per cent dividend was paid to the shareholders. The special reserve fund on March 31, 1917, was $7,926,150, while the amount actually required by law is only $1,113,727. During the period above mentioned, substantial improvements have been made in the condition of the property.

From these performance figures it is quite obvious that, notwithstanding the amounts being expended in developing the outside undertakings, this corporation, as a whole, is becoming very profitable. The area served is not at all densely populated as conditions go in the Far East, and this part of the country is of only the average productiveness for China. Therefore one seems warranted in calling attention to these results as an example of what can be accomplished by ably operated railways in other parts of China.

RESULTS OF OUTSIDE UNDERTAKINGS.

The outside undertakings of the corporation are of great importance. It is difficult to determine the order of their importance, but at present the coal mining is probably first (as shown by the table on page 194) and is now returning the largest profit. The shipping lines, harbors, wharves, tramways, electricity and gas plants, and workshops are all very important, and one of the important future developments will be the iron mining and smelting and the steel manufacture for which plants are now in course of construction. While the land enterprises show a loss from operation, it is largely through this medium that the agriculture of the country is being improved.

The tramways include only those at Dairen and Fushun, and the only gas plant is at Dairen. The electrical undertakings include the furnishing of commercial electricity at Dairen, Mukden, Changchun, Antung, and Fushun, with others contemplated. The hotels are those at Dainen, Hoshigaura, Mukden, and Changchun, and the four Korean Railway hotels at Seoul, Fusan, Shingishu, and Diamond Mountain. The land department includes the management of the railway area. The company, while assuming the obligation of providing the necessary arrangements for education, public works, hygienic welfare, etc., in the railway area, was, on the other hand, empowered by the Government to collect a house rate and other necessary assessments from the residents in the railway area-subject to the Government's sanction-in order to recoup the outlays.

In 1907, when the company took up the management of the railway area, there were settlement councils at various centers along the railway. The company thought it expedient to utilize them to act as its agents, but discontinued their experimental utilization in October of the same year. The company established, instead, district agencies at Liaoyang, Mukden, Changchun, and four other places. At present district agencies are maintained at the following 11 railway towns: Dairen, Wafangtien, Tashihkiao, Liaoyang, Mukden, Tiehling, Kaiyuan, Kungchuling, Changchun, Penchihu, and Antung. In addition, there are model industrial towns at the Shakako workshops and the Fushun mines. Eleven other towns are being added, some of which are now well toward completion.

This administration includes the operation of markets, slaughterhouses, vegetable farms, various kinds of welfare establishments, hospitals, sanitation and fire departments, amusement parks, and very complete arrangements for the schooling of all Japanese children in the railway area. In brief, conditions are made as attractive and as profitable as possible for the Japanese employees in the administration and operation of all the railway company's undertakings. The environment of the Japanese section of the mining town of Fushun is probably equal, if not superior, to that of any other place in the world where nearly 7,000 tons of coal are mined per day; this condition is particularly noticeable when compared with that at the coal-mining centers in Japan. .

EMPLOYEES AND WAGES.

The writer was not able to obtain information that would make possible such an analysis of wages as was given for the Japanese and the Korean railways. On March 31, 1915, there was a total of

22,833 officials and railway and general employees (this does not include such enterprises as the Fushun mines). Of these 4,714 were officials and 18,119 were termed employees. Of the latter, 8,443 were Japanese and 9,676, or more than 53 per cent, were Chinese. In the 1915 number of a small publication put out by the South Manchuria Railway the following significant statement is made: "Chinese coolies are being hired in place of Japanese laborers for the dual reason that the former cost less and are more convenient in dealing with Chinese customers." In July, 1917, more than 70 per cent of the employees of the Shakako works were Chinese, none of whom were employed in the administrative, technical, or "overhead-expense" positions. The writer was informed that the percentage of Chinese in the wage positions had materially increased since March, 1915. It is safe to say, however, that the wage employees are not paid any higher, and are probably paid lower wages than similar employees on the Korean railways. One reason for this is the larger percentage of natives employed on the Manchurian railways. At the Fushun mines before the war, the daily wage of the Chinese miners and laborers averaged 25 gold sen (equal to 121 cents United States currency) per day. It is now 30 gold sen, and while this is an increase in the railway area of Manchuria where Japanese money is the prevailing currency, outside this area it is not actually equivalent to the former wages on account of the increased price of silver in the last two years.

The writer made an effort to compare the wages in the Dairen shops with those in the Tangshan shops of the Chinese PekingMukden Railway, and his conclusions were that the wages of artisans and laborers were practically on a par in the two establishments, although in some respects the Tangshan shops probably pay higher

wages.

ROADWAY AND TRACK.

The country traversed by the main line has no particular difficulties for railway building, and the line is of low grade, well located, and substantially built with permanent structures. The bridges are capable of carrying heavy equipment; the track is laid with heavy rail well tied and ballasted mostly with broken stone. The MukdenAntung line runs through a much rougher country than the main line, and the location and construction were more difficult and expensive; it is, however, well located and substantially constructed, and while some temporary locations were first used these have been largely replaced by reconstructed line, most of which has now been completed. There are 24 tunnels on the line, the longest being about 4,900 feet and the second longest about 3,250 feet. A great deal of bridging was required for the line, there being a total of 205 bridges and 213 culverts.

There is also a very considerable tendency toward standardized track practice and the manufacture of much of the roadway and track material at the Shakako works, where all of the structural and bridge work has been taken care of for some time. Much of the existing track material has come from American sources, and the track construction, in general, is practically along American lines. As on the Japanese and Korean railways, considerable trouble has been experienced in some places with floods damaging the roadway,