029,000 m. tons of coal, but she was not able to secure sufficient coking coal, indispensable to the steel industry." In accordance with the estimates of the Japanese Economic Investigation Commission, created during the Okuma Ministry, the demand for pig iron, while not exceeding the supply in 1918, will be 743,000 tons for 1928, and the production of the same in Japan proper, in 1921 and thereafter, will be only 611,500 tons, thus giving rise to a shortage which must be filled by the production in Korea, Manchuria and China; 10 and the demand for steel in 1918 was 1,113,000 tons, and the output in Japan proper only 765,000 tons, and in 1928 the demand will be 2,112,000 and the yield in 1921 and thereafter only 1,090,000 tons,11 thus giving rise to a shortage of steel in 1918 at 348,000 tons and in 1928 at approximately 1,022,000 tons.

Before the World War, Japan relied upon Belgium and Great Britain for her supply of steel. After the outbreak of the war, she turned to the United States. But when, in July, 1917, the United States put an embargo on steel, Japan's supply was cut off, and her ship-building industries and iron-works almost came to a complete halt. "Never before did Japan realize so keenly as on that occasion the precarious nature of her industrial structure, depending upon foreign countries for the supply of steel." 12

Thus handicapped by nature, and yet at the same time driven by circumstances to become an industrial and commercial nation, Japan devoted attention to finding a field where she might obtain the necessary elements for the stability of her economic structure. Surveying the regions of the world, she finds China, her next-door neighbor, the logical and natural field for commercial expansion. There the teeming millions offer a market for Japanese manufactured products. There unbounded natural resources, especially coal, iron and steel, furnish the neces

sary sinews for Japanese industries. There the comparative shortness of distance, the affinity of language and race, and the potential increase of Chinese prosperityall indicate that nature has provided a special field of economic activity for the Japanese. Conceiving this to be her destiny, she sets her face like a flint toward China with the policy of economic exploitation.

The first region in China to be exploited is South Manchuria. By virtue of the Treaty of Portsmouth, she obtained from Russia transfer of the lease of Port Arthur and Talien-Wan and the cession of the Chinese Eastern Railway from Changchun to Port Arthur,13 with the adjoining mines. Possessed of these railway and mining interests, the Japanese Government organized the South Manchuria Railway Company. The capital is 200,000,000 Yen, one-half held by the Japanese Government, represented by the Manchurian railway and accessories and the coal mines at Fushan and Yentai, the other half offered to private investors, the Japanese Government guaranteeing a profit of six percent on the paid-up capital for fifteen years.14 Actually, however, the government owns four-fifths of the paid-up capital and appoints the president, vice-president and directors.15 It can therefore be said that the South Manchuria Railway Company is merely a name, and that the Japanese Government is the real factor exploiting the resources of South Manchuria.

The company runs its main line from Dairen to Changchun, the Port Arthur Branch Line, the Yingkow, Fushan and Yentai Branches, and the Mukden-Antung Line, making 692.7 miles in all.18 Besides the railways, it also maintains a regular shipping service between Shanghai and Dairen, and also a South China coastwise service. It has rebuilt the second quay, and constructed breakwaters, and a third quay, in the harbor of Dairen, all of which have been completed. Further, it operates electric power

stations at Dairen, Mukden, Changchun, Antung, Fushan and Yentai, and electric tramways and gas industries at Dairen and Fushan.17 In addition, the company manages its own hotels-all bearing the name of the "Yamato Hotel" at Dairen, Hoshigaura (suburbs of Dairen), Port Arthur, Mukden and Changchun. Besides these in the railway zone, it maintains, according to the report at the end of March, 1918,18 eleven hospitals, twenty primary schools, eleven Chinese common schools, thirty-two business schools, ten girls' practical schools, one medical school (at Mukden), a technical school, and a teachers' training institute at Dairen, one polytechnic laboratory, two agricultural experimental stations, thirteen farms and seventeen water works.19

Furthermore, the company is engaged in the operation of the mines, which form one of its most important undertakings. The Fushan Colliery, situated about twentytwo miles east of Mukden, contains a deposit of an average of 130 feet in thickness, "runs for about twelve miles parallel to the River Hun," and yields a total output of 6,000 tons a day, (or 2,275,905 tons in 1918). "The quality, too, is excellent, being of strong caloric power and containing very little sulphur." 20 The Yentai Coal Field, northeast of Liao-yang, yields an output of 247 tons daily or (113,679 tons in 1918).21 “The coal is soft and pulverizable and emits but little smoke.” 22 Among the new undertakings, the iron foundry at Anshantien yields an initial output of 150,000 tons which will be ultimately increased to 1,000,000, "the ore at Anshantien being almost inexhaustible." 23 The glass works, the porcelain and the fire-proof tile factory have begun to send forth their new products.24;25

Besides the activities of the South Manchuria Railway Company, the Japanese Government has other railway interests in South Manchuria and even in Eastern Inner Mongolia. In accordance with the treaty of April, 1917, she completed the construction of the Kirin-Chang

chun Railway on October 16, 1912.26 The South Manchuria Railway furnished half of the capital, repayable by the Chinese Government twenty-five years from the date of the opening.27 In the Treaty of May 25, 1915, the revision of the Kirin-Changchun Railway loan agreement was stipulated, "taking as a standard the provisions in railway loan agreements, made heretofore between China and foreign financiers," (Article 7), and also engaging the Chinese Government to extend to this railway any better terms which might be granted to other railway contractors (Article 7). "The effect of this undertaking," said the Chinese official statement of 1915, "is to transfer the capital originally held by the Chinese, as well as the full control and administration of the railway, to the Japanese." 28 By the exchange of notes on October 5, 1913,29 Japan obtained the railway concessions from Supingkai via Chengchiatun to Taonanfu, from Kaiyuan to Hailungchang, and from Changchun to Taonanfu. By the preliminary agreement for loans to build four railways in Manchuria and Mongolia on September 28, 1918,30 the construction of the four railways was contracted, from Jehol to Taonan, from Changchun to Taonan, from Kirin via Hailung to Kai-Yuan, and from a point between Jehol and Taonan to some point on the seacoast. All these railway concessions, with the single exception of the Taonanfu-Jehol Railway and the railway connecting a point on the Taonanfu-Jehol Railway with a seaport, are to be outside of the scope of the New International Banking Consortium.31 Aside from these, under the Terauchi Cabinet, the Kirin-Hueining Railway loan was contracted in 1918,32 and a loan of 30,000,000 Yen was made with all the forests and gold mines in Kirin and Heilungkiang as securities.33 In the same year, a concession for continuing the Kirin-Changchun line to the Korean border was granted.34

More than these, the Treaty of May 25, 1915, respecting South Manchuria and Eastern Inner Mongolia, con

ferred greater economic privileges on the Japanese in South Manchuria than ever before. The terms of the South Manchuria Railway and the Antung-Mudken railway are to be extended to ninety-nine years (Article 1). The whole of South Manchuria is to be opened to the Japanese (Article 3). Japanese subjects are to be permitted to lease, by negotiation, land necessary for building, trade, manufacture and farming (Article 2).35 The term "lease by negotiation" is understood "to imply a long term lease of not more than thirty years and also the possibility of its unconditional renewal." 38 Finally, the Japanese subjects are granted privileges to prospect and select mines in the following areas in South Manchuria : 37

FENGTIEN

Locality

36

Mineral

District
Pen-hsi

.Coal

66

Hailung

Tung-hua

Shin Shih Fu Kou ... Pen-hsi

Sha Sung Kang

Tinh Ch’ang

.....

Nuan Ti T'ang ..... Chin

An Shan Chan Region From Liaoyang to

Pen-hsi

KIRIN (southern portion)

66

.Iron

...

Turning now from South Manchuria to Shantung, we see Japan pursuing the same policy of economic exploitation. As we have seen, by the Treaty of May 25, 1915,3s respecting Shantung, she caused China to agree “to give full assent to all matters upon which the Japanese Government may hereafter agree with the German Government relating to the disposition of all rights, interests and concessions which Germany, by virtue of treaties or other