churia would have more points to recommend it than a system. involving two changes of gauge.

But, however this may be from a purely theoretic standpoint, the Japanese, after duly debating the matter, have decided on the adoption of the standard gauge for Southern Manchuria. Accordingly, the line between Kwangchengtze and Port Arthur is to be immediately converted, and a section between Dalny and Suchatun, a distance of 236 miles, made a double track. Similarly, the light railway between Antung and Mukden is to be replaced by a standard line.

To provide the necessary funds for these works,1 including the cost of new rolling-stock and improvements generally, a loan of £4,000,000, bearing interest at 5 per cent. per annum, and redeemable after ten and within twenty-five years of issue, was floated in London on the 23rd of July last by the South Manchurian Railway Company. The work is to be undertaken immediately, and subsequently the necessary financial arrangements will be made for the construction of the branch between Kwangchengtze and Kirin in accordance with the terms of the loan agreement.2

Turning now to the question as to whether the railways in Manchuria, other than the Manchurian sections of the Imperial Railways of North China, can be made to pay, we are at once faced with the difficulty that we have no capital figure expended on construction and rolling-stock upon which to base our calculations. It is only known, and so much is a matter of common knowledge, that the Russians spent fabulous sums 3 in the original construction of the line. It is also known, as has been already indicated, that the section between Kwangchengtze and Harbin, a distance of 508 miles, together with other valuable railway and mineral rights, have been acquired by the Southern Manchurian Railway Company for the sum of Yen 100,000,000 in shares. But these figures afford no criterion, for, besides having to allow for the value of the mineral rights and railway rights outside the section referred to, allowance must also be made for the contemplated expenditure of an unascertained, but considerable, sum on new rolling-stock and the alteration of the gauge.

1 It is estimated that they will be completed within three years. 2 Appendix A, No. 6.

3 It is said that the cost of the whole Trans-Siberian Railway, including the Manchurian Railway, has exceeded £100,000,000. Nevertheless, as an emigration agency alone, the expenditure is doubtless fully justified, several thousand Russians being annually settled, at a comparatively low cost, throughout Siberia.

In these circumstances it can only be said that on anything approaching a reasonably normal capital expenditure excellent returns should be assured.

There are sound reasons for this conclusion. In the first place, owing to a certain dearth of labour, considerably less than half the country available for cultivation has been taken up. There is thus ample room for development, a process which is always going on, and which should go on more quickly when the country is more opened up.

This appears specially probable when it is remembered that in recent years there has been a tendency among the Chinese in the northern provinces, from one cause or another, to overcome their ancient prejudices and enter Manchuria in search of work or business, as the case may be.

Secondly, prior to the Russo-Japanese War, the trade in Manchuria was very considerable, and therefore it is not unwarrantable to suppose that with the restoration of peace, if carefully fostered by railways, economically and scientifically managed, it must-taking into account the possibilities of development—at no distant date become enormous.

Any reasonable examination of the prevailing conditions will be found to justify these observations, and in passing we may perhaps with advantage remark upon them briefly.

In the first instance, we find the country more than ordinarily well favoured, and producing among other things a fine variety of cereals. Of these, the most important is the tall millet or kaoliang, which is put by the Chinese to several different uses. The grain is the staple article of diet, the outer leaves are woven into mats and used mainly for packing purposes, while the stalks are used for fences and fuel and in the construction of houses, the framework being cased in mud. Wheat, to the cultivation of which the country is highly suited, barley, rice, Indian corn, and other varieties of millet, are also grown in varying extent. But after kaoliang the chief article of cultivation is the bean, which forms the principal export. In fact, it represents roughly two-thirds of the total export trade in Manchuria, and is exported either in the form of pulse bean cake, which is used as an animal food and fertiliser, or bean oil, usually employed for culinary and lighting purposes. Opium, silk, and ginseng are also exported, the lastnamed mostly in the raw state.

In connection with the export trade, Mr. (now Sir Alexander), Hosie, a distinguished member of the consular service, when recording his experience from personal observation gained on one of his journeys, wrote:

"I have travelled in different parts of China, I have seen the great salt and piece-goods traffic between Ssuchuan Kweichow and Yunnan, but I never saw a sight which from its magnitude impressed me so much with the vast trade of China as the carrying trade from North to South in Manchuria." 1

Turning to the imports, the bulk of which consist of piece goods, it is found that this side of the trade is also in a flourishing condition, and together with the exports form a trade of which Mr. Hosie found himself able to write :

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'Although it may be considered presumption on my part to give an estimate of its value, I cannot refrain from hazarding the conjecture that we are faced with a trade whose annual value does not fall short of fifteen million pounds sterling."

In past years, practically the only port of entrance and exit for this trade is and has been the Treaty Port of Newchwang, icebound for a third of the year, with which Dalny, now Tairen, from which as an ice-free port so much was expected, was, under the Russian régime, unable to compete, apparently by reason in the main of the prohibitive railway freight. The great trade route is the Liao River, to which the bulk of the produce which is not carried direct to Newchwang is taken in carts. The roads in Manchuria, however, are bad, and much of the trade is entirely dependent on the Liao, which with all its feeders is frozen on an average for four months in the year.

In such circumstances, with a port open at all seasons of the year as one of its termini, it should not be difficult for the railway to secure a very large proportion of this great carrying trade if it set itself seriously to the task, with the result that besides benefiting itself it would also benefit the trade both export and import, which would rapidly increase as the country became accustomed to sustained trade movement throughout the year. It should also be mentioned that the mineral wealth of Manchuria is believed

1 Manchuria, by Alexander Hosie, F.R.G.S., late H.B.M. Consul of Newchwang, at page 15.

2 Ibid., at page 262.

to be considerable, particularly in the districts of Tung Wha and Huai Jen, which will be served by the Antung-Mukden line. A development, therefore, in that direction may certainly be expected.

In conclusion, it may seem that an observation is called for in regard to the future of Manchuria, as far as foreigners, other than Japanese and Russians, are concerned. The original agreement between Great Britain and Japan concluded in London on the 30th of January 1902, aimed at "maintaining the independence and territorial integrity of the Empire of China," which, of course, includes Manchuria," and the Empire of Corea," and at " securing equal opportunities in those countries for the commerce and industry of all nations." The same principle, at least as regards Manchuria, was reaffirmed in no measured terms by Japan and Russia in the famous Portsmouth Treaty of 1905. Nevertheless the fact remains that two years after the conclusion of peace, from one cause or another, the conditions prevailing in Manchuria are such as to render commercial intercourse with Europe and America extremely difficult, while the Japanese trader, on the other hand, is undoubtedly acquiring a firm hold on the country. In consequence, a distinct feeling of suspicion has been aroused, which the fate of Corea can scarcely be said to have done anything to allay.

In justice to Japan, however, it must be remarked that the stagnation of trade is at least in a measure due to the wasting effects of the recent war, from which Manchuria is only now beginning to recover, and that such investigations as have been made, though by no means conclusive, have not so far revealed the existence of any artificial barriers to European and American enterprise. Moreover, in all the circumstances of the situation, the time scarcely seems to have arrived to form a just estimate as to the ultimate intentions of Japan in Manchuria. At the moment, indeed, we should not be justified in doing more than express the pious hope that Japan will act up to the spirit of the understanding on the strength of which she secured Great Britain's support, and, for the present at least, to accept the view that it is a case of festina lente in regard to the practical as opposed to the theoretical opening up of the country in the interests of international trade.

CHAPTER IX

THE BRANCH LINE TO CHINWANGTAO

BEFORE

EFORE finally quitting the subject of the railway systems of North-East China and Manchuria brief mention should be made of the short branch running between Tangho on the main Peking-Shanhaikwan line and the port of Chinwangtao, which is rapidly assuming a position of considerable importance.

Chinwangtao is situated on the coast of Chihli, a few miles south of Shanhaikwan. It was opened to foreign trade by Imperial edict in 1898.

At that time, however, the place was entirely undeveloped, and merely represented the most favourable point on the coast for the construction of a harbour. For some years previously the Chinese Engineering and Mining Company, which now owned its own fleet of steamers, had been in search of an ice-free port from which to ship coal in the winter months when Tongku was inaccessible, and after trial Chinwangtao had been found suitable for the purpose. It was consequently decided to provide shipping facilities there, and steps were taken to secure the approval of the Throne to the proposed development.

Meanwhile the company acquired a considerable tract of land favourably situated in the neighbourhood of the proposed new port.

In its undeveloped state Chinwangtao attracted little attention, but under the able advice of Mr. Detring, a distinguished member of the Imperial Maritime Customs Service, the company steadily matured its scheme for the construction of harbour works, and a branch railway in connection with the main Peking-Shanhaikwan line. To this end certain contracts had actually been concluded when the Boxer outbreak occurred.

The development of the new port, however, was not destined to be delayed. On the occupation of the province of Chihli by the