compromise was ultimately arrived at by which a balance is always to be maintained in the bank sufficient to serve the loan for a period of twelve months, any excess funds being at the disposal of the railway directors, who were thus enabled to make their arrangements for the extension.

With these matters satisfactorily adjusted, the work was commenced with the least possible delay. Tenders were called for, surveys undertaken, and Mr. Jeme Tien Yow, a Chinese engineer educated in America, was appointed Engineer-in-chief, the authorities being of opinion that the work could be satisfactorily accomplished without the assistance of foreign engineers.

Starting from Fengtai, where it connects with the PekingShanhaikwan railway, the line proceeds, leaving Peking to the east, to the Nankou Pass, in the neighbourhood of the Ming Tombs. This section, about 33 miles in length,1 and traversing easy country, was completed in the autumn of last year, being formally opened to traffic on the 30th of September 1906.

From Nankou the line is under construction, by way of Suanhua, to Kalgan. But at this point considerable engineering difficulties arise. For 12 miles, including the Nankou Pass itself, the country is very difficult, and necessitates the construction of four tunnels aggregating 4894 feet, or rather less than a mile, and severe gradients as the line approaches the pass on either side. These gradients might have been considerably modified by increasing the length of the tunnels, and it would appear that the cost, and the time employed in the construction, of longer tunnels would have been justified by ensuring more economical working of the line.

The somewhat false notions of economy characteristic of the Chinese, however, were allowed to prevail, and the tunnel work has now been undertaken on the above lines. When completed, which, in accordance with the anticipations of Mr. Jeme Tien Yow, should be in the autumn of 1909, the line though connecting with the Peking-Shanhaikwan line at Fengtai, as already noted, will not, according to present ideas, become part of the parent line, but will remain under a separate administration.

The reason assigned for this decision is an alleged understanding with Russia that China shall not permit this particular railway

1 The whole line will be some 125 miles in length. The estimated cost, including rolling-stock, is 6,000,000 taels, equal to between £6000 and £7000 a mile.

to be subjected to foreign control. But assuming this to be, as possibly is, the case, it is difficult to follow the argument. In the first place, there is nothing in the loan agreement that could be interpreted as bringing such a railway within the scope of the mortgage provisions; and, secondly, the employment of foreign engineers does not involve foreign control, as the Chinese administration of the Imperial Railways of North China abundantly goes to prove. An explanation, therefore, must be sought in other directions. More probably it should be regarded as a sign of the times, and be ascribed to the incipient desire of the Chinese to build their own railways and to employ their own engineers, many of whom are talented men, trained in foreign schools.

On the other hand, some hold the view that the attitude of the British and Chinese Corporation in taking their stand on the strict letter of the loan agreement is responsible for the present development. It is urged that a less strict bearing at the outset would in all likelihood have resulted in some arrangement whereby the line would have been built by British engineers, as a branch of the existing northern system; and that at the same time some condition might perhaps have been imposed ear-marking the funds intended for the construction of the line, which would have been distinctly advantageous to the railway administration, as preventing all possibility of the funds thus liberated being diverted from their destination.

There is possibly some ground for this contention, for if the abstract notion of a trust is not entirely alien to Chinese ideas, at anyrate the strictness of the English method of its application is not readily appreciated. Hence, perhaps, arose a misunderstanding of the Corporation's obligations, as the issuers of a loan on a prospectus in which was embodied the main provision of the clause in the agreement with the Director General, Hu Yen Mei, requiring the payment of all receipts and earnings into the Hongkong and Shanghai Banking Corporation.

But to return, the effect of this line will be to open up the country to the north of Peking, and greatly to cheapen as well as to expedite the transit of goods from the interior to Tientsin. Kalgan is at the junction of the great caravan routes from the west and from the north, by way of which the great bulk of wool and skins from Mongolia and the distant province of Kansuh, which form the more valuable portion of the export cargo from Tientsin,

find their way to the foreign market. There should therefore be little doubt as to the earning capacity of the railway.

As regards the question of the ultimate continuation of the Kalgan line across Mongolia, opinions seem to differ. Some years ago the Russians had a scheme for a branch from the TransSiberian Railway, by way of Urga and Kalgan, to Peking. A flying survey was made at the time, and it was found that virtually the only engineering difficulties would be experienced in the crossing of the Yablonoi Mountains, north of Urga.

The scheme, however, has now apparently been abandoned. And it must be admitted that though such a line might, in certain circumstances, be politically justifiable, according to the point of view, and while its construction would be warmly welcomed by residents in the Far East, whom it would bring so many days nearer home, it is difficult to see how it could be made to justify its existence as a purely commercial undertaking. At anyrate, it is one of those projects the realisation of which will only come, if at all, with the distant future.

More immediate developments, on the other hand, may be looked for at the Hsinminting end of the Northern Railway. An extension to Fakumen has long been spoken of. This place was originally one of the gates in the palisade which, constructed during the Ming dynasty to keep back the Mongol hordes, stretched from the Great Wall of China, north-east across the Sungari, and some 60 or 70 miles beyond. By virtue of its position, Fakumen has become a place of some importance, and the most favourable point at which to tap the trade route southwards. An alternative project is to continue the line past Fakumen to tap the rich grain districts further north.

But extensions in this direction will probably be postponed for a time in favour of the perfection of the connection between Hsinminting and Mukden. This was effected during the recent war by the Japanese military authorities, who constructed a 3 gauge railway between these two places, which has now been taken over by the Imperial Railway administration.

An agreement1 in this regard was recently come to (April 15, 1907) between Mr. Hayashi, Japanese Minister at Peking, and the Wai-wu-pu, or Board of Foreign Affairs. In accordance with its provisions, the sum of gold yen 1,660,000 has to be paid 1 Appendix A, No. 6.

to Japan, but a considerable portion of this sum, representing half the cost of the section east of the Liao River, is to remain on loan for a period of eighteen years. The line and its earnings are security for the loan, and during its currency a Japanese engineerin-chief and a Japanese accountant are to be employed on the railway, following the precedent of the loan agreement with the British and Chinese Corporation in 1898.

At present the line is not actually connected with the Northern System, but in due course the gauge will doubtless be altered to the English standard in conformity therewith, and a junction effected.1

Meanwhile the observation may be ventured that, strictly speaking, the spirit of the arrangement constitutes an infringement of the rights of the British and Chinese Corporation under the loan agreement of 1898, which provides that in the event of the railway funds being insufficient for the construction of branches and extensions, application shall be made to the Corporation therefor. In other words, though the letter of the agreement cannot perhaps be attacked, if the Chinese are to make the most of their acquisition they must constitute it a branch or extension of the Imperial Northern System, whereby, in view of the loan from Japan, they will violate their prior obligations under the agreement of 1898.

From the Japanese point of view it is, of course, an exceedingly ingenious arrangement. They retain a substantial interest for an extended period in an important connecting link of railway, which may at any time become politically useful. Once more the Chinese are placed, or they have allowed themselves to be placed, in a position that is at least theoretically untenable. While Britishers are left to envy the astuteness of their allies, and to reflect sadly on their unsympathetic disregard of British interests. 1 Vide remarks on gauge in Manchuria, post p. 82.

THE

CHAPTER VIII

THE CHINESE EASTERN RAILWAY-1900 TO

THE PRESENT TIME

HE Boxer movement of 1900 did not confine itself to North China, but spread through Manchuria, leaving its mark on the Chinese Eastern Railway, much of the track of which was destroyed. Incidentally, the local Chinese military authorities declared war on Russia. It was not long, however, before the Russian repressive measures, carried out in some places with more than medieval rigour, restored sufficient order to enable the railway engineers to commence repairing the damage and to continue the construction of the line.

Of the various sections the southern, that is to say, the section between Harbin and Port Arthur, had suffered most, and a considerable amount of reconstruction was found necessary. But this proved by no means an unmixed evil, at least from the Russian point of view. In the first place, it made it possible, at the expense of the Chinese Government, to straighten up the alignment of the railway and bring it within a reasonable distance of Mukden and other important towns, which under the earlier conditions-now disregarded with impunity-it had been compelled to avoid; while, secondly, it was an opportunity for effecting improvements to the permanent way.

The work having been resumed, it was pushed forward with the utmost despatch, with the result that the last rail was laid in Manchuria, thereby completing the through track from European Russia across Siberia to Vladivostock and Port Arthur, on the 3rd of November 1901, just ten years after the commencement of the enterprise.

Thus was successfully accomplished a scheme which, for sheer magnitude and boldness of conception, is perhaps without a parallel. Only when one has travelled day after day through the