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This agreement having expired, both parties now agree to extend the term again by one year and have decided upon the following articles:

ARTICLE 1. The term of the loan of yen 1,500,000, made by the party of the first part from the party of the second part, having expired on the 16th day of the 10th month of the 5th year of the Republic of China, or the 16th day of the 10th month of the 5th year of Taisho (October 16, 1916), the extension will be reckoned from this date. The former agreement is canceled and a new one drawn up, sealed by both parties, and put into effect.

ART. 2. The term of this agreement will be reckoned from the date of signature and will be for one year, or until the 16th day of the 10th month of the 6th year of the Republic of China, or the 16th day of the 10th month of the 6th year of Taisho (October 16, 1917), which will be the date of repayment. Within the term of the agreement the capital cannot be repaid, but if it is wished to make repayments at different times, payment of capital and interest may be made in full not more than one month after the expiration of the term. If repayment cannot be made on the due date and it is wished to extend the term or repay the loan in instalments, negotiations to this end may be reopened.

ART. 3. The places for the repayment of this loan will be Dairen and Mukden, as convenient to the party of the second part.

ART. 4. Under this agreement, for every yen 100 of the loan, the actual amount of yen 95 will be paid. The amount of the loan will be yen 1,500,000, of which the actual amount paid will be 1,425,000, the discount being yen 75,000. Under this extension, the discount of yen 75,000 will as before be paid by the party of the first part to the party of the second part at Mukden on the date of the signature of this agreement.

.ART. 5. The interest on the loan will be 72% per annum, that is for every yen 100 there will be paid an annual interest of yen 7.50.

ART. 6. The interest referred to in the preceding Article, will be payable annually in two instalments at the end of June and at the end of December. The date and method of payment will be in accordance with a supplementary agreement.

ART. 7. The security for the capital and interest of this loan will be as follows

(1) All of the shares of Fengtien province in the Penhsihu Iron Works and the shaft-head tax.

(2) All of the shaft-head tax and royalties of the Fushun Collieries. (3) All of the shares of Fengtien province in the Antung Lumber Company.

ART. 8. Before this agreement is sealed, it is stated that the security referred to in the preceding Article has not been hypothecated to other

parties and that before this loan is repaid in full it will not be hypothecated or sold to other parties.

ART. 9. If there should be violations of the provisions of the preceding Articles, the party of the second part may at any time demand from the party of the first part that the capital and interest be at once paid in full or that other security be provided to make good the deficiency.

ART. 10. In connection with the exemption of loans from taxation, it is agreed that no taxes or contributions will be levied by the Government of the Republic of China on this loan.

ART. 11. This agreement will be drawn up in Chinese and Japanese and the party of the first part and the party of the second part will each keep one copy. Disagreement in regard to the text will be settled by a comparison of the Chinese and Japanese copies.

The above eleven articles are signed and sealed by the following authorized representatives of the party of the first part and the party of the second part:

The representatives of the Governor of the Province of
Fengtien of the Republic of China:

MA T'ING-LIANG,

Commissioner of Foreign Affairs.

WANG SHU-HAN,

Chief of the Department of Finance.

The representatives of the Messrs. Okura & Company, of Tokio, Japanese Empire:

"WU-KANG-LIANG-T'AI-LANG."

"LIN-CHI-T'AI-LANG."

16th day of the 10th month of the 5th year of the Republic of China: 16th day of the 10th month of the 5th year of Taisho (October 16, 1916).

No. 40

JAPAN AND CHINA

Exchanges of notes in regard to (A) the settlement of the Chengchiatun affair, (B) the employment of Japanese military advisers in South Manchuria, (C) the employment of Japanese military instructors, (D) the establishment of Japanese police stations in South Manchuria and Eastern Inner Mongolia, and (E) the withdrawal of Japanese troops stationed between Ssupingkai and Chengchiatun.1January 12-22, 1917

(A) THE SETTLEMENT OF THE CHENGCHIATUN AFFAIR

Note from the Japanese Minister to the Chinese Minister of Foreign Affairs

Peking, the 22nd day of the 1st month. of the 6th year of Taisho.

I have the honor to inform Your Excellency that with regard to the Chengchiatun affair for the settlement of which several conferences have been held between me and the Chinese Ministry of Foreign Affairs prior to Your Excellency's assumption of office, the articles set forth hereunder have been mutually agreed upon and, with the exception of such modifications and alterations to the phraseology, as have been considered, no further negotiation is possible. I, therefore, take this opportunity to submit the same to Your Excellency's consideration, and to request that a reply to that effect will be given.

1. The General Commanding the 28th Division to be reproved.

2. The Chinese military officers responsible for this incident to be punished according to law. If the law provides for severe punishment such punishment will be inflicted.

3. An official proclamation to be issued in the districts where there is mixed residence for the information of the soldiers and the people in general, to the effect that Japanese soldiers and subjects shall be accorded considerate treatment.

4. The Tu Chun of Fengtien Province to express in an appropriate way, his regret to the Governor of Kwantung and the Japanese Consul

1 MACMURRAY, vol. II, p. 1347; translations from Chinese texts, as printed with the Chinese official communiqué published in the Peking Gazette of January 29, 1917. Printed also in American Journal of International Law, Supplement, 1917, p. 112; TYAU, p. 268; and F. E. Review, vol. xIII, p. 296, which also reprint the Chinese official communiqué.

In connection with these see also the treaty between Japan and China respecting South Manchuria and Eastern Inner Mongolia, May 25, 1915 (No. 35, ante), particularly Articles 3 to 6, and attached exchanges of notes.

General in Mukden, when they are together at Port Arthur, but the method of this expression is left to the discretion of the said Tu Chun. 5. A solatium of $500 is to be given to the Japanese merchant, Yoshimoto.

I avail, etc.

Reply

Peking,

the 22nd day of the 1st month of the 6th year of the Republic of China.

I have the honour to acknowledge the receipt of Your Excellency's note of to-day, stating

[Here follows the Japanese Minister's Note]

In reply I have to state that I have taken note of the above articles which I find are contained in the minutes of the several Conferences and the records of this Ministry.

I avail, etc.

(B) THE EMPLOYMENT OF MILITARY ADVISERS

Note Verbale handed by the Japanese Minister to the Chinese Minister of Foreign Affairs

Peking, the 5th day of the 1st month. of the 6th year of Taisho.

The statement that if the Chinese Government should employ foreign advisers on military affairs in South Manchuria, Japanese will be employed first, etc., has been made in the note dated May 25th of the 4th year of the Republic of China, annexed to the treaty respecting South Manchuria and Eastern Inner Mongolia. As the employment of Japanese military advisers will facilitate mutual understanding between the military authorities of the two countries, and further as there is no doubt that this will help to prevent various trouble which may arise out of misunderstanding, the Imperial Government entertain the hope that the Chinese Government will continuously employ Japanese military advisers. However, it is not proper for the Imperial Government to insist upon this matter since it concerns the military affairs of the Chinese Government, and should therefore be left to the discretion of the Chinese Government.

Reply

Peking,

the 12th day of the 1st month of the 6th year of the Republic of China.

The Minister of Foreign Affairs has the honour to acknowledge the receipt of the Japanese Minister's Note Verbale of January 5, stating that [Japanese Note repeated]

The Minister of Foreign Affairs has to state that there is a Japanese military adviser already engaged in the Tuchun's Yamen at Fengtien. The Note Verbale is noted.

(C) THE EMPLOYMENT OF MILITARY INSTRUCTORS

Note Verbale handed by the Japanese Minister to the Chinese Minister of Foreign Affairs

Peking, the 5th day of the 1st month of the 6th year of Taisho.

The Imperial Government hopes the Chinese Government will employ a number of Japanese military officers to be instructors in military cadet schools. This is aimed at helping the training of military officers who will in the future be appointed to the various localities in Manchuria and Mongolia, and also to enlighten the spirit of friendship between China and Japan. Thus, it may be expected that unfortunate incidents like the Chengchiatun case will not occur again and that the root of trouble may be exterminated permanently. However, it is not proper for the Imperial Government to insist upon this matter since it concerns the military affairs of the Chinese Government and should therefore be left to the discretion of the Chinese Government.

Reply

Peking,

the 12th day of the 1st month of the 6th year of the Republic of China.

The Chinese Minister of Foreign Affairs has the honour to acknowledge the receipt of the Japanese Minister's Note Verbale of January 5th, stating that

[Japanese Note repeated]

The Minister of Foreign Affairs has to state that hitherto the military cadets school has employed only officers of the national army as instructors and there is at present no intention of employing any foreigner.

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