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Mingchien Joshua Bau.

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or 5,070,936 less than the need." Balancing yearly the
export of from 600,000 to 700,000 Koku for the 400,000
Japanese residing abroad with the import of 1,500,000
Koku from Korea and Formosa and a little over 1,000,-
000 from Saigon, the supply is still short by about three
or four million Koku, which means that three or four
million mouths would be left unfed, unless the requisite
supply of rice could be procured elsewhere. 7

Confronted with the intense pressure of population
against food supply, Japan is driven to become an indus-
trial and commercial nation. Just as Great Britain, Bel-
gium and Holland — all with growing populations and
comparatively small anas -nut their population prob-
lems through the development of industry and commerce,
so likewise Japan bends all her energy toward a similar

irse of development

In her attempt to do SO, however, she finds herself
detieient in coking coal, iron and steel— the essentials of
modern industry. She wa able t" produce in 1918. 28,-



194 THE POLICY OF JAPAN IN CHINA

00 m. tons of coal, 8 but she was not able to secure
sufficient coking coal, indispensable to the steel industry.'
In accordance with the estimates of the Japanese Eco-
nomic Investigation Commission, created during the
Okuma Ministry, the demand for pig iron, while not ex-

ng 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 he fdled by the production in
Korea. Manchuria and China; l0 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 indus-
tries 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 struc-
ture, 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 com-
mercial 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 re-
sources, especially coal, iron and steel, furnish the neces-



POLICY OF ECONOMIC EXPLOITATION 195

sary sinews for Japanese industries. There the compara-
tive shortness of distance, the affinity of language and
race, and the potential increase of Chinese prosperity —
all 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 capi-
tal for fifteen years. 14 Actually, however, the govern-
ment owns four-fifths of the paid-up capital and appoints
the president, vice-president and directors. 15 It can there-
fore 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 Man-
churia.

The company runs its main line from Dairen to Chang-
chun, the Tort Arthur Branch Line, the Yingkow, Fustian
and Yentai Branches, and the Mukden-Antung Line, mak-
''2.7 miles in all. 16 Besides the railways, it also main-
tains a regular shipping service between Shanghai and
Dairen, and also a South China coastwise service. It
ebuilt 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



196 THE POLICY OF JAPAN IN CHINA

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 hearing the name of the "Yamato
Hotel" — at Dairen, Hoshigaura (suburbs of Dairen I,
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 pri-
mary 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. 1 '

Furthermore, the company is engaged in the operation
of the mines, which form one of its most important under-
takings. The Fushan Colliery, situated about twenty-
two 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 out-
put 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 Yen-
tai Coal Field, northeast of Liao-yang, vields an output
of 247 tons daily or (113,679 tons in 1918). " "The
coal is soft and pulverizable and emits but little smoke." 22
Among the new undertakings, the iron foundry at An-
sbantien yields an initial output of 150,000 tons which
will be ultimately increased to 1,000,000, "the ore at \n-
shantien being almost inexhaustible." ■ The glass works,
the porcelain and the lire-proof tile factory have begun
to send forth their new products.- 41 - 5

Besides the activities of the South Manchuria Rail-
way Company, the Japanese Government has other rail-
way interests in South Manchuria and even in Eastern
Inner Mongolia. In accordance with the treaty of April,
1917, she completed the construction of the K inn-Chang-



POLICY OF ECONOMIC EXPLOITATION 197

chun Railway < >n October 16, 1912.-" The South Man-
churia 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-Changchuh Railway loan agree-
ment was stipulated, "taking as a standard the provisions
in railway loan agreements made heretofore between
China and foreign financiers," (Article 7), and also en-
gaging the Chinese Government to extend to this rail-
way 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,
11 as the full control and administration of the rail-
way, to the Japanese." M By the exchange of notes on
October 5, 1913,- 9 Japan obtained the railway concessions
from Supingkai via Chengchiatun to Taonanfu, from
Kaiyuan to I Iailungchang, and from Changchun to Tao-
nanfu. Ey the preliminary agreement for loans to build
four railways in Manchuria and Mongolia on September
28, 1918,™ the construction of the four railways was con-
tracted, from Jehol to Taonan, from Changchun to Tao-
nan, from Kirin via Hailung to Kai-Vuan, and from a
point between Jehol and Taonan to some point on the sea-
coast. All these railway concessions, with the -ingle ex-
ception of the Taonanfu-Jehitl Railway and the railway
connecting a point on the Taonanfu-Jehol Railway with

a seaport, arc to be OUtside of the SCOpe of the New In-
ternational Banking Consortium. 81 Aside from these,
under the 'I 'erauchi Cabinet, the Kirin-1 lueining Rail-
way loan was contracted in 1918, M and a loan of 30,-

000,000 Yen was made with all the forests and gold
mines in Kirin and Eieilungkiang as securities. In the

same year, a cone ion for continuing the Kirin-Chang-

chun line to the Korean border was granted. '

More than these, the Treaty of May 2?, 1915, respect-
ing South Manchuria and Eastern Inner Mongolia, eon-



198 THE POLICY OF JAPAN IN CHINA

fared greater economic privileges on the Japanese in
South Manchuria than ever before. The terms of the
South Manchuria Railway and the Antung-Mudken rail-
way are to be extended to ninety-nine years i \rticle 1).
The whole of South Manchuria is to be opened to the
Japanese (Article 3). Japanese subjects are to be per-
mitted to lease, by negotiation, land necessary for build-
ing, 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." ,; Finally, the
Japanese subjects are granted privileges to prospect and
select mines in the following areas in South Manchuria: 37

FENGTIEN

Locality District Mineral

Xiu Hsin T ? ai Pen-hsi Coal

Shin Shih Fu Kou . . . Pen-hsi "

Sha Sung Kang Hailung "

T'ieh Ch'ang Tung-hua "

Nuan Ti T'ang Chin

An Shan Chan Region From Liaoyang to "

Pen-hsi Iron

KIRIN (southern portion)

Locality District Mineral

Sha Sung Kang I Iolung Coal & Iron

Kang Yao Chi-lin ( Kirin) . . .Coal

Chia P'i Kou Hua-tien Gold

Turning now from South Manchuria to Shantung, we
see Japan pursuing the same policy of economic exploita-
tion. As we have seen, by the Treaty of May 25, 1915, "

respecting Shantung, she caused China to agree "to give

full assent to all matters upon which the Japanese Gov-
ernment may hereafter agree with the German Govern-
ment relating to the disposition of all rights, interests and
concessions which Germany, by virtue of treaties or other-



POLICY OF ECONOMIC EXPLOITATION 199

wise, possesses in relation to the Province of Shantung"
(Article 1), thus virtually compelling the Chinese Gov-
ernment to a full assent to the contemplated succession
of Japan to the German rights in Shantung. By Articles
156, 157, 158 of the Treaty of Peace with Germany
signed at Versailles on June 28, 1919, she obtained the
transfer by Germany of all the German rights in Shan-
tung, including the lease of Kiaochow, the submarine
cables from Tsingtau to Chefoo and from Tsingtau to
Shanghai, the Tsingtau-Tsinan Railway and the adjoin-
ing mines. Thus, she made herself the sole successor to
Germany in that Province.

Pursuing the policy of economic exploitation in Shan-
tung, as elsewhere, the Tsingtau-Tsinan line yielded in
1917-1918 gross receipts of 8,196,146 yen as against an
expenditure of 6,155,627 yen, making a total profit in
that year of 1,644.519 yen. 3 " Apart from this railway
in operation, Japan has obtained by the Treaty of May
25, 1915, a concession to finance the railway from Che-
foo or Lungkow connected it with the Kiaochow-Tsin-
anfu Railway (Article 2) ; 4U and by the Treaty of Sep-
tember 28, 1918, the concessions of the Chinan-Shunteh
and Kaomi-Hsuchow Railways. 41

In addition, she controls the mines in Shantung for-
merly belonging to the Germans. The Chunghsiang Col-
liery has an established annual output of 250,000 tons,
the Hungshan mines 800,000, the Poshan mines 25"

Shantung Besybau 560,000, and the Tzechuan Col-
liery 1,000,000. ■'- The Fangtze Colliery is, however, not
bo promising. It contains 52.X square kilometers of coal
deposit, but it is estimated that it will yield only one
million tons mure. 1 The Chinlingchen iron mines have
a deposit of 310 square kilometers, and the quality and
quantity are promising. 44

Respecting the industrial progress of rsingtau made
under the Japanese Administration, the Japan Year Book
says : * 8



200 THE POLICY OF JAPAN IN CHINA

"In Tsmgtau alone earisl about twenty-five factories
ol note backed by a capital of 50 million yen. contrasted
with the 17 years of German rule, during which time
Tsingtau had only one beer brewery and two egg pow-
der manufacturing companies, the development made
during the last few years in this direction may be said
to have been marked. These new enterprises are mostly
Japanese and include milling, brewery, tanning, packing,
soap making, oil, match and salt manufacturing, etc. The
electric works are government monopoly."

\

Passing from Shantung, the next field of exploitation
to be considered is the Hanyehping Company and it
cessories, a company composed of the Hanyang Iron
Works, the Tayeh Iron Mines and Pinghsiang Colliery,
corresponding in significance and influence to the Bethle-
hem Steel Corporation. The Tayeh iron field is among
the richest in the world. "It consist- of a range of nine
low hills, containing sixty-seven percent of iron ore.
The official Japanese survey of the mine proper
that the iron vein is 265 feet thick and of immeasurable
length and depth, the amount of ore being estimated at
700,000,000 tons." It yields an annual output of 700,000
tons. 47 The Pinghsiang coal field in Kiangsi covers a
total area of over 200 square miles, of which only twenty-
one square miles are yet being worked. It has a pos-
sible supply of 500,000,000 tons and an annual output of
750,000 tons. 48

Before the Chinese Revolution, Japan had contra
with the company for the supply of pig iron and iron
which went to the Japanese Imperial Iron Works
at Wakamatsu. During the Revolution, when the Han-
yehping was closed, the Japanese Imperial Iron Works
at Wakamatsu had to stop and make contracts with the
Tata Company at Bombay. 48 After the revolution, in
1913, Japan effected a loan of less than £2.000,000 to the
Hanyehping Company through Shen Kun-pao, the largest
share-holder of the Hanyehping, Yuan Shih-Kai vetoed



POLICY OF ECONOMIC FAPLOITATION 201

the loan agreement as being contrary to the mining laws
of 1913, but it was of no avail, as the decree was issued

after the contract had been concluded. 50

The Japanese Loan was made upon the security of the
property of the company, and on these conditions: First,
the Hanyehping Company shad repay it in forty years
by sale of fifteen million tons of iron ore and eight mil-
lion tons of pig-iron in addition to the amount already
contracted for. Second, the Japanese shall have pref-
erence in future loans. Third, the company shall employ
a Japanese "highest engineering adviser" and an "auditor
adviser." Further, the title deeds of the Company shall
be deposited in a safe having two keys, of which the
Japanese shall hold one.' 1 By means of this loan trans-
action, thirty-three percent of the entire output of iron
ore and about fifty percent of the entire yield of pig-iron
are at present to go to Japan annually ; and this in spite
of the rise in value of these exports from two million
taels in 1913 to nineteen million taels in 1918. -

As this loan did not give Japan the control of the
Company, a Sino-Japanese Corporation was formed, tak-
ing over the interests of Shen Kun-pao ; hut the Chinese
mining law of 1913, prohibiting foreigners from owning
more than fifty percent of the stock of a Chinese mining
company, prevented the consummation of the plan. 1 Con-
sequently, Group Three of the Twenty-one Demands re-
lating to the Hanyehping Company forced the Chinese
Government to give assent to a joint enterprise if the
Japanese and the Chinese capitalists should agree upon
cooperation in future. The pledge was also secured from
the Chinese Government "not to confiscate the said com-
pany, no]-, without the consent of the Japanese capitalists
to convert it into a state enterprise, nor came it to bor-
row and use foreign capital other than Japanese '

Further, Group Hiree of die original Twent) one he
tnands revealed the de igns of Japan, not only upon the
Hanyehping Company, but al i die mines of the



202 THE POLICY OF JAPAN IN CHINA

Central Provinces in the Yangtze Valley, — Hupeh, Hu-
nan, and Kiangsi. It practically aimed at the monopoly
of the minerals of these provinces. Article Two of Group

Three of the original demands read:

"The Chinese Government agrees that all mines in
the neighborhood of those owned by the Hanyehping
Company shall not be permitted, without the consent of
the said company, to be worked by other persons outside
of the said company, and further agrees that if it is
desired to carry out any undertaking which, it is ap-
prehended, may directly or indirectly affect the interests
of the said company, the consent of the said company shall
first be obtained." os

The language of this article was so general that it
could be practically made to mean the monopoly of the
mines in Hupeh, Hunan and Kiangsi, where the operations
of the Hanyehping Company were carried on. The mines
in the neighborhood of those owned by the Company were
not to be worked by other persons outside of the com-
pany, and the neighborhood was purposely left indefinite
and undefined. Tims, the doors of the Central Yangtze
provinces would be closed to the mining enterprises of
any other party but the Hanyehping Company, of which
Japan sought to make a Chino-Japanese joint concern.
Again, the second part of the article requiring the con-
sent of the company for any undertaking which might
directly or indirectly aiTect the interests of the said Com-
pany was worded so vaguely, as to be capable of being
interpreted to cover all kinds of enterprises that might
compete with the company or affect its interests in any
way. This would mean that, throughout China or at
Central China, the Hanyehping Company would en-
joy the monopoly of the iron industry and exclude any
competitors or conflicting interests. In short, had the
original article been granted, Japan would have, through
the instrument of the Hanyehping Company, practically



POLICY OF ECONOMIC EXPLOITATION 203

obtained the monopoly of the mines of the Central Yang-
tze Provinces and a monopoly of the iron industry in
China.

Turning from the Hanyehping Company, Japan has in-
terests in other parts of China. In Anhui Province, the
Sino-Japanesc Industrial Company owns the Taochung
Iron Mines, having visible ore of 60,000,000 tons — sixty-
five per cent pure. 50 Japan has concessions for large de-
posits in Fukien near Amoy. 57 The Terauchi Cabinet
also concluded the Communication Bank Loan, 58 and the
Telegraph Loan. 5 " Japan can also tap the fabulous
wealth of Shansi Province by the completion of the Tsi-
nan-Shunteh line and the connection of Tsingtau-Tsinan
Line with the Lung-Hai Railway. 00

In addition to the interests already acquired, Japan has
made several attempts of greatest significance to exploit
the riches of China. She sought to obtain the wine and
tobacco monopoly, both in trade and tax collection, by
the offer of a loan of 30,000,000 yen. 01 Nishihara sought
to acquire the monopoly of the foreign trade of China
through the organization of the Chung Hua Trading Co.,
against which the United States protested. M In her
proposal to remit the balance of the Boxer indemnity, the
Japanese Government stipulated, besides the requirement
of the presence of a Japanese adviser at the conference
for considering proposals to be submitted by the Chinese
Government at the Peace Conference, and of the ab-
stention from foreign loans other than Japanese dur-
ing the war, that Japan should direct the use of the in-
demnity so remitted, and control the export of China's
iron, cotton and wool.' Finally, Japan made desperate
efforts to control -till other in.n mines of China. The
Japanese financiers, together with some ( hinese, organ-
ized the Mulling Co., to develop the famous Fenghuang-

shan imn mine- near Nanking, which has BOUght to obtain



20* THE POLICY OF JAPAN IX CHINA

a license from the Chinese Government for the under-
taking In 1918, Japan proposed a loan of 100,000,000

yen



Online LibraryMingchien Joshua BauThe foreign relations of China: a history and a survey → online text (page 16 of 39)