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the Japanese minister that this referred only to South Manchuria, and he suggested that his Government would We satisfied if China agreed to engage Japanese as police advisers for that territory, the Chinese Government accepted the suggestion.

The two articles relating to the acquisition of land for schools, hospitals, and temples, as well as to the right of missionary propaganda, would, in the opinion of the Chinese Government, have presented grave obstacles to the consolidation of the friendly feeling subsisting between the two people. The religions of the two countries are identical and. therefore, the need for a missionary propaganda to be carried on in China by Japanese does not exist. The natural rivalry between Chinese and Japanese followers of the same faith would tend to create incessant disputes and friction. Whereas western missionaries live apart from the Chinese communities among which they lal>or. Japanese monks would live with the Chinese; and the similarity of their physical characteristics, their religious garb, and their habits of life would render it impossible to distinguish them for purposes of affording the protection which the Japanese Government would require should be extended to them under the system of extra-territoriality now obtaining in China. Moreover a general apprehension exists among the Chinese people that Jhese peculiar conditions favoring conspiracies for political purposes might be taken advantage of by some unscrupulous Chinese.

The demand for railway concessions in the Yangtze Valley conflicted with the Shanghai-Hangchow-N'ingpo Railway agreement of March (i, 1908, the XankingChangsha Railway agreement of March 31,1914,and theengagement of August 24, If! 1-4, giving preference to British firms for the projected line from Nanchang to Chaochowfu. For this reason the Chinese Government found themselves unable to consider the demand, though the Japanese minister, while informed of China's engagements with Great Britain, repeatedly pressed for its acceptance.

In respect to the demand for the appointment of influential Japanese to be advisers and instructors in political, financial, and military affairs, the policy of the Chinese Government in regard to the appointment of advisers has been similar to that which has presumably guided the Japanese Government in like selection of the best qualified men irrespective of their nationality. As on indication of their desire to avail themselves of the services of eminent Japanese, one of the earliest appointments made to an advisership was that of Dr. Ariga, while later on Dr. Hirai ana Mr. N akayami -were appointed to the ministry of communications.

It was considered that the demand that Japanese should be appointed in the three most important administrative departments, as well as the demand for the joint control of China's police, and the demand for an engagement to purchase a fixed amount of arms and ammunition from Japan or to establish joint arsenals in China, so clearly involved the sovereignty of the Republic that the Chinese Government were unable even to consider them.

For these reasons the Chinese Government, at the very outset of the negotiations, declared that they were unable to negotiate on the demands; but, in deference to the wishes of the Japanese Minister, the Chinese delegates consented to give the reasons for declining to enter into a discussion of them.

IN THE MATTER OF THE QUE8TIONS OP DISPUTE INVOLVED IN SOME OF THE FOREGOING

DEMANDS.

The demand by Japan for the right of her subjects in South Manchuria to lease or own land, and to reside and travel, and to engage in business or manufacture of any kind whatever, was deemed by the Chinese Government to obtain for Japanese subjects in this region a privileged status beyond the terms of the treaties existing between the two nations, and to give them a freedom of action which would be a restriction of China's sovereignty and a serious infringement of her administrative rights. Should Japanese subjects be granted the right of owning land, it would mean that all the landed property in the region might fall into their hands, thereby endangering China's territorial integrity. Moreover, residence in the interior was incompatible with the existence of extra-territoriality, the relinquishment of which is necessary to the actual enjoyment of the privilege of inland residence, as evidenced in the practice of other nations.

Japan's unconditional demand for the privilege of inland residence accompanied with a desire to extend extra-territoriality into the interior of China and to enable Japanese subjects to monopolize all the interests in South Manchuria, was also palpably irreconcilable with the principle of equal opportunity. For this reason the Chinese Government were, in the first instance, unable to accept this demand as a basis of negotiation. Their profound regard for the friendly relations of the two countries, however, persuaded them to exert their utmost efforts, in spite of all the inherent difficulties, to seek a solution of a question which was prarftically impossible to solve. Knowing that the proposal made by Japan was incompatible with treaties, they nevertheless sought to meet her wishes within the limits of treaties. Accordingly they submitted a counter-proposal to open more places in South Manchuria to international trade and to establish Sino-Japanese joint reclamation companies.

This suggestion was made in the belief that the places to which Japanese subjects would desire to resort for purposes of trade, could not be other than important localities; if all these localities were opened to commerce, then they could reside, trade, and lease land there for joint reclamation. Thus Japanese subjects might enjoy the essence of the privilege of inland residence and would still be able to reconcile their position with China's treaties and the principle of equal opportunity.

After the Japanese Government declined to accept this suggestion, China withdrew it and replaced it with an amendment to the original articles. It was proposed in this amendment to grant to Japanese subjects the extra-treaty privilege of inland residence with the provisos that Japanese subjects in places outside of trade marts should observe Chinese police regulations and pay taxes in the same manner as Chinese; and that civil and criminal cases involving such Japanese subjects should be adjudicated by Chinese authorities, the Japanese consul attending merely to watch the proceedings. This suggestion was not an innovation; it was based upon the modus operandi now in force as regards the Korean settlers in inland districts in Chientao. But the Japanese Government again declined to accept it.

The Chinese Government thereupon made a third proposal along the line of what constitutes the present practice in Turkey, making a distinction, nowever, in favor of Japanese subjects, in the exercise of jurisdiction over civil and criminal cases. This was once more objected to by the Japanese Government.

Then the Chinese Government proposed to concede still another step—the fourth endeavor to meet Japan's wishes. They proposed to agree to the full text of articles 2 and 3 relative to the question of inland residence, except that "the right of owning land" was changed into "the right of leasing land" and to the phraso "cultivating land" was added this clause: "the regulations for which shall be determined separately"; and, further, to add a supplementary article which embodied a modus operandi which the Chinese Government had constrained themselves to make, out of a desire to come to a settlement over this question. The view advanced in thi* supplementary article was based upon the Japanese minister's declaration made on March 6, 1915, that a separate article embodying some compromise might be added to the original articles 2 and 3 for the purpose of avoiding any conflict with China's sovereignty or the system established t>y treaties. These suggestions made by the Chinese Government were not accepted by Japan.

As regards eastern inner Mongolia, not only nave no treaties been entered into with Japan concerning this region, but also the people are so unaccustomed to foreign trade that the Chinese Government invariably feel much anxiety about the safety of foreigners who elect to travel there. The Chinese Government, therefore, considered that it would not be in the interest of foreigners to open the whole territory to them for residence and commerce, and on these grounds based their original refusal to place eastern inner Mongolia on the same footing as South Manchuria. Still, their desire to meet the wishes of the Japanese Government eventually prompted them to offer to open a number of places in the region to foreign trade.

IN THE MATTER OF JAPAN'S BEVISED DEMANDS.

The foregoing is an outline of the negotiations up to April 17. It was hoped by the Chinese Government that the Japanese Government, in view of the great concesssions made by China at the conferences held up to this time, would see a way of effecting an amicable settlement by modifying their position on certain points. In regard to these it had, by this time, become manifest that China would encounter almost insuperable difficulties in making further concessions.

The Japanese Government, however, suspended the negotiations until April 28 when they surprised the Chinese Government by presenting a new list of 24 demands (which is hereto appended), and requested the Chinese Government to accord their acceptance without delay, adding that this was their final proposal. At the same time the Japanese minister stated that the Japanese Government would restore the leased territory of Kiaochow to China at an opportune time in the future and under proper conditions if the Chinese Government would agree to the new list of 24 demands without modification.

In this new list, although the term "special position" in the preamble of the Manchurian group was changed to "economic relations," and although the character of the articles in the original fifth group was altered from demands to a recital of alleged statements by the Chinese foreign minister, four new demands were introduced conoeming eastern inner Mongolia. In deference to the wishes of the Japanese Government, the Chinese Government gave the revised list the most careful consideration; and being sincerely desirous of an early settlement offered new concessions in their reph presented to the Japanese minister on May 1. (Annexed.)

In this reply the Chinese Government reinserted the proposal in reference to the retxocession of Kiaochow, which they advanced at the first conference on February 2, and which was postponed at the request of the Japanese minister. This, therefore, was in no sense a new proposal.

The Chinese Government also proposed to agree to three of the four articles relating to eastern inner Mongolia. There was some difficulty in determining a definition of the boundaries of eastern inner Mongolia—this being a new expression in Chinese geographical terminology—but the Chinese Government, acting upon a statement made at a previous conference by the Japanese minister that the Japanese Government meant the region under Chinese administrative jurisdiction, and taking note, in the list presented by the Japanese minister, of the names of places in eastern inner Mongolia to be opened to trade, inferred that the so-called eastern inner Mongolia is that part of inner Mongolia which is under the jurisdiction of South Manchuria and the Jehol Intendency, and refrained from placing any limitations upon the definition of this term.

The Chinese Government also withdrew their supplementary proposal reserving the right of making regulations for agricultural enterprises to be undertaken by Japanese settlers in South Manchuria.

In respect of the trial of cases involving land disputes between Japanese only, or between Japanese and Chinese, the Chinese Government accorded to the Japanese consul the nght of deputing an officer to watch the proceedings.

The Chinese Government also agreed to accept the suggestion of the Japanese Government to modify the term " police law and ordinances into " police rules and regulations," thereby limiting the extent of control which the Chinese would have over Japanese subjects.

As regards the Hanyehping demand, the Chinese Government accepted the draft made by the Japanese Government, embodying an engagement by the Chinese Government not to convert the company into a State-owned concern, nor to confiscate it, nor to force it to borrow foreign capital other than Japanese.

In respect of the Fukien question the Chinese Government also agreed to give an assurance in the amplified form suggested by the Japanese Government that the Chinese Government had not given their consent to any foreign nations, to construct a dockyard, or a coaling station, or a naval base, or any other military establishment along the coast of Fukien Province; nor did they contemplate borrowing foreign capital for the foregoing purposes.

Having made these concessions which practically brought the views of China into line with those of Japan, and having explained in a note accompanying the reply the difficulty for China to make further concessions, the Chinese Government hoped that the Japanese Government would accept their reply of May 1, and thus bring the negotiations to an amicable conclusion.

The Japanese Government, however, expressed themselves as being dissatisfied with China's reply, and withdrew the conditional offer to restore Kiaochow to China made on April 26. It was further intimated that if the Chinese Government did not give their full compliance with the list of 24 demands, Japan would have recourse to drastic measures.

Upon receiving this intimation the Chinese Government, inspired by the conciliatory spirit which had been predominant from the very beginning of the negotiations and desirous of avoiding any possible rupture in the relations of the two countries, made a supreme effort to meet the situation, and represented to the Japanese Government that they would reconsider their position and make another attempt to find a solution that would be more satisfactory to Japan, in respect to those articles which China had declared could not be taken up for consideration, but to which Japan attached great importance. Even in the evening of May 6, after the Japanese minister had notified the Chinese Government that the ultimatum had arrived in Peking, the Chinese Government in the interests of peace still exerted efforts to save the situation by offering to meet Japan's wishes.

These overtures were again rejected and thus exhausted the means at the disposal of the Chinese Government to prevent an impasse.

It is plain that the Chinese Government proceeded to the fullest extent of possible concession in view of the strong national sentiment manifested by the people throughout the whole period of negotiations. All that the Chinese Government strove to maintain was China's plenary sovereignty, the treaty rights of foreign powers in China, and the principle of equal opportunity.

To the profound regret of the Chinese Government, however, the tremendous sacrifices which they had shown themselves ready to make, proved unavailing, and an ultimatum (the text of which is appended) was duly delivered to them by the Japanese minister at 3 o'clock on the afternoon of May 7.

As to the allegations made in the ultimatum against China, the Chinese Government hope that the foregoing outline of the history of the negotiations constitutes a clear, dispassionate, and complete reply.

In considering the nature of the course they should take with reference to the ultimatum the Chinese Government was influenced by a desire to preserve the Chinese people, as well as the large number of foreign residents in China, from unnecessary suffering, and also to prevent the interests of friendly powers from being imperiled. For these reasons the Chinese Government were constrained to comply in full with the terms of the ultimatum (the reply being hereto appended), but in complying the Chinese disclaim any desire to associate themselves with any revision, which may thus be 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.

Senator Brandegee. What was the date of that statement?

Mr. Ferguson. It was issued—I can not say, sir, because printing is so slow in Peking. It was somewhere toward the latter part of May.

Senator Brandegee. On what date was the treaty signed?

Mr. Ferguson. May 25. It was somewhere about that same time.

Senator Brandegee. It must have been issued within a week after the signature of the treaty.

Mr. Ferguson. I should say somewhere along there. It may have been in the first weeks of June. I do not remember exactly.

Senator Mccumber. It was given publicity throughout China?

Mr. Ferguson. Yes, sir.

Senator Johnson of California. Did you hear Senator McCormick's speoch yesterday?

Mr. Ferguson. I did, sir.

Senator Johnson of California. In the course of it he quoted from an eminent Japanese statesman's construction of, or the future construction that Japan would put upon, the Lansing-Ishii agreement. Did you follow that particular part?

Mr. Ferguson. Part of it. I could not hear from where I was siting in the gallery.

Senator Johnson of California. The only reason of my inquiry was that if you were familiar with it I was going to ask you about it, hut if you did not hear it I will not refer to it further.

Mr. Ferguson. If you could state

Senator Johnson of California. I do not want to state it. I might not state it with entire accuracy. The substance of it as I gathered was that some eminent Japanese statesman—here is the record, if I am going to question you about it, it will be far better, I think, to get it accurately. If somebody will proceed with other questions, I will ask that later.

Senator Knox. I was goinj* to make a suggestion that we might take the time to send out and got some of our Democratic brethern to come in and help expedite this treaty.

Senator Swanson. I would like to ha\e van give vour interpretation of the Lansing-Ishii text, as to its scope and its effect.

Mr. Ferguson. May I do so first without its going into the record, Senator? I would like to ask as to the expediency of putting it into the record. I should hate to put it in the record.

Senator Swanson. The reason I desire that is that in the question of Senator Johnson he used the words that the agreement disposed of the "fate" of China, and I would like to have also in the record your interpretation as to the effect of that agreement, the English text, which was the official text.

Mr. Ferguson. Personally, 1 regarded the Lansing-Ishii agreement as a most unfortunate document, and out of keeping with our traditional policy.

Senator Swanson. How about the Root-Takahira agreement?

Mr. Ferguson. That was perfectly right and perfectly in agreement with all our previous treatment of China.

Senator Swanson, Was China consulted about that agreement?

Mr. Ferguson. No, sir.

Senator Swanson. That agreement was made without any consultation with China?

Mr. Ferguson. Yes, sir; so far as I know.

Senator Brandegee. Have you finished, Senator?

Senator Swanson. No. You said it was out of accord. What special rights does that agreement give to Japan?

The Chairman. You mean the Root-Takahira agreement?

Senator Swanson. The Lansing-Ishii agreement.

Mr. Ferguson. Well, the primal difficulty in that is that it deals with China without consulting her, whereas the Root-Takahira agreement was following up by Mr. Hay's original plan of getting eyerybody to agree to recognize the territorial integrity and the "open door," the equal opportunity of all nations, and whether China was consulted about it, or was not consulted about it, made very little difference. But here it was a question of the attitude of the powers that were in treaty with China toward her.

The Lansing-Ishii agreement brings in something which directly affects China, by saying that territorial propinquity creates special relations between countries. That is a statement which I think is very broad.

Senator Swanson. Does that give Japan any greater interest in China than China would have in Japan? Their relations are similar to each other, as a general statement of the general proposition.

Mr. Ferguson. It states they are on the basis of territorial propinquity, and consequently that "the Government of the United States recognizes that Japan has special interests in China."

Senator Swanson. Well, now, the declaration of that general principle

Mr. Ferguson. It is very different from what we have ever stated, and is directly—how it can be possible to maintain on the one hand the "open door," equal opportunity, and on the other hand say that a certain nation on account of territorial propinquity has special interests, is more than I can understand, sir.

Senator Swanson. Does that general declaration give Japan any greater interest in China than Chma would have in Japan on account of being so geographically situated toward each other—the general declaration of principle?

Mr. Ferguson. No, sir; provided they were on an equal basis, which they have not been for several years.

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