# The Truth about China and Japan/Document I

(I)
THE MANCHURIAN AND MONGOLIAN (Secret) RAILWAY AGREEMENT
Explanatory Note.—This document, secretly signed in Tokio on the 28th September, 1918, by the Chinese Minister to Japan, acting under instructions not of the Chinese Government but of the Ministry of Communications, is of the utmost ​importance for the Japanese plan of the envelopment of Peking and North China by a railway network.
The reader is invited to study the matter on the map. Then it will be seen that the New Manchurian-Mongolian railway project, if allowed to pass unchallenged, will not only monopolize these areas to Japanese influence, but will allow Japan to get control of a new seaport just beyond the Great Wall at Shanhaikwan.
There is little doubt, although the agreement purposely leaves the name a blank, that Hu-lu-tao, an ice-free harbour which was to have been the terminus of the Anglo-American Chincho-Aigun Railway, is meant. This harbour has been developed by British engineers and nearly a million sterling spent on it. It is a magnificent natural harbour superior to Dairen, and it is plain that Japan covets it.
Although the preliminary agreement that follows calls for the signature of a final agreement within four months from the 26th September, 1918) (i.e., before the 28th January, 1919), nothing further has been done in the matter owing to the immense outcry which this matter has raised in China.
The Government of the Republic of China (hereinafter called the Government) for the purpose of constructing railways from Jehol to Taonan; from Changchun to Taonan; from Kirin to Kaiyuan through Hai-lung; and from a point on the Jehol-Taonan railway to a sea-port (hereinafter called the Four Railways of Manchuria and Mongolia), agrees to conclude a contract with a syndicate representative of the Industrial Bank of Japan, the Bank of Taiwan, and the Bank of Chosen (hereinafter called the Banks) in the terms of the following Preliminary Agreement in anticipation of the Formal Agreement:
* The Government recognizes and approves of the project to construct railways from Jehol to Taonan; from Changchun to Taonan; from Kirin to Kaiyuan; and from a point of Jehol-Taonan ​ Railway to a sea-port; and the Banks will issue Gold Bonds for the Government of the Republic of China which will be called the Gold Bonds of the Jehol-Taonan Railway, the Gold Bonds of the Changchun-Taonan Railway, the Gold Bonds of the Kirin-Kaiyuan Railway, and the Gold Bonds of the extension railway (hereinafter called the Gold Bonds of the Four Railways of Manchuria and Mongolia). The railway line from a given point on the Jehol-Taonan Railway to a given sea-port will be mutually arranged between the Government and Banks.
* The Government shall make a statement of the necessary expenditure for the construction of these four railways and obtain the consent of the Banks for the same.
* The term of the Gold Bonds of the Four Railways of Manchuria and Mongolia shall be 40 years and the repayment of the principal in annual instalments shall commence from the 11th year from the date of issue.
* As soon as the Government concludes the Formal Agreement regarding the said Four Railways of Manchuria and Mongolia with the Banks, the plan for the construction work shall be arranged between the both Parties without further delay.
* The following will be the security of the issuing of the Gold Bonds of the Four Railways of Manchuria and Mongolia:— ​ The properties and income of the Four Railways of Manchuria and Mongolia now and in the future. The Government may not offer the above-mentioned properties or the income derived therefrom as the security to any other Party without the approval of the Banks.
* The price and rate of interest of the Gold Bonds of the Four Railways of Manchuria and Mongolia will be arranged between the two Parties at the time of issue.
* The Articles concerning the above which have not been provided for shall be mutually arranged between the Government and the Banks.
* This Preliminary Agreement will be the basis of the formal agreement of the Four Railways of Manchuria and Mongolia which shall be made within four months from the date of signing this preliminary agreement.
* An advance of twenty million yen in full amount without commission will be made by the Banks at the time of the signature of the preliminary agreement.
* The interest on such advance will be at the rate of 8% annually, which is 8 yen annually for every 100 yen.
* On the paying-over of this advance, National Treasury Notes will be issued in exchange for the cash.
* The said National Treasury Notes will be re​ newed once every six months and on each renewal the interest of the prior six months will be paid over to the Banks.
* When the formal agreement of the Four Railways of Manchuria and Mongolia is signed, the money received from the issue of the said Gold Bonds shall be employed in part for the repayment of these advances.
* The paying-over of the advances as well as the payment of interest, with all other details, shall be carried out in Tokio, Japan.
This Preliminary Agreement is in Chinese and Japanese, two copies being made of each. The Government and the Banks shall each retain one copy in Chinese and Japanese. If there is any dispute, the Japanese text will be considered the authoritative one.
This Preliminary Agreement is signed on the 28th September, 1918.
Chang Tsung Hsiang, The Chinese Minister to Japan. Siao Ya In-Erh Long, The Vice-President of the Industrial Bank of Japan.