# The Truth about China and Japan/Document J

(J)
THE SHANTUNG RAILWAY EXTENSION AGREEMENT
Explanatory Note.—The railway agreement annexed completes the network of contracts rapidly entered into by the militarist elements in Tokio and Peking prior to the German collapse and the armistice of November 11th.
It will be observed that this Shantung railway extension agreement, like the Four Manchurian and Mongolian railway agreement (Document I) and the unratified Kiaochow railway agreement (Document E), was rushed through at the end of September, 1918, to complete the pernicious militarist programme drawn up by Japan and her Chinese tools before the fall of the Terauchi Cabinet in Tokio and the Tuan Chi Jui Cabinet in Peking.
Its importance is not so great as the Manchurian-Mongolian agreement, everything depending on the future status of the German Shantung railway (Chinanfu to Tsingtao). If this railway is completely restored to China, the fact that Japan has building contrasts west and south of the Shantung provincial capital will not be very important. If the Shantung railway is not completely restored to China, these projected extensions will hasten the Manchurianization of the central China territory.
The following is a translation of the Chinese text of the Tsi-Shun and Kao-Hsu Railways published by the Waichiaopu:—
Preamble
For the construction of the railways from Tsinan (Shantung) to Shunteh (Chihli) and from Kaomi (Shantung) to Hsuchow (Kiangsu) (hereinafter called the Two Railways), the Government of the Chinese Republic (hereinafter called the Govern​ment) enters upon the following Agreement, a protocol to the final loan agreement with the Representative of the Japanese Industrial Bank (hereinafter called the Bank) which represents the Japanese Industrial Bank, the Taiwan Bank and the Bank of Korea:—
Article 1. In order to meet the expenditure for the construction of the Tsinan-Shunteh and Kaomi-Hsuchow Railways, the Government will entrust the Bank for the issue of the Chinese Government Tsi-Shun Railway Gold Loan and the Chinese Government Kao-Hsu Railway Gold Loan (hereinafter called the two Railway Loans).
If it is found after due investigation that the lines fixed will not be profitable for business, the Government may negotiate with the Bank for alterations and changes.
Article 2. The Government shall at once draw up an estimate for the various expenses in connection with the two railways and submit same to the Bank for approval.
Article 3. The term of the loan shall be forty years; and in the 11th year of its issue, the redemption shall commence by instalment in each year.
Article 4. As soon as the Formal Loan Agreement is signed between the Government and the Bank, the construction shall begin.
Article 5. The Government shall give the following security to the Bank for the payment of coupons and the redemption of the loan:—
​All the properties and the incomes of these two railways, both the present and the future.
Without the permission of the Bank the Government shall not make use of the above properties and incomes as security to a third party.
Article 6. As to the price of the bonds, the rate of interest and the net proceeds to be received for the two railway loans, they shall be fixed in accordance with the circumstances of the time, and the interest of the Government.
Article 7. All details which have not been provided for in this Agreement shall be fixed between the Government and the Bank.
Article 8. This Agreement shall form the basis for the Formal Loan Agreement of these two railways, which shall be signed four months after its conclusion.
Article 9. After the signing of this, the Bank shall make an advance of Japanese yen 20,000,000 to the Government without commission or any deduction.
Article 10. The interest of the above advance shall be 8%, i.e. Yen 8 per year for each Yen 100.
Article 11. A similar amount of the Government Treasury Bonds shall be given by the Government for the above advance.
Article 12. In a period of each six months these bonds shall be changed, when an interest for this period shall be given to the Bank.
Article 13. After the conclusion of the Formal Loan Agreement, the Government shall refund the ​above advances by the proceeds first realized by the sale of the bonds.
Article 14. The transactions connected with the delivery of the proceeds, the payment of interest and the redemption of the above advance shall be done in Tokyo.
Two copies of the above agreement shall be made in Chinese and Japanese and one each be kept by the Government and the Bank. Should doubts arise in any point, the Japanese version shall be followed.
(Signed) Chang Chung-hsiang and "Hsiao-ya-yin er lan." Dated 29th day, 9th month of the 7th Year of the Chinese Republic, etc.
In addition to the above there are two notes addressed to the Japanese Foreign Minister by Mr. Chang Chung-hsiang, stating that the Chinese Government has decided to contract loans from the Japanese capitalists for the construction of the following railways:
* Between Kaiyuan, Hailung and Kirin.
* Between Chanchung and Taoman.
* Between Taonan and Jehol.
* A second line between Taonan and Jehol.
* Between Tsinan and Shunteh.
* Between Kaomi and Hsuchow, etc.
The Japanese Foreign Minister's Note states that in order to cement the good relations between the two Neighbouring Nations, the Japanese Government has ​made the following proposals in connection with the Shantung Problem:—
* With the exception of Tsinan, all the Japanese troops along the Kiaochow-Tsinan Railway shall be withdrawn to Tsingtao.
* The police forces for the protection of the Kiaochow-Tsinan line shall be organized by the Chinese Government.
* An adequate amount of money shall be paid by the Kiaochow-Tsingtao Railway to meet the expenses of the above police forces.
* Japanese shall be engaged in the police headquarters, training institutes, etc.
* Some Chinese shall be selected and appointed officers for the Chiaochow-Tsinan Railway.
* It is now definitely fixed that the Kiaochow-Tsinan Railway and its offices shall later on be under the joint control of the Japanese and the Chinese.
* The civil offices which have now been established shall be abolished.
All the above communications were duly acknowledged and approved by either party.