understanding that it means a long-term lease with the privilege of its unconditional renewal.1

"5.-The phrase 'the Japanese Government will be consulted' in connection with questions of railway loans and loans to be secured by the taxes in Eastern Inner Mongolia, should be altered in the sense that 'Japanese capitalists shall be consulted,' as in the case of similar agreement relating to manchuria on matters of the same kind.

"Of the Article relating to the opening of trade marts in Eastern Inner Mongolia, the part which refers to the location and regulations may be left to an exchange of notes, as in the case of Shantung agreement.

"6. From the phrase 'those interested in the said Company' in Group III of the revised Japanese proposals, the words 'those interested in' may be deleted.

"7. The official text of the treaties and their annexes shall be in Japanese or in both Japanese and Chinese."

To this ultimatum the Chinese Government replied on May 8, 1915, in terms of which the English version is thus given in the official Chinese statement cited above:

Chinese Reply to Japanese Ultimatum, May 8, 1915

"On the 7th of this month, at 3 o'clock P. M., the Chinese Government received an Ultimatum from the Japanese Government together with an Explanatory Note of seven articles. The Ultimatum concluded with the hope that the Chinese Government by 6 o'clock P. M. on the 9th of May, will give a satisfactory reply, and it is hereby declared that if no satisfactory reply is received before or at the specified time, the Japanese Government will take steps she may deem necessary.

"The Chinese Government with a view to preserving the peace of the Far East, hereby accepts, with the exception of those five articles of Group V postponed for later negotiations, all the articles of Groups I, II, III, and IV, and the exchange of notes in connection with Fukien Province in Group V as contained in the revised proposals presented on the 26th of April, and in accordance with the Explanatory Note of seven articles accompanying the Ultimatum of the Japanese Government with the hope that thereby all the outstanding questions are settled, so that the cordial relationship between the two countries may be further consolidated. The Japanese Minister is hereby requested to appoint a day to call at the Ministry of Foreign Affairs to make the literary improvement of the text and sign the Agreement as soon as possible."

In its official statement concerning these negotiations, the Chinese Government declares that although it was "constrained to comply in full with the terms of the Ultimatum," the Chinese Government nevertheless "disclaim any desire to associate themselves with any revision, which may be thus effected, of the various conventions and agreements concluded between other Powers in respect of the maintenance of China's territorial independence and integrity, the preservation of the status quo, and the principle of equal opportunity for the commerce and industry of all nations in China.”

During the course of the negotiations, the American Government took occasion to communicate to the Chinese Government, through its Legation in Peking, under date of May 13, 1915, the following statement:

Reservation of Rights by American Government, May 13, 1915

"In view of the circumstances of the negotiations which have taken place and which are now pending between the Government of China and the Government of Japan and of the agreements which have been reached as a result thereof, the Government of the United States has the honor to notify the Government of the Chinese Republic that it cannot recognize any agreement or undertaking which has been entered into or which may be entered into between the Governments of China and Japan impairing the treaty rights of the United States and its citizens in China, the political or territorial integrity of the Republic of China, or the international policy relative to China commonly known as the Open Door Policy.

"An identical Note has been transmitted to the Imperial Japanese Government." A communication of identical tenor was conveyed to the Japanese Government through the American Embassy in Tokyo.

1 At this point, the English version of the explanatory note, accompanying the Chinese official communiqué cited above, gives the following additional paragraph:

"Article 4 of Group II relating to the approval of Police laws and Ordinances and local taxes by the Japanese Consul may form the subject of a secret agreement."

No. 36

RUSSIA AND CHINA

Arrangement concerning the situation of Houlounbouir (Hailar).1November 6, 1915

ARTICLE I. Hailar will form a special district, directly subject to the Central Government of the Chinese Republic. In case of necessity, however, and to accelerate correspondence, the authorities of Hailar may put themselves into communication with the principal authority of the Province of Heilungkiang, to whom they are subordinate.

ART. II. The Fu Tu T'ung2 of Hailar will be appointed by a decree of the President of the Chinese Republic, and will exercise the powers of a provincial governor.

Only the five Ouhérida of Hailar, and those of the local officials whose grade is not lower than the third class, may be appointed to this post.

ART. III. There shall be created two sections in the administration of the Fu Tu T'ung-the right section, and the left section. One of the chiefs of these two sections will be chosen by the Fu Tu T'ung, and the other by the Ministry of the Interior. They will be confirmed in their functions by the Central Government of the Chinese Republic. Only the officials of Hailar whose grade is not lower than the fourth class may be appointed to the posts of chiefs of sections.

It will be for the Fu Tu T'ung to establish the competence of each of these two sections, whose chiefs will be placed under his orders and will have no right of direct relations with the central authorities and with those of the other provinces, save in so far as they may have been authorized thereto by the Fu Tu T'ung.

ART. IV. In normal times, all the military requirements of Hailar will be served solely by the local militia. The Fu Tu T'ung will be bound to make report to the Central Government of all measures of a military character that he may have taken, indicating the reasons therefor.

In case there should arise in Hailar troubles of which the local authorities should recognize themselves unable to assure the suppression, the Cen

1 MACMURRAY, vol. II, p. 1247, translation from the French text as printed in Bulletin of Laws, No. 42, Section I, February 13/26, 1917.

As there printed, the text of the actual agreement is preceded by an exchange of notes, under date of October 24/November 6, 1915, between the Chinese Minister for Foreign Affairs and the Russian Minister at Peking, recording the approval of the agreement by both Governments, and also embodying a declaraton by the Chinese Government of its intention to appoint the Ouhérida Shen Fu as first Fu Tu T'ung of Hailar.

2. e., Military deputy lieutenant governor.

tral Government might send there detachments of its troops, after giving advance notice thereof to the Russian Government. After the reestablishment of order, these detachments would be withdrawn from the territories of Hailar.

ART. V. The proceeds of all taxes collected in Hailar, as well as all the revenues of this district, will be reserved for the satisfaction of local requirements, excepting, however, the revenues of the maritime customs and of the salt gabelle, which will be taken by the Central Government. At the end of each year, the Fu Tu T'ung will be bound to render to the Central Government an account of the sums collected by his administration and also of the manner in which these sums may have been expended.

ART. VI. The inhabitants of Hailar and of interior China, belonging to the classes of farmers, artisans and merchants, may freely circulate and reside both in China and in Hailar. They will be treated on a footing of equality, without any distinction being made between them.

Since, however, the lands of Hailar are the common property of all its people, the Chinese may acquire farms there only upon lease for a term of years, and solely in localities where, in the opinion of the local authorities, their agricultural industry will not be objectionable from the viewpoint of the interests of cattle raising by the native population.

ART. VII. If, in the future, the construction of railways should be undertaken in Hailar, and foreign capital should be required for their construction, the Government of the Chinese Republic would address itself in the first instance to Russia to obtain such capital.

Such branches as the Chinese Eastern Railway Company and the other Russian holders of concessions for mines, timber-felling, etc., in Hailar, may propose to construct, for the purpose of transporting their materials and the products of the working of their concessions, may be built only with the authorization of the Central Government of the Chinese Republic. This authorization will be granted to the concessionaires, except in cases where special considerations stand in the way.

It is clearly understood, however, that the present provision does not relate to the branches of which construction is already provided for by the terms of concessions to Russian subjects, confirmed by the Central Government of the Chinese Republic, as stipulated in the following article.

ART. VIII. The contracts that have already been concluded between Russian investors and the authorities of Hailar, and which have been examined by a commission composed of Russian and Chinese delegates, are hereby confirmed by the Government of the Chinese Republic.

(Sgd.) B. KROUPENSKY
(L. S.)

(Sgd.) Lou TSENG-TSIANG.
(L. S.)

No. 37

JAPAN (Yokohama Specie Bank) AND CHINA

Agreement for the building of the Ssupingkai-Chengchiatun Railway.'December 27, 1915

December 27, 1915 (4th year of the Republic, according to the Chinese chronology, and the 4th year of Taisho, according to the Japanese chronology), the Chinese Government (hereinafter called the Government), represented by the Minister of Finance and the Minister of Communications, of the one part, and the Yokohama Specie Bank (hereinafter called the Bank), of the other part, have concluded between themselves the present Agreement on the basis of the agreement in principle which was arranged between the Chinese and Japanese Governments on October 5th, 1913 (2nd year of the Republic, according to the Chinese chronology, and 2nd year of Taisho, Japanese chronology).

ARTICLE 1. The Government authorizes the Bank to issue a 5% Gold Loan in the sum of 5,000,000 Yen. The Loan will bear the date of the day of issue, and will be known as the Chinese Government 5% Loan for the Building of the Ssupingkai-Chengchiatun Railway.

ART. 2. The present Loan is for the building of a railway from Ssupingkai to Chengchiatun. After the completion of a survey, the route will be fixed by the Director-General of the road and the Bank, and submitted to the Ministry of Communications for approval.

ART. 3. The capital obtained from the loan above mentioned is set apart exclusively for the building of the road, including the payment for the expropriation of land, acquiring rolling-stock, and other necessary equipment (or materials), and also expenses for the operation of the road and for the payment of interest on the present loan during the period of construction of the said road.

The work must be started not later than six months after the signing of this Agreement, and must be finished if possible within two years of the day of starting the same. Before the end of six months the Bank will place at the disposition of the Director-General of the road a sum not to exceed 200,000 Yen as an advance upon the Loan, which money will be deposited

1 MACMURRAY, vol. II, p. 1249; translation as printed in F. E. Review, vol. XIII, p. 472, from Chinese text. Japanese text printed in Shina Kankei Tokushu Joyaku Isan, p. 55, where the date is given as December 29, 1915.

In connection with this agreement see the Sino-Japanese agreement in regard to railways in Southern Manchuria, October 5, 1913 (No. 33, ante); see also the SinoJapanese treaty of May 25, 1915, respecting South Manchuria and Eastern Inner Mongolia, with accompanying exchanges of notes (No. 35, ante).

in Japan or remitted to China in accordance with the instructions of the Director-General. The sum so advanced, together with the interest which will be charged on the account at a rate not over 7% per annum, will be withheld by the Bank from the proceeds of the first bonds issued. The advance will be paid in Shanghai Taels.

ART. 4. The interest on the present Loan will be calculated at the rate of 5% per annum on the nominal value of the bonds from the day of issue of the Loan, and the payment of interest to the bondholders will be made semi-annually. During the period of the building of the road, the Government will pay the interest either from the principal of the Loan or from other sources, at its discretion, and when the building is finished the interest will be paid first from the revenue of the road and thereafter from other State revenues at the discretion of the Government. Interest, which as above stated will be computed from the day the Loan is issued, will be payable 14 days in advance of the expiration of each half-yearly term in accordance with the amortization table annexed to the Agreement..

ART. 5. The term of the Loan shall be forty years. The amortization of the principal shall begin from the 11th year from the day of issuing the Loan, and shall be carried out by means of half-yearly instalments, 14 days in advance, in accordance with the amortization table (except in the case anticipated in the 6th Article of the Agreement), and will be paid from earnings of the road or from other Government revenues at the discretion of the Government.

ART. 6. The Government reserves to itself the right, upon notice to the Bank in writing six months in advance, beginning with the 11th year after the issue of the Loan, to pay off, if it desires, before maturity, all or part of the principal which has not been amortized, upon condition that the holders of the bonds are to be paid a premium at the rate of 22% above the par value of the bonds, i.e., upon each bond of 100 Yen will be paid 102 Yen 50 Sen. At the end of the 20th year after the day of issue of the Loan, the Government may increase the amounts of the amortization payments, without paying a premium over and above the par value. Such payments before maturity will be carried out by means of a supplementary drawing of bonds upon the days fixed in the prospectus of the Loan for the usual drawings.

ART. 7. The Government binds itself to make the payments of the interest and principal of this Loan, in accordance with Articles 4 and 5 of this Agreement, to the Bank through the Director-General, according to the attached amortization table, but 14 days in advance. For payments to be

1 Not printed. See MACMURRAY, vol. II, p. 1258.