South Manchuria Railway

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SOUTH MANCHURIA RAILWAY
the Pioneer on the Continent


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SOUTH MANCHURIA RAILWAY
the Pioneer on the Continent
PART I
S.M.R. and Railway Building in Manchuria
PART II
S.M.R. and General Development of Manchuria




Memorial monument of S. M. R. employees who have died
while discharging their duties (Dairen).
A sectional view of the Head Office of the S. M. R., Dairen.


The General Directorate of Railways of the S. M. R. at Mukden which manages
the railways of Manchoukuo (State Railways and S. M. R. lines).
The ultra-modern super-express " Asia " which is the best and fastest train in the
Orient. She covers the distance between Dairen and Harbin in 12£ hours.


S. M. R. Hsinking Office.
The smart modern building in which the S. M. R. Tokyo Office is housed.


Yesterday's enemies as today's friends. Russian officials bid the Japanese farewell
before departing for the north after transferring the South Manchuria Railway.
Members of the Japanese and Russian Commission for the legal transfer
of the South Manchuria Railway.


The Nihon Bashi in the vicinity of the Dairen
Station, in 1907.
Night view of Rensagai, one of Dairen's
chief shopping centers today.
Looking down along Tatung Thoroughfare,
the chief boulevard of Hsinking,
Manchoukuo's rising capital.


Trains that ran the tracks in 1907, the year in which
the S. M. R. commenced operations.
A modern stream-lined train of the present day.


Another line undergoing construction.
Inaugural ceremony of a new line opened to traffic.


Interior of the elegantly decorated modern diner of the super-express " Asia
Travel in the spacious modern observation car is a pleasure indeed.


The former Dairen Station of bygone days.
Night view of Dairen's up-to-date railway station.


The S. M. R. manages 7,000 kilometers of bus lines in Manchoukuo
linking even the remotest parts of the country.
River transportation on the Sungari and the Heilungkiang (Amur)
Rivers is also conducted by the S. M. R.


A view of Dairen Port reputed to be the best in the Orient.
The waiting pavilion of Dairen's main pier, capable of
accommodating 5,000 persons.


Loading bean oil onto a tanker.
Modern port facilities at Dairen.


Huge steam-shovels like the one pictured above rip off huge
chunks of glistening coal.
A bird's-eye view of the world famous open-cut mines at Fushun.


The Ryuho shaft mine at Fushun which produces 5,000 metric
tons of coal per day.


Coaling pier at Kanseishi.


The Showa Steel Works at Anshan, established by the S. M. R.
The great shale oil plant at Fushun.


Soya beans under cultivation.
Soya beans in storage in the compounds of a dealer.


Transporting soya beans by rail.
Open air storage of beans awaiting shipment.


Transporting shale oil from Fushun.
One of the oil mills in Dairen.


The Dairen Yamato Hotel.
The Grill Room of the Dairen Yamato Hotel.


The Mukden Yamato Hotel.
The Hoshigaura Yamato Hotel, a branch of the Dairen Yainato Hotel.


The South Manchuria Sanatorium at Shoheito in the suburbs of Dairen.
The Dairen Hospital.


The Dairen Library.
The Mukden Medical College and the hospital attached to it.


The Harbin Library, owned by the South Manchuria Railway Company, contains
110,000 books and is one of the largest institutions of its kind in Manchoukuo.
The Central Research Laboratory.


Komura Park, Dairen,
Hoshigaura recreation park in Dairen.


Exhibition car of a comfort train.
Interior of a comfort train.
A show-boat on the the Sungari.


Entrance to the S. M. R. Employees' Co-operative
Union Central Distributing Store, Dairen.
One of the sales counters of the Central Co-operative Union, Dairen.


The S. M. R. Employees' Club. Head Office, Dairen.
JK
S. M. R. Employees' Association Building. Head Office, Dairen.




PART I
RAILWAY BUILDING IN MANCHURIA
Forty-five years ago Manchuria was still a tranquil and
backward Oriental land without modern transportation facili-
ties. With the closing years of the last century, a new era
of railway building slowly dawned over the country and a
miraculous transformation was wrought within a short span
of less than five decades. To-day, Manchuria is covered with
a network of railways exceeding ten thousand kilometres in
all, and the light of civilization began to penetrate the re-
motest corners of the country. It is this achievement in
speed and service which the South Manchuria Railway Com-
pany, in co-operation with the Manchoukuo Department of
Communications, is celebrating on October 1, 1939.
1. FIRST PERIOD, 1894-1904
Railway building in Manchuria was pioneered by a British
interest in 1894 when what later came to be known as the
Peking-Mukden Railway was pushed beyond Shanhaikuan
into Manchuria. It was motivated primarily by the British
desire to acquire the Manchurian market by connecting Tient-
sin with Yingkou, then known as Newchwang. This move
was soon followed by Russia in her search for an ice-free
outlet to the sea, eventually resulting in the construction of
the Chinese Eastern Railway. The Russo-Japanese War ended
all construction activities for the time being.
— 1 —


The Shanhaikuan-Mukden Line
The first page in the history of railway building in Man-
churia was turned through British initiative in 1894. In that
year, an attempt was made to extend a railway line from
Tientsin which reached Shanhaikuan by 1893 to Yingkou,
then Newchwang, via Koupangtzu. As a result, a short dis-
tance of 60 kilometres between Shanhaikuan and Suichung
had been actually completed. The remainder of the project,
however, was delayed largely on account of the Sino-Japanese
War which broke out in 1894. With the Russian acquisition
of railway interests in North Manchuria, the project was
revived by the British interest concerned in 1898 and the
Shanhaikuan-Mukden line was since completed in two stages,
the Shanhaikuan-Hsinmintun-Yingkou line by a British syndi-
cate and the Hsinmintun-Mukden line by the Japanese Ex-
peditionary Force.
The preliminary agreement for the extension of the Peking-
Tientsin-Shanhaikuan line to Yingkou through Hsinmintun
was concluded in June, 1898, between the Hongkong and
Shanghai Banking Corporation and the Chinese Administra-
tive General of the Imperial Railways of North China. This
was followed by a formal agreement on October 10, 1898,
under which the British and Chinese Corporation obtained
the right to build the proposed line which was to be com-
pleted in three years. The actual construction work was
started in 1899 and completed by 1902, and the line was
opened to traffic in 1903.
That portion of the Peking-Mukden Railway between
Hsinmintun and Mukden was built by the Japanese Expedi-
tionary Force in the course of the Russo-Japanese War as a
military line. After the War, Japan agreed to transfer this
— 2 —


line to China under the Peking Treaty of 1905 and the
transfer was effected under the Sino-Japanese convention of
April 15, 1907, with an understanding that it be reconstructed
with a Japanese loan. The final transfer was consummated
on May 27, 1907, and the line was completely rebuilt since.
The Japanese Government agreed to permit its extension to
the walled city of Mukden on September 4, 1909, thus allow-
ing it to cross the South Manchuria Railway.
The Chinese Eastern Railway
The Russian entrance into international railway politics in
Manchuria was signaled by the conclusion on September 8,
1896, of a Sino-Russian railway contract for the construction
and operation of a railway line across North Manchuria.
This contract was based upon the Sino-Russian secret treaty
of alliance of June 3, 1896, and it was a first step in realizing
Tzarist Russia's supreme dream for a Far Eastern empire with
an ice-free outlet to the sea. To put this agreement into
execution, the Russo-Chinese (later Russo-Asiatic) Bank pro-
moted the Chinese Eastern Railway Company, a Russian
joint-stock company which was chartered by the Russian
Government on December 4, 1896. The Chinese Govenment
had the right to name the president of the Company, a
normal head, but it was for all practical purposes a Russian
Government agency.
Armed with these necessary treaty and legal arrangements,
the historic building of the Chinese Eastern Railway was
started early in 1897, but its progress was delayed on account
of unforeseen difficulties in the actual construction work and
the Boxer Rebellion in China in 1900. It was completed,
however, by the end of 1902 and was officially opened to
— 3 —


traffic on July 1, 1903, with head offices at Harbin. The
Chinese Eastern Railway, some 1,570 kilometres in length
from Manchouli to Pogranichnaya across North Manchuria,
shortened the original Trans-Siberian Railway line from
Moscow to Vladivostok by some 908 kilometres.
Upon acquisition under pressure in 1898 of the lease to
the Kwantung Territory, the very territory of which she had
only three years before deprived Japan in the name of pre-
serving peace, Russia immediately planned to build a branch
line from Harbin on the Chinese Eastern Railway main line
to the proposed port of Dalny, now Dairen, and the naval
base at Port Arthur. To this project China gave her consent
under the Sino-Russian convention of March 27, 1898, and
a treaty to that effect was signed on July 6, 1898. The
construction of this line, some 998 kilometres long, was
immediately undertaken and was completed before the out-
break of the Russo-Japanese War in 1904.
Of these lines, that stretch south of Changchun, now Hsin-
king, was transferred to Japan as a result of the Portsmouth
Treaty of 1905 which ended the Russo-Japanese War and be-
came the South Manchuria Railway. The Russian interest in
the remainder of the Chiogse_jastern_Railway, renamed the
North_M^nehu^5aRail^ayaf^ some^T772Tlalo -
metres, was transferred to Manchoukuo for 170 million yen in
1935 and became a part of the Manchoukuo State Railways.
In the wake of the Russo-Japanese War, the second
decade of railway building in Manchuria was marked by
Japan's entrance into Manchuria by succeeding to the Russian
2. SECOND PERIOD, 1905-1912
— 4 —


railway and industrial rights south of Changchun, now Hsin-
king, and the establishment of the South Manchuria Railway
Company. This period also witnessed the American attempt
to dominate international railway politics in Manchuria.
The South Manchuria Railway
The Russo-Japanese War definitely established and con-
siderably strengthened Japan's foothold upon the Asiatic
continent. By the terms of the Portsmouth Peace Treaty of
September 5, 1905, which was approved by China by the
Peking Treaty of December 22, 1905, Japan succeeded to the
Russian Railway lines south of Changchun, now Hsinking,
totaling some 840 kilometres. Under the Additional Agree-
ment of December 22, 1905, between Japan and China, Japan
also acquired, this time from China, the right to reconstruct
and to operate the Antung-Mukden military line totaling
some 290 kilometres. In order to operate these lines and
to manage appurtenant rights attached thereto, the Japanese
Government caused the establishment of the South Manchuria
Railway Company in {L906iandjhe Company began its official
life on April 1, 1907.
The first task of the Company was to reconstruct and to
standardize variegated gauges of the lines it took over. First
to be completed was the Dairen-Port Arthur line of 60
kilometres which was ready in December, 1907. The Dairen-
Changchun main line, together with the Fushun and Yingkou
branch lines, were successfully reconstructed between Maj^,
1907, and April, 1908, the official operation of entire lines
being celebrated on May 30, 1908. The reconstruction work
on the Antung-Mukden line was started in August, 1909, and,
after encountering numerous difficulties in railway engineering,
— 5 —


was completed in November, 1911. The double tracking of
these lines was also started in 1907 and the greater part of
which was completed by 1934. To-day the South Manchuria
Railway Company operates 1,129 kilometres of its own lines
in South Manchuria.
American Interest in Manchurian Railways
The history of international railway politics in Manchuria
during this period reveals the interesting fact that the United
States of America more than once tried to enter the Man-
churian railway arena but failed on every occasion. The
late E. H. Harriman, an American railway king, was the
first American who recognized the value of Manchurian rail-
way enterprises, and he boldly planned, as early as 1905, to
buy up both the South Manchuria Railway and the Chinese
Eastern Railway and to organize them as links in his aroun-
th^-worId~cKaifi. This plan failed when Japan refused to give
up her practically only fruit of the War. Harriman and his
New York financial group, through the aid of Willard Straight,
the American Consul-General at Mukden, and in co-operation
with a British interest, then tried, during 1908-1909, to materi-
alize the Chinchou-Aigun railway project, but the scheme
was brought to an abrupt end with the sudden death in
September, 1909, of Harriman, its motivating genius. After
the failure of these plans came Secretary Knox's famous
neutralization proposal, under which all railways in Manchuria
were to be purchased back by China with loans advanced by
interested Powers and then to be operated by an international
syndicate. The proposal met a strong international opposi-
tion and failed of realization. More than once since then
the " open door" policy has been invoked as an entering
— 6 —


wedge of American financial interests in the railway enter-
prises in Manchuria, all in vain. Notable among the latter
attempts was the China Consortium of 1920 which included
the American banking interests and which reserved a certain
railway project in Manchuria upon Japan's waiver, but noth-
ing, however, resulted therefrom.
The Hsinmintun-Fakumen Railway Project
In 1907, the new Viceroy of Manchuria undertook the
development of railway so as to connect North China
with Kirin and the Tumen River area and also with
Tsitsihar and Aigun. As a portion of the western system
thus projected, the Chinese Government in November, 1907,
entered into an agreement with Pauling and Company, a
British firm, for the construction of a short line between
Hsinmintun and Fakumen. The project was opposed by the
Japanese Gevernment on the ground that it violated the
" parallel line " clause of the Sino-Japanese Protocol of 1905
and was never realized.
The Kirin-Changehun Railway
The only new railway line which was actually built during
this period was the Kirin-Changchun line of some 128 kilo-
metres. A preliminary* contract agreement for the construc-
tion of this line had been signed by the representatives of
the Chinese Eastern Railway for Russia and the Chinese
Government on July 11, 1902, but nothing was done before
the Russo-Japanese War. Under the Sino-Japanese Protocols
of 1905, China agreed to build this line with Japanese capital
and such a loan agreement was included in the convention
— 7 —


of April 15, 1907, for the transfer of the Hsinmintun-Mukden
line to China. Additional agreements were signed in 1908
and 1909, and the construction of the line which was com-
pleted and opened to traffic in October, 1912 was started by
the Soutfi Manchuria Railway Company in April, 1910. At
first, however, its operation was not profitable and the South
Manchuria Railway Company advanced a further loan in 1917
and took over the management and operation of the line
during the period the lean agreement was effective.
3. THIRD PERIOD, 1913-1920
The second decade of the present century was the least
productive period in railway building in Manchuria as only
one short line had been built. The World War was largely
responsible for this result. Japan and China, however, have
entered into several important railway agreements which be-
came the basis of future railway construction works as well
as of prolonged Sino-Japanese disputes.
Sino-Japanese Railway Agreements
The most important Sino-Japanese agreement of this period
is represented by the Treaties and Notes of 1915. Among
other things, these Treaties and Note^ extended the territorial
and railway leases from twenty-five years to one hundred
years, namely, the Kwantung Territory to 1997, the South
Manchuria Railway to 2002, and the Antung-Mukden line to
2007.
Equally important were the Sino-Japanese agreements known
as the " Five Manchurian and Mongolian Railway Agreement"
— 8 —


of 1913 and the "Four Manchurian and Mongolian Railway
Agreement" of 1918. Under these Agreements, a certain
group of Japanese bankers obtained from China the right to
finance the construction of the following railways: (1) Taonan-
Jehol Railway; (2) Kirin-Hailungcheng-Kaiyuan Railway; (3)
Changchun-Taonan Railway ; (4) Ssupingkai-Taonan Railway ;
and (5) a railway from a point on the Taonan-Jehol Railway
to a seaport on the Gulf of Pechihli to be decided upon by
consultation between China and banks concerned. In addition
to these, through a series of agreements made in 1907-1909
and 1918, the Japanese Government obtained, on behalf of
several Japanese banks, the right to construct the Kirin-Kainei
Railway. All of these projected railway lines except a short
line between Ssupingkai and Chengchiatun as we shall see
later, however, remained on paper only during the second
decade and only a small portion had been realized even
during the third decade.
Russian Contract for Harbin-Heiho Railway
The Russo-Asiatic Bank obtained an agreement from the
Chinese Government, signed on March 27, 1916, for the con-
struction of a line from Harbin to Heiho on the Amur River,
opposite the city of Bragoveshchensk, to be known as the
Pin-Hei Railway. It was to have a branch line from Mergen
to Tsitsihar. These lines, however, were never constructed
by the said Bank and were actually built by other agencies
during the third and fourth decades.
International Railway Politics
International railway politics continued to enliven the
western interest in Manchuria. This is best shown by the
— 9 —


Multi-power agreements relating to the international banking
consortium, namely, the Four Power Consortium of 1911,
the Six Power Consortium of 1912, and the China Consor-
tium of 1920. Especially outspoken was the China Consor-
tium of 1920 in its desire to finance the. construction of
railways in Manchuria. Japan tried to safeguard her special
interests in South Manchuria and Eastern Inner Mongolia
while the British and American Governments attempted to
include the construction of the Taonan-Jehol Railway and
its branch to the sea within the scope of the consortium
activities. After prolonged negotations, Japan succeeded in
reaching an agreement to except the South Machuria Railway
and its mines as well as several railways already projected
under Sino-Japanese agreements but conceded the inclusion
of the construction of the Taonan-Jehol Railway and its
branch to the sea within the scope of the consortium agree-
ment. Within the five years during which the consortium
agreement was in force, however, the China Consortium
undertook to float on loan with respect to financing the
construction of any railway or other enterprises in Man-
churia, thus ending the last attempt made by the Western
Powers to construct railways in Manchuria.
4. FOURTH PERIOD, 1921-1939
From the third decade of the present century, Western
Powers had been completely eliminated from international
railway politics in Manchuria and the question of railway
building has become largely a local problem between China
and Japan. It was during this period, however, that China
for the first time began to take up railway building in Man-
— 10 —


churia herself and to promote her own program of effecting
a railway network by ignoring various Sino-Japanese railway
agreements. As a result, a tense international atmosphere
was gradually created in Manchuria which eventually led to
the Manchurian Incident of 1931.
Chinese-Built Railways
Beginning in 1924, several railways were constructed during
this period through Chinese initiative without any foreign
participation. Of these State Railways, the more important
lines are the Mukden-Hailungcheng-Kirin line, the Harbin-
Hailun line, the Tsitsihar-Koshan line, and the Tahushan-
Tungliao line.
The Mukden-Hailungcheng-Kirin line was built in two
stages. The Mukden-Hailungcheng (or more specifically
Chaoyangchen) line of some 264 kilometres is one of the
very first of various railways projected by the Chinese authori-
ties at Mukden, and Japan approved its construction by the
Chinese in 1924 at the time when the contract agreement
for the construction of the Taonan-Angangchi line was signed.
It was started in July, 1926, and completed in September,
1928. The branch line to Hsian was also completed in
December, 1928. The Kirin-Hailungchen line, totaling some
183 kilometres, on the other hand, is one of the four rail-
ways, the construction of which bad been conceded to Japan
under the " Four Manchurian and Mongolian Railway Agree-
ment " of 1918, but it was built by the Kirin Provincial
Government by completely ignoring all Japanese protests. It
was started in June, 1927, and completed in August, 1929,
thereby effecting the direct connection between Mukden and
Kirin with a Chinese built-railway. The Mukden-Hailung-
— 11 —


cheng-Kirin line is one of the very few railways in Manchuria
which had been constructed entirely by Chinese engineers
with Chinese capital.
The Tahushan-Tungliao line, connecting the Mukden-
Shanhaikuan line with the Ssupingkai-Tsitsihar line, was
announced by the Chinese authorities at Mukden in 1925,
and Japan immediately protested against it on the basis of
the Sino-Japanese Protocol of 1905 as it clearly constitutes
a " parallel line" of the South Manchuria Railway. The
Mukden Government, in spite of Japanese protests, proceeded
to construct the line and completed it in November, 1927.
A short distance between Tahushan and Pataokuo had been
built earlier, in December, 1922, for the purpose of develop-
ing the coal mines at Pataokuo.
The Harbin-Hailun line via Hulun is a portion of the
railway connecting Harbin with Heiho which the Russo-
Asiatic Bank had contracted to build in 1916 but which
remained untouched. The Heilungkiang Provincial Govern-
ment took the project into its own hand and organized the
Huhai Railway Company in 1925 to undertake the actual
construction work. The building of the line was started in
October, 1926, at Manchuankou across the Sungari from
Harbin and completed in December, 1928. The total length
is some 215 kilometres.
The Tsitsihar-Koshan line was started in June, 1928, but
financial difficulties delayed the construction work and it
reached as far as Taian in March, 1930. Nothing was done
beyond Taian before the outbreak of the Manchurian Incident.
Several short branch lines were also added to the railway
map of Manchuria during this period. Among these, the
more important ones, especially in their relation to the future
railway network, are a line from Taoan, now Paichengtzu, to
— 12 —


Huiyuanchen, a distance of some 84 kilometres, which was
constructed during 1929-1931, a Peipiao branch line of the
Mukden-Shanhaikuan line, from Chinchou to Peipiao, a
distance of about 112 kilometres, which was laid during
1921-1924, and a Lafa branch line of the Tsitsiher-Koshan
line, a distance of some 48 kilometres between Ningnien to
Lafa, which was built in 1930. "
Japanese-Built Railways
While the Chinese authorities were thus busy working
out their own transportation program, two railways were
constructed under Japanese loan agreements during this period.
These are the Ssupingkai-Tsitsihar and Kirin-Tunhua lines.
The Ssupingkai-Tsitsihar line, covering 571 kilometres, the
only railway among the " Five Manchurian and Mongolian
Railway Agreement" of 1913 which was actually built in
accordance with the Agreement, was constructed by the South
Manchuria Railway Company in several sections. The first
section, that between Ssupingkai and Chengchiatun, was built
between April and October, 1917, and opened to traffic in
July, 1918. The second section, that between Chengchiatun
and Taonan. is based upon the Sino-Japanese loan agreement
of September 7, 1919, and its construction was started in
September, 1922, and completed in October, 1923, being
opened to traffic in July, 1924. Under the same agreement,
the Chengchiatun-Tungliao branch line was constructed during
April—December, 1921, and was opened to traffic in January,
1922. The third section, that between Taonan and Angangchi,
is based upon the Sino-Japanese loan contract agreement
signed at Mukden on September 3, 1924, and its construction
was started in May, 1925, and completed in July, 1926. The
— 13 —


last section, a short extension from Angangchi to Tsitsihar,
was built during June—December, 1928.
The Kirin-Tunhua line is a portion of the much-disputed
Kirin-Kainei line and is based upon several Sino-Japanese
agreements which were concluded in 1907-1909 and 1918.
The final and detailed contract agreement for financing the
construction of the Kirin-Tunhua extension was signed at
Peking on October 24, 1925. The construction work was
started by the South Manchuria Railway Company in June,
1926, and was completed in October, 1928. The extension
of this line to Kainei was steadfastly evaded by the Mukden
authorities and has become one of the complicated Sino-
Japanese issues prior to the Manchurian Incident.
In addition to the above Chinese State Railways, a short
private line was laid within the Kwantung Leased Territory,
namely, the Chinchou-Chengtzutan line. This line, covering
a distance of 102 kilometres, owes its birth to the Chinfu
Railway Company which was established in 1925. The con-
struction of the line was started in May, 1926, and completed
in October, 1927. The enterprise was not profitable and
after offering continued subsidies, the South Manchuria Rail-
way Company absorbed it in 1939.
5. FIFTH PERIOD, 1931-1939
With the establishment of Manchoukuo, a new era of
railway construction dawned over Manchuria and the railway
map of Manchuria was completely changed during the first
eight years' of her statehood. To this end, three revolutionary
steps were taken. The first was the entrusting to the South
Manchuria Railway Company of the management and opera-
— 14 —


tion of all Manchoukuo State Railways which the Manchou-
kuo Government had taken over in 1932. The second was
the drawing up of a comprehensive program of railway
construction for the purpose of expediting the development
of national resources and facilitating the organization of
national defence. The third was the outright purchase in
1935 of all Russian rights in the Chinese Eastern Railway,
renamed the North Manchuria Railway since 1932, thus
eliminating the last vestige of Russian control in North
Manchuria.
The speed with which railways had been built during the
past eight years of this decade is nothing short of a marvel.
The " General Outline of Economic Construction Program
of Manchoukuo published on March 1, 1933, envisaged the
country with 25,000 kilometres of railways in the future and
announced the proposed building of some 4,000 kilometres
of new lines within the next ten years, making a total of
10,000 kilometres by adding the existing lines. In seven and
one-half years, this dream has been already realized.
In line with the general policy, the Manchoukuo Govern-
ment had entrusted the responsible task of constructing new
railway lines to the South Manchuria Railway Company and
granted several contracts for this purpose. The first series
of new lines, for which the contract was concluded in March,
1933, included the Tuhua-Tumen, Lafa-Harbin, and Taitung-
Hailun lines. The Tunhua-Tumen line" with its Chaoyang-
chuan-Kaishantun branch is the final realization of the last
link in the much disputed Kirin-Kainei line. The next group
of railways for which the contract was granted in December,
1933, involved the Tumen-Mutankiang, Koupeiyingtzu-Ling-
yuan, and Peian-Tierhchan lines. The third contract, signed
in April, 1934, enumerated seven new lines, namely, the
— 15 —


Mutankiang-ChiamuSsu, Lingyuan-Chengte, Yehpaishan-Chih-
feng, Tierhchan-Heiho, Hsinking-Talai, Talai-Taonan, and
Huiyuanchen-Solun lines. The fourth contract, signed in
December, 1934, authorized three lines between Linkou and
Mishan, Solun and Halunarshan, and Ssupingkai and Hsian.
The fifth contract, signed in December, 1935, projected six
new lines, namely, the Mishan-Hulin, Noho-Nonkiang, Meiho-
Tunghua, Tunghua-Chian, Hsinlitun-Fuhsin-Ichan and Tai-
pingchuan-Lupei lines.
For the exclusive purpose of undertaking these manifold
railway construction works, the South Manchuria Railway
Company created the Railway Construction Bureau with its
headquarters in Dairen, later moved to Mukden, and branch
offices at Hsinking, Harbin, Tsitsihar, and Rashin. Additional
branch offices were opened from time to time in accordance
with the need created by the expanding radius of new railway
lines such as those at Tumen, Mutankiang, Peian, and
Paichengtzu. The difficulties which the South Manchuria
Railway Company had to face in the construction of railway
lines in the outlying regions of the country are beyond
description, but the work proceeded steadily upon the remains
of scores of sacrificed lives and the Company successfully
financed and completed the following new railways, all of
which are now in operation.
New Railway Lines
Years Lines
1933 Tunhua-Tumen.............
„ Tailin-Koshan .............
„ Taian-Koshan................
„ Lafa-Noho...................
Built, 1932-1939
Length Turned over to
in Kms. State Railways
...... 191.9 August 31
...... 163.3 November 30
...... 30.8
...... 38.8
— 16 —


Length Turned over to
Years Lines in Kms. State Railways
1934 Chaoyangchuan-Kaishantun ... 59.5 March 31
„ Lafa-Harbin and branches............293.7 August 31
„ Chinlingsu-Lingyuan ........................156.8 November 30
„ Peian-Lungchen..........................................136.8 „
1935 Tumen-Mutankiang ..............................248.7 June 30
„ Lingyuan-Pingchuan..............................87.2 September 30
„ Lungchen-Heiho and branch ... 170.3 October 31
„ Huiyuanchen-Solun..............................119.8 „
„ Hsinking-Paichengtzu ........................332.6 „
„ Yehpaishan-Chihfeng ........................146.9 November 30
1936 Pingchuan-Chengte ..............................97.4 June 15
„ Mutankiang-Linkou..............................110.0 June 30
„ Linkou-Mishan ..........................................170.9 „
„ Solun-South Hsingan ........................130.8 „
„ Ssupingkai-Hsian ....................................82.5 August 31
1937 Noho-Nonkiang..........................................93.5 June 30
„ Linkou-Chiamussu ..............................221.5 „
„ South Hsingan-Halunarshan ... 15.4 September 30
„ Hsinlitun-Ihsien..........................................131.5 „
„ Meiho-Tunghua..........................................130.2 October 31
„ Mishan-Hulin................................................160.9 November 30
1938 Lungtanshan-Tafengman..................22.4 September 30
„ Chengte-Kupeikou ..............................106.3 October 31
1939 Tunghua-Chian..........................................121.6
„ Hsinhsing-Peihuangling ..................82.4
„ Suihua-Shenshu..........................................135.8
„ Minghsan-Niuhsintai..................13.3
„ Suiyang-Tungning....................................96.2
— 17 —


PART II
1. S.M.R. AND GENERAL DEVELOPMENT
OF MANCHURIA
Seven years after the foundation of Manchoukuo the
South Manchuria Railway Company observes the completion
of 10,000 kilometres of lines under the General Directorate
of Railways at Mukden, of which total 4,000 kilometres have
been constructed since the advent of the new State.
This remarkable feat finds few parallels either in national
development or railway expansion, comparable to the winning
of the great American West, when the virgin plains of the
United States were transformed into fertile farmlands through
the march of the iron steed across the North American
continent.
Just as the civilization of Egypt depends on the bountiful
Nile, so the progress of Manchoukuo is inseparably linked
with the communication vertebra that is the S. M. R. In the
development of industry, just as the prosperity of great in-
dustrial cities of the world such as Pittsburgh, Gary, Young-
stown, Dusseldorf, Essen and Sheffield was made possible
only by smooth railway transportation, so not only industries
in Manchuria but industrial cities of Japan are making great
progress through the efficient transportation facilities provided
by the S. M. R.
The S. M. R. is bending every effort in this service and
is giving full co-operation in the strengthening of the Japan-
Manchoukuo economic bloc as well as in the execution of
that part of the Manchoukuo Five-Year Industrial Plan affect-
— 18 —


ing transportation. The S. M. R. has, moreover, contributed
greatly to various enterprises in the past by revising and
reducing freight rates in accordance with the true ideal of
service. From a national defence standpoint too, the com-
pany has a great mission to participate in the Japan-Man-
choukuo joint defence in conformity with the spirit of the
Japan-Manchoukuo Protocol.
As a national policy organ for Japan's advancement on
the continent, the South Manchuria Railway Company has
during the past thirty years carried out its important mission
in various fields. Although the company has come to lay
sole emphasis upon railway enterprises in consequence of the
transfer to Manchoukuo of administrative rights in the S. M. R.
Zone, and its withdrawal from heavy industries, it still is
performing its mission as an organ for the execution of
national policy through the establishment of a great research
organization to determine the policy to be pursued by Japan
in her advancement on the continent.
The achievement of harmony and co-operation among the
five principal races of Manchuria will be accomplished by
the development of transportation facilities. The mission of
the S. M. R. may be briefly summarized as the " realization
of Wangtaoism through railways." As the prophet Isaiah
expressed his ideal of road construction in Asia Minor in the
words, " And an highway shall be there, and a way.... the
wayfaring men, though fools, shall not err therein. Prepare
ye the way of the Lord, make straight in the desert a high-
way ... Every valley shall be exalted, and every mountain
and hill shall be made low, and the crooked shall be made
straight, and the rough places plain," so the S. M. R. has as
its motto " the Establishment of an Earthly Paradise in Man-
choukuo through Railways."
— 19 —


The extreme hardships which the men of Mantetsu under-
went in the service of railway construction following the
Manchurian Incident may be appreciated by the fact that the
number of Japanese employees who were killed in the per-
formance of their duties and whose spirits are now enshrined
in the Yasukuni Shrine, Tokyo, alone totals sixty. In celebrat-
ing the construction of 10,000 kilometres of railways in Man-
churia, the South Manchuria Railway Company prays for the
repose of the spirits of those who gallantly sacrificed their
lives in railway construction work.
In order to rectify the mistaken conception of conditions
in Manchoukuo on the part of various European and American
countries generally the S. M. R. Company issues a biennial
Report on Progress in Manchuria and a quarterly magazine
entitled Contemporary Manchuria (both in English), and other
publications in various languages, as well as producing motion
pictures presenting Manchurian life and customs and industri-
al conditions in the new State. Every convenience is accorded
to foreigners touring Manchoukuo.
During 1938 the Company issued no fewer than 600 free
railway passes to foreigners making an inspection tour of
Manchuria. From this a conception may be formed of the
great efforts which the S. M. R. is making to give the out-
side world an appreciation of actual conditions in Man-
churia.
2. THE ORGANIZATION OF THE S. M. R.
The South Manchuria Railway Company was established
for the purpose of managing and operating the main and
branch lines of the former' Chinese Eastern Railway in South
— 20 —


Manchuria, which the Japanese Government took over from
Soviet Russia by virtue of the Treaty of Portsmouth concluded
in September 1905 upon the termination of the Russo-Japa-
nese War.
Preparations for the founding of the company were com-
menced in accordance with the Imperial Ordinance Concerning
the Establishment of the South Manchuria Railway Company,
promulgated in June 1906; and in the following month an
organization committee, composed of eighty members and
headed by General Gentaro Kodama, Chief of the General
Staff, was appointed. The late Count Shimpei Goto was ap-
pointed first president of the S. M. R., and the Company
formally came into being on December 7 of the same year.
The South Manchuria Railway Company was at first under
the control of the Kwantung Government-General but it was
later brought under the supervision of the Governor of
Kwantung Territory when the aforementioned office was
abolished and the Kwantung Government was formed in its
stead. Following the Manchurian Incident the Company was
placed under the control of the Japanese Ambassador Pleni-
potentiary to Manchoukuo, who is concurrently Commander-
in-Chief of the Kwantung Army.
The Ministry of Communications in Tokyo was originally
the central supervisory organ, but this function was later
transferred to the Prime Minister and then to the Ministry
of Overseas Affairs, reverting to the Prime Minister in Decem-
ber, 1934. The Superintendence Department of the Kwantung
Bureau in Hsinking and the Manchurian Affairs Bureau of
the Japanese Government are at present the ex post facto
supervisory organs of the South Manchuria Railway Company.
The executive of the Company comprises one president,
two vice-presidents, eight directors and five auditors. The
— 21 —


present president is Mr. Takuichi Ohmura; the vice-presidents,
Mr. Kenichiro Sasaki and Mr. Ojiro Sato ; the directors, Mr.
Toshinori Nakanishi, Mr. Jiuyemon Takebe, Mr. Takashi
Kubo, Mr. Michio Izawa, Mr. Toshio Hirashima, Mr. Mata-
jiro Hirayama, Mr. Itto Inoko, and Mr. Ken Ogaki; and the
auditors, Mr. Shintaro Ohashi, Mr. Masatsune Ogura, Mr.
Kunizo Hara, Mr. Hirozo Mori, and Mr. Yakichi Ataka.
The president and vice-presidents are appointed by the
Japanese Government after obtaining Imperial sanction. The
directors are also appointed by the Government from among
the shareholders with more than 100 shares. The auditors
are selected from among the shareholders at the general meet-
ing of shareholders. The term of office of both the president
and vice-presidents is five years, that of directors four years,
and of auditors, three years.
The number of persons employed by the Company (as in
August 1939) exceeds a quarter million, of which " sha-in"
or salaried employees number more than 150,000 including
50,000 Manchurians. The total personnel expenditures of the
Company for the 1937 fiscal year amounted to the huge sum
of 113,000,000 yen.
Railways in Manchuria and North Chosen measuring 10,-
000 kilometres, and enterprises affiliated therewith such as
ports and harbours, hotels, coal mines and iron and steel
works, form the basic undertakings of the S. M. R. Company.
In addition there are sixty-seven affiliated concerns which the
S. M. R. controls directly or indirectly, through securities held
by the Company. Two-thirds of the enterprise capital of all
joint-stock companies in Manchuria other than itself are held
by the railway company.
The income and expenditures of the S. M. R. Company
on the whole have increased steadily year by year. The
— 22 —


total revenue and outlay for the 1938 fiscal year amounted to
387,410,000 yen and 314,540,000 yen respectively, as compared
with 13,000,000 yen and 11,000,000 yen in the year of the
establishment of the company, both figures representing some
thirty-fold increase over 1906. The Company's profits for the
year under review amounted to 72,870,000 yen. The per-
centage of expenditure against income has invariably ranged
between 80 and 85 per cent.
The railways and the mines are the two main enterprises,
from the standpoint of financial returns. The receipts from
the railways in 1938 amounted to 192,740,000 yen, comprising
about 50 per cent of the revenue from all sources, while ex-
penditures reached 82,940,000 yen or about 22 per cent of
the gross outlay, leaving a profit of 109,000,000 yen.
Representing about 30 per cent of the gross receipts, the
income of the mining operations of the Company for the
same year amounted to 105,780,000 yen. Expenditures totalled
89,200,000 yen or 30 per cent of the total disbursements. The
profit was 16,570,000 yen.
The revenue from and expenditures upon ports and har-
bours reached 23,080,000 yen and 15,840,000 yen respectively,
in each case representing about six per cent of the grand totals.
3. CAPITAL AND INVESTMENTS
The South Manchuria Railway was established with an
initial capital of 200,000,000 yen, of which 100,000,000 yen
was invested by the Japanese Government in kind, including
the railways, coal mines and all other property south of Hsin-
king (then Changchun), which Japan took over from Tzarist
Russia. The remaining 100,000,000 yen was raised by offer-
— 23 —


ing shares for general subscription in Japan and China.
The business of the company expanded rapidly following
the World War and the S. M. R., out of necessity, increased
its capital to 440,000,000 yen in 1920, thirteen years after its
establishment. The capital was again raised to 800,000,000
yen (16,000,000 shares) in March, 1933 because of enormous
funds required for the management and operation of all State
railways which the new Government entrusted to the S. M. R.
following the foundation of Manchoukuo, and for the con-
struction of new railway lines, harbour improvements at North
Korean ports, and investments in the Showa Steel Works at
Anshan, the Manchuria Chemical Industry Company and other
enterprises. The Japanese Government, which undertook to
furnish one-half of the first and second capital increases,
agreed to redeem that portion of S. M. R. debentures in British
currency issued in London equivalent to its share of the capital
increase. On the occasion of the second capital increase,
200,000 of the shares offered for public subscription were
allotted to S. M. R. employees at face-value. Public reception
of the shares was very satisfactory, and the shares were sold
at an average premium of ¥ 5.18.
The par value of S. M. R. shares at the time of the organi-
zation of the Company was fixed at 200 yen. It was later
changed to 100 yen, and in 1928, to 50 yen.
Of the total capital stock of 800,000,000 yen, the shares
subscribed by the public are fully paid up. The amount
paid in by the Government up to the end of September,
1938 aggregated 296,208,000 yen, and the amount still unpaid
totalled 103,792,000 yen.
The working funds of the S. M. R. as at the end of Septem-
ber 1938 amounted to 1,825,350,000 yen, consisting of the
amount paid up on shares, reserve funds totalling 296,620,000
— 24 —


yen, and domestic debentures amounting to 832,500,000 yen.
In the field of investment, holdings in such commercial
enterprises as railways, hotels, ports and harbours, coal mines,
shale oil and coal liquefaction plants, which constitute the
Company's main business, and the amount of capital spent
for the construction of non-commercial undertakings such as
educational institutions, hospitals and research facilities, have
totalled 847,500,000 yen. In addition, the S. M. R. Company
has advanced funds to the amount of 625,580,000 yen to
non-company enterprises for the purpose of assisting in the
development of Manchuria, has invested 170,890,000 yen in
various comanies for promoting Manchurian industry, as well
as spending some 283,770,000 yen on the construction of
State railways, which sum is to be eventually paid back by
the Manchoukuo Government. Total investments in all
S. M. R. and non-company enterprises up to the end of
September 1938 amounted to 1,927,830,000 yen. Funds for
these investments were obtained from paid-up shares, money
raised by issuing debentures, and from the Company's reserves.
Classified according to enterprises, investments made in
the S. M. R. up to the end of December, 1937 were as follows :
Amount Percentage
(Â¥ 1,000)
Railways ..............................
Hotels .................................
Ports and harbours ...............
Coal mines...........................
Shale oil plant .....................
Coal liquefaction plant............
Iron and steel works ............
Industrial development facilities
Local facilities........................
Miscellaneous facilities ............
548 —
8,592 1
181,874 21
73,529 9
852,720 100
317,466 37
5,247 1
110,239 13
137,260 16
12,753 1
5,302 1
Total
25


4. RAILWAY ENTERPRISES
The South Manchuria Railway Company transports annual-
ly no fewer than 40,000,000 passengers and 49,000,000 metric
tons of freight on 10,000 kilometres of railways under its
jurisdiction, representing a total capital investment of over
1,000,000,000 yen. For convenience in business administra-
tion, these railways are divided into S. M. R. lines, State
Railways, and North Chosen Railways. Although marked
differences are perceptible in their respective business condi-
tions, there is one common characteristic which applies to all,
and which reflects the economic conditions of Manchoukuo.
Manchoukuo is a comparatively sparsely populated and
undeveloped country, and is now on the way to tremendous
industrial expansion. Agricultural products and minerals are
the principal resources and constitute the chief exports, while
manufactured wares are the main imports. In consequence,
the revenue from the railways relies more upon goods than
passengers. The main characteristics of freight transportation
in Manchuria are the shipment of heavy goods such as
agricultural and mineral products from the interior to the
seaports, and the tranport of such light commodities as manu-
factured products or construction materials from the seaports
to the interior.
The ratio of passenger and freight receipts is about one
to three. The principal commodities carried are Manchurian
staple products such as soya beans, kaoliang, bean cake and
cereals, and coal and iron. The volumes of shipments differ
markedly according to their destinations, and the tonnage is
subject to marked seasonal fluctuations, which all reflect the
special conditions prevailing in Manchuria. The growth in
the volume of general merchandise and the rapid increase in
— 26 —


shipments of such construction materials as iron and steel,
lumber, cement, crushed rocks and gravel, coincident with
the development and industrial progress of Manchoukuo in
recent years are also noteworthy. The business condition of
the S. M. R. lines, the Manchoukuo State Railways and the
North Chosen Railways, in the light of these various con-
ditions, is given in the following outline.
S. M.R. Lines
Measuring 1,129.1 kilometres, the railways owned by the
S. M. R. consist of two trunk lines—the Dairen-Hsinking line
(704 km.) and the Antung-Mukden line (260 km.)—and the
Fushun, Yingkou, Port Arthur and other branch lines. These
railways are the fountain-head from which the S. M. R. derives
its huge revenue.
The locomotives, passenger and freight cars operating on
S. M. R. lines and the various other railway facilities are up-
to-date and in perfect condition, and compare favorably with
the best in the world. Thirty thousand persons are employed
on these lines, which have a handling capacity of more than
30,000,000 metric tons of goods annually.
Huge sums of money have been invested in the railway
enterprises; the initial investment of 35,000,000 yen made at
the time of the establishment of the S. M. R., has increased
today to 300,000,000 yen. The proportion of income to ex-
penditures is 100 to 40 and the high ratio of profit to ex-
penditures, amounting to about 28 per cent, is almost without
parallel.
According to an analysis made in 1937, the railway receipts
from the S. M. R. lines rapidly increased after the Manchurian
Incident, and have amounted to from 130,000,000 yen to
— 27 —


150,000,000 yen annually in recent years. On the other
hand, annual expenditures have totalled only about 60,000,000
yen. Compared with 60 per cent in the case of Japanese
Government Railways, 75 per cent for the first class American
railways, and about 80 per cent for the four big railways of
Great Britain, the business coefficient of 40 per cent in the
case of the S. M. R. lines is an exceptional record. The
average income per kilometre of lines operated for business
is. thus very high, amounting to 130,000 yen in marked
contrast to 50,000 yen in Great Britain, 30,000 yen in Japan
and Germany, and around 20,000 yen in the United States
and France.
The ratio of S. M. R. passenger and freight receipts is 2
to 8 as against 4.5 to 5.5 in Japan and Great Britain, and 3
to 7 in Germany and France. As the above figures show,
the S. M. R. relies more upon freight receipts than on income
from the passenger service, and is somewhat in a similar
position to the American railways.
The number of passengers transported on the S. M. R.
lines totals between 15,000,000 and 18,000,000 annually. The
distance travelled by each passenger averages about 80 to 90
kilometres; the average fare per kilometre is 1.3 sen; and
the number of passengers travelling per kilometre of lines
operated for business averages about 1,500,000.
The average distance travelled by each passenger in other
countries with the exception of the United States and Italy,
where it is about 60 kilometres, ranges between 20 and 30
kilometres. Many of the passengers on S. M. R. trains travel
long distances. The average fare of each passenger per kilo-
metre is somewhat higher than that in Japan, Germany and
France, which is about one sen, but it is lower in comparison
with the average fare of about two sen in Great Britain, the
— 28 —


United States and Italy. The average number of passengers
travelling per kilometre is far greater than in other countries
excepting Japan, where it is about the same. In Britain the
average number is about 1,000,000; in Germany, France and
Italy, it is between 300,000 and 800,000, and in the United
States, 100,000. From these figures the heavy passenger traffic
on the S. M. R. lines in comparison with other countries
may be readily understood.
The amount of goods shipped annually on the S. M. R.
lines totals between 20,000,000 and 25,000,000 metric tons.
One metric ton of freight is transported for a distance of
300 kilometres on an average; the average freight rate per
kilometre is 1.6 sen a metric ton; and the average amount
of goods transported per kilometre is 6,400,000 metric tons.
The average distance one metric ton of freight is transported
is somewhat the same as in the United States, but is long
when compared with 230 kilometres in the case of Italy,
150 kilometres for Japan, Germany and France, and about
70 kilometres for Britain. The average freight rate for one
ton per kilometre is far lower than that in Britain, Germany,
France and Italy, which is over 2 sen. It is about the same
as in Japan, and a little higher than in the United States.
The average tonnage transported per kilometre is very large
and is about eight times that in other countries.
The profits of the S. M. R. rely mostly upon income from
the railways, particularly freight revenue. Of the annual gross
proceeds amounting to some 355,000,000 yen, the railway
receipts comprise about 150,000,000 yen (43 per cent). Of
this sum, the freight revenue amounts to 116,000,000 yen or
77 per cent. As about 70 per cent of the freight revenue is
obtained from handling coal and staple products, the volume
of these products has an important bearing upon railway
— 29 —


receipts and, in consequence, also upon the gross revenue of
the S.M.R.
The principal commodities carried on the S. M. R. lines
are coal (9,600,000 metric tons per annum), staple products
(3,600,000 tons) such as soya beans, bean cake, kaoliang and
maize; minerals and ores (1,700,000 tons); metals and manu-
factures thereof (1,000,000 tons); cement (400,000 tons); lumber
(500,000 tons); salt (500,000 tons); and building-stones (200,000
tons); as well as fruits, vegetables, fats and oils, lime, flour,
sugar, cotton cloth, and gunny bags. The ratio of goods
transported southward to goods shipped northward is 60 to 40.
The main items of the annual outlay totalling 61,000,000
yen, are transportation and operation expenses amounting to
about 20,000,000 yen, expenses for the repair and preservation
of rolling-stock amounting to some 14,000,000 yen, and special
allowances amounting to 9,000,000 yen. The appropriation
of more than 7,000,000 yen for the redemption fund is also
worthy of notice.
Manchoukuo State Railways
The total length of the Manchoukuo State Railways op-
erated commercially is 8,781.1 kilometres. These railways are
undergoing complete transformation under the efficient man-
agement of the S. M. R. Company, which has been entrusted
by the Manchoukuo Government with their operation. The
business coefficient of the State Railways, however, still falls
far behind that of the S. M. R. lines.
Ninety thousand persons are employed on the State Rail-
ways. It is interesting to note in passing that the Harbin
Railway Directorate employs some 2,000 White Russians.
The number of passengers transported on the State Railways
— 30 —


has recently exceeded that on the S. M. R. lines, and already
totals about 20,000,000 annually. Freight transportation, how-
ever, is a little less than over the S. M. R. lines, and amounts
to 21,000,000 metric tons a year. The ratio of income to
expenditures is generally about 100 to 80. Even if the number
of passengers and the amount of goods transported on the
State Railways should equal those on the S. M. R. lines, the
traffic on the former would be far less than on the latter
because the length of the State Railways operated for business
is seven times that of the S. M. R. lines.
The ratio of passenger receipts to freight revenue on State
Railways is about 2.9 to 7.1. The percentage of income from
the passenger service is somewhat higher than that of the
S. M. R. lines, but this is due to the exceedingly large freight
revenue of the S. M. R. lines. The income of the State
Railways also relies greatly upon freight revenue.
The principal commodities shipped on the State Railways
are agricultural staple products (4,300,000 metric tons an-
nually), chiefly soya beans (2,000,000 tons); coal (1,600,000
tons); iron and steel material (320,000 tons); lumber and
crushed rocks (190,000 tons) ; cement (190,000 tons); flour
(400,000 tons); salt (300,000 tons); fruits, vegetables and live-
stock. As in the case of S. M. R. lines, more goods are trans-
ported southward than northward. This ratio is, however,
changing, with the steady increase in shipments to the interior
in recent years.
North Chosen Railways
The management of the North Chosen Railways, which
were intended to join with the terminal port of the former
Kirin-Kainei Railway, was entrusted by the Chosen Govern-
— 31 —


ment-General to the South Manchuria Railway Company in
October, 1933, upon the opening of the Hsinking-Tumen
Railway. The length of the lines operated for business is
352.4 kilometres.
Although the North Chosen Railways yield a revenue of
only 6,000,000-8,000,000 yen a year, they are vitally important
from the standpoint of economy and national defence in that
they connect the back-door of Manchoukuo, namely, the
North Korean ports of Yuki, Rashin and Seishin.
The number of passengers transported on the North
Chosen Railways totals 2,000,000 a year, with passenger
receipts amounting to 1,800,000 yen. Goods transported on
the same lines amount to 2,400,000 metric tons, yielding
5,800,000 yen in freight revenue. The principal products
transported on the lines are coal (600,000 metric tons per
annum), lumber (300,000 tons), soya beans (500,000 tons),
millet, fruits and vegetables.
5. INTERNATIONAL CONNECTIONS
AND THROUGH TRAINS
As the gauge of the former Chinese Eastern Railway was
five feet and was 3£ inches broader than the standard gauge
of the S.M. R. lines, S.M.R. trains were formerly upable to
switch on to the C. E. R. tracks. In consequence, all passen-
gers bound for Harbin had to change trains at Hsinking, much
to thier incovenience. In order to remove this incovenience,
and to give every facility to passengers travelling between
Europe and Asia, the Hsinking-Harbin section, measuring 242
kilometres, was changed to the standard gauge on August 31,
1935, five months after the C. E. R. was purchased by the
— 32 —


Manchoukuo Government from Soviet Russia. The narrow-
ing of the gauge was started at 5 o'clock in the morning and
was completed in the amazingly short time of three hours—
a striking evidence of S. M. R. efficiency.
The 943.4 kilometre stretch between Dairen and Harbin
is now covered by the pride of the S. M. R., the ultra-modern,
stream-lined limited express " Asia," in twelve and a half
hours. One trip is made daily from both points by the
" Asia ".
The " Asia" was planned and constructed on the basis
of long years of experience gained by the South Manchuria
Railway Company on the continent. The fire box of the
engine was particularly designed so as to be adapted for
using Fushun coal as fuel. Weighing 202 metric tons (gross
weight), the locomotive is 25.7 metres long, has a capacity
of developing 2,400 horsepower, and can attain a maximum
speed of 130 kilometres per hour.
The " Asia " consists of seven coaches (besides the locomo-
tive), including five passenger cars, one dining car, and one
baggage and mail car. Domestic (Japanese) products were
almost entirely used in the construction of this super-express.
Total construction cost was about 500,000 yen, which is very
low when compared with 200,000 dollars expended on the
production of the new three-car high-speed express operated
by the Union Pacific Railway of the United States.
Europe-Asia Communication
By making good train connections, travellers proceeding
to Europe via Siberia can reach Paris within eleven days
after leaving Dairen. If a traveller bound for Europe takes
the super-express " Asia " leaving Dairen at 9 o'clock in the
— 33 —


morning, he will arrive at Harbin at 9:30 o'clock the same
evening. After stopping overnight in the North Manchurian
metropolis, he boards the 10:30 a.m. train bound for Man-
chouli and reaches the border city at 10:50 o'clock the
following morning. There he transfers to a trans-Siberian
express of the Molotovskaya Railway, which leaves at 2:34
o'clock in the afternoon, and arrives at Moscow at 1:35
o'clock on the afternoon of the seventh day after leaving
Manchouli. From Moscow, if he takes a Paris-bound express
at 11:05 p.m. the same day, he will reach the French capital
two days later at 9:30 p.m., enabling him to cover the
distance between Dairen and Paris in eleven days.
Passenger transportation connecting Europe and Asia was
inaugurated on December 10, 1936. A noticeable feature of
this service is that in case the trans-Siberian express bound
from Moscow does not reach the Soviet-Manchoukuo border
on schedule, the connecting S. M. R. train waits for its arrival.
This is a good instance of the unparalleled service which the
S. M. R. is giving to Europe-Asia passengers.
Connections from North * Manchurian railways with the
trans-Siberian line are made every Monday and Thursday, while
those from the latter with the former are made every Thursday
and Sunday, connecting with the Harbin bound train which
leaves Manchouli at 1 o'clock in the afternoon. This train
consists of one mail car, one first class sleeper, one second
class sleeper, one dining-car and one third class coach. The
S. M. R. has a member of the Japan Tourist Bureau on board
the train to offer his services to travellers in the examination
of passports, Customs inspection and other matters.
Connections with Japan can be made via three routes,
namely, Dairen-Moji, Fusan, and Seishin. In the case of the
Dairen-Moji route, if a traveller leaves Hs inking on the "Asia"
— 34 —


at 1:40 o'clock in the afternoon, he will arrive at Dairen at
11 o'clock the same night. At 11 o'clock the following morn-
ing, he sails from Dairen on a liner of the Osaka Shosen
Kaisha (18 sailings every month), and arrives at Moji at
7 a.m. on the third day, reaching Kobe at 8 a.m. on the
fourth day. From Kobe, if he takes the 8:50 a.m. express,
he will arrive in Tokyo at 7 :45 o'clock the same evening.
The average travelling time required to make the trip between
ti&inking and Tokyo via Dairen is 79 hours and 30 minutes.
In travelling via the North Korean port of Seishin, two
routes can be taken, one via the Tsuruga port, and the other
via the Niigata port, both on the Japan Sea board. The
average actual travelling time between Hsinking and Tokyo
via Tsuruga is 71 hours and 35 minutes, and via Niigata 70
hours and 55 minutes.
In the case of the route via the South Korean port of
Fusan, the through trains, the " Nozomi" and the " Hikari,"
run between Hsinking and Fusan, making two round trips
daily. The actual travelling time on this route averages 54
hours and 36 minutes.
Manchuria-China Through Traffic
On July 1, 1934, three years after the Manchurian In-
cident, the South Manchuria Railway Company, with the co-
operation of the Chinese railway authorities, inaugurated
international through traffic connecting Manchoukuo and
China, by operating one round trip daily between Mukden
and Peking. This service was increased to two return trips
in February, 1937, when two additional trains were placed on
the run. Availing itself of this occasion, the S. M. R. reduced
the travelling time between Mukden and Peking by two and
— 35 —


a half hours, with the result that if one left Mukden for
Peking at 8 o'clock in the morning, or vice-versa, he reached
his destination on the evening of the same day. Formerly it
took two days to make the trip between the two places.
Following the outbreak of the current China Incident ad-
ditional through trains were brought into service, increasing
the total to four express and four ordinary trains, and the
number of round trips to four. Further, the four return
trips were augmented to five as a result of the opening of
through train service between Fusan and Peking via Mukden
on October 1, 1938. Moreover, as the Tientsin-Pukow Rail-
way has been reopened for traffic since April 1, 1939, the
inauguration of through service between Fusan and Nanking
is merely a question of time. The materialization of through
train service as far as Canton is anticipated in the future.
6. HOTELS
For the convenience of travellers the South Manchuria
Railway Company, since opening for business, has maintained
hotels at principal cities along the railway lines, as well as
operating laundry plants and motor-car service as affiliated
enterprises. Investments involved in these enterprises at the
time the S. M. R. was established amounted to only 220,000
yen, but in 1938 they totalled 5,900,000 yen. To-day the S.M.R.
has seven Western style hotels, namely, the Yamato Hotels at
Dairen, Hoshigaura, Ogondai (Port Arthur), Mukden, Hsinking,
Harbin and Mutankiang. In addition, the Company directly
manages Japanese hotels at the Wulungpei Hot Springs,
Hulutao, Hsingcheng Hot Springs, Tsitsihar, and Aerhshan.
Up to several years ago the income from the hotels did
— 36 —


not exceed 1,000,000 yen annually. Since the Manchurian
Incident, however, the hotel business has prospered and has
yielded a revenue of more than 3,000,000 yen per annum.
During 1938 a total of 122,294 persons put up at the various
S. M. R. hotels. Of this number, 98,605 were guests at the
hotels on the S. M. R. lines, and 23,689 at the hotels on the
State railways.
Travel was retarded for a time following the outbreak of
the current China Incident, but with the restoration of peace
and stability in North China, the number of travellers coming
to Manchuria has rapidly increased and in the principal cities
such as Dairen, Mukden and Hsinking, the present hotel
facilities are far from sufficient to accommodate the ever in-
creasing volume of travellers. The hotels directly managed
by the S. M. R. are always crowded to capacity.
7. RAILWAY FREIGHT RATE POLICY
In recalling the freight rate policy of the S. M. R. at the
time Japanese, Soviet and Chinese influences were tangled
during the few years preceding the Manchurian Incident, it
is notable that the S. M. R. besides establishing special rates
on freight shipped to seaports, devised every possible measure
to divert goods from the interior to the S. M. R. lines and to
transport them southwards. The Company met with stiff
competition from Soviet Russia which did its utmost to gather
staple products raised on the fertile plains of North Man-
churia, to the former Chinese Eastern Railway and ship them
all to Vladivostok. In order to check the southward flow of
goods as much as possible, the Soviet railway authorities
charged unreasonably high rates on the southern section of
— 37 —


the C. E. R. connecting wit"h the S. M. R. line. On the other
hand, the former Northeastern regime, in an effort to expand
its own railway network in the country, made secret reduc-
tions on freight rates and bent all its energies to draw all
traffic to Yingkou and the Hopei ports. Thus, owing to the
intense rivalry between the Japanese, Soviet and Chinese in-
fluences, railway freight rates in Manchuria constantly changed,
placing the financial market in a state of utter confusion.
The South Manchuria Railway Company, which under-
took to control railways throughout Manchuria following the
Manchurian Incident, attempted to readjust the freight rate
policy, but general conditions at the time did not permit of
a basic revision of freight charges, and it took a long time
before a complete reorganization could be effected. When
the North Manchuria Railway (C. E. R.) was transferred to
the Manchoukuo Government in 1935 and the foundation for
unified management of all railways in Manchuria was finally
laid, the South Manchuria Railway Company, in conformity
with its new mission, decided to exert every effort to establish
a rational freight rate system covering all railways under its
jurisdiction. Thus, on February 1 of the following year re-
vised rates were effected on all lines.
In this revision, the freight rates over the State railways
were set with a view to developing industries throughout
Manchuria, particularly North Manchuria, and were accord-
ingly unified; tariffs on the S. M. R. lines were rationalized,
and the S. M. R. and State Railway tariff regulations, grading
of goods and freight charges were unified. Through such
revision, it was hoped to make the freight rates on all lines
in Manchuria conform to the new situation and also to enable
the S. M. R. to carry out satisfactorily its original mission as
a colonization railway. Above all, adequate provision in
— 38 —


freight rates on agricultural products is the fundamental pur-
pose of the Manchurian railway tariff policy. Moreover, since
soya beans, the most important agricultural product, are prin-
cipally produced in North Manchuria, farthest from the sea-
ports, the commercial value of this staple is gravely affected
by railway freight rates. Under such circumstances the de-
velopment of the agricultural industry and the progress of
immigration to Manchuria were most keenly anticipated in
the railway tariff revision, which resulted in lessening the
burden of shippers throughout the S. M R. and State railways
to the extent of some 5,600,000 yen annually.
The Manchoukuo Government, placing emphasis upon the
development of native resources needed in time of emergency
under the tense international situation, worked out the Five-
Year Industrial Plan, which laid the foundation for industrial
development of Manchuria, to expedite the consolidation of
national strength and the stabilization of national welfare. No
sooner had the Government launched the Five-Year Plan than
the China Incident broke out in July, 1937. In the course
of these developments, unification of the organization for
operation of all Manchurian railways and the North Chosen
Railways was carried out in October, 1936 and the founda-
tion for co-ordinated railway management was established.
Then followed important events such as the transfer of ad-
ministrative rights in the S/M. R. Zone, the establishment of
the Manchuria Industrial Development Corporation, and the
transfer of railway policing to Manchoukuo, which brought
about a new situation necessitating a revision of the South
Manchuria Railway Company's policy of railway operation
and management. Thus, on the basis of its original mission
as a colonization railway and in conformity with general
prevailing conditions, the S. M. R., in order to co-operate with
— 39 —


the Governments policy of developing Manchuria, particularly
North Manchuria, the policy of expanding heavy industries,
and the foreign trade policy, and, on the other hand, to effect
co-ordinated" management, unify freight rates on the S. M. R.,
State, and North Chosen railways, and to establish a rational,
efficacious tariff system, carried out a fundamental revision of
the tariff system on October 1, 1938.
Under this revision, it was planned to remove the numer-
ous irrationalities and inconveniences resulting from the dis-
crepancy in freight rates on the S. M. R., State and North
Chosen railways, by establishing flat rates under the system
of diminishing mileage rates for longer distances, on all these
lines, and also to enforce commodity rates on special impor-
tant products in order to appropriately contribute as much as
possible toward various policies under the new situation.
With the above objects in view, the S. M. R. divided the
railway tariff into two main categories, ordinary rates and
special rates. The ordinary rates are divided into ordinary
freight rates and commodity rates, the latter applicable to five
classes of commodities, namely, cereals, live-stock, lumber,
coal, and minerals and ores. The special rates, designed in
consideration of special circumstances, are applicable to special
districts and commodities, where the imposition of ordinary
freight rates is regarded unfair. The revision in the class-
ification of goods provides for the reduction of the former
six classes to three in the case of goods in small lots, and
in the case of carload lots, from six classes to four, in order
to simplify the handling of goods.
The decrease in freight revenue due directly to the enact-
ment of the revised rates exceeds 10,000,000 yen annually.
Of this sum about 50 per cent is represented by the drop
in freight revenues from staple products.
— 40 —


Under the new schedule, rates on cereals are based on
the principle of diminishing mileage rates for longer distances.
A uniform rate of 23 yen per metric tons is, however, levied
in the case of cereals transported more than 1,100 kilometres.
This has resulted in a substantial reduction of rates on cereals
transported from the interior to seaports, the charges on ship-
ments from Harbin for Dairen, Yingkou, Seishin and Rashin
decreasing by ¥2.80, ¥3.10, ¥2.60 and ¥2.50 per metric ton
respectively, in comparison with the former rates.
The enactment of the 23 yen unifom tariff on cereals is
indeed epochal, and will contribute in no small way toward
promoting the interests of North Manchuria farmers and
expediting the development of the hinterland. Particularly
great will be its contribution to the policy of increasing the
cultivation of soya beans from the standpoint of improving
Manchoukuo's international accounts.
8. SOYA BEANS AND THE S. M. R.
Soya bean is an important crop of Manchurian farmers,
comparable to what raw silk is to Japan. The Manchurian
soya bean ranks first in the world in both quality and pro-
duction. The finest varieties are produced chiefly in South
Manchuria, where no fewer than two hundred species can
be counted. They are generally classified into yellow, blue
and black beans, of which the yellow variety is mainly sent
to the market as the common Manchurian soya bean. This
species is rich in oil and is edible and is also abundantly
used for extracting oil. It served in olden times as food for
the peasants, fodder and for oil extraction, but it was not
until it had been introduced to the European market by
— 41 —


Japanese business men after the Russo-Japanese War of 1904-
05 that it gained world-wide fame. Production has since
gradually increased along with market demands, and at pre-
sent Manchuria produces about 4,000,000 metric tons annually
or 60 per cent of the world's soya bean crop. Twenty per
cent of the annual output is consumed at home, and of the
remaining 80 per cent, three-fifths is exported abroad and
two-fifths is used for oil extraction.
Manchurian national economy is based on rural economy.
Moreover, agricultural development by immigrants has played
an extremely important part in the promotion of Manchurian
economy and Manchurian agriculture has been marked by
an expansion in the production of soya beans to be supplied
as raw material to foreign countries. These facts have, on
the one hand, naturally fixed the course of the development
of Manchurian railways, while the development of railways
reciprocally has served to stimulate the development of agri-
culture. Agricultural and railway development have thus
been placed in a position of inter-dependence.
An investigation into soya bean transportation and freight
charges on the S. M. R. lines reveals' that of the total volume
of goods carried on these lines in 1939, amounting to
25,130,000 metric tons, soya bean shipments comprised 2,049,-
000 tons or 8.2 per cent, as against 9,577,000 tons of coal.
The gross freight revenue for the same year was 112,549,000
yen, of which 21,830,000 yen or 19.4 per cent was obtained
from bean shipments as compared with 33,893,000 yen from
coal. Next to coal, the soya bean constitutes the most
important source of railway revenue in Manchuria.
A familiar instance of how the vigorous construction of
new railway lines is acting as an incentive to the develop-
ment of agriculture follows:
— 42 —


As a result of the opening of the Tumen-Chiamussu
Railway and the Hulin-Linkou Railway, which latter leads
to the settlements of the fourth and fifth contingents of
Japanese immigrants in the region west of Lake Khanka, the
districts along these lines have been linked with the North
Korean ports of Yuki, Rashin and Seishin by railway, and
the transportation of agricultural products, formerly shipped
down the Sungari River to Harbin, direct to the port of
Rashin has become possible.
In South Manchuria the area cultivated to soya beans
comprises about ten per cent of the total acreage under
various crops. In North Manchuria (where many new Japa-
nese settlements are located), on the other hand, the bean
acreage is more than 30 per cent of the area under cultivation.
The expansion of the railway network in North Manchuria
and the rational management of railways in that part of
Manchuria are thus extremely important to the promotion
of Manchurian economy and as well as to facilitate the trans-
portation of agricultural products, chiefly soya beans, in North
Manchuria.
The South Manchuria Railway Company has paid con-
siderable attention to the improvement and propagation of
soya beans in the past. As a part of the Five-Year Agri-
cultural Plan, the Manchoukuo Government in 1937 launched
a five-year plan for improving and increasing the production
of soya beans in each province, but the principle was a
negative one aiming at increasing the yield of each plot and
was not drafted along positive lines to raise production by
increasing the area devoted to the crop. The Government,
however, realized its mistake when the need of acquiring
foreign currency by promoting exports came to be most
keenly felt as a result of the sudden change in the general
— 43 —


situation following the outbreak of the China Incident; and
the Government therefore revised the five-year plan in the
second year of its execution with the object of increasing the
annual soya bean production to 5,000,000 metric tons in 1941.
Various experiments and researches on the industrialization
of soya beans have been conducted at the S. M. R. Central
Laboratory in Dairen, with satisfactory results. Noteworthy
discoveries to date are the process of producing silk wool
substitute from bean cake and the extraction of oil from
soya beans by the alcoholic process. In order to commer-
cialize the latter process the Manchuria Soya Bean Industry
Company has been established at Jijiko, Dairen, with a capital
of 1,500,000 yen, of which 800,000 yen is invested by the
S. M. R.
9. COAL AND THE S. M. R.
There are no fewer than fifty coal mines in all parts
of Manchuria and the total coal deposits are estimated at
10,000,000,000 metric tons. Together with iron mining, coal
mining is the most important mining industry in Manchuria.
The coal mines which the South Manchuria Railway
Company took over from the Japanese Government were the
Fushun, Yentai and Wafangtien collieries of which the first
two mentioned were re-opened simultaneously with the estab-
lishmemt of the company. The S. M.R. began working the
Wafangtien Colliery in 1933, when it also undertook the
management of the coal mines at Chiaoho and Laotoukou.
The total area of these coal-fields is 8,800 square kilometres,
with the deposits aggregating 1,500,000,000 metric tons. The
coal is bituminous.
— 44 —


Following the foundation of Manchoukuo, the Manchuria
Coal Mining Company was established to manage the collieries
owned by the former regime and all other mines with the
exception of those worked by the S. M. R. The railway
company is now reportedly contemplating transfer of its
mines, excepting the Fushun and Yentai collieries, to the
Manchuria Coal Mining Company.
Manchuria Coal Mining Company
Established in May, 1934 with the object of effecting
unified control over the mining industry throughout Man-
churia, the Manchuria Coal Mining Company was originally
capitalized at 16,000,000 yen, of which 8,000,000 yen was
invested by the Manchoukuo Government in kind, and the
remaining 8,000,000 yen by the South Manchuria Railway
Company (5,000,000 yen in kind and 3,000,000 yen in cash).
With the establishment of the Manchuria Industrial
Development Corporation in October, 1937, however, the
shares held by the S. M. R. in the Manchuria Coal Mining
Company were transferred to the new corporation which
became the parent firm of the mining company. In February
of the same year the capital of the Manchuria Coal Mining
Company had been increased to 80,000,000 yen in oder to
increase production to 15,000,000 tons annually, in line with
the Manchoukuo Five-Year Industrial Plan.
Fushun Collieries
Coal mining is the main business of the Fushun Collieries.
In order, however, to reduce the cost of coal and to be
self-sufficient and self-supporting as well as to obtain additional
— 45 —


income, the Collieries also conduct various enterprises such
as a power plant and plants for the production of mond
gas, tar, pitch coke, oil from shale and by the liquefaction
of coal, sulphate of ammonia, sulphuric acid, oxygen and
hydrogen, in addition to a powder-mill, mechanical work-
shops, railways, public works, water-works, electric lighting
and telephone services. Electric power generated at Fushun
is sent to Mukden and Anshan. The capital expenditure
of the Fushun Collieries at the time they started operations
amounted to 50,000,000 yen, as compared with 137,000,000
yen in 1937.
Located about 30 miles to the east of Muden in the Hun
River valley, the Fushun coal-fields cover an area of about
16,000 acres, extending 10 miles east to west and two miles
north to south. The width of the seams ranges from 78 to
420 feet and averages 130 feet. The total deposits are esti-
mated at 1,000,000,000 metric tons of which some 600,000,000
tons can be mined. Annual output is about 9,000,000 tons.
The daily production of the Fushun Collieries at the time
they were taken over by the South Manchuria Railway Com-
pany amounted to only 360 metric tons. The average daily
output has since increased to more than 25,000 tons as a
result of the untiring efforts made by the S. M. R. in the im-
provement of workings, the opening up of new mines, the
expansion of mining equipment, and the improvement of
mining methods in tempo with the progress of the times.
The coal-beds are of great thickness the like of which is
exceptionally rare. Open-cut mining is carried on in a por-
tion of the mines, and 3,200,000 tons are mined annually
by this method alone.
— 46 —


Yentai and Other Mines
Estimated at 40,000,000 tons, the deposits of the Yentai
Mine are semi-anthracitic and are well adapted to coking.
Annual output is about 300,000 metric tons.
The Wafangtien, Chiaoho and Laotoukou mines are all
worked on a small scale and turn out about 50,000 tons,
30,000 tons and 60,000 tons respectively, annually.
Record of Coal Sales
Revenue from the Company's mines, chiefly derived from
the sale of coal, occupies second place in the South Man-
churia Railway Company's income, ranking next to railway
receipts. In recent years it has amounted to about 90,000,000
yen annually, or about 30 per cent of the Company's gross
proceeds.
The Company's income from mining in 1937 totalled
91,000,000 yen, of which 88,000,000 yen was obtained from
the sale of coal. Coal sales in recent years have averaged
between 7,000,000 and 10,000,000 metric tons annually. The
amount sold in 1937 totalled 10,000,000 tons, of which
1,900,000 tons were used by the S. M. R., 4,900,000 tons were
sold in Manchuria, 2,300,000 tons were exported, and 820,000
tons were used for transporting coal shipments. The sale
of coal mined from the S. M. R.-owned collieries is exclusively
undertaken by the Japan-Manchuria Trading Company, which
is directly managed by the South Manchuria Railway Company.
10. THE S. M. R. AND OIL EXTRACTION
It was around 1907 that shale was first discovered as an
oil yielding "rock". In view of the indispensability of fuel
— 47 —


oil in national defence, various experiments were conducted as
a result of which, the S. M. R. succeeded in discovering the
so-called Fushun process in 1925. After government permit
was obtained and further concrete experiments were begun
the following year, the S. M. R. commenced construction of
a plant at Fushun in 1928 at a cost of ¥7,000,000. This
plant was completed the following year.
When experiments and experience showed that oil produc-
tion can be doubled by improving the furnace, the S. M. R.
soon carried out the improvements and in addition constructed
a dry distillation plant in 1935 and a volatile oil plant im-
mediately afterwards.
Furthermore, in conformity with the national fuel policy,
a gigantic expansion program calling for increased production
within five years beginning with February, 1936, at a total
cost of ¥ 18,000,000, was launched. The enterprise appropria-
tion for shale oil amounted to ¥ 13,000,000 in 1937, while
incomes from the sale of crude oil, crude wax and coke
totalled ¥9,000,000 for the same year.
Oil shale deposits at Fushun which are estimated at
5,000,000,000 metric tons are about 130 meters thick, but oil
shale which is used as raw material in manufacturing oil
comes from the upper two-thirds of the shale layer, the oil
content of which is about 6 per cent on the average.
Oil shale containing much more oil than the Fushun
shale are said to be found in the state of Colorado in the
United States and also in Estonia, but there being no way
of profitably exploiting these deposits it seems as though
nothing much has been done in those countries other than
the staking of claims. The extraction of oil from shale at
Fushun is not only a pride of the S. M. R. but also of Japan.
During the earlier part of the nineteenth century, the
— 48 —


production of oil similar to petroleum through dry distilla-
tion was discovered, and since then shale oil dry distillation
plants were constructed in Scotland, France, North America
and Canada, but when rich extensive oil fields were discovered
in North America in 1895, the continuation of shale oil
extraction was rendered economically inadvisable.
As soon as the national policy regarding fuel oil began
to be regarded with great importance, the S. M. R. drafted
plans for the inauguration of coal liquefaction and instructed
the Central Research Laboratory (of the Company) to con-
duct necessary experiments and research. It was finally con-
cluded in May, 1936 that this undertaking was feasible.
About the same time the Ministry of the Navy was also
requested to conduct experiments, and favorable encouraging
results were also produced. In addition it was proven that
the Fushun coal was ideally suitable for coal liquefaction
purposes.
Thus, with the results obtained from the experiments and
research which were conducted at a huge cost over a period
of years and months, coal liquefaction was begun on a large
scale. All matters pertaining to the new enterprises were
transferred from the Central Research Laboratory to Fushun
in August, 1936, and construction work on the plant which
cost ¥14,000,000 was begun.
President Ohmra commented on the completion of the
direct liquefaction method on July 22, 1939, in the following
words :
The coal liquefaction enterprise of the South Manchuria Railway
Company has its beginning in 1928 when Mr. Kumetaro Yamamoto
who was then the president, after drafting concrete plans for con-
ducting coal liquefaction, requested the naval authorities of the
Tokushima fueling station to carry out extensive studies on the
subject. The Navy Ministry complied with this request and con-
— 49 —


ducted energetic experiments. The efforts of the Navy and the
S. M. R. Central Research Laboratory were combined for making
concrete industrial experiments.
Then, when in August, 1936, the former president, Mr. Yosuke
Matsuoka, established the Fushun Coal Liquefaction Office, construc-
tion of a plant was begun immediately, but with the adoption of
the Five-Year Industrial Development Plan by the Government of
Manchoukuo, the coal liquefaction undertaking was incorporated
into the Plan. Since then, innumerable difficulties were encountered
but with the completion of the plant in February of this year (1939),
coal liquefaction operations were formally begun. Further experi-
mental operations, however, were conducted and various weaknesses
were remedied. With this, the direct liquefaction method which
was considered difficult, was finally perfected, and the quality of
the oil produced was found to be exceptionally good.
Heretofore, the direct liquefaction method was considered
to be the most difficult process for the manufacture of petro-
leum artificially. The direct liquefaction method which the
Germans use is not as difficult as it might appear when
German lignitic coal is employed as raw material, but the
situation is somewhat different when lignitic coal of Man-
churia, and especially so when bituminous coal of Fushun
is used. Even the Germans have not succeeded in perfect-
ing a process using bituminous coal.
11. STEEL MANUFACTURING
The iron and steel undertaking is the industrialization of
the special process of magnetizing ores which was discovered
by the Central Research Laboratory in 1932. Construction
work on an experimental steel plant for the production of
20,000 metric tons of steel from rich Manchurian ores, using
Fushun coal, was begun in October, 1937. The enterprise
appropriation for this experiment which will be carried out
over a period of two years is ¥8,000,000.
— 50 —


Such is the present situation in the manufacture of iron
and steel by the S. M. R., but the fact that the Company
has made a tremendous contribution toward the development
of this industry in the past cannot be overlooked. No sooner
had the S. M. R. been organized than it discovered extensive
iron ore deposits in the vicinity of Anshan. Determined to
develop the iron industry, it drew up plans for a huge iron
works and completed the. first stage of the plans in 1919
when operations were first begun.
Although there were vast deposits of iron ore in the
vicinity of Anshan, the iron content was very poor being
only between 35 and 40 per cent. Since industrial exploi-
tation of these low grade ores was considered a matter of
much difficulty and unprofitable, the S. M. R. sent samples
of Anshan ores to Sweden, Germany and the University of
Minnesota for experiment and analysis, but on the other
hand its own experiments produced successful results and a
process peculiar to Anshan was discovered. As a result, the
production of the steel works increased tremendously, the
annual output of pig iron reaching 300,000 metric tons.
Then in April, 1933, or after the Manchurian Incident,
the Showa Steel Works capitalized at ¥100,000,000, was
established and all operations in this line were entrusted to
the new concern by the S. M. R. Today, the Showa Steel
Works is engaged in the manufacture of iron and steel, but
its success is entirely due to the trying experiences of the past.
12. PORTS AND HARBOURS
Ports and harbours and inland water navigation which is
inseparably linked with the S. M. R. constitutes an important
— 51 —


part in the transportation undertakings of the S. M. R. In
November, 1936, the management of ports, harbours and
waterways were placed under the supervision of the General
Directorate of Railways together with the unification of all
railways under the same organ. As a result, the ports of
Dairen, Ryojun, Yingkou, Hopei, Antung, Hulutao and three
North Chosen ports and the transportation facilities on the
Sungari, Heilungkiang and Ussuri rivers were incorporated
under the management of the General Directorate of Railways.
In addition piers are managed by the S. M. R. at Kanseishi
(Dairen), Shanghai and Kawasaki, Japan to facilitate the ex-
portation of coal, pig iron, ammonium of sulphate and other
commodities.
At the beginning, the S. M. R. appropriated about ¥ 1,000,-
000 for the direct management of various Manchurian ports,
but by the end of the fiscal year, 1937, total investment in
this enterprise amounted to ¥ 96,000,000. Incomes from ports
and harbours have increased or declined according to the
nature of freight handled, but in recent years, they totalled
between 12,000,000 and 15,000,000 yen, 80 per cent of which
coming from handling of freight.
Since the greater part of rail-borne traffic in Manchuria
begins or ends at a seaport, the equipment of ports and
harbours, suitability of harbour facilities and operations, high
or low charges and connection between rail and ship have
an immediate effect upon railway transportation, and conse-
quently an important bearing upon the carrying out of the
mission of developing the continent. Of the average 38,000,-
000 metric tons of freight transported during each of the
three years between 1934 and 1936, 26 per cent arrived at
or departed from Dairen, or roughly 34 per cent when
Yingkou, Antung, Ryojun, and three North Chosen ports are
— 52 —


included. Moreover, goods exported from ports and harbours
under S. M.R. control aggregated in 1937, 8,103,987 metric
tons and imports 5,779,464 metric tons or a total of 13,883,451
metric tons, while the number of vessels docking at wharves
totalled 9,676.
Dairen
The port of Dairen, which is an ice-free port, was handed
over to the Japanese upon the termination of the Russo-
Japanese War, but since then, a huge sum of ¥70,000,000
has been invested in the improvement of port facilities, with
the result that Dairen's complexion was radically changed.
There is also a coaling pier at Kanseishi across the bay, and
one for loading and unloading dangerous goods at Jijiko.
The port of Dairen holds the premier position among all
Manchurian ports. Practically 80 per cent of all exports and
imports pass through this port. Approximately 10,000,000
metric tons of goods pass through Dairen in a year, 7,000,000
metric tons of which are exports and 3,000,000 tons, imports.
Both exports and imports have increased ten times over the
respective amounts of the time the Company undertook manage-
ment. The principal export commodities are, like those trans-
ported over railroads, coal and staple produce, the former
amounting to 2,000,000 metric tons in a year and the latter
3,000,000 metric tons, their total being 80 per cent of all
export commodities.
In contrast to exports, import commodities are numerous,
but the fact that the volume of construction materials has
increased tremendously as a result of the phenomenal progress
made by Manchoukuo and the rise of various industries, is
worthy of special note.
— 53 —


Moreover, between 600,000 and 800,000 passengers embark
or land at Dairen annually, while the aggregate number of
incoming and outgoing ships reach 6,000 or a total tonnage
of 17,000,000 tons.
The volume of exports and imports of Ryojun, Yingkou
and Antung are 200,000, 1,000,000 and 150,000 metric tons
respectively, but these figures are quite insignificant when
compared with that of Dairen.
Ryojun
The port of Ryojun was formally opened to maritime
commerce on August 10, 1923, as an auxiliary port to £)airen.
Coal and salt are the chief import and export commodities
of this port.
Yingkou
Yingkou has a history of eighty years as a port, but it
was in 1910 that the S. M. R. commenced operations there.
Its present capacity is 1,600,000 metric tons, but is being
expanded considerably. It has a weakness of freezing during
the winter months.
Hopei Port
Hopei port which is located at the mouth of the Liao
River opposite Yingkou is not an ice-free port. The former
Northeastern regime used Hopei port as an outlet for the
goods carried over their lines which were built parallel to
the S. M. R. lines, in competition with Dairen until the
completion of its port at Hulutao. At the present time,
— 54 —


Hopei acts as an auxiliary port of Hulutao and is capable of
handling 300,000 metric tons of freight per annum.
Antung
Antung, which lies at a point 25 miles upstream from
the mouth of the Yalu River was opened as a port in May,
1912. Traffic is rather heavy, but as the years went by, the
waterway became poor. It freezes during the winter. How-
ever, since a large increase in the volume of goods that
assemble there is envisaged upon development of the Tung-
pientao region, improvement plans are being contemplated.
Hulutao
In 1908, the Northeastern regime formulated plans for
the construction of port facilities at Hulutao and numerous
attempts were made to carry out the plan since then, but it
was not until 1930 after a contract was signed between Chang
Hsueh-liang and a Dutch company that actual construction
work was begun. Undoubtedly, Dairen would have received
a serious threat if Hulutao had been completed, but the
outbreak of the Manchurian Incident brought about a com-
plete change.
In 1935, the S. M. R. launched a five-year plan to perfect
port facilities which would be capable of handling 3,500,000
metric tons of freight at a cost of ¥ 20,000,000, but with the
outbreak of the China Incident, relations with North China
were so intensified that the original plan was revised. As a
result, ¥ 10,000,000 were added to the former appropriation
and the capacity of the port increased to 4,000,000 metric
tons. The whole plan will be completed in 1940. It is
— 55 —


surmised that tremendous quantities of coal from Jehol Prov-
ince will seek an outlet at Hulutao.
The Three North Chosen Ports
Rashin. The South Manchuria Railway Company under-
took the construction of three ports in North Chosen in
1933, and will complete a portion of the plan in October,
1939. Considerable quantities of goods are assembled from
North Manchuria, the total for 1938 being 500,000 metric
tons, of which soya beans constituted 400,000 metric tons.
Seishin. Seishin was opened to international trade in 1908
and is the oldest among North Chosen ports. It has an an-
nual capacity of 900,000 metric tons. With the development
of steel manufacturing by the Japan Steel Company and Mi-
tsubishi, cement industry and oil-milling, this port will un-
doubtedly become prominent as an industrial port.
Yuki. Yuki was designated as a port in June, 1921. It
has an annual capacity of 600,000 metric tons. Coal and
lumber are the chief transit commodities.
Shanghai Wharf
The Yangchiakouma Wharf which is located in the eastern
sector of Potung, Shanghai, was purchased in 1928 by the
Chinese Eastern Railway from a Chinese, but it was trans-
ferred over to the S. M. R. when the North Manchuria Rail-
way was taken over. However, the Manchoukuo Government
purchased all rights in April, 1936, and has entrusted the
management to the Dairen Kisen Kaisha. Its capacity is
3,000 metric tons and two ships can dock at the same time.
The Huangpoma Wharf is situated on the Shanghai side.
— 56 —


It was purchased in September, 1911 and is now managed
by the Dairen Kisen Kaisha.
Nichi-Man Wharf
In December, 1928, the Company purchased land in Ka-
wasaki, Kanagawa Prefecture, Japan and constructed a coaling
pier, wharf for loading and unloading miscellaneous goods,
warehouses and other facilities. The capacity of this port is
1,500,000 metric tons.
Rivers
Manchurian rivers are frozen from November to March
of the following year and movement of ships is at a stand-
still, but when April comes along much activity takes place
on both banks, and economic life is revived.
The Sungari, Heilungkiang, Ussuri and Nonho rivers are
the most important waterways, but all of these are found in
North Manchuria. The Liao and Yalu rivers are also navi-
gable, but the majority of good waterways are found in North
Manchuria. When considering rivers individually, the Sungari
River is the most important since it traverses the vast plains
known as the granary of North Manchuria, and consequently
90 per cent of all inland water transportation is carried on
on this river.
Since it was entrusted after the foundation of Manchou-
kuo, with the management of all inland water transportation
facilities formerly managed by the Government, railways and
ports and harbours, the S. M. R. established at Mukden the
General Directorate of Railways on March 1, 1933 and under-
took the operation of river fleets and facilities in North
Manchuria.
— 57 —


In March, 1939, all private shipping firms were purchased
and incorporated into the unified river transportation system,
while in April, the North Manchuria River Transportation
Bureau, an organ under the General Directorate of Railways,
was established at Harbin. Thus, a singular rail and river
transportation system was perfected.
The total number of river boats is 113, their total tonnage
being 50,188, of sailing vessels 67 and tonnage thereof 5,689,
of barges 130 and tonnage thereof 62,122 or a grand total of
310 ships with a total tonnage of 117,999.
13. MOTOR-BUS SERVICE BY THE S.M.R.
In February, 1933, as enterprises subsidiary to the opera-
tion of Manchoukuo State Railways, the South Manchuria
Railway Company was entrusted with the management of
harbours and shipping, in addition to the conduct of motor-
bus services under the policy of " one bus line for one
highway." Since then the bus lines run by the General
Directorate of Railways have been expanded until today
their total length is approximately 20,000 kilometres.
The operation of bus lines was entrusted to the S. M. R.
because of the vital bearing it has not only upon the de-
velopment of industry, but also upon the maintenance of
public peace, and national defence. Specifically the following
three kinds of bus routes were brought under the manage-
ment of the S. M. R.:
1. Bus lines competing with railways;
2. Bus lines taking the place of railways ; and
3. Bus lines essential for the preservation of peace
and order, and for industrial development.
— 58 —


Passenger fares on the S. M. R. operated bus lines are,
generally speaking, similar to those on the State Railways,
and are charged according to distance. The standard rate is
five sen per person for each kilometre, although the rate may
vary somewhat according to the different lines. The minimum
rate is two sen per kilometre, and the maximum, six sen.
Freight rates differ according to kinds of goods, but are on
the whole 4.5 to 5.5 sen per 100 kilograms. On newly-opened
lines, however, the rate is fixed uniformly at 2.5 sen for all
classes of goods.
Passenger traffic on the bus lines since 1933 has grown
by leaps and bounds to a point that probably no one antici-
pated at the time of the commencement of the business.
Whereas the number of passengers carried by the bus lines
in the initial year of operation was 93,000, the total in 1937
reached 1,137,000, representing a twelve-fold increase. This
phenomenal gain was admittedly due partially to an extension
of the bus lines, but the other important contributing factors
were the improvement of public peace and the development
of industry, which combined to increase the number of Man-
chu passengers. The year 1938 saw an epochal advancement
in bus traffic as new routes were rapidly opened, swelling
the passenger traffic to 2,270,000 and the total receipts from
this traffic to over 2,000,000 yen.
Goods traffic on the bus lines also showed a twelve-fold
increase between 1933 and 1937, gaining in volume from
1,500 metric tons to 19,000 tons. Nevertheless, compared
with the figures for passenger traffic during the same period,
the above totals for goods traffic are still exceedingly small.
The total volume of goods carried on the bus routes in 1938
reached 23,707 metric tons, with freight charges' aggregating
598,731 yen.
— 59 —


Highways
Roads in Manchuria in the past have been notoriously
bad, most of them being natural roads, and artificial highways
being limited to a few. During the 300-year peaceful rule
of the Ching Dynasty practically no attention was paid by
the Central Government to the preservation and repair of
roads. As a result the local authorities were compelled to
enlist the assistance of local inhabitants in keeping the roads
from becoming a total loss.
With the advent of the Republic of China laws were
enacted for protecting and developing roads, but no practical
results were obtained therefrom due to successive internal and
external troubles and the cupidity of the warlords. What-
ever roads that were kept in comparatively good order were
those which had been developed for military and political
purposes. It was thus only in recent times that industrial
highways came to be built with harbours or railways as
their starting points. A fact which needs mentioning at
this point is the unusual development of country roads in
North Manchuria during the freight war between the South
Manchuria Railway and the old Chinese Eastern Railway,
when these two different railway systems were engaged in
a fierce competition to attract goods to their respective
lines.
The foundation of Manchoukuo heralded the advent of
the age of systematic modern highway construction. Soon
after the establishment of the new regime, a ten-year road
building program was drafted with 60,000 kilometres as the
goal. Due to various circumstances, however, this program
had to be revised, and the goal of the first five-year stage of
the modified plan ending in 1936 was set at 10,000 kilo*
— 60 —


metres, and that of the second five-year stage at 13,000, or
a total of 23,000 kilometres for the ten years.
14. IMMIGRATION AND THE S. M. R.
Immigration to Manchuria was one of the first problems
tackled by the South Manchuria Railway Company simulta-
neously with its establishment. The vital importance of this
question was pointed out by its first president, the late Count
Shimpei Goto, in his statement of reasons for assuming the
post. One passage in this statement reads :
" The Russo-Japanese War will probably not come to an
end with this single battle in Manchuria."
But added the late Count Goto:
" If, however, we can transfer 500,000 of our people to
Manchuria through the management of railways, even Russia
will not be able rashly to open hostilities against us."
Soon after the opening of its business, the South Man-
churia Railway Company offered to lease about 4,000,000
hectares of land within the Railway Zone to Japanese im-
migrants at low rentals with a view to encouraging them to
settle on the land. But those days were a boom age for the
S. M. R., and very few Japanese would take to agriculture
with its comparatively small profit. The result was that the
S. M. R. had no choice but to lease its land to native in-
habitants.
However, when the world depression of 1919 also struck
Manchuria, an increasing number of Japanese residents in
the country began to turn to agriculture. The S. M. R. seized
this opportunity to encourage the settlement of Japanese on
farms by affording every possible facility therefor. Regarding
— 61 —


the S. M. R. Zone as a huge experimental farm, the Company,
in co-operation with the Japanese military, authorities in
Manchuria, in 1914 started selecting from among the men
discharged from the Railway Garrison reliable youths to whom
an average of 20 hectares of land per household were leased.
In this manner 34 Japanese families were settled on farms
within the Railway Zone by 1917. However the outbreak
of the World War, which ushered in an age of unprecedented
boom in Manchuria, served to undo the good progress made
in the above experiment. The Japanese settlers, unable to
resist the temptation of reaping quick profit, turned to busi-
ness. Some of them re-leased their lands to others, or con-
ducted some line of business along with farming. The final
result in practically all cases was tragic. The settlers found
themselves heavily in debt when the post-war financial panic
swept the world.
This economic panic nevertheless helped to prove that
farming was after all one enterprise which offered comparative
security. This realization for a time turned more Japanese
to farming, but the tendency did not continue long. The
protracted world agricultural depression, which followed the
financial panic, coupled with lack of experience in continental
agriculture and the absence of adequate rural financing and
sales facilities, again gave rise to a decline in Japanese farm-
ing activity in Manchuria.
Realizing from the above experiment that the chances of
settling on land were small in the case of individual free
immigrants, the South Manchuria Railway Company next
undertook to encourage immigration through the medium of
a company specifically formed for this purpose. In 1921 the
Toa Kangyo Kaisha (East Asiatic Industry Encouragement Co.)
was organized in Mukden to purchase and manage agricultural
— 62 —


lands. Due to excessive pressure brought to bear upon
Japanese interests by the former warlord regime in Manchuria,
the business of the newly-formed company, however, was
brought to a virtual standstill. After the Manchurian Incident
the Toa Kangyo Kaisha managed to revive its business activity,
but merely as a medium for sponsoring Chosenese immigra-
tion to Manchuria.
The South Manchuria Railway Company since the Man-
churian Incident nevertheless has been playing its share in
the settlement of Japanese farm immigrants in Manchuria by
subscribing to the entire 10,000,000 yen capital stock of the
Dairen Noji Kaisha (Dairen Agricultural Company), by in-
vesting 10,000,000 yen in the 50 million yen Manchuria
Colonization Company, and by other divers means. These
include the subsidizing of the Manchuria Immigration As-
sociation and agricultural unions, and the granting of greatly
reduced railway passenger fares to Japanese immigrants.
Self-protective Railway Villages
Falling in line with the Japanese Government's national
emigration policy, the South Manchuria Railway Company,
with the two-fold object of* contributing to the maintenance
of peace and order, and the development of industry, es-
tablished so-called self-protective railway villages along the
railways under its jurisdiction. Soldiers discharged from the
Japanese Garrison in Manchuria and men selected from rural
communities in Japan were engaged for organizing these
villages. The first stage plan for the formation of such
villages was completed between April, 1935 and June of the
same year. Later the second and third stage self-protective
villages were formed. Upon the transfer to Manchoukuo of
— 63 —


the police force of the General Directorate of Railways, the
Japanese and Manchoukuo military and police authorities and
the General Railway Protection Corps undertook the guidance
of matters pertaining to the maintenance of peace and order.
As for the members of the self-protective villlages, they were
brought under the jurisdiction of the Industrial Department of
the Auxiliary Enterprises Bureau of the General Directorate of
Railways to engage in the guarding of railways while conducting
farming and live-stock raising with their families. The number
of such families in the self-protective villages at the end of
June, 1939 totalled 438, comprising 1,456 members.
In addition to the self-protective railway villages the In-
dustrial Department of the General Directorate has under its
charge the agricultural training schools of the self-protective
railway villages and the Manchoukuo colonization youth
volunteer corps' self-protective railway village training schools.
During the first year of settlement land, house, various tools,
agricultural implements, live-stock and seeds are loaned free
of charge to the members of the self-protective railway vil-
lages. The land, house and other property automatically be-
come their own after a period of ten years.
Railway Protection Corps
The old railway protection villages were renamed the rail-
way protection corps in January, 1938, and placed under the
jurisdiction of the Railway Safeguarding Department of the
General Directorate of Railways. When the General Directo-
rate was commissioned to manage the Manchoukuo State
Railways, it took over the Manchu employees engaged in the
safeguarding of the lines to exercise the police power which
it was entitled to wield subsidiary to its main business of
— 64 —


managing the railway. These employees were brought under
control of the Police Bureau of the General Directorate. In
December, 1937, the Police Bureau was abolished, and with
the exception of affairs relating to the railway safeguarding
villages and the self-protective railway villages, all affairs con-
cerning the policing of the railways were transferred to the
Government of Manchoukuo, and the General Railway Pro-
tection Corps was newly organized under the jurisdiction of
the Department of Public Peace.
In all matters pertaining to the policing of railways, the
different Railway Protection Corps are under the substantial
control of the Commander-in-Chief of the Kwantung Army,
but with the exception of education, social facilities and other
affairs specially designated, all general administrative matters
are under the guidance of Manchoukuo administrative offices.
For this reason the General Directorate of Railways is now
devoting itself to the propagation among the people of the
idea of safeguarding the railways as though the lines were
their own, and to other educational and publicity work among
the railway protection corps, besides providing technical train-
ing for the preservation of railways and undertaking other
activities for enhancing the industrial welfare of the people
residing along the railways.
It is stipulated that railway protection corps may be es-
tablished in villages in a five-kilometre zone on either side
of a railway or bus line. In 1938 there were in all 2,718
such protection corps along railways and 943 along bus lines.
In addition there were as. many as 1,637 young men's and
boys' corps for safeguarding such transportation routes, their
total membership running up to 38,166.
— 65 —


The Manchuria Colonization Youth Volunteer Corps' Self-
protective Railway Village Training Schools
These schools were first established in June, 1938 under
the jurisdiction of the Industrial Department of the General
Directorate of Railways. Though the schools are under the
guidance of the General Railway Protection Corps in matters
concerning the guarding of railways, guidance in matters re-
lating to industry is offered by the Industrial Department of
the General Directorate of Railways. Young men and boys
qualified to enter these training schools are those of 16 to
20 years of age selected from throughout Japan by the Man-
churia Emigration Association, who have finished three months'
training in the school managed by the said Association in
Ibaragi Prefecture. These young Japanese enter either the
aforementioned self-protective railway training schools run by
the S. M. R. (General Directorate of Railways) or the youth
volunteer corps organized by the Manchuria Colonization
Company.
The students of the self-protective railway training school
are given training in agriculture and farming, railway policing,
besides military training, including the military arts,- and are
taught house building and live-stock raising. Young men
finishing the stipulated course in the self-protective railway
training schools, who are conscripted into the Army, are upon
discharge, allowed to enter the self-protective railway villages
or become so-called free settlers or may be given opportunities
to become group settlers. There are at present 20 self-protec-
tive railway training schools with a total enrollment of about
6,000 youths.
— 66 —

PAGE 1

SOUTH MANCHURIA RAILWAY th e Pionee r o n th e Continent

PAGE 2

H Sil.iM h ,4 1 presente d t o SOA S Librar y b y SOA S iSf i 'W rM fl ( f m i )$ m m • h wQst! o 1> 1 i * w^ff ^JQJL S2 I ||L v |\ v mWt^ ^j g 4 A Hil t Itsi i j L f ril l • i I f M \ t \li \ ••' • • Ml? ? sp c

PAGE 5

SOUT H MANCHURI A RAILWA Y th e Pionee r o n th e Continen t PAR T I S.M.R . an d Railwa y Buildin g i n Manchuri a PAR T I I S.M.R . an d Genera l Developmen t o f Manchuri a

PAGE 7

Memoria l monumen t o f S . M . R . employee s wh o hav e die d whil e dischargin g thei r dutie s (Dairen) . A sectiona l vie w o f th e Hea d Offic e o f th e S . M . R. , Dairen .

PAGE 8

Th e Genera l Directorat e o f Railway s o f th e S . M . R . a t Mukde n whic h manage s th e railway s o f Manchouku o (Stat e Railway s an d S . M . R . lines) . Th e ultra-moder n super-expres s " Asi a " whic h i s th e bes t an d fastes t trai n i n th e Orient . Sh e cover s th e distanc e betwee n Daire n an d Harbi n i n 12 £ hours .

PAGE 9

S . M . R . Hsinkin g Office . Th e smar t moder n buildin g i n whic h th e S . M . R . Toky o Offic e i s housed .

PAGE 10

Yesterday' s enemie s a s today' s friends . Russia n official s bi d th e Japanes e farewel l befor e departin g fo r th e nort h afte r transferrin g th e Sout h Manchuri a Railway . Member s o f th e Japanes e an d Russia n Commissio n fo r th e lega l transfe r o f th e Sout h Manchuri a Railway .

PAGE 11

Th e Niho n Bash i i n th e vicinit y o f th e Daire n Station , i n 1907 . Nigh t vie w o f Rensagai , on e o f Dairen' s chie f shoppin g center s today . Lookin g dow n alon g Tatun g Thoroughfare , th e chie f boulevar d o f Hsinking , Manchoukuo' s risin g capital .

PAGE 12

Train s tha t ra n th e track s i n 1907 , th e yea r i n whic h th e S . M . R . commence d operations . A moder n stream-line d trai n o f th e presen t day .

PAGE 13

Anothe r lin e undergoin g construction . Inaugura l ceremon y o f a ne w lin e opene d t o traffic .

PAGE 14

Interio r o f th e elegantl y decorate d moder n dine r o f th e super-expres s " Asi a Trave l i n th e spaciou s moder n observatio n ca r i s a pleasur e indeed .

PAGE 15

Th e forme r Daire n Statio n o f bygon e days . Nigh t vie w o f Dairen' s up-to-dat e railwa y station .

PAGE 16

Th e S . M . R . manage s 7,00 0 kilometer s o f bu s line s i n Manchouku o linkin g eve n th e remotes t part s o f th e country . Rive r transportatio n o n th e Sungar i an d th e Heilungkian g (Amur ) River s i s als o conducte d b y th e S . M . R .

PAGE 17

A vie w o f Daire n Por t repute d t o b e th e bes t i n th e Orient . Th e waitin g pavilio n o f Dairen' s mai n pier , capabl e o f accommodatin g 5,00 0 persons .

PAGE 18

Loadin g bea n oi l ont o a tanker . Moder n por t facilitie s a t Dairen .

PAGE 19

Hug e steam-shovel s lik e th e on e picture d abov e ri p of f hug e chunk s o f glistenin g coal . A bird's-ey e vie w o f th e worl d famou s open-cu t mine s a t Fushun .

PAGE 20

Th e Ryuh o shaf t min e a t Fushu n whic h produce s 5,00 0 metri c ton s o f coa l pe r day . Coalin g pie r a t Kanseishi .

PAGE 21

Th e Show a Stee l Work s a t Anshan , establishe d b y th e S . M . R . Th e grea t shal e oi l plan t a t Fushun .

PAGE 22

Soy a bean s unde r cultivation . Soy a bean s i n storag e i n th e compound s o f a dealer .

PAGE 23

Transportin g soy a bean s b y rail . Ope n ai r storag e o f bean s awaitin g shipment .

PAGE 24

Transportin g shal e oi l fro m Fushun . On e o f th e oi l mill s i n Dairen .

PAGE 25

Th e Daire n Yamat o Hotel . Th e Gril l Roo m o f th e Daire n Yamat o Hotel .

PAGE 26

Th e Mukde n Yamat o Hotel . Th e Hoshigaur a Yamat o Hotel , a branc h o f th e Daire n Yainat o Hotel .

PAGE 27

Th e Sout h Manchuri a Sanatoriu m a t Shoheit o i n th e suburb s o f Dairen . Th e Daire n Hospital .

PAGE 28

Th e Daire n Library . Th e Mukde n Medica l Colleg e an d th e hospita l attache d t o it .

PAGE 29

Th e Harbi n Library , owne d b y th e Sout h Manchuri a Railwa y Company , contain s 110,00 0 book s an d i s on e o f th e larges t institution s o f it s kin d i n Manchoukuo . Th e Centra l Researc h Laboratory .

PAGE 30

Komur a Park , Dairen , Hoshigaur a recreatio n par k i n Dairen .

PAGE 31

Exhibitio n ca r o f a comfor t train . Interio r o f a comfor t train . A show-boa t o n th e th e Sungari .

PAGE 32

Entranc e t o th e S . M . R . Employees ' Co-operativ e Unio n Centra l Distributin g Store , Dairen . On e o f th e sales counter s o f th e Centra l Co-operativ e Union , Dairen .

PAGE 33

Th e S . M . R . Employees ' Club . Hea d Office , Dairen . J K S . M . R . Employees ' Associatio n Building . Hea d Office , Dairen .

PAGE 35

PAR T I RAILWA Y BUILDIN G I N MANCHURI A Forty-fiv e year s ag o Manchuri a wa s stil l a tranqui l an d backwar d Orienta l lan d withou t moder n transportatio n facili ties . Wit h th e closin g year s o f th e las t century , a ne w er a o f railwa y buildin g slowl y dawne d ove r th e countr y an d a miraculou s transformatio n wa s wrough t withi n a shor t spa n o f les s tha n five decades . To-day , Manchuri a i s covere d wit h a networ k o f railway s exceedin g te n thousan d kilometre s i n all , an d th e ligh t o f civilizatio n bega n t o penetrat e th e re motes t corner s o f th e country . I t i s thi s achievemen t i n spee d an d servic e whic h th e Sout h Manchuri a Railwa y Com pany , i n co-operatio n wit h th e Manchouku o Departmen t o f Communications , i s celebratin g o n Octobe r 1 , 1939 . 1 . FIRS T PERIOD , 1894-190 4 Railwa y buildin g i n Manchuri a wa s pioneere d b y a Britis h interes t i n 189 4 whe n wha t late r cam e t o b e know n a s th e Peking-Mukde n Railwa y wa s pushe d beyon d Shanhaikua n int o Manchuria . I t wa s motivate d primaril y b y th e Britis h desir e t o acquir e th e Manchuria n marke t b y connectin g Tient si n wit h Yingkou , the n know n a s Newchwang . Thi s mov e wa s soo n followe d b y Russi a i n he r searc h fo r a n ice-fre e outle t t o th e sea , eventuall y resultin g i n th e constructio n o f th e Chines e Easter n Railway . Th e Russo-Japanes e Wa r ende d al l constructio n activitie s fo r th e tim e being . — 1 —

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Th e Shanhaikuan-Mukde n Lin e Th e firs t pag e i n th e histor y o f railwa y buildin g i n Man churi a wa s turne d throug h Britis h initiativ e i n 1894 . I n tha t year , a n attemp t wa s mad e t o exten d a railwa y lin e fro m Tientsi n whic h reache d Shanhaikua n b y 189 3 t o Yingkou , the n Newchwang , vi a Koupangtzu . A s a result , a shor t dis tanc e o f 6 0 kilometre s betwee n Shanhaikua n an d Suichun g ha d bee n actuall y completed . Th e remainde r o f th e project , however , wa s delaye d largel y o n accoun t o f th e Sino-Japanes e Wa r whic h brok e ou t i n 1894 . Wit h th e Russia n acquisitio n o f railwa y interest s i n Nort h Manchuria , th e projec t wa s revive d b y th e Britis h interes t concerne d i n 189 8 an d th e Shanhaikuan-Mukde n lin e wa s sinc e complete d i n tw o stages , th e Shanhaikuan-Hsinmintun-Yingko u lin e b y a Britis h syndi cat e an d th e Hsinmintun-Mukde n lin e b y th e Japanes e Ex peditionar y Force . Th e preliminar y agreemen t fo r th e extensio n o f th e Peking Tientsin-Shanhaikua n lin e t o Yingko u throug h Hsinmintu n wa s conclude d i n June , 1898 , betwee n th e Hongkon g an d Shangha i Bankin g Corporatio n an d th e Chines e Administra tiv e Genera l o f th e Imperia l Railway s o f Nort h China . Thi s wa s followe d b y a forma l agreemen t o n Octobe r 10 , 1898 , unde r whic h th e Britis h an d Chines e Corporatio n obtaine d th e righ t t o buil d th e propose d lin e whic h wa s t o b e com plete d i n thre e years . Th e actua l constructio n wor k wa s starte d i n 189 9 an d complete d b y 1902 , an d th e lin e wa s opene d t o traffi c i n 1903 . Tha t portio n o f th e Peking-Mukde n Railwa y betwee n Hsinmintu n an d Mukde n wa s buil t b y th e Japanes e Expedi tionar y Forc e i n th e cours e o f th e Russo-Japanes e Wa r a s a militar y line . Afte r th e War , Japa n agree d t o transfe r thi s — 2 —

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lin e t o Chin a unde r th e Pekin g Treat y o f 190 5 an d th e transfe r wa s effecte d unde r th e Sino-Japanes e conventio n o f Apri l 15 , 1907 , wit h a n understandin g tha t i t b e reconstructe d wit h a Japanes e loan . Th e fina l transfe r wa s consummate d o n Ma y 27 , 1907 , an d th e lin e wa s completel y rebuil t since . Th e Japanes e Governmen t agree d t o permi t it s extensio n t o th e walle d cit y o f Mukde n o n Septembe r 4 , 1909 , thu s allow in g i t t o cros s th e Sout h Manchuri a Railway . Th e Chines e Easter n Railwa y Th e Russia n entranc e int o internationa l railwa y politic s i n Manchuri a wa s signale d b y th e conclusio n o n Septembe r 8 , 1896 , o f a Sino-Russia n railwa y contrac t fo r th e constructio n an d operatio n o f a railwa y lin e acros s Nort h Manchuria . Thi s contrac t wa s base d upo n th e Sino-Russia n secre t treat y o f allianc e o f Jun e 3 , 1896 , an d i t wa s a firs t ste p i n realizin g Tzaris t Russia' s suprem e drea m fo r a Fa r Easter n empir e wit h a n ice-fre e outle t t o th e sea . T o pu t thi s agreemen t int o execution , th e Russo-Chines e (late r Russo-Asiatic ) Ban k pro mote d th e Chines e Easter n Railwa y Company , a Russia n joint-stoc k compan y whic h wa s chartere d b y th e Russia n Governmen t o n Decembe r 4 , 1896 . Th e Chines e Govenmen t ha d th e righ t t o nam e th e presiden t o f th e Company , a norma l head , bu t i t wa s fo r al l practica l purpose s a Russia n Governmen t agency . Arme d wit h thes e necessar y treat y an d lega l arrangements , th e histori c buildin g o f th e Chines e Easter n Railwa y wa s starte d earl y i n 1897 , bu t it s progres s wa s delaye d o n accoun t o f unforesee n difficultie s i n th e actua l constructio n wor k an d th e Boxe r Rebellio n i n Chin a i n 1900 . I t wa s completed , however , b y th e en d o f 190 2 an d wa s officiall y opene d t o — 3 —

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traffi c o n Jul y 1 , 1903 , wit h hea d office s a t Harbin . Th e Chines e Easter n Railway , som e 1,57 0 kilometre s i n lengt h fro m Manchoul i t o Pogranichnay a acros s Nort h Manchuria , shortene d th e origina l Trans-Siberia n Railwa y lin e fro m Mosco w t o Vladivosto k b y som e 90 8 kilometres . Upo n acquisitio n unde r pressur e i n 189 8 o f th e leas e t o th e Kwantun g Territory , th e ver y territor y o f whic h sh e ha d onl y thre e year s befor e deprive d Japa n i n th e nam e o f pre servin g peace , Russi a immediatel y planne d t o buil d a branc h lin e fro m Harbi n o n th e Chines e Easter n Railwa y mai n lin e t o th e propose d por t o f Dalny , no w Dairen , an d th e nava l bas e a t Por t Arthur . T o thi s projec t Chin a gav e he r consen t unde r th e Sino-Russia n conventio n o f Marc h 27 , 1898 , an d a treat y t o tha t effec t wa s signe d o n Jul y 6 , 1898 . Th e constructio n o f thi s line , som e 99 8 kilometre s long , wa s immediatel y undertake n an d wa s complete d befor e th e out brea k o f th e Russo-Japanes e Wa r i n 1904 . O f thes e lines , tha t stretc h sout h o f Changchun , no w Hsin king , wa s transferre d t o Japa n a s a resul t o f th e Portsmout h Treat y o f 190 5 whic h ende d th e Russo-Japanes e Wa r an d be cam e th e Sout h Manchuri a Railway . Th e Russia n interes t i n th e remainde r o f th e Chiogse_jastern_ Railway , rename d th e North_M^nehu^5aRail^ayaf ^ some^T772Tlal o metres , wa s transferre d t o Manchouku o fo r 17 0 millio n ye n i n 193 5 an d becam e a par t o f th e Manchouku o Stat e Railways . I n th e wak e o f th e Russo-Japanes e War , th e secon d decad e o f railwa y buildin g i n Manchuri a wa s marke d b y Japan' s entranc e int o Manchuri a b y succeedin g t o th e Russia n 2 . SECON D PERIOD , 1905-191 2 — 4 —

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railwa y an d industria l right s sout h o f Changchun , no w Hsin king , an d th e establishmen t o f th e Sout h Manchuri a Railwa y Company . Thi s perio d als o witnesse d th e America n attemp t t o dominat e internationa l railwa y politic s i n Manchuria . Th e Sout h Manchuri a Railwa y Th e Russo-Japanes e Wa r definitel y establishe d an d con siderabl y strengthene d Japan' s foothol d upo n th e Asiati c continent . B y th e term s o f th e Portsmout h Peac e Treat y o f Septembe r 5 , 1905 , whic h wa s approved b y Chin a b y th e Pekin g Treat y o f Decembe r 22 , 1905 , Japa n succeede d t o th e Russia n Railwa y line s sout h o f Changchun , no w Hsinking , totalin g som e 84 0 kilometres . Unde r th e Additiona l Agree men t o f Decembe r 22 , 1905 , betwee n Japa n an d China , Japa n als o acquired , thi s tim e fro m China , th e righ t t o reconstruc t an d t o operat e th e Antu ng-Mukde n militar y lin e totalin g som e 29 0 kilometres . I n orde r t o operat e thes e line s an d t o manag e appurtenan t right s attache d thereto , th e Japanes e Governmen t cause d th e establishmen t o f th e Sout h Man chur i a Railwa y Compan y i n {L906iandjh e Compan y bega n it s officia l lif e o n Apri l 1 , 1907 . Th e firs t tas k o f th e Compan y wa s t o reconstruc t an d t o standardiz e variegate d gauge s o f th e line s i t too k over . Firs t t o b e complete d wa s th e Dairen-Por t Arthu r lin e o f 6 0 kilometre s whic h wa s read y i n December , 1907 . Th e Dairen Changchu n mai n line , togethe r wit h th e Fushu n an d Yingko u branc h lines , wer e successfull y reconstructe d betwee n Maj^ , 1907 , an d April , 1908 , th e officia l operatio n o f entir e line s bein g celebrate d o n Ma y 30 , 1908 . Th e reconstructio n wor k o n th e Antung-Mukde n lin e wa s starte d i n August , 1909 , and , afte r encounterin g numerou s difficultie s i n railwa y engineering , — 5 —

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wa s complete d i n November , 1911 . Th e doubl e trackin g o f thes e line s wa s als o starte d i n 190 7 an d th e greate r par t o f whic h wa s complete d b y 1934 . To-da y th e Sout h Manchuri a Railwa y Compan y operate s 1, 12 9 kilometre s o f it s ow n line s i n Sout h Manchuria . America n Interes t i n Manchuria n Railway s Th e histor y o f internationa l railwa y politic s i n Manchuri a durin g thi s perio d reveal s th e interestin g fac t tha t th e Unite d State s o f Americ a mor e tha n onc e trie d t o ente r th e Man churia n railwa y aren a bu t faile d o n ever y occasion . Th e lat e E . H . Harriman , a n America n railwa y king , wa s th e firs t America n wh o recognize d th e valu e o f Manchuria n rail wa y enterprises , an d h e boldl y planned , a s earl y a s 1905 , t o bu y u p bot h th e Sout h Manchur i a Railwa y an d th e Chines e Easter n Railwa y an d t o organiz e the m a s link s i n hi s aroun th^-worId~cKaifi . Thi s pla n faile d whe n Japa n refuse d t o giv e u p he r practicall y onl y frui t o f th e War . Harrima n an d hi s Ne w Yor k financia l group , throug h th e ai d o f Willar d Straight , th e America n Consul-Genera l a t Mukden , an d i n co-operatio n wit h a Britis h interest , the n tried , durin g 1908-1909 , t o materi aliz e th e Chinchou-Aigu n railwa y project , bu t th e schem e wa s brough t t o a n abrup t en d wit h th e sudde n deat h i n September , 1909 , o f Harriman , it s motivatin g genius . Afte r th e failur e o f thes e plan s cam e Secretar y Knox' s famou s neutralizatio n proposal , unde r whic h al l railway s i n Manchuri a wer e t o b e purchase d bac k b y Chin a wit h loan s advance d b y intereste d Power s an d the n t o b e operate d b y a n internationa l syndicate . Th e proposa l me t a stron g internationa l opposi tio n an d faile d o f realization . Mor e tha n onc e sinc e the n th e " ope n door " polic y ha s bee n invoke d a s a n enterin g — 6 —

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wedg e o f America n financia l interest s i n th e railwa y enter prise s i n Manchuria , al l i n vain . Notabl e amon g th e latte r attempt s wa s th e Chin a Consortiu m o f 192 0 whic h include d th e American bankin g interest s an d whic h reserve d a certai n railwa y projec t i n Manchuri a upo n Japan' s waiver , bu t noth ing , however , resulte d therefrom . Th e Hsinmintun-Fakume n Railwa y Projec t I n 1907 , th e ne w Vicero y o f Manchuri a undertoo k th e developmen t o f railwa y s o a s t o connec t Nort h Chin a wit h Kiri n an d th e Tume n Rive r are a an d als o wit h Tsitsiha r an d Aigun . A s a portio n o f th e wester n syste m thu s projected , th e Chines e Governmen t i n November , 1907 , entere d int o a n agreemen t wit h Paulin g an d Company , a Britis h firm, fo r th e constructio n o f a shor t lin e betwee n Hsinmintu n an d Fakumen . Th e projec t wa s oppose d b y th e Japanes e Gevernmen t o n th e groun d tha t i t violate d th e " paralle l lin e " claus e o f th e Sino-Japanes e Protoco l o f 190 5 an d wa s neve r realized . Th e Kirin-Changehu n Railwa y Th e onl y ne w railwa y lin e whic h wa s actuall y buil t durin g thi s perio d wa s th e Kirin-Changchu n lin e o f som e 12 8 kilo metres . A preliminary * contrac t agreemen t fo r th e construc tio n o f thi s lin e ha d bee n signe d b y th e representative s o f th e Chines e Easter n Railwa y fo r Russi a an d th e Chines e Governmen t o n Jul y 11 , 1902 , bu t nothin g wa s don e befor e th e Russo-Japanes e War . Unde r th e Sino-Japanes e Protocol s o f 1905 , Chin a agree d t o buil d thi s lin e wit h Japanes e capita l an d suc h a loa n agreemen t wa s include d i n th e conventio n — 7 —

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o f Apri l 15 , 1907 , fo r th e transfe r o f th e Hsinmintun-Mukde n lin e t o China . Additiona l agreement s wer e signe d i n 190 8 an d 1909 , an d th e constructio n o f th e lin e whic h wa s com plete d an d opene d t o traffi c i n October , 191 2 wa s starte d b y th e Soutf i Manchuri a Railwa y Compan y i n April , 1910 . A t first, however , it s operatio n wa s no t profitabl e an d th e Sout h Manchuri a Railwa y Compan y advance d a furthe r loa n i n 191 7 an d too k ove r th e managemen t an d operatio n o f th e lin e durin g th e perio d th e lea n agreemen t wa s effective . 3 . THIR D PERIOD , 1913-192 0 Th e secon d decad e o f th e presen t centur y wa s th e leas t productiv e perio d i n railwa y buildin g i n Manchuri a a s onl y on e shor t lin e ha d bee n built . Th e Worl d Wa r wa s largel y responsibl e fo r thi s result . Japa n an d China , however , hav e entere d int o severa l importan t railwa y agreement s whic h be cam e th e basi s o f futur e railwa y constructio n work s a s wel l a s o f prolonge d Sino-Japanes e disputes . Sino-Japanes e Railwa y Agreement s Th e mos t importan t Sino-Japanes e agreemen t o f thi s perio d i s represente d b y th e Treatie s an d Note s o f 1915 . Amon g othe r things , thes e Treatie s an d Note ^ extende d th e territoria l an d railwa y lease s fro m twenty-fiv e year s t o on e hundre d years , namely , th e Kwantun g Territor y t o 1997 , th e Sout h Manchuri a Railwa y t o 2002 , an d th e Antung-Mukde n lin e t o 2007 . Equall y importan t wer e th e Sino-Japanes e agreement s know n a s th e " Fiv e Manchuria n an d Mongolia n Railwa y Agreement " — 8 —

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o f 191 3 an d th e "Fou r Manchuria n an d Mongolia n Railwa y Agreement " o f 1918 . Unde r thes e Agreements , a certai n grou p o f Japanes e banker s obtaine d fro m Chin a th e righ t t o financ e th e constructio n o f th e followin g railways : (1 ) Taonan Jeho l Railway ; (2 ) Kirin-Hailungcheng-Kaiyua n Railway ; (3 ) Changchun-Taona n Railwa y ; (4 ) Ssupingkai-Taona n Railwa y ; an d (5 ) a railwa y fro m a poin t o n th e Taonan-Jeho l Railwa y t o a seapor t o n th e Gul f o f Pechihl i t o b e decide d upo n b y consultatio n betwee n Chin a an d bank s concerned . I n additio n t o these , throug h a serie s o f agreement s mad e i n 1907-190 9 an d 1918 , th e Japanes e Governmen t obtained , o n behal f o f severa l Japanes e banks , th e righ t t o construc t th e Kirin-Kaine i Railway . Al l o f thes e projecte d railwa y line s excep t a shor t lin e betwee n Ssupingka i an d Chengchiatu n a s w e shal l se e later , however , remaine d o n pape r onl y durin g th e secon d decad e an d onl y a smal l portio n ha d bee n realize d eve n durin g th e thir d decade . Russia n Contrac t fo r Harbin-Heih o Railwa y Th e Russo-Asiati c Ban k obtaine d a n agreemen t fro m th e Chines e Government , signe d o n Marc h 27 , 1916 , fo r th e con structio n o f a lin e fro m Harbi n t o Heih o o n th e Amu r River , opposit e th e cit y o f Bragoveshchensk , t o b e know n a s th e Pin-He i Railway . I t wa s t o hav e a branc h lin e fro m Merge n t o Tsitsihar . Thes e lines , however , wer e neve r constructe d b y th e sai d Ban k an d wer e actuall y buil t b y othe r agencie s durin g th e thir d an d fourt h decades . Internationa l Railwa y Politic s Internationa l railwa y politic s continue d t o enlive n th e wester n interes t i n Manchuria . Thi s i s bes t show n b y th e — 9 —

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Multi-powe r agreement s relatin g t o th e internationa l bankin g consortium , namely , th e Fou r Powe r Consortiu m o f 1911 , th e Si x Powe r Consortiu m o f 1912 , an d th e Chin a Consor tiu m o f 1920 . Especiall y outspoke n wa s th e Chin a Consor tiu m o f 192 0 i n it s desir e t o financ e the . constructio n o f railway s i n Manchuria . Japa n trie d t o safeguar d he r specia l interest s i n Sout h Manchuri a an d Easter n Inne r Mongoli a whil e th e Britis h an d America n Government s attempte d t o includ e th e constructio n o f th e Taonan-Jeho l Railwa y an d it s branc h t o th e se a withi n th e scop e o f th e consortiu m activities . Afte r prolonge d negotations , Japa n succeede d i n reachin g a n agreemen t t o excep t th e Sout h Machuri a Railwa y an d it s mine s a s wel l a s severa l railway s alread y projecte d unde r Sino-Japanes e agreement s bu t concede d th e inclusio n o f th e constructio n o f th e Taonan-Jeho l Railwa y an d it s branc h t o th e se a withi n th e scop e o f th e consortiu m agree ment . Withi n th e fiv e year s durin g whic h th e consortiu m agreemen t wa s i n force , however , th e Chin a Consortiu m undertoo k t o floa t o n loa n wit h respec t t o financin g th e constructio n o f an y railwa y o r othe r enterprise s i n Man churia , thu s endin g th e las t attemp t mad e b y th e Wester n Power s t o construc t railway s i n Manchuria . 4 . FOURT H PERIOD , 1921-193 9 Fro m th e thir d decad e o f th e presen t century , Wester n Power s ha d bee n completel y eliminate d fro m internationa l railwa y politic s i n Manchuri a an d th e questio n o f railwa y buildin g ha s becom e largel y a loca l proble m betwee n Chin a an d Japan . I t wa s durin g thi s period , however , tha t Chin a fo r th e firs t tim e bega n t o tak e u p railwa y buildin g i n Man — 10 —

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churi a hersel f an d t o promot e he r ow n progra m o f effectin g a railwa y networ k b y ignorin g variou s Sino-Japanes e railwa y agreements . A s a result , a tens e internationa l atmospher e wa s graduall y create d i n Manchuri a whic h eventuall y le d t o th e Manchuria n Inciden t o f 1931 . Chinese-Buil t Railway s Beginnin g i n 1924 , severa l railway s wer e constructe d durin g thi s perio d throug h Chines e initiativ e withou t an y foreig n participation . O f thes e Stat e Railways , th e mor e importan t line s ar e th e Mukden-Hailungcheng-Kiri n line , th e Harbin Hailu n line , th e Tsitsihar-Kosha n line , an d th e Tahushan Tunglia o line . Th e Mukden-Hailungcheng-Kiri n lin e wa s buil t i n tw o stages . Th e Mukden-Hailungchen g (o r mor e specificall y Chaoyangchen ) lin e o f som e 26 4 kilometre s i s on e o f th e ver y first o f variou s railway s projecte d b y th e Chines e authori tie s a t Mukden , an d Japa n approved it s constructio n b y th e Chines e i n 192 4 a t th e tim e whe n th e contrac t agreemen t fo r th e constructio n o f th e Taonan-Angangch i lin e wa s signed . I t wa s starte d i n July , 1926 , an d complete d i n September , 1928 . Th e branc h lin e t o Hsia n wa s als o complete d i n December , 1928 . Th e Kirin-Hailungche n line , totalin g som e 18 3 kilometres , o n th e othe r hand , i s on e o f th e fou r rail ways , th e constructio n o f whic h ba d bee n concede d t o Japa n unde r th e " Fou r Manchuria n an d Mongolia n Railwa y Agree men t " o f 1918 , bu t i t wa s buil t b y th e Kiri n Provincia l Governmen t b y completel y ignorin g al l Japanes e protests . I t wa s starte d i n June , 1927 , an d complete d i n August , 1929 , thereb y effectin g th e direc t connectio n betwee n Mukde n an d Kiri n wit h a Chines e built-railway . Th e Mukden-Hailung — 11 —

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cheng-Kiri n lin e i s on e o f th e ver y fe w railway s i n Manchuri a whic h ha d bee n constructe d entirel y b y Chines e engineer s wit h Chines e capital . Th e Tahushan-Tunglia o line , connectin g th e Mukden Shanhaikua n lin e wit h th e Ssupingkai-Tsitsiha r line , wa s announce d b y th e Chines e authoritie s a t Mukde n i n 1925 , an d Japa n immediatel y proteste d agains t i t o n th e basi s o f th e Sino-Japanes e Protoco l o f 190 5 a s i t clearl y constitute s a " paralle l line " o f th e Sout h Manchuri a Railway . Th e Mukde n Government , i n spit e o f Japanes e protests , proceede d t o construc t th e lin e an d complete d i t i n November , 1927 . A shor t distanc e betwee n Tahusha n an d Pataoku o ha d bee n buil t earlier , i n December , 1922 , fo r th e purpos e o f develop in g th e coa l mine s a t Pataokuo . Th e Harbin-Hailu n lin e vi a Hulu n i s a portio n o f th e railwa y connectin g Harbi n wit h Heih o whic h th e Russo Asiati c Ban k ha d contracte d t o buil d i n 191 6 bu t whic h remaine d untouched . Th e Heilungkian g Provincia l Govern men t too k th e projec t int o it s ow n han d an d organize d th e Huha i Railwa y Compan y i n 192 5 t o undertak e th e actua l constructio n work . Th e buildin g o f th e lin e wa s starte d i n October , 1926 , a t Manchuanko u acros s th e Sungar i fro m Harbi n an d complete d i n December , 1928 . Th e tota l lengt h i s som e 21 5 kilometres . Th e Tsitsihar-Kosha n lin e wa s starte d i n June , 1928 , bu t financia l difficultie s delaye d th e constructio n wor k an d i t reache d a s fa r a s Taia n i n March , 1930 . Nothin g wa s don e beyon d Taia n befor e th e outbrea k o f th e Manchuria n Incident . Severa l shor t branc h line s wer e als o adde d t o th e railwa y ma p o f Manchuri a durin g thi s period . Amon g these , th e mor e importan t ones , especiall y i n thei r relatio n t o th e futur e railwa y network , ar e a lin e fro m Taoan , no w Paichengtzu , t o — 12 —

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Huiyuanchen , a distanc e o f som e 8 4 kilometres , whic h wa s constructe d durin g 1929-1931 , a Peipia o branc h lin e o f th e Mukden-Shanhaikua n line , fro m Chincho u t o Peipiao , a distanc e o f abou t 11 2 kilometres , whic h wa s lai d durin g 1921-1924 , an d a Laf a branc h lin e o f th e Tsitsiher-Kosha n line , a distanc e o f som e 4 8 kilometre s betwee n Ningnie n t o Lafa , whic h wa s buil t i n 1930 . " Japanese-Buil t Railway s Whil e th e Chines e authoritie s wer e thu s bus y workin g ou t thei r ow n transportatio n program , tw o railway s wer e constructe d unde r Japanes e loa n agreement s durin g thi s period . Thes e ar e th e Ssupingkai-Tsitsiha r an d Kirin-Tunhu a lines . Th e Ssupingkai-Tsitsiha r line , coverin g 57 1 kilometres , th e onl y railwa y amon g th e " Fiv e Manchuria n an d Mongolia n Railwa y Agreement " o f 191 3 whic h wa s actuall y buil t i n accordanc e wit h th e Agreement , wa s constructe d b y th e Sout h Manchuri a Railwa y Compan y i n severa l sections . Th e firs t section , tha t betwee n Ssupingka i an d Chengchiatun , wa s buil t betwee n Apri l an d October , 1917 , an d opene d t o traffi c i n July , 1918 . Th e secon d section , tha t betwee n Chengchiatu n an d Taonan . i s base d upo n th e Sino-Japanes e loa n agreemen t o f Septembe r 7 , 1919 , an d it s constructio n wa s starte d i n September , 1922 , an d complete d i n October , 1923 , bein g opene d t o traffi c i n July , 1924 . Unde r th e sam e agreement , th e Chengchiatun-Tunglia o branc h lin e wa s constructe d durin g April—December , 1921 , an d wa s opene d t o traffi c i n January , 1922 . Th e thir d section , tha t betwee n Taona n an d Angangchi , i s base d upo n th e Sino-Japanes e loa n contrac t agreemen t signe d a t Mukde n o n Septembe r 3 , 1924 , an d it s constructio n wa s starte d i n May , 1925 , an d complete d i n July , 1926 . Th e — 13 —

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las t section , a shor t extensio n fro m Angangch i t o Tsitsihar , wa s buil t durin g June—December , 1928 . Th e Kirin-Tunhu a lin e i s a portio n o f th e much-dispute d Kirin-Kaine i lin e an d i s base d upo n severa l Sino-Japanes e agreement s whic h wer e conclude d i n 1907-190 9 an d 1918 . Th e final an d detaile d contrac t agreemen t fo r financing th e constructio n o f th e Kirin-Tunhu a extensio n wa s signe d a t Pekin g o n Octobe r 24 , 1925 . Th e constructio n wor k wa s starte d b y th e Sout h Manchuri a Railwa y Compan y i n June , 1926 , an d wa s complete d i n October , 1928 . Th e extensio n o f thi s lin e t o Kaine i wa s steadfastl y evade d b y th e Mukde n authoritie s an d ha s becom e on e o f th e complicate d Sino Japanes e issue s prio r t o th e Manchuria n Incident . I n additio n t o th e above Chines e Stat e Railways , a shor t privat e lin e wa s lai d withi n th e Kwantun g Lease d Territory , namely , th e Chinchou-Chengtzuta n line . Thi s line , coverin g a distanc e o f 10 2 kilometres , owe s it s birt h t o th e Chinf u Railwa y Compan y whic h wa s establishe d i n 1925 . Th e con structio n o f th e lin e wa s starte d i n May , 1926 , an d complete d i n October , 1927 . Th e enterpris e wa s no t profitabl e an d afte r offerin g continue d subsidies , th e Sout h Manchuri a Rail wa y Compan y absorbe d i t i n 1939 . 5 . FIFT H PERIOD , 1931-193 9 Wit h th e establishmen t o f Manchoukuo , a ne w er a o f railwa y constructio n dawne d ove r Manchuri a an d th e railwa y ma p o f Manchuri a wa s completel y change d durin g th e first eigh t years ' o f he r statehood . T o thi s end , thre e revolutionar y step s wer e taken . Th e first wa s th e entrustin g t o th e Sout h Manchuri a Railwa y Compan y o f th e managemen t an d opera — 14 —

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tio n o f al l Manchouku o Stat e Railway s whic h th e Manchou ku o Governmen t ha d take n ove r i n 1932 . Th e secon d wa s th e drawin g u p o f a comprehensiv e progra m o f railwa y constructio n fo r th e purpos e o f expeditin g th e developmen t o f nationa l resource s an d facilitatin g th e organizatio n o f nationa l defence . Th e thir d wa s th e outrigh t purchas e i n 193 5 o f al l Russia n right s i n th e Chines e Easter n Railway , rename d th e Nort h Manchuri a Railwa y sinc e 1932 , thu s eliminatin g th e las t vestig e o f Russia n contro l i n Nort h Manchuria . Th e spee d wit h whic h railway s ha d bee n buil t durin g th e pas t eigh t year s o f thi s decad e i s nothin g shor t o f a marvel . Th e " Genera l Outlin e o f Economi c Constructio n Progra m o f Manchouku o publishe d o n Marc h 1 , 1933 , envisage d th e countr y wit h 25,00 0 kilometre s o f railway s i n th e futur e an d announce d th e propose d buildin g o f som e 4,00 0 kilometre s o f ne w line s withi n th e nex t te n years , makin g a tota l o f 10,00 0 kilometre s b y addin g th e existin g lines . I n seve n an d one-hal f years , thi s drea m ha s bee n alread y realized . I n lin e wit h th e genera l policy , th e Manchouku o Govern men t ha d entruste d th e responsibl e tas k o f constructin g ne w railwa y line s t o th e Sout h Manchuri a Railwa y Compan y an d grante d severa l contract s fo r thi s purpose . Th e firs t serie s o f ne w lines , fo r whic h th e contrac t wa s conclude d i n March , 1933 , include d th e Tuhua-Tumen , Lafa-Harbin , an d Taitung Hailu n lines . Th e Tunhua-Tume n line " wit h it s Chaoyang chuan-Kaishantu n branc h i s th e fina l realizatio n o f th e las t lin k i n th e muc h dispute d Kirin-Kaine i line . Th e nex t grou p o f railway s fo r whic h th e contrac t wa s grante d i n December , 1933 , involve d th e Tumen-Mutankiang , Koupeiyingtzu-Ling yuan , an d Peian-Tierhcha n lines . Th e thir d contract , signe d i n April , 1934 , enumerate d seve n ne w lines , namely , th e — 15 —

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Mutankiang-ChiamuSsu , Lingyuan-Chengte , Yehpaishan-Chih feng , Tierhchan-Heiho , Hsinking-Talai , Talai-Taonan , an d Huiyuanchen-Solu n lines . Th e fourt h contract , signe d i n December , 1934 , authorize d thre e line s betwee n Linko u an d Mishan , Solu n an d Halunarshan , an d Ssupingka i an d Hsian . Th e fift h contract , signe d i n December , 1935 , projecte d si x ne w lines , namely , th e Mishan-Hulin , Noho-Nonkiang , Meiho Tunghua , Tunghua-Chian , Hsinlitun-Fuhsin-Icha n an d Tai pingchuan-Lupe i lines . Fo r th e exclusiv e purpos e o f undertakin g thes e manifol d railwa y constructio n works , th e Sout h Manchuri a Railwa y Compan y create d th e Railwa y Constructio n Burea u wit h it s headquarter s i n Dairen , late r move d t o Mukden , an d branc h office s a t Hsinking , Harbin , Tsitsihar , an d Rashin . Additiona l branc h office s wer e opene d fro m tim e t o tim e i n accordanc e wit h th e nee d create d b y th e expandin g radiu s o f ne w railwa y line s suc h a s thos e a t Tumen , Mutankiang , Peian , an d Paichengtzu . Th e difficultie s whic h th e Sout h Manchuri a Railwa y Compan y ha d t o fac e i n th e constructio n o f railwa y line s i n th e outlyin g region s o f th e countr y ar e beyon d description , bu t th e wor k proceede d steadil y upo n th e remain s o f score s o f sacrifice d live s an d th e Compan y successfull y finance d an d complete d th e followin g ne w railways , al l o f whic h ar e no w i n operation . Ne w Railwa y Line s Year s Line s 193 3 Tunhua-Tume n „ Tailin-Kosha n „ Taian-Kosha n „ Lafa-Noh o Built , 1932-193 9 Lengt h Turne d ove r t o i n Kms . Stat e Railway s 191. 9 Augus t 3 1 163. 3 Novembe r 3 0 ..... . 30. 8 38. 8 — 16 —

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Lengt h Turne d ove r t o Year s Line s i n Kms . Stat e Railway s 193 4 Chaoyangchuan-Kaishantu n .. . 59. 5 Marc h 3 1 „ Lafa-Harbi n an d branche s 293. 7 Augus t 3 1 „ Chinlingsu-Lingyua n 156. 8 Novembe r 3 0 „ Peian-Lungche n 136. 8 „ 193 5 Tumen-Mutankian g 248. 7 Jun e 3 0 „ Lingyuan-Pingchua n 87. 2 Septembe r 3 0 „ Lungchen-Heih o an d branc h .. . 170. 3 Octobe r 3 1 „ Huiyuanchen-Solu n 119. 8 „ „ Hsinking-Paichengtz u 332. 6 „ „ Yehpaishan-Chihfen g 146. 9 Novembe r 3 0 193 6 Pingchuan-Chengt e 97. 4 Jun e 1 5 „ Mutankiang-Linko u 110. 0 Jun e 3 0 „ Linkou-Misha n 170. 9 „ „ Solun-Sout h Hsinga n 130. 8 „ „ Ssupingkai-Hsia n 82. 5 Augus t 3 1 193 7 Noho-Nonkian g 93. 5 Jun e 3 0 „ Linkou-Chiamuss u 221. 5 „ „ Sout h Hsingan-Halunarsha n .. . 15. 4 Septembe r 3 0 „ Hsinlitun-Ihsie n 131. 5 „ „ Meiho-Tunghu a 130. 2 Octobe r 3 1 „ Mishan-Huli n 160. 9 Novembe r 3 0 193 8 Lungtanshan-Tafengma n 22. 4 Septembe r 3 0 „ Chengte-Kupeiko u 106. 3 Octobe r 3 1 193 9 Tunghua-Chia n 121. 6 „ Hsinhsing-Peihuanglin g 82. 4 „ Suihua-Shensh u 135. 8 „ Minghsan-Niuhsinta i 13. 3 „ Suiyang-Tungnin g 96. 2 — 17 —

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PAR T I I 1 . S.M.R . AN D GENERA L DEVELOPMEN T O F MANCHURI A Seve n year s afte r th e foundatio n o f Manchouku o th e Sout h Manchuri a Railwa y Compan y observe s th e completio n o f 10,00 0 kilometre s o f line s unde r th e Genera l Directorat e o f Railway s a t Mukden , o f whic h tota l 4,00 0 kilometre s hav e bee n constructe d sinc e th e adven t o f th e ne w State . Thi s remarkabl e fea t finds fe w parallel s eithe r i n nationa l developmen t o r railwa y expansion , comparabl e t o th e winnin g o f th e grea t America n West , whe n th e virgi n plain s o f th e Unite d State s wer e transforme d int o fertil e farmland s throug h th e marc h o f th e iro n stee d acros s th e Nort h America n continent . Jus t a s th e civilizatio n o f Egyp t depend s o n th e bountifu l Nile , s o th e progres s o f Manchouku o i s inseparabl y linke d wit h th e communicatio n vertebr a tha t i s th e S . M . R . I n th e developmen t o f industry , jus t a s th e prosperit y o f grea t in dustria l citie s o f th e worl d suc h a s Pittsburgh , Gary , Young stown , Dusseldorf , Esse n an d Sheffiel d wa s mad e possibl e onl y b y smoot h railwa y transportation , s o no t onl y industrie s i n Manchuri a bu t industria l citie s o f Japa n ar e makin g grea t progres s throug h th e efficien t transportatio n facilitie s provide d b y th e S . M . R . Th e S . M . R . i s bendin g ever y effor t i n thi s servic e an d i s givin g ful l co-operatio n i n th e strengthenin g o f th e Japan Manchouku o economi c blo c a s wel l a s i n th e executio n o f tha t par t o f th e Manchouku o Five-Yea r Industria l Pla n affect — 18 —

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in g transportation . Th e S . M . R . has , moreover , contribute d greatl y t o variou s enterprise s i n th e pas t b y revisin g an d reducin g freigh t rate s i n accordanc e wit h th e tru e idea l o f service . Fro m a nationa l defenc e standpoin t too , th e com pan y ha s a grea t missio n t o participat e i n th e Japan-Man chouku o join t defenc e i n conformit y wit h th e spiri t o f th e Japan-Manchouku o Protocol . A s a nationa l polic y orga n fo r Japan' s advancemen t o n th e continent , th e Sout h Manchuri a Railwa y Compan y ha s durin g th e pas t thirt y year s carrie d ou t it s importan t missio n i n variou s fields. Althoug h th e compan y ha s com e t o la y sol e emphasi s upo n railwa y enterprise s i n consequenc e o f th e transfe r t o Manchouku o o f administrativ e right s i n th e S . M . R . Zone , an d it s withdrawa l fro m heav y industries , i t stil l i s performin g it s missio n a s a n orga n fo r th e executio n o f nationa l polic y throug h th e establishmen t o f a grea t researc h organizatio n t o determin e th e polic y t o b e pursue d b y Japa n i n he r advancemen t o n th e continent . Th e achievemen t o f harmon y an d co-operatio n amon g th e five principa l race s o f Manchuri a wil l b e accomplishe d b y th e developmen t o f transportatio n facilities . Th e missio n o f th e S . M . R . ma y b e briefl y summarize d a s th e " realizatio n o f Wangtaois m throug h railways. " A s th e prophe t Isaia h expresse d hi s idea l o f roa d constructio n i n Asi a Mino r i n th e words , " An d a n highwa y shal l b e there , an d a way... . th e wayfarin g men , thoug h fools , shal l no t er r therein . Prepar e y e th e wa y o f th e Lord , mak e straigh t i n th e deser t a high wa y .. . Ever y valle y shal l b e exalted , an d ever y mountai n an d hil l shal l b e mad e low , an d th e crooke d shal l b e mad e straight , an d th e roug h place s plain, " s o th e S . M . R . ha s a s it s mott o " th e Establishmen t o f a n Earthl y Paradis e i n Man chouku o throug h Railways. " — 19 —

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Th e extrem e hardship s whic h th e me n o f Mantets u under wen t i n th e servic e o f railwa y constructio n followin g th e Manchuria n Inciden t ma y b e appreciate d b y th e fac t tha t th e numbe r o f Japanes e employee s wh o wer e kille d i n th e per formanc e o f thei r dutie s an d whos e spirit s ar e no w enshrine d i n th e Yasukun i Shrine , Tokyo , alon e total s sixty . I n celebrat in g th e constructio n o f 10,00 0 kilometre s o f railway s i n Man churia , th e Sout h Manchuri a Railwa y Compan y pray s fo r th e repos e o f th e spirit s o f thos e wh o gallantl y sacrifice d thei r live s i n railwa y constructio n work . I n orde r t o rectif y th e mistake n conceptio n o f condition s i n Manchouku o o n th e par t o f variou s Europea n an d America n countrie s generall y th e S . M . R . Compan y issue s a biennia l Report on Progress in Manchuria an d a quarterl y magazin e entitle d Contemporary Manchuria (bot h i n English) , an d othe r publication s i n variou s languages , a s wel l a s producin g motio n picture s presentin g Manchuria n lif e an d custom s an d industri a l condition s i n th e ne w State . Ever y convenienc e i s accorde d t o foreigner s tourin g Manchoukuo . Durin g 193 8 th e Compan y issue d n o fewe r tha n 60 0 fre e railwa y passe s t o foreigner s makin g a n inspectio n tou r o f Manchuria . Fro m thi s a conceptio n ma y b e forme d o f th e grea t effort s whic h th e S . M . R . i s makin g t o giv e th e out sid e worl d a n appreciatio n o f actua l condition s i n Man churia . 2 . TH E ORGANIZATIO N O F TH E S . M . R . Th e Sout h Manchuri a Railwa y Compan y wa s establishe d fo r th e purpos e o f managin g an d operatin g th e mai n an d branc h line s o f th e former ' Chines e Easter n Railwa y i n Sout h — 20 —

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Manchuria , whic h th e Japanes e Governmen t too k ove r fro m Sovie t Russi a b y virtu e o f th e Treat y o f Portsmout h conclude d i n Septembe r 190 5 upo n th e terminatio n o f th e Russo-Japa nes e War . Preparation s fo r th e foundin g o f th e compan y wer e com mence d i n accordanc e wit h th e Imperia l Ordinanc e Concernin g th e Establishmen t o f th e Sout h Manchuri a Railwa y Company , promulgate d i n Jun e 1906 ; an d i n th e followin g mont h a n organizatio n committee , compose d o f eight y member s an d heade d b y Genera l Gentar o Kodama , Chie f o f th e Genera l Staff , wa s appointed . Th e lat e Coun t Shimpe i Got o wa s ap pointe d firs t presiden t o f th e S . M . R. , an d th e Compan y formall y cam e int o bein g o n Decembe r 7 o f th e sam e year . Th e Sout h Manchuri a Railwa y Compan y wa s a t firs t unde r th e contro l o f th e Kwantun g Government-Genera l bu t i t wa s late r brough t unde r th e supervisio n o f th e Governo r o f Kwantun g Territor y whe n th e aforementione d offic e wa s abolishe d an d th e Kwantun g Governmen t wa s forme d i n it s stead . Followin g th e Manchuria n Inciden t th e Compan y wa s place d unde r th e contro l o f th e Japanes e Ambassado r Pleni potentiar y t o Manchoukuo , wh o i s concurrentl y Commander in-Chie f o f th e Kwantun g Army . Th e Ministr y o f Communication s i n Toky o wa s originall y th e centra l supervisor y organ , bu t thi s functio n wa s late r transferre d t o th e Prim e Ministe r an d the n t o th e Ministr y o f Oversea s Affairs , revertin g t o th e Prim e Ministe r i n Decem ber , 1934 . Th e Superintendenc e Departmen t o f th e Kwantun g Burea u i n Hsinkin g an d th e Manchuria n Affair s Burea u o f th e Japanes e Governmen t ar e a t presen t th e e x pos t fact o supervisor y organ s o f th e Sout h Manchuri a Railwa y Company . Th e executiv e o f th e Compan y comprise s on e president , tw o vice-presidents , eigh t director s an d fiv e auditors . Th e — 21 —

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presen t presiden t i s Mr . Takuich i Ohmura ; th e vice-presidents , Mr . Kenichir o Sasak i an d Mr . Ojir o Sat o ; th e directors , Mr . Toshinor i Nakanishi , Mr . Jiuyemo n Takebe , Mr . Takash i Kubo , Mr . Michi o Izawa , Mr . Toshi o Hirashima , Mr . Mata jir o Hirayama , Mr . Itt o Inoko , an d Mr . Ke n Ogaki ; an d th e auditors , Mr . Shintar o Ohashi , Mr . Masatsun e Ogura , Mr . Kuniz o Hara , Mr . Hiroz o Mori , an d Mr . Yakich i Ataka . Th e presiden t an d vice-president s ar e appointe d b y th e Japanes e Governmen t afte r obtainin g Imperia l sanction . Th e director s ar e als o appointe d b y th e Governmen t fro m amon g th e shareholder s wit h mor e tha n 10 0 shares . Th e auditor s ar e selecte d fro m amon g th e shareholder s a t th e genera l meet in g o f shareholders . Th e ter m o f offic e o f bot h th e presiden t an d vice-president s i s fiv e years , tha t o f director s fou r years , an d o f auditors , thre e years . Th e numbe r o f person s employe d b y th e Compan y (a s i n Augus t 1939 ) exceed s a quarte r million , o f whic h " sha-in " o r salarie d employee s numbe r mor e tha n 150,00 0 includin g 50,00 0 Manchurians . Th e tota l personne l expenditure s o f th e Compan y fo r th e 193 7 fisca l yea r amounte d t o th e hug e su m o f 113,000,00 0 yen . Railway s i n Manchuri a an d Nort h Chose n measurin g 10, 00 0 kilometres , an d enterprise s affiliate d therewit h suc h a s port s an d harbours , hotels , coa l mine s an d iro n an d stee l works , for m th e basi c undertaking s o f th e S . M . R . Company . I n additio n ther e ar e sixty-seve n affiliate d concern s whic h th e S . M . R . control s directl y o r indirectly , throug h securitie s hel d b y th e Company . Two-third s o f th e enterpris e capita l o f al l joint-stoc k companie s i n Manchuri a othe r tha n itsel f ar e hel d b y th e railwa y company . Th e incom e an d expenditure s o f th e S . M . R . Compan y o n th e whol e hav e increase d steadil y yea r b y year . Th e — 22 —

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tota l revenu e an d outla y fo r th e 193 8 fisca l yea r amounte d t o 387,410,00 0 ye n an d 314,540,00 0 ye n respectively , a s compare d wit h 13,000,00 0 ye n an d 11,000,00 0 ye n i n th e yea r o f th e establishmen t o f th e company , bot h figure s representin g som e thirty-fol d increas e ove r 1906 . Th e Company' s profit s fo r th e yea r unde r revie w amounte d t o 72,870,00 0 yen . Th e per centag e o f expenditur e agains t incom e ha s invariabl y range d betwee n 8 0 an d 8 5 pe r cent . Th e railway s an d th e mine s ar e th e tw o mai n enterprises , fro m th e standpoin t o f financia l returns . Th e receipt s fro m th e railway s i n 193 8 amounte d t o 192,740,00 0 yen , comprisin g abou t 5 0 pe r cen t o f th e revenu e fro m al l sources , whil e ex penditure s reache d 82,940,00 0 ye n o r abou t 2 2 pe r cen t o f th e gros s outlay , leavin g a profi t o f 109,000,00 0 yen . Representin g abou t 3 0 pe r cen t o f th e gros s receipts , th e incom e o f th e minin g operation s o f th e Compan y fo r th e sam e yea r amounte d t o 105,780,00 0 yen . Expenditure s totalle d 89,200,00 0 ye n o r 3 0 pe r cen t o f th e tota l disbursements . Th e profi t wa s 16,570,00 0 yen . Th e revenu e fro m an d expenditure s upo n port s an d har bour s reache d 23,080,00 0 ye n an d 15,840,00 0 ye n respectively , i n eac h cas e representin g abou t si x pe r cen t o f th e gran d totals . 3 . CAPITA L AN D INVESTMENT S Th e Sout h Manchuri a Railwa y wa s establishe d wit h a n initia l capita l o f 200,000,00 0 yen , o f whic h 100,000,00 0 ye n wa s investe d b y th e Japanes e Governmen t i n kind , includin g th e railways , coa l mine s an d al l othe r propert y sout h o f Hsin kin g (the n Changchun) , whic h Japa n too k ove r fro m Tzaris t Russia . Th e remainin g 100,000,00 0 ye n wa s raise d b y offer — 23 —

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in g share s fo r genera l subscriptio n i n Japa n an d China . Th e busines s o f th e compan y expande d rapidl y followin g th e Worl d Wa r an d th e S . M . R. , ou t o f necessity , increase d it s capita l t o 440,000,00 0 ye n i n 1920 , thirtee n year s afte r it s establishment . Th e capita l wa s agai n raise d t o 800,000,00 0 ye n (16,000,00 0 shares ) i n March , 193 3 becaus e o f enormou s fund s require d fo r th e managemen t an d operatio n o f al l Stat e railway s whic h th e ne w Governmen t entruste d t o th e S . M . R . followin g th e foundatio n o f Manchoukuo , an d fo r th e con structio n o f ne w railwa y lines , harbou r improvement s a t Nort h Korea n ports , an d investment s i n th e Show a Stee l Work s a t Anshan , th e Manchuri a Chemica l Industr y Compan y an d othe r enterprises . Th e Japanes e Government , whic h undertoo k t o furnis h one-hal f o f th e firs t an d secon d capita l increases , agree d t o redee m tha t portio n o f S . M . R . debenture s i n Britis h currenc y issue d i n Londo n equivalen t t o it s shar e o f th e capita l increase . O n th e occasio n o f th e secon d capita l increase , 200,00 0 o f th e share s offere d fo r publi c subscriptio n wer e allotte d t o S . M . R . employee s a t face-value . Publi c receptio n o f th e share s wa s ver y satisfactory , an d th e share s wer e sol d a t a n averag e premiu m o f • 5.18 . Th e pa r valu e o f S . M . R . share s a t th e tim e o f th e organi zatio n o f th e Compan y wa s fixe d a t 20 0 yen . I t wa s late r change d t o 10 0 yen , an d i n 1928 , t o 5 0 yen . O f th e tota l capita l stoc k o f 800,000,00 0 yen , th e share s subscribe d b y th e publi c ar e full y pai d up . Th e amoun t pai d i n b y th e Governmen t u p t o th e en d o f September , 193 8 aggregate d 296,208,00 0 yen , an d th e amoun t stil l unpai d totalle d 103,792,00 0 yen . Th e workin g fund s o f th e S . M . R . a s a t th e en d o f Septem be r 193 8 amounte d t o 1,825,350,00 0 yen , consistin g o f th e amoun t pai d u p o n shares , reserv e fund s totallin g 296,620,00 0 — 24 —

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yen , an d domesti c debenture s amountin g t o 832,500,00 0 yen . I n th e fiel d o f investment , holding s i n suc h commercia l enterprise s a s railways , hotels , port s an d harbours , coa l mines , shal e oi l an d coa l liquefactio n plants , whic h constitut e th e Company' s mai n business , an d th e amoun t o f capita l spen t fo r th e constructio n o f non-commercia l undertaking s suc h a s educationa l institutions , hospital s an d researc h facilities , hav e totalle d 847,500,00 0 yen . I n addition , th e S . M . R . Compan y ha s advance d fund s t o th e amoun t o f 625,580,00 0 ye n t o non-compan y enterprise s fo r th e purpos e o f assistin g i n th e developmen t o f Manchuria , ha s investe d 170,890,00 0 ye n i n variou s comanie s fo r promotin g Manchuria n industry , a s wel l a s spendin g som e 283,770,00 0 ye n o n th e constructio n o f Stat e railways , whic h su m i s t o b e eventuall y pai d bac k b y th e Manchouku o Government . Tota l investment s i n al l S . M . R . an d non-compan y enterprise s u p t o th e en d o f Septembe r 193 8 amounte d t o 1,927,830,00 0 yen . Fund s fo r thes e investment s wer e obtaine d fro m paid-u p shares , mone y raise d b y issuin g debentures , an d fro m th e Company' s reserves . Classifie d accordin g t o enterprises , investment s mad e i n th e S . M . R . u p t o th e en d o f December , 193 7 wer e a s follow s : Amoun t Percentag e ( • 1,000 ) Railway s Hotel s Port s an d harbour s Coa l mine s Shal e oi l plan t Coa l liquefactio n plan t Iro n an d stee l work s Industria l developmen t facilitie s Loca l facilitie s Miscellaneou s facilitie s 54 8 — 8,59 2 1 181,87 4 2 1 73,52 9 9 852,72 0 10 0 317,46 6 3 7 5,24 7 1 110,239 1 3 137,26 0 1 6 12,75 3 1 5,30 2 1 Tota l 25

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4 . RAILWA Y ENTERPRISE S Th e Sout h Manchuri a Railwa y Compan y transport s annual l y n o fewe r tha n 40,000,00 0 passenger s an d 49,000,00 0 metri c ton s o f freigh t o n 10,00 0 kilometre s o f railway s unde r it s jurisdiction, representin g a tota l capita l investmen t o f ove r 1,000,000,00 0 yen . Fo r convenienc e i n busines s administra tion , thes e railway s ar e divide d int o S . M . R . lines , Stat e Railways , an d Nort h Chose n Railways . Althoug h marke d difference s ar e perceptibl e i n thei r respectiv e busines s condi tions , ther e i s on e commo n characteristi c whic h applie s t o all , an d whic h reflect s th e economi c condition s o f Manchoukuo . Manchouku o i s a comparativel y sparsel y populate d an d undevelope d country , an d i s no w o n th e wa y t o tremendou s industria l expansion . Agricultura l product s an d mineral s ar e th e principa l resource s an d constitut e th e chie f exports , whil e manufacture d ware s ar e th e mai n imports . I n consequence , th e revenu e fro m th e railway s relie s mor e upo n good s tha n passengers . Th e mai n characteristic s o f freigh t transportatio n i n Manchuri a ar e th e shipmen t o f heav y good s suc h a s agricultura l an d minera l product s fro m th e interio r t o th e seaports , an d th e tranpor t o f suc h ligh t commoditie s a s manu facture d product s o r constructio n material s fro m th e seaport s t o th e interior . Th e rati o o f passenge r an d freigh t receipt s i s abou t on e t o three . Th e principa l commoditie s carrie d ar e Manchuria n stapl e product s suc h a s soy a beans , kaoliang , bea n cak e an d cereals , an d coa l an d iron . Th e volume s o f shipment s diffe r markedl y accordin g t o thei r destinations , an d th e tonnag e i s subjec t t o marke d seasona l fluctuations , whic h al l reflec t th e specia l condition s prevailin g i n Manchuria . Th e growt h i n th e volum e o f genera l merchandis e an d th e rapi d increas e i n — 26 —

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shipment s o f suc h constructio n material s a s iro n an d steel , lumber , cement , crushe d rock s an d gravel , coinciden t wit h th e developmen t an d industria l progres s o f Manchouku o i n recen t year s ar e als o noteworthy . Th e busines s conditio n o f th e S . M . R . lines , th e Manchouku o Stat e Railway s an d th e Nort h Chose n Railways , i n th e ligh t o f thes e variou s con ditions , i s give n i n th e followin g outline . S . M.R . Line s Measurin g 1,129. 1 kilometres , th e railway s owne d b y th e S . M . R . consis t o f tw o trun k lines—th e Dairen-Hsinkin g lin e (70 4 km. ) an d th e Antung-Mukde n lin e (26 0 km.)—an d th e Fushun , Yingkou , Por t Arthu r an d othe r branc h lines . Thes e railway s ar e th e fountain-hea d fro m whic h th e S . M . R . derive s it s hug e revenue . Th e locomotives , passenge r an d freigh t car s operatin g o n S . M . R . line s an d th e variou s othe r railwa y facilitie s ar e up to-dat e an d i n perfec t condition , an d compar e favorabl y wit h th e bes t i n th e world . Thirt y thousan d person s ar e employe d o n thes e lines , whic h hav e a handlin g capacit y o f mor e tha n 30,000,00 0 metri c ton s o f good s annually . Hug e sum s o f mone y hav e bee n investe d i n th e railwa y enterprises ; th e initia l investmen t o f 35,000,00 0 ye n mad e a t th e tim e o f th e establishmen t o f th e S . M . R. , ha s increase d toda y t o 300,000,00 0 yen . Th e proportio n o f incom e t o ex penditure s i s 10 0 t o 4 0 an d th e hig h rati o o f profi t t o ex penditures , amountin g t o abou t 2 8 pe r cent , i s almos t withou t parallel . Accordin g t o a n analysi s mad e i n 1937 , th e railwa y receipt s fro m th e S . M . R . line s rapidl y increase d afte r th e Manchuria n Incident , an d hav e amounte d t o fro m 130,000,00 0 ye n t o — 27 —

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150,000,00 0 ye n annuall y i n recen t years . O n th e othe r hand , annua l expenditure s hav e totalle d onl y abou t 60,000,00 0 yen . Compare d wit h 6 0 pe r cen t i n th e cas e o f Japanes e Governmen t Railways , 7 5 pe r cen t fo r th e firs t clas s America n railways , an d abou t 8 0 pe r cen t fo r th e fou r bi g railway s o f Grea t Britain , th e busines s coefficien t o f 4 0 pe r cen t i n th e cas e o f th e S . M . R . line s i s a n exceptiona l record . Th e averag e incom e pe r kilometr e o f line s operate d fo r busines s is . thu s ver y high , amountin g t o 130,00 0 ye n i n marke d contras t t o 50,00 0 ye n i n Grea t Britain , 30,00 0 ye n i n Japa n an d Germany , an d aroun d 20,00 0 ye n i n th e Unite d State s an d France . Th e rati o o f S . M . R . passenge r an d freigh t receipt s i s 2 t o 8 a s agains t 4. 5 t o 5. 5 i n Japa n an d Grea t Britain , an d 3 t o 7 i n German y an d France . A s th e above figure s show , th e S . M . R . relie s mor e upo n freigh t receipt s tha n o n incom e fro m th e passenge r service , an d i s somewha t i n a simila r positio n t o th e America n railways . Th e numbe r o f passenger s transporte d o n th e S . M . R . line s total s betwee n 15,000,00 0 an d 18,000,00 0 annually . Th e distanc e travelle d b y eac h passenge r average s abou t 8 0 t o 9 0 kilometres ; th e averag e far e pe r kilometr e i s 1. 3 sen ; an d th e numbe r o f passenger s travellin g pe r kilometr e o f line s operate d fo r busines s average s abou t 1,500,000 . Th e averag e distanc e travelle d b y eac h passenge r i n othe r countrie s wit h th e exceptio n o f th e Unite d State s an d Italy , wher e i t i s abou t 6 0 kilometres , range s betwee n 2 0 an d 3 0 kilometres . Man y o f th e passenger s o n S . M . R . train s trave l lon g distances . Th e averag e far e o f eac h passenge r pe r kilo metr e i s somewha t highe r tha n tha t i n Japan , German y an d France , whic h i s abou t on e sen , bu t i t i s lower i n compariso n wit h th e averag e far e o f abou t tw o se n i n Grea t Britain , th e — 28 —

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Unite d State s an d Italy . Th e averag e numbe r o f passenger s travellin g pe r kilometr e i s fa r greate r tha n i n othe r countrie s exceptin g Japan , wher e i t i s abou t th e same . I n Britai n th e averag e numbe r i s abou t 1,000,000 ; i n Germany , Franc e an d Italy , i t i s betwee n 300,00 0 an d 800,000 , an d i n th e Unite d States , 100,000 . Fro m thes e figures th e heav y passenge r traffi c o n th e S . M . R . line s i n compariso n wit h othe r countrie s ma y b e readil y understood . Th e amoun t o f good s shippe d annuall y o n th e S . M . R . line s total s betwee n 20,000,00 0 an d 25,000,00 0 metri c tons . On e metri c to n o f freigh t i s transporte d fo r a distanc e o f 30 0 kilometre s o n a n average ; th e averag e freigh t rat e pe r kilometr e i s 1. 6 se n a metri c ton ; an d th e averag e amoun t o f good s transporte d pe r kilometr e i s 6,400,00 0 metri c tons . Th e averag e distanc e on e metri c to n o f freigh t i s transporte d i s somewha t th e sam e a s i n th e Unite d States , bu t i s lon g whe n compare d wit h 23 0 kilometre s i n th e cas e o f Italy , 15 0 kilometre s fo r Japan , German y an d France , an d abou t 7 0 kilometre s fo r Britain . Th e averag e freigh t rat e fo r on e to n pe r kilometr e i s fa r lower tha n tha t i n Britain , Germany , Franc e an d Italy , whic h i s ove r 2 sen . I t i s abou t th e sam e a s i n Japan , an d a littl e highe r tha n i n th e Unite d States . Th e averag e tonnag e transporte d pe r kilometr e i s ver y larg e an d i s abou t eigh t time s tha t i n othe r countries . Th e profit s o f th e S . M . R . rel y mostl y upo n incom e fro m th e railways , particularl y freigh t revenue . O f th e annua l gros s proceed s amountin g t o som e 355,000,00 0 yen , th e railwa y receipt s compris e abou t 150,000,00 0 ye n (4 3 pe r cent) . O f thi s sum , th e freigh t revenu e amount s t o 116,000,00 0 ye n o r 7 7 pe r cent . A s abou t 7 0 pe r cen t o f th e freigh t revenu e i s obtaine d fro m handlin g coa l an d stapl e products , th e volum e o f thes e product s ha s a n importan t bearin g upo n railwa y — 29 —

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receipt s and , i n consequence , als o upo n th e gros s revenu e o f th e S.M.R . Th e principa l commoditie s carrie d o n th e S . M . R . line s ar e coa l (9,600,00 0 metri c ton s pe r annum) , stapl e product s (3,600,00 0 tons ) suc h a s soy a beans , bea n cake , kaolian g an d maize ; mineral s an d ore s (1,700,00 0 tons) ; metal s an d manu facture s thereo f (1,000,00 0 tons) ; cemen t (400,00 0 tons) ; lumbe r (500,00 0 tons) ; sal t (500,00 0 tons) ; an d building-stone s (200,00 0 tons) ; a s wel l a s fruits , vegetables , fat s an d oils , lime , flour , sugar , cotto n cloth , an d gunn y bags . Th e rati o o f good s transporte d southwar d t o good s shippe d northwar d i s 6 0 t o 40 . Th e mai n item s o f th e annua l outla y totallin g 61,000,00 0 yen , ar e transportatio n an d operatio n expense s amountin g t o abou t 20,000,00 0 yen , expense s fo r th e repai r an d preservatio n o f rolling-stoc k amountin g t o som e 14,000,00 0 yen , an d specia l allowance s amountin g t o 9,000,00 0 yen . Th e appropriatio n o f mor e tha n 7,000,00 0 ye n fo r th e redemptio n fun d i s als o worth y o f notice . Manchouku o Stat e Railway s Th e tota l lengt h o f th e Manchouku o Stat e Railway s op erate d commerciall y i s 8,781. 1 kilometres . Thes e railway s ar e undergoin g complet e transformatio n unde r th e efficien t man agemen t o f th e S . M . R . Company , whic h ha s bee n entruste d b y th e Manchouku o Governmen t wit h thei r operation . Th e busines s coefficien t o f th e Stat e Railways , however , stil l fall s fa r behin d tha t o f th e S . M . R . lines . Ninet y thousan d person s ar e employe d o n th e Stat e Rail ways . I t i s interestin g t o not e i n passin g tha t th e Harbi n Railwa y Directorat e employ s som e 2,00 0 Whit e Russians . Th e numbe r o f passenger s transporte d o n th e Stat e Railway s — 30 —

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ha s recentl y exceede d tha t o n th e S . M . R . lines , an d alread y total s abou t 20,000,00 0 annually . Freigh t transportation , how ever , i s a littl e les s tha n ove r th e S . M . R . lines , an d amount s t o 21,000,00 0 metri c ton s a year . Th e rati o o f incom e t o expenditure s i s generall y abou t 10 0 t o 80 . Eve n i f th e numbe r o f passenger s an d th e amoun t o f good s transporte d o n th e Stat e Railway s shoul d equa l thos e o n th e S . M . R . lines , th e traffi c o n th e forme r woul d b e fa r les s tha n o n th e latte r becaus e th e lengt h o f th e Stat e Railway s operate d fo r busines s i s seve n time s tha t o f th e S . M . R . lines . Th e rati o o f passenge r receipt s t o freigh t revenu e o n Stat e Railway s i s abou t 2. 9 t o 7.1 . Th e percentag e o f incom e fro m th e passenge r servic e i s somewha t highe r tha n tha t o f th e S . M . R . lines , bu t thi s i s du e t o th e exceedingl y larg e freigh t revenu e o f th e S . M . R . lines . Th e incom e o f th e Stat e Railway s als o relie s greatl y upo n freigh t revenue . Th e principa l commoditie s shippe d o n th e Stat e Railway s ar e agricultura l stapl e product s (4,300,00 0 metri c ton s an nually) , chiefl y soy a bean s (2,000,00 0 tons) ; coa l (1,600,00 0 tons) ; iro n an d stee l materia l (320,00 0 tons) ; lumbe r an d crushe d rock s (190,00 0 tons ) ; cemen t (190,00 0 tons) ; flou r (400,00 0 tons) ; sal t (300,00 0 tons) ; fruits , vegetable s an d live stock . A s i n th e cas e o f S . M . R . lines , mor e good s ar e trans porte d southwar d tha n northward . Thi s rati o is , however , changing , wit h th e stead y increas e i n shipment s t o th e interio r i n recen t years . Nort h Chose n Railway s Th e managemen t o f th e Nort h Chose n Railways , whic h wer e intende d t o joi n wit h th e termina l por t o f th e forme r Kirin-Kaine i Railway , wa s entruste d b y th e Chose n Govern — 31 —

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ment-Genera l t o th e Sout h Manchuri a Railwa y Compan y i n October , 1933 , upo n th e openin g o f th e Hsinking-Tume n Railway . Th e lengt h o f th e line s operate d fo r busines s i s 352. 4 kilometres . Althoug h th e Nort h Chose n Railway s yiel d a revenu e o f onl y 6,000,000-8,000,00 0 ye n a year , the y ar e vitall y importan t fro m th e standpoin t o f econom y an d nationa l defenc e i n tha t the y connec t th e back-doo r o f Manchoukuo , namely , th e Nort h Korea n port s o f Yuki , Rashi n an d Seishin . Th e numbe r o f passenger s transporte d o n th e Nort h Chose n Railway s total s 2,000,00 0 a year , wit h passenge r receipt s amountin g t o 1,800,00 0 yen . Good s transporte d o n th e sam e line s amoun t t o 2,400,00 0 metri c tons , yieldin g 5,800,00 0 ye n i n freigh t revenue . Th e principa l product s transporte d o n th e line s ar e coa l (600,00 0 metri c ton s pe r annum) , lumbe r (300,00 0 tons) , soy a bean s (500,00 0 tons) , millet , fruit s an d vegetables . 5 . INTERNATIONA L CONNECTION S AN D THROUG H TRAIN S A s th e gaug e o f th e forme r Chines e Easter n Railwa y wa s fiv e fee t an d wa s 3 £ inche s broade r tha n th e standar d gaug e o f th e S.M . R . lines , S.M.R . train s wer e formerl y upabl e t o switc h o n t o th e C . E . R . tracks . I n consequence , al l passen ger s boun d fo r Harbi n ha d t o chang e train s a t Hsinking , muc h t o thie r incovenience . I n orde r t o remov e thi s incovenience , an d t o giv e ever y facilit y t o passenger s travellin g betwee n Europ e an d Asia , th e Hsinking-Harbi n section , measurin g 24 2 kilometres , wa s change d t o th e standar d gaug e o n Augus t 31 , 1935 , fiv e month s afte r th e C . E . R . wa s purchase d b y th e — 32 —

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Manchouku o Governmen t fro m Sovie t Russia . Th e narrow in g o f th e gaug e wa s starte d a t 5 o'cloc k i n th e mornin g an d wa s complete d i n th e amazingl y shor t tim e o f thre e hours — a strikin g evidenc e o f S . M . R . efficiency . Th e 943. 4 kilometr e stretc h betwee n Daire n an d Harbi n i s no w covere d b y th e prid e o f th e S . M . R. , th e ultra-modern , stream-line d limite d expres s " Asia, " i n twelv e an d a hal f hours . On e tri p i s mad e dail y fro m bot h point s b y th e " Asi a " . Th e " Asia " wa s planne d an d constructe d o n th e basi s o f lon g year s o f experienc e gaine d b y th e Sout h Manchuri a Railwa y Compan y o n th e continent . Th e fire bo x o f th e engin e wa s particularl y designe d s o a s t o b e adapte d fo r usin g Fushu n coa l a s fuel . Weighin g 20 2 metri c ton s (gros s weight) , th e locomotiv e i s 25. 7 metre s long , ha s a capacit y o f developin g 2,40 0 horsepower , an d ca n attai n a maximu m spee d o f 13 0 kilometre s pe r hour . Th e " Asi a " consist s o f seve n coache s (beside s th e locomo tive) , includin g fiv e passenge r cars , on e dinin g car , an d on e baggag e an d mai l car . Domesti c (Japanese ) product s wer e almos t entirel y use d i n th e constructio n o f thi s super-express . Tota l constructio n cos t wa s abou t 500,00 0 yen , whic h i s ver y lo w whe n compare d wit h 200,00 0 dollar s expende d o n th e productio n o f th e ne w three-ca r high-spee d expres s operate d b y th e Unio n Pacifi c Railwa y o f th e Unite d States . Europe-Asi a Communicatio n B y makin g goo d trai n connections , traveller s proceedin g t o Europ e vi a Siberi a ca n reac h Pari s withi n eleve n day s afte r leavin g Dairen . I f a travelle r boun d fo r Europ e take s th e super-expres s " Asi a " leavin g Daire n a t 9 o'cloc k i n th e — 33 —

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morning , h e wil l arriv e a t Harbi n a t 9:3 0 o'cloc k th e sam e evening . Afte r stoppin g overnigh t i n th e Nort h Manchuria n metropolis , h e board s th e 10:3 0 a.m . trai n boun d fo r Man choul i an d reache s th e borde r cit y a t 10:5 0 o'cloc k th e followin g morning . Ther e h e transfer s t o a trans-Siberia n expres s o f th e Molotovskay a Railway , whic h leave s a t 2:3 4 o'cloc k i n th e afternoon , an d arrive s a t Mosco w a t 1:3 5 o'cloc k o n th e afternoo n o f th e sevent h da y afte r leavin g Manchouli . Fro m Moscow , i f h e take s a Paris-boun d expres s a t 11:0 5 p.m . th e sam e day , h e wil l reac h th e Frenc h capita l tw o day s late r a t 9:3 0 p.m. , enablin g hi m t o cove r th e distanc e betwee n Daire n an d Pari s i n eleve n days . Passenge r transportatio n connectin g Europ e an d Asi a wa s inaugurate d o n Decembe r 10 , 1936 . A noticeabl e featur e o f thi s servic e i s tha t i n cas e th e trans-Siberia n expres s boun d fro m Mosco w doe s no t reac h th e Soviet-Manchouku o borde r o n schedule , th e connectin g S . M . R . trai n wait s fo r it s arrival . Thi s i s a goo d instanc e o f th e unparallele d servic e whic h th e S . M . R . i s givin g t o Europe-Asi a passengers . Connection s fro m Nort h * Manchuria n railway s wit h th e trans-Siberia n lin e ar e mad e ever y Monda y an d Thursday , whil e thos e fro m th e latte r wit h th e forme r ar e mad e ever y Thursda y an d Sunday , connectin g wit h th e Harbi n boun d trai n whic h leave s Manchoul i a t 1 o'cloc k i n th e afternoon . Thi s trai n consist s o f on e mai l car , on e firs t clas s sleeper , on e secon d clas s sleeper , on e dining-ca r an d on e thir d clas s coach . Th e S . M . R . ha s a membe r o f th e Japa n Touris t Burea u o n boar d th e trai n t o offe r hi s service s t o traveller s i n th e examinatio n o f passports , Custom s inspectio n an d othe r matters . Connection s wit h Japa n ca n b e mad e vi a thre e routes , namely , Dairen-Moji , Fusan , an d Seishin . I n th e cas e o f th e Dairen-Moj i route , i f a travelle r leave s H s inkin g o n th e "Asia " — 34 —

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a t 1:4 0 o'cloc k i n th e afternoon , h e wil l arriv e a t Daire n a t 1 1 o'cloc k th e sam e night . A t 1 1 o'cloc k th e followin g morn ing , h e sail s fro m Daire n o n a line r o f th e Osak a Shose n Kaish a (1 8 sailing s ever y month) , an d arrive s a t Moj i a t 7 a.m . o n th e thir d day , reachin g Kob e a t 8 a.m . o n th e fourt h day . Fro m Kobe , i f h e take s th e 8:5 0 a.m . express , h e wil l arriv e i n Toky o a t 7 :4 5 o'cloc k th e sam e evening . Th e averag e travellin g tim e require d t o mak e th e tri p betwee n ti&inkin g an d Toky o vi a Daire n i s 7 9 hour s an d 3 0 minutes . I n travellin g vi a th e Nort h Korea n por t o f Seishin , tw o route s ca n b e taken , on e vi a th e Tsurug a port , an d th e othe r vi a th e Niigat a port , bot h o n th e Japa n Se a board . Th e averag e actua l travellin g tim e betwee n Hsinkin g an d Toky o vi a Tsurug a i s 7 1 hour s an d 3 5 minutes , an d vi a Niigat a 7 0 hour s an d 5 5 minutes . I n th e cas e o f th e rout e vi a th e Sout h Korea n por t o f Fusan , th e throug h trains , th e " Nozomi " an d th e " Hikari, " ru n betwee n Hsinkin g an d Fusan , makin g tw o roun d trip s daily . Th e actua l travellin g tim e o n thi s rout e average s 5 4 hour s an d 3 6 minutes . Manchuria-Chin a Throug h Traffi c O n Jul y 1 , 1934 , thre e year s afte r th e Manchuria n In cident , th e Sout h Manchuri a Railwa y Company , wit h th e co operatio n o f th e Chines e railwa y authorities , inaugurate d internationa l throug h traffi c connectin g Manchouku o an d China , b y operatin g on e roun d tri p dail y betwee n Mukde n an d Peking . Thi s servic e wa s increase d t o tw o retur n trip s i n February , 1937 , whe n tw o additiona l train s wer e place d o n th e run . Availin g itsel f o f thi s occasion , th e S . M . R . reduce d th e travellin g tim e betwee n Mukde n an d Pekin g b y tw o an d — 35 —

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a hal f hours , wit h th e resul t tha t i f on e lef t Mukde n fo r Pekin g a t 8 o'cloc k i n th e morning , o r vice-versa , h e reache d hi s destinatio n o n th e evenin g o f th e sam e day . Formerl y i t too k tw o day s t o mak e th e tri p betwee n th e tw o places . Followin g th e outbrea k o f th e curren t Chin a Inciden t ad ditiona l throug h train s wer e brough t int o service , increasin g th e tota l t o fou r expres s an d fou r ordinar y trains , an d th e numbe r o f roun d trip s t o four . Further , th e fou r retur n trip s wer e augmente d t o fiv e a s a resul t o f th e openin g o f throug h trai n servic e betwee n Fusa n an d Pekin g vi a Mukde n o n Octobe r 1 , 1938 . Moreover , a s th e Tientsin-Puko w Rail wa y ha s bee n reopene d fo r traffi c sinc e Apri l 1 , 1939 , th e inauguratio n o f throug h servic e betwee n Fusa n an d Nankin g i s merel y a questio n o f time . Th e materializatio n o f throug h trai n servic e a s fa r a s Canto n i s anticipate d i n th e future . 6 . HOTEL S Fo r th e convenienc e o f traveller s th e Sout h Manchuri a Railwa y Company , sinc e openin g fo r business , ha s maintaine d hotel s a t principa l citie s alon g th e railwa y lines , a s wel l a s operatin g laundr y plant s an d motor-ca r servic e a s affiliate d enterprises . Investment s involve d i n thes e enterprise s a t th e tim e th e S . M . R . wa s establishe d amounte d t o onl y 220,00 0 yen , bu t i n 193 8 the y totalle d 5,900,00 0 yen . To-da y th e S.M.R . ha s seve n Wester n styl e hotels , namely , th e Yamat o Hotel s a t Dairen , Hoshigaura , Ogonda i (Por t Arthur) , Mukden , Hsinking , Harbi n an d Mutankiang . I n addition , th e Compan y directl y manage s Japanes e hotel s a t th e Wulungpe i Ho t Springs , Hulutao , Hsingchen g Ho t Springs , Tsitsihar , an d Aerhshan . U p t o severa l year s ag o th e incom e fro m th e hotel s di d — 36 —

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no t excee d 1,000,00 0 ye n annually . Sinc e th e Manchuria n Incident , however , th e hote l busines s ha s prospere d an d ha s yielde d a revenu e o f mor e tha n 3,000,00 0 ye n pe r annum . Durin g 193 8 a tota l o f 122,29 4 person s pu t u p a t th e variou s S . M . R . hotels . O f thi s number , 98,60 5 wer e guest s a t th e hotel s o n th e S . M . R . lines , an d 23,68 9 a t th e hotel s o n th e Stat e railways . Trave l wa s retarde d fo r a tim e followin g th e outbrea k o f th e curren t Chin a Incident , bu t wit h th e restoratio n o f peac e an d stabilit y i n Nort h China , th e numbe r o f traveller s comin g t o Manchuri a ha s rapidl y increase d an d i n th e principa l citie s suc h a s Dairen , Mukde n an d Hsinking , th e presen t hote l facilitie s ar e fa r fro m sufficien t t o accommodat e th e eve r in creasin g volum e o f travellers . Th e hotel s directl y manage d b y th e S . M . R . ar e alway s crowde d t o capacity . 7 . RAILWA Y FREIGH T RAT E POLIC Y I n recallin g th e freigh t rat e polic y o f th e S . M . R . a t th e tim e Japanese , Sovie t an d Chines e influence s wer e tangle d durin g th e fe w year s precedin g th e Manchuria n Incident , i t i s notabl e tha t th e S . M . R . beside s establishin g specia l rate s o n freigh t shippe d t o seaports , devise d ever y possibl e measur e t o diver t good s fro m th e interio r t o th e S . M . R . line s an d t o transpor t the m southwards . Th e Compan y me t wit h stif f competitio n fro m Sovie t Russi a whic h di d it s utmos t t o gathe r stapl e product s raise d o n th e fertil e plain s o f Nort h Man churia , t o th e forme r Chines e Easter n Railwa y an d shi p the m al l t o Vladivostok . I n orde r t o chec k th e southwar d flo w o f good s a s muc h a s possible , th e Sovie t railwa y authoritie s charge d unreasonabl y hig h rate s o n th e souther n sectio n o f — 37 —

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th e C . E . R . connectin g wit" h th e S . M . R . line . O n th e othe r hand , th e forme r Northeaster n regime , i n a n effor t t o expan d it s ow n railwa y networ k i n th e country , mad e secre t reduc tion s o n freigh t rate s an d ben t al l it s energie s t o dra w al l traffi c t o Yingko u an d th e Hope i ports . Thus , owin g t o th e intens e rivalr y betwee n th e Japanese , Sovie t an d Chines e in fluences , railwa y freigh t rate s i n Manchuri a constantl y changed , placin g th e financial marke t i n a stat e o f utte r confusion . Th e Sout h Manchuri a Railwa y Company , whic h under too k t o contro l railway s throughou t Manchuri a followin g th e Manchuria n Incident , attempte d t o readjus t th e freigh t rat e policy , bu t genera l condition s a t th e tim e di d no t permi t o f a basi c revisio n o f freigh t charges , an d i t too k a lon g tim e befor e a complet e reorganizatio n coul d b e effected . Whe n th e Nort h Manchuri a Railwa y (C . E . R. ) wa s transferre d t o th e Manchouku o Governmen t i n 193 5 an d th e foundatio n fo r unifie d managemen t o f al l railway s i n Manchuri a wa s finally laid , th e Sout h Manchuri a Railwa y Company , i n conformit y wit h it s ne w mission , decide d t o exer t ever y effor t t o establis h a rationa l freigh t rat e syste m coverin g al l railway s unde r it s jurisdiction . Thus , o n Februar y 1 o f th e followin g yea r re vise d rate s wer e effecte d o n al l lines . I n thi s revision , th e freigh t rate s ove r th e Stat e railway s wer e se t wit h a vie w t o developin g industrie s throughou t Manchuria , particularl y Nort h Manchuria , an d wer e accord ingl y unified ; tariff s o n th e S . M . R . line s wer e rationalized , an d th e S . M . R . an d Stat e Railwa y tarif f regulations , gradin g o f good s an d freigh t charge s wer e unified . Throug h suc h revision , i t wa s hope d t o mak e th e freigh t rate s o n al l line s i n Manchuri a confor m t o th e ne w situatio n an d als o t o enabl e th e S . M . R . t o carr y ou t satisfactoril y it s origina l missio n a s a colonizatio n railway . Abov e all , adequat e provisio n i n — 38 —

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freigh t rate s o n agricultura l product s i s th e fundamenta l pur pos e o f th e Manchuria n railwa y tarif f policy . Moreover , sinc e soy a beans , th e mos t importan t agricultura l product , ar e prin cipall y produce d i n Nort h Manchuria , farthes t fro m th e sea ports , th e commercia l valu e o f thi s stapl e i s gravel y affecte d b y railwa y freigh t rates . Unde r suc h circumstance s th e de velopmen t o f th e agricultura l industr y an d th e progres s o f immigratio n t o Manchuri a wer e mos t keenl y anticipate d i n th e railwa y tarif f revision , whic h resulte d i n lessenin g th e burde n o f shipper s throughou t th e S . M R . an d Stat e railway s t o th e exten t o f som e 5,600,00 0 ye n annually . Th e Manchouku o Government , placin g emphasi s upo n th e developmen t o f nativ e resource s neede d i n tim e o f emergenc y unde r th e tens e internationa l situation , worke d ou t th e Five Yea r Industria l Plan , whic h lai d th e foundatio n fo r industria l developmen t o f Manchuria , t o expedit e th e consolidatio n o f nationa l strengt h an d th e stabilizatio n o f nationa l welfare . N o soone r ha d th e Governmen t launche d th e Five-Yea r Pla n tha n th e Chin a Inciden t brok e ou t i n July , 1937 . I n th e cours e o f thes e developments , unificatio n o f th e organizatio n fo r operatio n o f al l Manchuria n railway s an d th e Nort h Chose n Railway s wa s carrie d ou t i n October , 193 6 an d th e founda tio n fo r co-ordinate d railwa y managemen t wa s established . The n followe d importan t event s suc h a s th e transfe r o f ad ministrativ e right s i n th e S/M . R . Zone , th e establishmen t o f th e Manchuri a Industria l Developmen t Corporation , an d th e transfe r o f railwa y policin g t o Manchoukuo , whic h brough t abou t a ne w situatio n necessitatin g a revisio n o f th e Sout h Manchuri a Railwa y Company' s polic y o f railwa y operatio n an d management . Thus , o n th e basi s o f it s origina l missio n a s a colonizatio n railwa y an d i n conformit y wit h genera l prevailin g conditions , th e S . M . R. , i n orde r t o co-operat e wit h — 39 —

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th e Government s polic y o f developin g Manchuria , particularl y Nort h Manchuria , th e polic y o f expandin g heav y industries , an d th e foreig n trad e policy , and , o n th e othe r hand , t o effec t co-ordinated " management , unif y freigh t rate s o n th e S . M . R. , State , an d Nort h Chose n railways , an d t o establis h a rational , efficaciou s tarif f system , carrie d ou t a fundamenta l revisio n o f th e tarif f syste m o n Octobe r 1 , 1938 . Unde r thi s revision , i t wa s planne d t o remov e th e numer ou s irrationalitie s an d inconvenience s resultin g fro m th e dis crepanc y i n freigh t rate s o n th e S . M . R. , Stat e an d Nort h Chose n railways , b y establishin g fla t rate s unde r th e syste m o f diminishin g mileag e rate s fo r longe r distances , o n al l thes e lines , an d als o t o enforc e commodit y rate s o n specia l impor tan t product s i n orde r t o appropriatel y contribut e a s muc h a s possibl e towar d variou s policie s unde r th e ne w situation . Wit h th e abov e object s i n view , th e S . M . R . divide d th e railwa y tarif f int o tw o mai n categories , ordinar y rate s an d specia l rates . Th e ordinar y rate s ar e divide d int o ordinar y freigh t rate s an d commodit y rates , th e latte r applicabl e t o fiv e classe s o f commodities , namely , cereals , live-stock , lumber , coal , an d mineral s an d ores . Th e specia l rates , designe d i n consideratio n o f specia l circumstances , ar e applicabl e t o specia l district s an d commodities , wher e th e impositio n o f ordinar y freigh t rate s i s regarde d unfair . Th e revisio n i n th e class ificatio n o f good s provide s fo r th e reductio n o f th e forme r si x classe s t o thre e i n th e cas e o f good s i n smal l lots , an d i n th e cas e o f carloa d lots , fro m si x classe s t o four , i n orde r t o simplif y th e handlin g o f goods . Th e decreas e i n freigh t revenu e du e directl y t o th e enact men t o f th e revise d rate s exceed s 10,000,00 0 ye n annually . O f thi s su m abou t 5 0 pe r cen t i s represente d b y th e dro p i n freigh t revenue s fro m stapl e products . — 40 —

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Unde r th e ne w schedule , rate s o n cereal s ar e base d o n th e principl e o f diminishin g mileag e rate s fo r longe r distances . A unifor m rat e o f 2 3 ye n pe r metri c ton s is , however , levie d i n th e cas e o f cereal s transporte d mor e tha n 1,10 0 kilometres . Thi s ha s resulte d i n a substantia l reductio n o f rate s o n cereal s transporte d fro m th e interio r t o seaports , th e charge s o n ship ment s fro m Harbi n fo r Dairen , Yingkou , Seishi n an d Rashi n decreasin g b y •2.80 , •3.10 , •2.6 0 an d •2.5 0 pe r metri c to n respectively , i n compariso n wit h th e forme r rates . Th e enactmen t o f th e 2 3 ye n unifo m tarif f o n cereal s i s indee d epochal , an d wil l contribut e i n n o smal l wa y towar d promotin g th e interest s o f Nort h Manchuri a farmer s an d expeditin g th e developmen t o f th e hinterland . Particularl y grea t wil l b e it s contributio n t o th e polic y o f increasin g th e cultivatio n o f soy a bean s fro m th e standpoin t o f improvin g Manchoukuo' s internationa l accounts . 8 . SOY A BEAN S AN D TH E S . M . R . Soy a bea n i s a n importan t cro p o f Manchuria n farmers , comparabl e t o wha t ra w sil k i s t o Japan . Th e Manchuria n soy a bea n rank s firs t i n th e worl d i n bot h qualit y an d pro duction . Th e fines t varietie s ar e produce d chiefl y i n Sout h Manchuria , wher e n o fewe r tha n tw o hundre d specie s ca n b e counted . The y ar e generall y classifie d int o yellow , blu e an d blac k beans , o f whic h th e yello w variet y i s mainl y sen t t o th e marke t a s th e commo n Manchuria n soy a bean . Thi s specie s i s ric h i n oi l an d i s edibl e an d i s als o abundantl y use d fo r extractin g oil . I t serve d i n olde n time s a s foo d fo r th e peasants , fodde r an d fo r oi l extraction , bu t i t wa s no t unti l i t ha d bee n introduce d t o th e Europea n marke t b y — 41 —

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Japanes e busines s me n afte r th e Russo-Japanes e Wa r o f 1904 0 5 tha t i t gaine d world-wid e fame . Productio n ha s sinc e graduall y increase d alon g wit h marke t demands , an d a t pre sen t Manchuri a produce s abou t 4,000,00 0 metri c ton s annuall y o r 6 0 pe r cen t o f th e world' s soy a bea n crop . Twent y pe r cen t o f th e annua l outpu t i s consume d a t home , an d o f th e remainin g 8 0 pe r cent , three-fifth s i s exporte d abroa d an d two-fifth s i s use d fo r oi l extraction . Manchuria n nationa l econom y i s base d o n rura l economy . Moreover , agricultura l developmen t b y immigrant s ha s playe d a n extremel y importan t par t i n th e promotio n o f Manchuria n econom y an d Manchuria n agricultur e ha s bee n marke d b y a n expansio n i n th e productio n o f soy a bean s t o b e supplie d a s ra w materia l t o foreig n countries . Thes e fact s have , o n th e on e hand , naturall y fixe d th e cours e o f th e developmen t o f Manchuria n railways , whil e th e developmen t o f railway s reciprocall y ha s serve d t o stimulat e th e developmen t o f agri culture . Agricultura l an d railwa y developmen t hav e thu s bee n place d i n a positio n o f inter-dependence . A n investigatio n int o soy a bea n transportatio n an d freigh t charge s o n th e S . M . R . line s reveals ' tha t o f th e tota l volum e o f good s carrie d o n thes e line s i n 1939 , amountin g t o 25,130,00 0 metri c tons , soy a bea n shipment s comprise d 2,049, 00 0 ton s o r 8. 2 pe r cent , a s agains t 9,577,00 0 ton s o f coal . Th e gros s freigh t revenu e fo r th e sam e yea r wa s 112,549,00 0 yen , o f whic h 21,830,00 0 ye n o r 19. 4 pe r cen t wa s obtaine d fro m bea n shipment s a s compare d wit h 33,893,00 0 ye n fro m coal . Nex t t o coal , th e soy a bea n constitute s th e mos t importan t sourc e o f railwa y revenu e i n Manchuria . A familia r instanc e o f ho w th e vigorou s constructio n o f ne w railwa y line s i s actin g a s a n incentiv e t o th e develop men t o f agricultur e follows : — 42 —

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A s a resul t o f th e openin g o f th e Tumen-Chiamuss u Railwa y an d th e Hulin-Linko u Railway , whic h latte r lead s t o th e settlement s o f th e fourt h an d fift h contingent s o f Japanes e immigrant s i n th e regio n wes t o f Lak e Khanka , th e district s alon g thes e line s hav e bee n linke d wit h th e Nort h Korea n port s o f Yuki , Rashi n an d Seishi n b y railway , an d th e transportatio n o f agricultura l products , formerl y shippe d dow n th e Sungar i Rive r t o Harbin , direc t t o th e por t o f Rashi n ha s becom e possible . I n Sout h Manchuri a th e are a cultivate d t o soy a bean s comprise s abou t te n pe r cen t o f th e tota l acreag e unde r variou s crops . I n Nort h Manchuri a (wher e man y ne w Japa nes e settlement s ar e located) , o n th e othe r hand , th e bea n acreag e i s mor e tha n 3 0 pe r cen t o f th e are a unde r cultivation . Th e expansio n o f th e railwa y networ k i n Nort h Manchuri a an d th e rationa l managemen t o f railway s i n tha t par t o f Manchuri a ar e thu s extremel y importan t t o th e promotio n o f Manchuria n econom y an d a s wel l a s t o facilitat e th e trans portatio n o f agricultura l products , chiefl y soy a beans , i n Nort h Manchuria . Th e Sout h Manchuri a Railwa y Compan y ha s pai d con siderabl e attentio n t o th e improvemen t an d propagatio n o f soy a bean s i n th e past . A s a par t o f th e Five-Yea r Agri cultura l Plan , th e Manchouku o Governmen t i n 193 7 launche d a five-year pla n fo r improvin g an d increasin g th e productio n o f soy a bean s i n eac h province , bu t th e principl e wa s a negativ e on e aimin g a t increasin g th e yiel d o f eac h plo t an d wa s no t drafte d alon g positiv e line s t o rais e productio n b y increasin g th e are a devote d t o th e crop . Th e Government , however , realize d it s mistak e whe n th e nee d o f acquirin g foreig n currenc y b y promotin g export s cam e t o b e mos t keenl y fel t a s a resul t o f th e sudde n chang e i n th e genera l — 43 —

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situatio n followin g th e outbrea k o f th e Chin a Incident ; an d th e Governmen t therefor e revise d th e five-yea r pla n i n th e secon d yea r o f it s executio n wit h th e objec t o f increasin g th e annua l soy a bea n productio n t o 5,000,00 0 metri c ton s i n 1941 . Variou s experiment s an d researche s o n th e industrializatio n o f soy a bean s hav e bee n conducte d a t th e S . M . R . Centra l Laborator y i n Dairen , wit h satisfactor y results . Noteworth y discoverie s t o dat e ar e th e proces s o f producin g sil k woo l substitut e fro m bea n cak e an d th e extractio n o f oi l fro m soy a bean s b y th e alcoholi c process . I n orde r t o commer cializ e th e latte r proces s th e Manchuri a Soy a Bea n Industr y Compan y ha s bee n establishe d a t Jijiko , Dairen , wit h a capita l o f 1,500,00 0 yen , o f whic h 800,00 0 ye n i s investe d b y th e S . M . R . 9 . COA L AN D TH E S . M . R . Ther e ar e n o fewe r tha n fift y coa l mine s i n al l part s o f Manchuri a an d th e tota l coa l deposit s ar e estimate d a t 10,000,000,00 0 metri c tons . Togethe r wit h iro n mining , coa l minin g i s th e mos t importan t minin g industr y i n Manchuria . Th e coa l mine s whic h th e Sout h Manchuri a Railwa y Compan y too k ove r fro m th e Japanes e Governmen t wer e th e Fushun , Yenta i an d Wafangtie n collierie s o f whic h th e firs t tw o mentione d wer e re-opene d simultaneousl y wit h th e estab lishmem t o f th e company . Th e S . M.R . bega n workin g th e Wafangtie n Collier y i n 1933 , whe n i t als o undertoo k th e managemen t o f th e coa l mine s a t Chiaoh o an d Laotoukou . Th e tota l are a o f thes e coal-field s i s 8,80 0 squar e kilometres , wit h th e deposit s aggregatin g 1,500,000,00 0 metri c tons . Th e coa l i s bituminous . — 44 —

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Followin g th e foundatio n o f Manchoukuo , th e Manchuri a Coa l Minin g Compan y wa s establishe d t o manag e th e collierie s owne d b y th e forme r regim e an d al l othe r mine s wit h th e exceptio n o f thos e worke d b y th e S . M . R . Th e railwa y compan y i s no w reportedl y contemplatin g transfe r o f it s mines , exceptin g th e Fushu n an d Yenta i collieries , t o th e Manchuri a Coa l Minin g Company . Manchuri a Coa l Minin g Compan y Establishe d i n May , 193 4 wit h th e objec t o f effectin g unifie d contro l ove r th e minin g industr y throughou t Man churia , th e Manchuri a Coa l Minin g Compan y wa s originall y capitalize d a t 16,000,00 0 yen , o f whic h 8,000,00 0 ye n wa s investe d b y th e Manchouku o Governmen t i n kind , an d th e remainin g 8,000,00 0 ye n b y th e Sout h Manchuri a Railwa y Compan y (5,000,00 0 ye n i n kin d an d 3,000,00 0 ye n i n cash) . Wit h th e establishmen t o f th e Manchuri a Industria l Developmen t Corporatio n i n October , 1937 , however , th e share s hel d b y th e S . M . R . i n th e Manchuri a Coa l Minin g Compan y wer e transferre d t o th e ne w corporatio n whic h becam e th e paren t fir m o f th e minin g company . I n Februar y o f th e sam e yea r th e capita l o f th e Manchuri a Coa l Minin g Compan y ha d bee n increase d t o 80,000,00 0 ye n i n ode r t o increas e productio n t o 15,000,00 0 ton s annually , i n lin e wit h th e Manchouku o Five-Yea r Industria l Plan . Fushu n Collierie s Coa l minin g i s th e mai n busines s o f th e Fushu n Collieries . I n order , however , t o reduc e th e cos t o f coa l an d t o b e self-sufficien t an d self-supportin g a s wel l a s t o obtai n additiona l — 45 —

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income , th e Collierie s als o conduc t variou s enterprise s suc h a s a powe r plan t an d plant s fo r th e productio n o f mon d gas , tar , pitc h coke , oi l fro m shal e an d b y th e liquefactio n o f coal , sulphat e o f ammonia , sulphuri c acid , oxyge n an d hydrogen , i n additio n t o a powder-mill , mechanica l work shops , railways , publi c works , water-works , electri c lightin g an d telephon e services . Electri c powe r generate d a t Fushu n i s sen t t o Mukde n an d Anshan . Th e capita l expenditur e o f th e Fushu n Collierie s a t th e tim e the y starte d operation s amounte d t o 50,000,00 0 yen , a s compare d wit h 137,000,00 0 ye n i n 1937 . Locate d abou t 3 0 mile s t o th e eas t o f Mude n i n th e Hu n Rive r valley , th e Fushu n coal-field s cove r a n are a o f abou t 16,00 0 acres , extendin g 1 0 mile s eas t t o wes t an d tw o mile s nort h t o south . Th e widt h o f th e seam s range s fro m 7 8 t o 42 0 fee t an d average s 13 0 feet . Th e tota l deposit s ar e esti mate d a t 1,000,000,00 0 metri c ton s o f whic h som e 600,000,00 0 ton s ca n b e mined . Annua l outpu t i s abou t 9,000,00 0 tons . Th e dail y productio n o f th e Fushu n Collierie s a t th e tim e the y wer e take n ove r b y th e Sout h Manchuri a Railwa y Com pan y amounte d t o onl y 36 0 metri c tons . Th e averag e dail y outpu t ha s sinc e increase d t o mor e tha n 25,00 0 ton s a s a resul t o f th e untirin g effort s mad e b y th e S . M . R . i n th e im provemen t o f workings , th e openin g u p o f ne w mines , th e expansio n o f minin g equipment , an d th e improvemen t o f minin g method s i n temp o wit h th e progres s o f th e times . Th e coal-bed s ar e o f grea t thicknes s th e lik e o f whic h i s exceptionall y rare . Open-cu t minin g i s carrie d o n i n a por tio n o f th e mines , an d 3,200,00 0 ton s ar e mine d annuall y b y thi s metho d alone . — 46 —

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Yenta i an d Othe r Mine s Estimate d a t 40,000,00 0 tons , th e deposit s o f th e Yenta i Min e ar e semi-anthraciti c an d ar e wel l adapte d t o coking . Annua l outpu t i s abou t 300,00 0 metri c tons . Th e Wafangtien , Chiaoh o an d Laotouko u mine s ar e al l worke d o n a smal l scal e an d tur n ou t abou t 50,00 0 tons , 30,00 0 ton s an d 60,00 0 ton s respectively , annually . Recor d o f Coa l Sale s Revenu e fro m th e Company' s mines , chiefl y derive d fro m th e sal e o f coal , occupie s secon d plac e i n th e Sout h Man churi a Railwa y Company' s income , rankin g nex t t o railwa y receipts . I n recen t year s i t ha s amounte d t o abou t 90,000,00 0 ye n annually , o r abou t 3 0 pe r cen t o f th e Company' s gros s proceeds . Th e Company' s incom e fro m minin g i n 193 7 totalle d 91,000,00 0 yen , o f whic h 88,000,00 0 ye n wa s obtaine d fro m th e sal e o f coal . Coa l sale s i n recen t year s hav e average d betwee n 7,000,00 0 an d 10,000,00 0 metri c ton s annually . Th e amoun t sol d i n 193 7 totalle d 10,000,00 0 tons , o f whic h 1,900,00 0 ton s wer e use d b y th e S . M . R. , 4,900,00 0 ton s wer e sol d i n Manchuria , 2,300,00 0 ton s wer e exported , an d 820,00 0 ton s wer e use d fo r transportin g coa l shipments . Th e sal e o f coa l mine d fro m th e S . M . R.-owne d collierie s i s exclusivel y undertake n b y th e Japan-Manchuri a Tradin g Company , whic h i s directl y manage d b y th e Sout h Manchuri a Railwa y Company . 10 . TH E S . M . R . AN D OI L EXTRACTIO N I t wa s aroun d 190 7 tha t shal e wa s firs t discovere d a s a n oi l yieldin g "rock" . I n vie w o f th e indispensabilit y o f fue l — 47 —

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oi l i n nationa l defence , variou s experiment s wer e conducte d a s a resul t o f which , th e S . M . R . succeede d i n discoverin g th e so-calle d Fushu n proces s i n 1925 . Afte r governmen t permi t wa s obtaine d an d furthe r concret e experiment s wer e begu n th e followin g year , th e S . M . R . commence d constructio n o f a plan t a t Fushu n i n 192 8 a t a cos t o f •7,000,000 . Thi s plan t wa s complete d th e followin g year . Whe n experiment s an d experienc e showe d tha t oi l produc tio n ca n b e double d b y improvin g th e furnace , th e S . M . R . soo n carrie d ou t th e improvement s an d i n additio n constructe d a dr y distillatio n plan t i n 193 5 an d a volatil e oi l plan t im mediatel y afterwards . Furthermore , i n conformit y wit h th e nationa l fue l policy , a giganti c expansio n progra m callin g fo r increase d productio n withi n five year s beginnin g wit h February , 1936 , a t a tota l cos t o f • 18,000,000 , wa s launched . Th e enterpris e appropria tio n fo r shal e oi l amounte d t o • 13,000,00 0 i n 1937 , whil e income s fro m th e sal e o f crud e oil , crud e wa x an d cok e totalle d •9,000,00 0 fo r th e sam e year . Oi l shal e deposit s a t Fushu n whic h ar e estimate d a t 5,000,000,00 0 metri c ton s ar e abou t 13 0 meter s thick , bu t oi l shal e whic h i s use d a s ra w materia l i n manufacturin g oi l come s fro m th e uppe r two-third s o f th e shal e layer , th e oi l conten t o f whic h i s abou t 6 pe r cen t o n th e average . Oi l shal e containin g muc h mor e oi l tha n th e Fushu n shal e ar e sai d t o b e foun d i n th e stat e o f Colorad o i n th e Unite d State s an d als o i n Estonia , bu t ther e bein g n o wa y o f profitabl y exploitin g thes e deposit s i t seem s a s thoug h nothin g muc h ha s bee n don e i n thos e countrie s othe r tha n th e stakin g o f claims . Th e extractio n o f oi l fro m shal e a t Fushu n i s no t onl y a prid e o f th e S . M . R . bu t als o o f Japan . Durin g th e earlie r par t o f th e nineteent h century , th e — 48 —

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productio n o f oi l simila r t o petroleu m throug h dr y distilla tio n wa s discovered , an d sinc e the n shal e oi l dr y distillatio n plant s wer e constructe d i n Scotland , France , Nort h Americ a an d Canada , bu t whe n ric h extensiv e oi l field s wer e discovere d i n Nort h Americ a i n 1895 , th e continuatio n o f shal e oi l extractio n wa s rendere d economicall y inadvisable . A s soo n a s th e nationa l polic y regardin g fue l oi l bega n t o b e regarde d wit h grea t importance , th e S . M . R . drafte d plan s fo r th e inauguratio n o f coa l liquefactio n an d instructe d th e Centra l Researc h Laborator y (o f th e Company ) t o con duc t necessar y experiment s an d research . I t wa s finall y con clude d i n May , 193 6 tha t thi s undertakin g wa s feasible . Abou t th e sam e tim e th e Ministr y o f th e Nav y wa s als o requeste d t o conduc t experiments , an d favorabl e encouragin g result s wer e als o produced . I n additio n i t wa s prove n tha t th e Fushu n coa l wa s ideall y suitabl e fo r coa l liquefactio n purposes . Thus , wit h th e result s obtaine d fro m th e experiment s an d researc h whic h wer e conducte d a t a hug e cos t ove r a perio d o f year s an d months , coa l liquefactio n wa s begu n o n a larg e scale . Al l matter s pertainin g t o th e ne w enterprise s wer e transferre d fro m th e Centra l Researc h Laborator y t o Fushu n i n August , 1936 , an d constructio n wor k o n th e plan t whic h cos t •14,000,00 0 wa s begun . Presiden t Ohmr a commente d o n th e completio n o f th e direc t liquefactio n metho d o n Jul y 22 , 1939 , i n th e followin g word s : Th e coa l liquefactio n enterpris e o f th e Sout h Manchuri a Railwa y Compan y ha s it s beginnin g i n 192 8 whe n Mr . Kumetar o Yamamot o wh o wa s the n th e president , afte r draftin g concret e plan s fo r con ductin g coa l liquefaction , requeste d th e nava l authoritie s o f th e Tokushim a fuelin g statio n t o carr y ou t extensiv e studie s o n th e subject . Th e Nav y Ministr y complie d wit h thi s reques t an d con — 49 —

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ducte d energeti c experiments . Th e effort s o f th e Nav y an d th e S . M . R . Centra l Researc h Laborator y wer e combine d fo r makin g concret e industria l experiments . Then , whe n i n August , 1936 , th e forme r president , Mr . Yosuk e Matsuoka , establishe d th e Fushu n Coa l Liquefactio n Office , construc tio n o f a plan t wa s begu n immediately , bu t wit h th e adoptio n o f th e Five-Yea r Industria l Developmen t Pla n b y th e Governmen t o f Manchoukuo , th e coa l liquefactio n undertakin g wa s incorporate d int o th e Plan . Sinc e then , innumerabl e difficultie s wer e encountere d bu t wit h th e completio n o f th e plan t i n Februar y o f thi s yea r (1939) , coa l liquefactio n operation s wer e formall y begun . Furthe r experi menta l operations , however , wer e conducte d an d variou s weaknesse s wer e remedied . Wit h this , th e direc t liquefactio n metho d whic h wa s considere d difficult , wa s finall y perfected , an d th e qualit y o f th e oi l produce d wa s foun d t o b e exceptionall y good . Heretofore , th e direc t liquefactio n metho d wa s considere d t o b e th e mos t difficul t proces s fo r th e manufactur e o f petro leu m artificially . Th e direc t liquefactio n metho d whic h th e German s us e i s no t a s difficul t a s i t migh t appea r whe n Germa n ligniti c coa l i s employe d a s ra w material , bu t th e situatio n i s somewha t differen t whe n ligniti c coa l o f Man churia , an d especiall y s o whe n bituminou s coa l o f Fushu n i s used . Eve n th e German s hav e no t succeede d i n perfect in g a proces s usin g bituminou s coal . 11 . STEE L MANUFACTURIN G Th e iro n an d stee l undertakin g i s th e industrializatio n o f th e specia l proces s o f magnetizin g ore s whic h wa s discovere d b y th e Centra l Researc h Laborator y i n 1932 . Constructio n wor k o n a n experimenta l stee l plan t fo r th e productio n o f 20,00 0 metri c ton s o f stee l fro m ric h Manchuria n ores , usin g Fushu n coal , wa s begu n i n October , 1937 . Th e enterpris e appropriatio n fo r thi s experimen t whic h wil l b e carrie d ou t ove r a perio d o f tw o year s i s •8,000,000 . — 50 —

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Suc h i s th e presen t situatio n i n th e manufactur e o f iro n an d stee l b y th e S . M . R. , bu t th e fac t tha t th e Compan y ha s mad e a tremendou s contributio n towar d th e developmen t o f thi s industr y i n th e pas t canno t b e overlooked . N o soone r ha d th e S . M . R . bee n organize d tha n i t discovere d extensiv e iro n or e deposit s i n th e vicinit y o f Anshan . Determine d t o develo p th e iro n industry , i t dre w u p plan s fo r a hug e iro n work s an d complete d the . firs t stag e o f th e plan s i n 191 9 whe n operation s wer e firs t begun . Althoug h ther e wer e vas t deposit s o f iro n or e i n th e vicinit y o f Anshan , th e iro n conten t wa s ver y poo r bein g onl y betwee n 3 5 an d 4 0 pe r cent . Sinc e industria l exploi tatio n o f thes e lo w grad e ore s wa s considere d a matte r o f muc h difficult y an d unprofitable , th e S . M . R . sen t sample s o f Ansha n ore s t o Sweden , German y an d th e Universit y o f Minnesot a fo r experimen t an d analysis , bu t o n th e othe r han d it s ow n experiment s produce d successfu l result s an d a proces s peculia r t o Ansha n wa s discovered . A s a result , th e productio n o f th e stee l work s increase d tremendously , th e annua l outpu t o f pi g iro n reachin g 300,00 0 metri c tons . The n i n April , 1933 , o r afte r th e Manchuria n Incident , th e Show a Stee l Work s capitalize d a t •100,000,000 , wa s establishe d an d al l operation s i n thi s lin e wer e entruste d t o th e ne w concer n b y th e S . M . R . Today , th e Show a Stee l Work s i s engage d i n th e manufactur e o f iro n an d steel , bu t it s succes s i s entirel y du e t o th e tryin g experience s o f th e past . 12 . PORT S AN D HARBOUR S Port s an d harbour s an d inlan d wate r navigatio n whic h i s inseparabl y linke d wit h th e S . M . R . constitute s a n importan t — 51 —

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par t i n th e transportatio n undertaking s o f th e S . M . R . I n November , 1936 , th e managemen t o f ports , harbour s an d waterway s wer e place d unde r th e supervisio n o f th e Genera l Directorat e o f Railway s togethe r wit h th e unificatio n o f al l railway s unde r th e sam e organ . A s a result , th e port s o f Dairen , Ryojun , Yingkou , Hopei , Antung , Huluta o an d thre e Nort h Chose n port s an d th e transportatio n facilitie s o n th e Sungari , Heilungkian g an d Ussur i river s wer e incorporate d unde r th e managemen t o f th e Genera l Directorat e o f Railways . I n additio n pier s ar e manage d b y th e S . M . R . a t Kanseish i (Dairen) , Shangha i an d Kawasaki , Japa n t o facilitat e th e ex portatio n o f coal , pi g iron , ammoniu m o f sulphat e an d othe r commodities . A t th e beginning , th e S . M . R . appropriate d abou t • 1,000, 00 0 fo r th e direc t managemen t o f variou s Manchuria n ports , bu t b y th e en d o f th e fisca l year , 1937 , tota l investmen t i n thi s enterpris e amounte d t o • 96,000,000 . Income s fro m port s an d harbour s hav e increase d o r decline d accordin g t o th e natur e o f freigh t handled , bu t i n recen t years , the y totalle d betwee n 12,000,00 0 an d 15,000,00 0 yen , 8 0 pe r cen t o f whic h comin g fro m handlin g o f freight . Sinc e th e greate r par t o f rail-born e traffi c i n Manchuri a begin s o r end s a t a seaport , th e equipmen t o f port s an d harbours , suitabilit y o f harbou r facilitie s an d operations , hig h o r lo w charge s an d connectio n betwee n rai l an d shi p hav e a n immediat e effec t upo n railwa y transportation , an d conse quentl y a n importan t bearin g upo n th e carryin g ou t o f th e missio n o f developin g th e continent . O f th e averag e 38,000, 00 0 metri c ton s o f freigh t transporte d durin g eac h o f th e thre e year s betwee n 193 4 an d 1936 , 2 6 pe r cen t arrive d a t o r departe d fro m Dairen , o r roughl y 3 4 pe r cen t whe n Yingkou , Antung , Ryojun , an d thre e Nort h Chose n port s ar e — 52 —

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included . Moreover , good s exporte d fro m port s an d harbour s unde r S . M.R . contro l aggregate d i n 1937 , 8,103,98 7 metri c ton s an d import s 5,779,46 4 metri c ton s o r a tota l o f 13,883,45 1 metri c tons , whil e th e numbe r o f vessel s dockin g a t wharve s totalle d 9,676 . Daire n Th e por t o f Dairen , whic h i s a n ice-fre e port , wa s hande d ove r t o th e Japanes e upo n th e terminatio n o f th e Russo Japanes e War , bu t sinc e then , a hug e su m o f •70,000,00 0 ha s bee n investe d i n th e improvemen t o f por t facilities , wit h th e resul t tha t Dairen' s complexio n wa s radicall y changed . Ther e i s als o a coalin g pie r a t Kanseish i acros s th e bay , an d on e fo r loadin g an d unloadin g dangerou s good s a t Jijiko . Th e por t o f Daire n hold s th e premie r positio n amon g al l Manchuria n ports . Practicall y 8 0 pe r cen t o f al l export s an d import s pas s throug h thi s port . Approximatel y 10,000,00 0 metri c ton s o f good s pas s throug h Daire n i n a year , 7,000,00 0 metri c ton s o f whic h ar e export s an d 3,000,00 0 tons , imports . Bot h export s an d import s hav e increase d te n time s ove r th e respectiv e amount s o f th e tim e th e Compan y undertoo k manage ment . Th e principa l expor t commoditie s are , lik e thos e trans porte d ove r railroads , coa l an d stapl e produce , th e forme r amountin g t o 2,000,00 0 metri c ton s i n a yea r an d th e latte r 3,000,00 0 metri c tons , thei r tota l bein g 8 0 pe r cen t o f al l expor t commodities . I n contras t t o exports , impor t commoditie s ar e numerous , bu t th e fac t tha t th e volum e o f constructio n material s ha s increase d tremendousl y a s a resul t o f th e phenomena l progres s mad e b y Manchouku o an d th e ris e o f variou s industries , i s worth y o f specia l note . — 53 —

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Moreover , betwee n 600,00 0 an d 800,00 0 passenger s embar k o r lan d a t Daire n annually , whil e th e aggregat e numbe r o f incomin g an d outgoin g ship s reac h 6,00 0 o r a tota l tonnag e o f 17,000,00 0 tons . Th e volum e o f export s an d import s o f Ryojun , Yingko u an d Antun g ar e 200,000 , 1,000,00 0 an d 150,00 0 metri c ton s respectively , bu t thes e figures ar e quit e insignifican t whe n compare d wit h tha t o f Dairen . Ryoju n Th e por t o f Ryoju n wa s formall y opene d t o maritim e commerc e o n Augus t 10 , 1923 , a s a n auxiliar y por t t o £)airen . Coa l an d sal t ar e th e chie f impor t an d expor t commoditie s o f thi s port . Yingko u Yingko u ha s a histor y o f eight y year s a s a port , bu t i t wa s i n 191 0 tha t th e S . M . R . commence d operation s there . It s presen t capacit y i s 1,600,00 0 metri c tons , bu t i s bein g expande d considerably . I t ha s a weaknes s o f freezin g durin g th e winte r months . Hope i Por t Hope i por t whic h i s locate d a t th e mout h o f th e Lia o Rive r opposit e Yingko u i s no t a n ice-fre e port . Th e forme r Northeaster n regim e use d Hope i por t a s a n outle t fo r th e good s carrie d ove r thei r line s whic h wer e buil t paralle l t o th e S . M . R . lines , i n competitio n wit h Daire n unti l th e completio n o f it s por t a t Hulutao . A t th e presen t time , — 54 —

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Hope i act s a s a n auxiliar y por t o f Huluta o an d i s capabl e o f handlin g 300,00 0 metri c ton s o f freigh t pe r annum . Antun g Antung , whic h lie s a t a poin t 2 5 mile s upstrea m fro m th e mout h o f th e Yal u Rive r wa s opene d a s a por t i n May , 1912 . Traffi c i s rathe r heavy , bu t a s th e year s wen t by , th e waterwa y becam e poor . I t freeze s durin g th e winter . How ever , sinc e a larg e increas e i n th e volum e o f good s tha t assembl e ther e i s envisage d upo n developmen t o f th e Tung pienta o region , improvemen t plan s ar e bein g contemplated . Huluta o I n 1908 , th e Northeaster n regim e formulate d plan s fo r th e constructio n o f por t facilitie s a t Huluta o an d numerou s attempt s wer e mad e t o carr y ou t th e pla n sinc e then , bu t i t wa s no t unti l 193 0 afte r a contrac t wa s signe d betwee n Chan g Hsueh-lian g an d a Dutc h compan y tha t actua l constructio n wor k wa s begun . Undoubtedly , Daire n woul d hav e receive d a seriou s threa t i f Huluta o ha d bee n completed , bu t th e outbrea k o f th e Manchuria n Inciden t brough t abou t a com plet e change . I n 1935 , th e S . M . R . launche d a five-year pla n t o perfec t por t facilitie s whic h woul d b e capabl e o f handlin g 3,500,00 0 metri c ton s o f freigh t a t a cos t o f • 20,000,000 , bu t wit h th e outbrea k o f th e Chin a Incident , relation s wit h Nort h Chin a wer e s o intensifie d tha t th e origina l pla n wa s revised . A s a result , • 10,000,00 0 wer e adde d t o th e forme r appropriatio n an d th e capacit y o f th e por t increase d t o 4,000,00 0 metri c tons . Th e whol e pla n wil l b e complete d i n 1940 . I t i s — 55 —

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surmise d tha t tremendou s quantitie s o f coa l fro m Jeho l Prov inc e wil l see k a n outle t a t Hulutao . Th e Thre e Nort h Chose n Port s Rashin. Th e Sout h Manchuri a Railwa y Compan y under too k th e constructio n o f thre e port s i n Nort h Chose n i n 1933 , an d wil l complet e a portio n o f th e pla n i n October , 1939 . Considerabl e quantitie s o f good s ar e assemble d fro m Nort h Manchuria , th e tota l fo r 193 8 bein g 500,00 0 metri c tons , o f whic h soy a bean s constitute d 400,00 0 metri c tons . Seishin. Seishi n wa s opene d t o internationa l trad e i n 190 8 an d i s th e oldes t amon g Nort h Chose n ports . I t ha s a n an nua l capacit y o f 900,00 0 metri c tons . Wit h th e developmen t o f stee l manufacturin g b y th e Japa n Stee l Compan y an d Mi tsubishi , cemen t industr y an d oil-milling , thi s por t wil l un doubtedl y becom e prominen t a s a n industria l port . Yuki. Yuk i wa s designate d a s a por t i n June , 1921 . I t ha s a n annua l capacit y o f 600,00 0 metri c tons . Coa l an d lumbe r ar e th e chie f transi t commodities . Shangha i Whar f Th e Yangchiakoum a Whar f whic h i s locate d i n th e easter n secto r o f Potung , Shanghai , wa s purchase d i n 192 8 b y th e Chines e Easter n Railwa y fro m a Chinese , bu t i t wa s trans ferre d ove r t o th e S . M . R . whe n th e Nort h Manchuri a Rail wa y wa s take n over . However , th e Manchouku o Governmen t purchase d al l right s i n April , 1936 , an d ha s entruste d th e managemen t t o th e Daire n Kise n Kaisha . It s capacit y i s 3,00 0 metri c ton s an d tw o ship s ca n doc k a t th e sam e time . Th e Huangpom a Whar f i s situate d o n th e Shangha i side . — 56 —

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I t wa s purchase d i n September , 191 1 an d i s no w manage d b y th e Daire n Kise n Kaisha . Nichi-Ma n Whar f I n December , 1928 , th e Compan y purchase d lan d i n Ka wasaki , Kanagaw a Prefecture , Japa n an d constructe d a coalin g pier , whar f fo r loadin g an d unloadin g miscellaneou s goods , warehouse s an d othe r facilities . Th e capacit y o f thi s por t i s 1,500,00 0 metri c tons . River s Manchuria n river s ar e froze n fro m Novembe r t o Marc h o f th e followin g yea r an d movemen t o f ship s i s a t a stand still , bu t whe n Apri l come s alon g muc h activit y take s plac e o n bot h banks , an d economi c lif e i s revived . Th e Sungari , Heilungkiang , Ussur i an d Nonh o river s ar e th e mos t importan t waterways , bu t al l o f thes e ar e foun d i n Nort h Manchuria . Th e Lia o an d Yal u river s ar e als o navi gable , bu t th e majorit y o f goo d waterway s ar e foun d i n Nort h Manchuria . Whe n considerin g river s individually , th e Sungar i Rive r i s th e mos t importan t sinc e i t traverse s th e vas t plain s know n a s th e granar y o f Nort h Manchuria , an d consequentl y 9 0 pe r cen t o f al l inlan d wate r transportatio n i s carrie d o n o n thi s river . Sinc e i t wa s entruste d afte r th e foundatio n o f Manchou kuo , wit h th e managemen t o f al l inlan d wate r transportatio n facilitie s formerl y manage d b y th e Government , railway s an d port s an d harbours , th e S . M . R . establishe d a t Mukde n th e Genera l Directorat e o f Railway s o n Marc h 1 , 193 3 an d under too k th e operatio n o f rive r fleet s an d facilitie s i n Nort h Manchuria . — 5 7 —

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I n March , 1939 , al l privat e shippin g firm s wer e purchase d an d incorporate d int o th e unifie d rive r transportatio n system , whil e i n April , th e Nort h Manchuri a Rive r Transportatio n Bureau , a n orga n unde r th e Genera l Directorat e o f Railways , wa s establishe d a t Harbin . Thus , a singula r rai l an d rive r transportatio n syste m wa s perfected . Th e tota l numbe r o f rive r boat s i s 113 , thei r tota l tonnag e bein g 50,188 , o f sailin g vessel s 6 7 an d tonnag e thereo f 5,689 , o f barge s 13 0 an d tonnag e thereo f 62,12 2 o r a gran d tota l o f 31 0 ship s wit h a tota l tonnag e o f 117,999 . 13 . MOTOR-BU S SERVIC E B Y TH E S.M.R . I n February , 1933 , a s enterprise s subsidiar y t o th e opera tio n o f Manchouku o Stat e Railways , th e Sout h Manchuri a Railwa y Compan y wa s entruste d wit h th e managemen t o f harbour s an d shipping , i n additio n t o th e conduc t o f motor bu s service s unde r th e polic y o f " on e bu s lin e fo r on e highway. " Sinc e the n th e bu s line s ru n b y th e Genera l Directorat e o f Railway s hav e bee n expande d unti l toda y thei r tota l lengt h i s approximatel y 20,00 0 kilometres . Th e operatio n o f bu s line s wa s entruste d t o th e S . M . R . becaus e o f th e vita l bearin g i t ha s no t onl y upo n th e de velopmen t o f industry , bu t als o upo n th e maintenanc e o f publi c peace , an d nationa l defence . Specificall y th e followin g thre e kind s o f bu s route s wer e brough t unde r th e manage men t o f th e S . M . R. : 1 . Bu s line s competin g wit h railways ; 2 . Bu s line s takin g th e plac e o f railway s ; an d 3 . Bu s line s essentia l fo r th e preservatio n o f peac e an d order , an d fo r industria l development . — 58 —

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Passenge r fare s o n th e S . M . R . operate d bu s line s are , generall y speaking , simila r t o thos e o n th e Stat e Railways , an d ar e charge d accordin g t o distance . Th e standar d rat e i s fiv e se n pe r perso n fo r eac h kilometre , althoug h th e rat e ma y var y somewha t accordin g t o th e differen t lines . Th e minimu m rat e i s tw o se n pe r kilometre , an d th e maximum , si x sen . Freigh t rate s diffe r accordin g t o kind s o f goods , bu t ar e o n th e whol e 4. 5 t o 5. 5 se n pe r 10 0 kilograms . O n newly-opene d lines , however , th e rat e i s fixe d uniforml y a t 2. 5 se n fo r al l classe s o f goods . Passenge r traffi c o n th e bu s line s sinc e 193 3 ha s grow n b y leap s an d bound s t o a poin t tha t probabl y n o on e antici pate d a t th e tim e o f th e commencemen t o f th e business . Wherea s th e numbe r o f passenger s carrie d b y th e bu s line s i n th e initia l yea r o f operatio n wa s 93,000 , th e tota l i n 193 7 reache d 1,137,000 , representin g a twelve-fol d increase . Thi s phenomena l gai n wa s admittedl y du e partiall y t o a n extensio n o f th e bu s lines , bu t th e othe r importan t contributin g factor s wer e th e improvemen t o f publi c peac e an d th e developmen t o f industry , whic h combine d t o increas e th e numbe r o f Man ch u passengers . Th e yea r 193 8 sa w a n epocha l advancemen t i n bu s traffi c a s ne w route s wer e rapidl y opened , swellin g th e passenge r traffi c t o 2,270,00 0 an d th e tota l receipt s fro m thi s traffi c t o ove r 2,000,00 0 yen . Good s traffi c o n th e bu s line s als o showe d a twelve-fol d increas e betwee n 193 3 an d 1937 , gainin g i n volum e fro m 1,50 0 metri c ton s t o 19,00 0 tons . Nevertheless , compare d wit h th e figure s fo r passenge r traffi c durin g th e sam e period , th e abov e total s fo r good s traffi c ar e stil l exceedingl y small . Th e tota l volum e o f good s carrie d o n th e bu s route s i n 193 8 reache d 23,70 7 metri c tons , wit h freigh t charges ' aggregatin g 598,73 1 yen . — 59 —

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Highway s Road s i n Manchuri a i n th e pas t hav e bee n notoriousl y bad , mos t o f the m bein g natura l roads , an d artificia l highway s bein g limite d t o a few . Durin g th e 300-yea r peacefu l rul e o f th e Chin g Dynast y practicall y n o attentio n wa s pai d b y th e Centra l Governmen t t o th e preservatio n an d repai r o f roads . A s a resul t th e loca l authoritie s wer e compelle d t o enlis t th e assistanc e o f loca l inhabitant s i n keepin g th e road s fro m becomin g a tota l loss . Wit h th e adven t o f th e Republi c o f Chin a law s wer e enacte d fo r protectin g an d developin g roads , bu t n o practica l result s wer e obtaine d therefro m du e t o successiv e interna l an d externa l trouble s an d th e cupidit y o f th e warlords . What eve r road s tha t wer e kep t i n comparativel y goo d orde r wer e thos e whic h ha d bee n develope d fo r militar y an d politica l purposes . I t wa s thu s onl y i n recen t time s tha t industria l highway s cam e t o b e buil t wit h harbour s o r railway s a s thei r startin g points . A fac t whic h need s mentionin g a t thi s poin t i s th e unusua l developmen t o f countr y road s i n Nort h Manchuri a durin g th e freigh t wa r betwee n th e Sout h Manchuri a Railwa y an d th e ol d Chines e Easter n Railway , whe n thes e tw o differen t railwa y system s wer e engage d i n a fierc e competitio n t o attrac t good s t o thei r respectiv e lines . Th e foundatio n o f Manchouku o heralde d th e adven t o f th e ag e o f systemati c moder n highwa y construction . Soo n afte r th e establishmen t o f th e ne w regime , a ten-yea r roa d buildin g progra m wa s drafte d wit h 60,00 0 kilometre s a s th e goal . Du e t o variou s circumstances , however , thi s progra m ha d t o b e revised , an d th e goa l o f th e firs t five-yea r stag e o f th e modifie d pla n endin g i n 193 6 wa s se t a t 10,00 0 kilo * — 60 —

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metres , an d tha t o f th e secon d five-yea r stag e a t 13,000 , o r a tota l o f 23,00 0 kilometre s fo r th e te n years . 14 . IMMIGRATIO N AN D TH E S . M . R . Immigratio n t o Manchuri a wa s on e o f th e firs t problem s tackle d b y th e Sout h Manchuri a Railwa y Compan y simulta neousl y wit h it s establishment . Th e vita l importanc e o f thi s questio n wa s pointe d ou t b y it s firs t president , th e lat e Coun t Shimpe i Goto , i n hi s statemen t o f reason s fo r assumin g th e post . On e passag e i n thi s statemen t read s : " Th e Russo-Japanes e Wa r wil l probabl y no t com e t o a n en d wit h thi s singl e battl e i n Manchuria. " Bu t adde d th e lat e Coun t Goto : " If , however , w e ca n transfe r 500,00 0 o f ou r peopl e t o Manchuri a throug h th e managemen t o f railways , eve n Russi a wil l no t b e abl e rashl y t o ope n hostilitie s agains t us. " Soo n afte r th e openin g o f it s business , th e Sout h Man churi a Railwa y Compan y offere d t o leas e abou t 4,000,00 0 hectare s o f lan d withi n th e Railwa y Zon e t o Japanes e im migrant s a t lo w rental s wit h a vie w t o encouragin g the m t o settl e o n th e land . Bu t thos e day s wer e a boo m ag e fo r th e S . M . R. , an d ver y fe w Japanes e woul d tak e t o agricultur e wit h it s comparativel y smal l profit . Th e resul t wa s tha t th e S . M . R . ha d n o choic e bu t t o leas e it s lan d t o nativ e in habitants . However , whe n th e worl d depressio n o f 191 9 als o struc k Manchuria , a n increasin g numbe r o f Japanes e resident s i n th e countr y bega n t o tur n t o agriculture . Th e S . M . R . seize d thi s opportunit y t o encourag e th e settlemen t o f Japanes e o n farm s b y affordin g ever y possibl e facilit y therefor . Regardin g — 61 —

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th e S . M . R . Zon e a s a hug e experimenta l farm , th e Company , i n co-operatio n wit h th e Japanes e military , authoritie s i n Manchuria , i n 191 4 starte d selectin g fro m amon g th e me n discharge d fro m th e Railwa y Garriso n reliabl e youth s t o who m a n averag e o f 2 0 hectare s o f lan d pe r househol d wer e leased . I n thi s manne r 3 4 Japanes e familie s wer e settle d o n farm s withi n th e Railwa y Zon e b y 1917 . Howeve r th e outbrea k o f th e Worl d War , whic h ushere d i n a n ag e o f unprecedente d boo m i n Manchuria , serve d t o und o th e goo d progres s mad e i n th e above experiment . Th e Japanes e settlers , unabl e t o resis t th e temptatio n o f reapin g quic k profit , turne d t o busi ness . Som e o f the m re-lease d thei r land s t o others , o r con ducte d som e lin e o f busines s alon g wit h farming . Th e final resul t i n practicall y al l case s wa s tragic . Th e settler s foun d themselve s heavil y i n deb t whe n th e post-wa r financial pani c swep t th e world . Thi s economi c pani c nevertheles s helpe d t o prov e tha t farmin g wa s afte r al l on e enterpris e whic h offere d comparativ e security . Thi s realizatio n fo r a tim e turne d mor e Japanes e t o farming , bu t th e tendenc y di d no t continu e long . Th e protracte d worl d agricultura l depression , whic h followe d th e financial panic , couple d wit h lac k o f experienc e i n continenta l agricultur e an d th e absenc e o f adequat e rura l financing an d sale s facilities , agai n gav e ris e t o a declin e i n Japanes e farm in g activit y i n Manchuria . Realizin g fro m th e above experimen t tha t th e chance s o f settlin g o n lan d wer e smal l i n th e cas e o f individua l fre e immigrants , th e Sout h Manchuri a Railwa y Compan y nex t undertoo k t o encourag e immigratio n throug h th e mediu m o f a compan y specificall y forme d fo r thi s purpose . I n 192 1 th e To a Kangy o Kaish a (Eas t Asiati c Industr y Encouragemen t Co. ) wa s organize d i n Mukde n t o purchas e an d manag e agricultura l — 62 —

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lands . Du e t o excessiv e pressur e brough t t o bea r upo n Japanes e interest s b y th e forme r warlor d regim e i n Manchuria , th e busines s o f th e newly-forme d company , however , wa s brough t t o a virtua l standstill . Afte r th e Manchuria n Inciden t th e To a Kangy o Kaish a manage d t o reviv e it s busines s activity , bu t merel y a s a mediu m fo r sponsorin g Chosenes e immigra tio n t o Manchuria . Th e Sout h Manchuri a Railwa y Compan y sinc e th e Man churia n Inciden t nevertheles s ha s bee n playin g it s shar e i n th e settlemen t o f Japanes e far m immigrant s i n Manchuri a b y subscribin g t o th e entir e 10,000,00 0 ye n capita l stoc k o f th e Daire n Noj i Kaish a (Daire n Agricultura l Company) , b y in vestin g 10,000,00 0 ye n i n th e 5 0 millio n ye n Manchuri a Colonizatio n Company , an d b y othe r diver s means . Thes e includ e th e subsidizin g o f th e Manchuri a Immigratio n As sociatio n an d agricultura l unions , an d th e grantin g o f greatl y reduce d railwa y passenge r fare s t o Japanes e immigrants . Self-protectiv e Railwa y Village s Fallin g i n lin e wit h th e Japanes e Government' s nationa l emigratio n policy , th e Sout h Manchuri a Railwa y Company , wit h th e two-fol d objec t of * contributin g t o th e maintenanc e o f peac e an d order , an d th e developmen t o f industry , es tablishe d so-calle d self-protectiv e railwa y village s alon g th e railway s unde r it s jurisdiction . Soldier s discharge d fro m th e Japanes e Garriso n i n Manchuri a an d me n selecte d fro m rura l communitie s i n Japa n wer e engage d fo r organizin g thes e villages . Th e first stag e pla n fo r th e formatio n o f suc h village s wa s complete d betwee n April , 193 5 an d Jun e o f th e sam e year . Late r th e secon d an d thir d stag e self-protectiv e village s wer e formed . Upo n th e transfe r t o Manchouku o o f — 63 —

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th e polic e forc e o f th e Genera l Directorat e o f Railways , th e Japanes e an d Manchouku o militar y an d polic e authoritie s an d th e Genera l Railwa y Protectio n Corp s undertoo k th e guidanc e o f matter s pertainin g t o th e maintenanc e o f peac e an d order . A s fo r th e member s o f th e self-protectiv e villlages , the y wer e brough t unde r th e jurisdictio n o f th e Industria l Departmen t o f th e Auxiliar y Enterprise s Burea u o f th e Genera l Directorat e o f Railway s t o engag e i n th e guardin g o f railway s whil e conductin g farmin g an d live-stoc k raisin g wit h thei r families . Th e numbe r o f suc h familie s i n th e self-protectiv e village s a t th e en d o f June , 193 9 totalle d 438 , comprisin g 1,45 6 members . I n additio n t o th e self-protectiv e railwa y village s th e In dustria l Departmen t o f th e Genera l Directorat e ha s unde r it s charg e th e agricultura l trainin g school s o f th e self-protectiv e railwa y village s an d th e Manchouku o colonizatio n yout h voluntee r corps ' self-protectiv e railwa y villag e trainin g schools . Durin g th e firs t yea r o f settlemen t land , house , variou s tools , agricultura l implements , live-stoc k an d seed s ar e loane d fre e o f charg e t o th e member s o f th e self-protectiv e railwa y vil lages . Th e land , hous e an d othe r propert y automaticall y be com e thei r ow n afte r a perio d o f te n years . Railwa y Protectio n Corp s Th e ol d railwa y protectio n village s wer e rename d th e rail wa y protectio n corp s i n January , 1938 , an d place d unde r th e jurisdictio n o f th e Railwa y Safeguardin g Departmen t o f th e Genera l Directorat e o f Railways . Whe n th e Genera l Directo rat e wa s commissione d t o manag e th e Manchouku o Stat e Railways , i t too k ove r th e Manch u employee s engage d i n th e safeguardin g o f th e line s t o exercis e th e polic e powe r whic h i t wa s entitle d t o wiel d subsidiar y t o it s mai n busines s o f — 64 —

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managin g th e railway . Thes e employee s wer e brough t unde r contro l o f th e Polic e Burea u o f th e Genera l Directorate . I n December , 1937 , th e Polic e Burea u wa s abolished , an d wit h th e exceptio n o f affair s relatin g t o th e railwa y safeguardin g village s an d th e self-protectiv e railwa y villages , al l affair s con cernin g th e policin g o f th e railway s wer e transferre d t o th e Governmen t o f Manchoukuo , an d th e Genera l Railwa y Pro tectio n Corp s wa s newl y organize d unde r th e jurisdictio n o f th e Departmen t o f Publi c Peace . I n al l matter s pertainin g t o th e policin g o f railways , th e differen t Railwa y Protectio n Corp s ar e unde r th e substantia l contro l o f th e Commander-in-Chie f o f th e Kwantun g Army , bu t wit h th e exceptio n o f education , socia l facilitie s an d othe r affair s speciall y designated , al l genera l administrativ e matter s ar e unde r th e guidanc e o f Manchouku o administrativ e offices . Fo r thi s reaso n th e Genera l Directorat e o f Railway s i s no w devotin g itsel f t o th e propagatio n amon g th e peopl e o f th e ide a o f safeguardin g th e railway s a s thoug h th e line s wer e thei r own , an d t o othe r educationa l an d publicit y wor k amon g th e railwa y protectio n corps , beside s providin g technica l train in g fo r th e preservatio n o f railway s an d undertakin g othe r activitie s fo r enhancin g th e industria l welfar e o f th e peopl e residin g alon g th e railways . I t i s stipulate d tha t railwa y protectio n corp s ma y b e es tablishe d i n village s i n a five-kilometre zon e o n eithe r sid e o f a railwa y o r bu s line . I n 193 8 ther e wer e i n al l 2,71 8 suc h protectio n corp s alon g railway s an d 94 3 alon g bu s lines . I n additio n ther e wer e as . man y a s 1,63 7 youn g men' s an d boys ' corp s fo r safeguardin g suc h transportatio n routes , thei r tota l membershi p runnin g u p t o 38,166 . — 65 —

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Th e Manchuri a Colonizatio n Yout h Voluntee r Corps ' Self protectiv e Railwa y Villag e Trainin g School s Thes e school s wer e firs t establishe d i n June , 193 8 unde r th e jurisdictio n o f th e Industria l Departmen t o f th e Genera l Directorat e o f Railways . Thoug h th e school s ar e unde r th e guidanc e o f th e Genera l Railwa y Protectio n Corp s i n matter s concernin g th e guardin g o f railways , guidanc e i n matter s re latin g t o industr y i s offere d b y th e Industria l Departmen t o f th e Genera l Directorat e o f Railways . Youn g me n an d boy s qualifie d t o ente r thes e trainin g school s ar e thos e o f 1 6 t o 2 0 year s o f ag e selecte d fro m throughou t Japa n b y th e Man churi a Emigratio n Association , wh o hav e finishe d thre e months ' trainin g i n th e schoo l manage d b y th e sai d Associatio n i n Ibarag i Prefecture . Thes e youn g Japanes e ente r eithe r th e aforementione d self-protectiv e railwa y trainin g school s ru n b y th e S . M . R . (Genera l Directorat e o f Railways ) o r th e yout h voluntee r corp s organize d b y th e Manchuri a Colonizatio n Company . Th e student s o f th e self-protectiv e railwa y trainin g schoo l ar e give n trainin g i n agricultur e an d farming , railwa y policing , beside s militar y training , includin g th e militar y arts, an d ar e taugh t hous e buildin g an d live-stoc k raising . Youn g me n finishin g th e stipulate d cours e i n th e self-protectiv e railwa y trainin g schools , wh o ar e conscripte d int o th e Army , ar e upo n discharge , allowe d t o ente r th e self-protectiv e railwa y village s o r becom e so-calle d fre e settler s o r ma y b e give n opportunitie s t o becom e grou p settlers . Ther e ar e a t presen t 2 0 self-protec tiv e railwa y trainin g school s wit h a tota l enrollmen t o f abou t 6,00 0 youths . — 66 —

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15 . AGRICULTURA L GUIDANC E AN D TH E S . M . R . Th e Sout h Manchuri a Railwa y Compan y possesse s alon g bot h it s ow n line s an d Manchouku o Stat e Railway s an d i n thei r adjoinin g district s agricultura l experimenta l stations , ex perimenta l cultivatio n farms , nurseries , see d raisin g farms , farm s fo r raisin g sheep , hog s an d poultr y fo r breedin g pur poses , an d forestr y experimenta l stations . Variou s experiment s ar e bein g continuall y conducted , an d superio r specie s o f plants , trees , an d live-stoc k ar e raise d an d distribute d amon g th e farmers . I n additio n agricultura l an d live-stoc k expert s ar e dispatche d fro m tim e t o tim e t o giv e prope r instructio n t o th e farmers , agricultura l exhibition s ar e held , o r vaccine s agains t anima l epidemic s ar e distribute d fre e o f charg e t o farmin g communities . Th e Sout h Manchuri a Railwa y Com pan y furthermor e conduct s multifol d othe r enterprise s suc h a s th e encouragemen t an d aidin g o f cotto n raisin g an d far m management , th e openin g u p o f settlement s fo r immigrants , th e sal e o f agricultura l products , th e purchas e o f good s neede d fo r farming , etc . Enterprises , th e prosperit y o f whic h directl y affect s tha t o f th e railways , ar e encourage d throug h th e grant in g o f subsidies . Encouragemen t o f Live-stoc k Raisin g Th e Sout h Manchuri a Railwa y ha s bee n endeavourin g t o rais e th e numbe r an d qualit y o f live-stoc k b y distributin g an d loanin g superio r breed s o f sheep , pig s an d cattl e amon g farmer s alon g th e railwa y lines . Live-stoc k show s ar e hel d a t regula r intervals , an d anti-epidemi c injection s ar e give n t o live-stoc k wheneve r necessary . Th e cultivatio n o f lucern e i s — 67 —

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als o encouraged . A s enterprise s unde r it s direc t managemen t th e S . M . R . operate s eigh t live-stoc k breedin g station s withi n th e jurisdictio n o f th e variou s loca l railwa y directorates . I n additio n th e Compan y manage s a lacti c aci d factor y a t Fularchi , th e Harbi n Agricultur e Fosterin g Station , an d a mea t packin g establishmen t i n th e sam e city . Encouragemen t o f Forestr y Th e Genera l Directorat e o f Railways , fro m it s ver y incep tion , ha s mappe d ou t a forestatio n progra m wit h th e objec t o f plantin g tree s alon g th e Stat e Railways , encouragin g forest r y an d sceni c beauty . Th e raisin g o f sapling s i s bein g con ducte d i n a wel l regulate d manner , whil e alon g th e railwa y line s forest s fo r th e protectio n o f railway s ar e establishe d i n variou s districts . Ther e ar e i n additio n 1 8 nurserie s a t ap propriat e place s alon g th e lines . Th e sapling s grow n a t thes e nurserie s ar e furnishe d fre e o f charg e t o loca l inhabitant s i n orde r t o encourag e forestatio n o r ar e use d b y th e Genera l Directorat e fo r it s ow n reforestatio n enterprise . 16 . WELFAR E ENTERPRISE S Fo r th e welfar e o f it s vas t arm y o f employee s th e Sout h Manchuri a Railwa y Compan y ha s establishe d variou s facilities , whic h ar e bein g operate d t o giv e th e maximu m possibl e results . Th e mos t importan t o f thes e facilitie s ar e th e em ployees ' mutua l ai d societ y an d th e syste m o f company-buil t dwelling s fo r th e employees . — 68 —

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Th e Employees * Mutua l Ai d Societ y Fo r th e enhancemen t o f th e mutua l welfar e o f th e em ployees , th e abov e societ y wa s organize d i n August , 1915 . Applyin g t o al l employee s wit h salarie s o f les s tha n 15 0 ye n pe r month ; th e mutua l ai d syste m provide s fo r th e paymen t int o a mutua l ai d fun d o f a su m equivalen t t o fiv e t o seve n pe r cen t o f th e salar y o f eac h employee , an d fo r th e paymen t o f a simila r amoun t b y th e Company . Th e fun d thu s ac cumulate d i s use d fo r th e mutua l benefi t o f th e member s o f th e societ y an d thei r familie s principall y fo r medica l expenses , hospita l hills , maternit y allowances , condolenc e mone y t o bereave d persons , relie f mone y t o afflicte d person s an d o f expense s fo r funera l service s fo r an y decease d perso n belong in g t o th e famil y o f an y membe r o f th e Society . Th e mem bershi p o f th e Mutua l Ai d Societ y i n 193 7 reache d 54,528 , an d th e mutua l ai d fun d totalle d 4,307,00 0 yen . Fo r th e benefi t o f th e Manch u employee s o f th e S . M . R . a mutua l ai d associatio n practicall y simila r t o th e abov e societ y look s afte r thei r mutua l welfare . Syste m o f Company-Buil t Dwelling s fo r Employee s Th e S . M . R . provide s fre e o f charg e company-owne d house s t o it s employee s wheneve r possible . I n cas e o f a shortag e o f suc h houses , house s belongin g t o other s ar e rente d b y th e Compan y an d supplie d t o it s employee s unde r th e sam e condition s a s company-owne d dwellings . Bachelor s ar e ac commodate d i n bachelors ' dormitorie s manage d b y th e Company . I n th e cas e o f an y employe e livin g i n an y hous e no t owne d o r rente d directl y b y th e Company , a certai n fixe d renta l allowanc e i s mad e eac h month . Th e tota l — 69 —

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amoun t o f suc h allowance s pai d durin g 193 7 reache d 5,200, 00 0 yen . Th e Comfor t Train , th e Comfor t Boat , an d th e Comfor t Motorcad e Beside s offerin g suc h varie d entertainmen t a s motio n pic tures , play s an d musica l concerts , an d holdin g exhibition s o f variou s kind s fo r th e benefi t o f it s employees , th e S . M . R . operate s a specia l train , a steamshi p an d automobile s t o provid e amusemen t no t onl y t o it s employees , bu t als o t o loca l farmer s an d peasant s a s on e wa y o f arousin g amon g the m a protectiv e interes t i n th e communicatio n enterprise s manage d b y th e S . M . R . Th e comfor t trai n ha s bee n makin g tour s o f railwa y line s ' sinc e 1933 , providin g entertainmen t t o S . M . R . employees , soldier s an d polic e authorities , member s o f th e railwa y pro tectio n corp s an d o f th e self-protectiv e railwa y village s an d th e inhabitant s i n general . Anothe r importan t functio n o f thi s trai n i s t o propagat e amon g th e native s th e ide a o f pro tectin g railways . Eac h comfor t trai n consit s o f 1 5 carriages , includin g on e fo r medica l treatment , anothe r fo r providin g entertainment , a dinin g car , a cookin g car , a bargai n sale s car , etc . Eac h trai n i s manne d b y ove r 10 0 person s an d i s wel l stocke d wit h variou s goods . A t al l station s th e trai n hold s bargai n sale s an d offer s medica l treatmen t an d enter tainmen t durin g th e day-time . I n th e cas e o f larg e station s motio n pictue s ar e show n a t night . I n additio n comfor t gift s ar e distribute d fre e o f charg e t o th e age d a s wel l a s schoo l children . Appropriat e entertainmen t i s als o offere d t o soldiers . Th e numbe r o f patient s receivin g medica l treatmen t o n th e comfor t trai n ha s bee n increasin g yearly , unti l toda y — 70 —

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accordin g t o ailments , th e patient s sufferin g fro m intestina l troubl e excee d al l othe r classe s o f patients , comprisin g clos e t o 3 0 pe r cen t o f th e tota l treated . Person s afflicte d wit h ski n disease s ran k second , an d person s wit h trachom a rep resen t abou t 1 0 pe r cen t o f th e total . T o thos e inhabitant s livin g i n th e remot e district s wher e medica l facilitie s ar e scarc e o r non-existen t an d t o thos e Manchu s an d Korean s to o poo r t o affor d th e cos t o f a doctor' s examination , th e amusemen t trai n i s a boon . Al l suc h peopl e seekin g treat men t ar e attende d t o wit h th e utmos t kindnes s an d give n fre e medicines . Othe r wor k conducte d b y th e medica l siaf f o f th e comfor t trai n i s th e propagatio n o f th e ide a o f sanita tion , an d th e examinatio n o f well s whic h hav e suc h a n im portan t bearin g upo n publi c health . Th e medica l staf f con sist s o f doctors , pharmacists , nurse s an d clerk s dispatche d fro m th e Mukde n Medica l Colleg e manage d b y th e S . M . R . Thes e person s tak e turn s i n workin g o n th e comfor t train . Th e cos t o f operatin g th e comfor t trai n ha s ru n u p t o abou t 150,00 0 yen . Th e comfor t trai n i s operate d o n a n averag e o f 15 0 day s a year , durin g whic h i t tour s 40 0 stations . Th e numbe r o f dramati c performance s an d movi e show s give n o n eac h tou r i s 35 0 an d 15 0 respectively . Th e forme r ar e witnesse d b y abou t 450,00 0 persons , an d latte r b y 250,000 . Bargai n sale s o f chea p dail y necessitie s durin g eac h tou r amoun t t o abou t 200,00 0 yen . A s fo r medica l treatmen t a n averag e o f abou t 30,00 0 case s ar e treate d eac h year . Th e comfor t boa t i s a 1,000-to n steamshi p operate d fo r th e entertainmen t o f me n engage d i n navigatio n o n th e Sungari , th e Amu r an d th e Ussur i river s an d o f th e Japanes e an d Manchouku o garrison s maintainin g peac e an d orde r i n th e basin s o f thes e waterways . Th e comfor t boa t i s als o — 71 —

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ope n t o th e inhabitant s i n genera l livin g i n thes e districts . Th e boa t wa s firs t introduce d i n 1934 . Lik e th e comfor t trains , i t leave s o n it s tou r wit h a n abundan t stoc k o f chea p dail y necessities . Becaus e o f th e scarcit y o f suc h good s i n th e district s whic h th e boa t travels , it s bargai n sale s ar e ver y popula r amon g th e loca l people , wh o ar e als o gratefu l fo r th e rar e opportunit y give n the m t o purchas e suc h good s a t price s wel l withi n thei r reach . Th e medica l servic e whic h th e staf f o f doctor s an d nurse s o n th e boa t offers , i s als o accepte d wit h gratitud e amon g th e loca l inhabitants . A s i n th e cas e o f th e comfor t train , th e comfor t boa t stage s play s an d bargai n sales , an d dispense s medica l treatmen t durin g day-time , an d give s motio n pictur e entertainmen t i n th e evenings . Th e boat' s tou r last s fro m abou t th e beginnin g o f Jul y t o th e middl e o f August . It s expenditur e fo r eac h tri p i s clos e t o 20,00 0 yen . Wit h a crew , a Russia n band , a medica l staf f an d other s numberin g abou t 100 , th e comfor t boat , tastefull y decorated , lend s a carniva l atmospher e t o ever y rive r whar f a s i t goe s o n it s annua l summe r journe y dow n th e Sungar i an d u p th e Amu r t o Heiho , th e por t opposit e th e Sovie t tow n o f Blagoveschensk . Th e comfor t motorcad e lik e th e trai n an d th e boa t men tione d above , hav e als o produce d ver y satisfactor y results . Consistin g o f a flee t o f fou r larg e buse s an d fou r trucks , th e motor-ca r cavalcad e leave s annuall y o n a tou r o f th e bu s route s operate d b y th e Genera l Directorat e o f Railways . Th e flee t carrie s abou t 5 0 person s divide d int o thre e squads , entertainment , medica l an d police .

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Th e S . M . R . Employee' s Clu b an d th e Employees ' Co-operativ e Unio n Th e S . M . R . Employees ' Clu b wa s unde r th e direc t manage men t o f th e S . M . R . Co . unti l January , 1924 , whe n i t wa s reorganize d int o a n autonomou s organizatio n o f th e employees . I t toda y ha s club s a t 11 6 place s throughou t Manchuria . Th e S . M . R . employee s als o hav e thei r ow n co-operativ e union , th e paid-u p capita l o f whic h amounte d t o 1,108,59 9 ye n i n th e fisca l yea r 1938 . I n th e sam e yea r it s 1 5 branche s an d 7 4 distributin g station s ha d a tota l incom e o f 34,408,60 0 yen , whil e th e aggregat e expenditur e wa s 33,699,60 0 yen . Th e S . M . R . Employees ' Co-operativ e Unio n owe d it s origi n t o th e seriou s post-wa r economi c depression , whic h a s i n othe r countrie s menace d th e livin g standard s o f th e salar y an d wag e earner s i n Manchuria . A s a mean s o f alleviatin g th e difficultie s confrontin g thei r life , th e S . M . R . employee s i n November , 191 9 organize d th e co-operativ e union . A t th e beginnin g th e unio n wa s subsidize d b y th e S . M . R . Co. , bu t sinc e April , 1925 , i t ha s bee n a genuin e employees ' co-operativ e purchasin g union . Eac h membe r mus t pa y a membershi p fe e o f five yen . A dividen d o f 1 0 pe r cen t pe r annu m i s guaran tee d fo r al l membershi p fees . Good s ar e obtainabl e a t th e co-operativ e store s maintaine d b y th e S . M . R . employee s a t price s o n a n averag e 2 0 pe r cen t cheape r tha n marke t values . Th e S . M . R . co-operativ e store s i n Daire n an d Mukde n ar e mor e popula r tha n eve n th e loca l departmen t stores . Th e Sout h Manchuri a Railwa y Compan y ha s als o estab lishe d variou s athletic , educationa l an d cultura l establishment s fo r th e benefi t o f it s arm y o f employees . Fo r instance , fo r th e promotio n o f physica l health , i t ha s buil t a t enormou s expenditur e suc h establishment s a s militar y art s halls , athleti c — 73 —

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ground s an d field s fo r winte r sport s a t variou s place s alon g th e railway s throughou t Manchuria . Suc h establishment s ar e als o manage d b y th e S . M . R . Th e Railwa y Compan y i n addi tio n give s guidanc e t o th e physica l educatio n o f th e employees ' familie s includin g th e wome n an d children ; i t provide s an d distribute s variou s physica l exercis e apparatu s a t 49 3 differen t places , i n additio n t o healt h establishment s a t nin e places , includin g th e Kakakashi , an d Hoshigaur a Famil y Hall s an d children' s playin g ground s a t 20 5 places . I n th e matte r o f cultur e an d educatio n th e S . M . R . pay s clos e attentio n no t onl y t o th e enlightenmen t an d enhance men t o f knowledg e an d th e buildin g u p o f th e characte r o f it s employees , bu t als o t o th e educatio n o f wome n an d children . Amon g th e enterprise s th e S . M . R . conduct s fo r thes e purpose s ar e th e holdin g o f summe r seminarie s an d th e managemen t o f circulatin g libraries , children' s dormitorie s an d children' s halls . 17 . SANITAR Y ESTABLISHMENT S AN D TH E S . M . R . Th e Sout h Manchuri a Railwa y Compan y own s an d operate s hospital s an d sanatori a alon g th e railwa y line s an d a t othe r variou s place s fo r th e benefi t no t onl y o f it s employee s an d thei r families , bu t als o fo r us e b y th e genera l public . I n additio n i t ha s a hygieni c researc h institut e i n Daire n an d numerou s healt h office s an d sanitatio n corp s engage d i n th e preventio n o f th e sprea d o f epidemics . Th e S . M . R . ha s thu s bee n playin g a n importan t rol e i n th e promotio n o f healt h an d sanitatio n i n Manchuria , it s tota l investmen t i n healt h establishment s sinc e it s organizatio n increasin g eac h — 74 —

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yea r unti l a t th e en d o f th e 193 7 fiscal yea r i t ha d reache d th e hug e figure o f 17,000,00 0 yen . Th e Hygieni c Researc h Institut e i n Daire n wa s transferre d t o th e Manchouku o Governmen t i n April , 1938 , togethe r wit h th e Mukde n Veterinar y Institute , th e Geologica l Researc h Institute , an d th e Agricultura l Experimenta l Statio n i n Kung chuling , owne d als o b y th e S . M . R. , an d brough t unde r th e contro l o f a simila r institut e operate d b y th e Government . Mos t o f th e S . M . R . hospitals , however , ar e stil l retaine d b y th e Railwa y Company . Th e numbe r o f suc h hospital s unde r th e jurisdictio n o f th e Genera l Directorat e o f Railway s a t th e en d o f April , 1939 , wa s 41 , no t countin g 5 5 branc h hospital s an d medica l consultatio n offices . Th e S . M . R . furthermor e own s an d operate s a larg e hospita l fo r tubercula r patient s a t Shoheit o i n th e suburb s o f Dairen , know n a s th e Sout h Manchuri a Sanatorium , i n additio n t o othe r sanatori a a t Fushun , Mukden , Hsinking , Harbi n an d Fularchi . Fo r th e benefi t o f thos e employee s o r familie s wh o wis h t o recuperat e a t spas , th e S . M . R . als o manage s th e " Mantetsu-Kan " (S . M . R . Inn ) a t Beppu , th e famou s hot-sprin g resor t i n Kyushu , an d th e Tangkangtz u Hot-sprin g Sanatoriu m a t Tang kangtz u o n th e mai n lin e o f th e S . M . R . betwee n Daire n an d Mukden . Wit h th e exceptio n o f th e sanatori a a t Shoheit o an d Fularchi , th e othe r sanatori a wer e constructe d a s enter prise s i n commemoratio n 'o f th e 30t h anniversar y o f th e establishmen t o f th e S . M . R. , an d wer e al l complete d durin g th e 193 8 fiscal year . Amon g th e hospitals , th e Eas t Tungkian g Stree t branc h hospita l i n Antung , an d th e nin e hospital s a t Hsingcheng , Tungliao , Chihfeng , Linhsi , Tumen , Chiamussu , Heiho , Chal untun , an d Hailar , respectivel y wer e buil t b y th e S . M . R . i n commemoratio n o f th e inauguratio n o f Imperia l rul e i n Man — 7 5 —

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choukuo . Th e hospital s i n thes e town s hav e prove d a bless in g t o th e loca l Manch u inhabitant s wh o ar e no w abl e t o receiv e medica l car e a t ver y moderat e charges . Fo r supplyin g doctor s t o Manchuria , th e S . M . R . operate s i n Mukde n th e Manchuri a Medica l Colleg e whic h ha s a hospita l attache d t o it . Ther e ar e als o trainin g school s fo r nurse s i n Mukden , Antung , an d Fushun . Althoug h th e S . M . R . Hygieni c Researc h Institut e ha s bee n transferre d t o th e Manchouku o Government , th e S . M . R . co-operate s wit h i t b y extendin g financial assistanc e an d lendin g it s ow n ex pert s i n suc h undertaking s a s the » conques t o f epidemic s an d endemics . Researc h concernin g healt h an d sanitatio n neces sar y fo r th e Company' s business , i s moreover , stil l continue d a t th e Hygieni c Researc h Offic e o f th e Healt h Departmen t o f th e Genera l Directorat e o f Railways . Grea t attentio n i s bein g pai d particularl y t o researc h relatin g t o housing , food stuffs , water , sanitatio n aboar d trains , an d th e eliminatio n o f smok e an d soot . Manchuri a extend s fro m Daire n i n th e south , whos e geographica l position , 3 8 degree s Nort h Latitude , approximate s t o tha t o f St . Louis , Missouri , U.S.A. , an d it s northernmos t boundar y passe s throug h 5 3 degree s Nort h Latitude , whic h i s equivalen t t o th e position s o f Norther n Saghalie n Islan d an d o f Berlin . Hsinking , th e capita l o f Manchoukuo , lie s a t a latitud e approximatel y th e sam e a s tha t o f Vladivosto k an d Chicago . However , i t woul d no t b e a n exaggeratio n t o sa y tha t ther e i s hardl y an y othe r civilize d countr y i n th e worl d whic h ha s suc h sever e winte r climat e a s Manchuria . Fo r instance , eve n i n Mosco w an d Montreal , i n suc h col d coun trie s a s Russi a an d Easter n Canada , respectively , th e averag e temperatur e i n Januar y i s onl y abou t —1 0 degree s Centigrade , a s compare d wit h —1 3 i n Mukden . Manchuria n summers , — 76 —

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o n th e othe r hand , ar e extremel y hot , th e temperature s bein g muc h highe r tha n th e countrie s i n Europ e an d th e America n Continen t whic h ar e situate d i n th e sam e latitude . Typicall y continental , th e Manchuria n climat e i s char acterise d b y grea t change s i n temperatur e no t onl y throughou t th e year , bu t als o betwee n da y an d night . Generall y speaking , durin g th e winte r month s th e ai r i s dr y wit h stron g north westerl y winds . I n Ma y an d June , Manchuri a i s occasionall y swep t b y th e famou s " Mongo l wind s " whic h carr y cloud s o f yello w dust . Ther e ar e stron g southerl y wind s i n summer , thoug h th e amoun t o f rainfal l i s abou t one-hal f o r one-thir d o f th e rainfal l i n Japa n Proper , th e averag e fo r Mukde n bein g 67 0 millimetre s a year , an d fo r Harbin , 1,01 5 milli metres . Becaus e o f suc h climati c conditions , suc h epidemic s a s colds , pneumonia , scarle t fever , diphtheria , smallpox , an d meningiti s ar e prevalen t durin g th e winte r season , an d suc h intestina l disease s a s dysentery , diarrhoe a an d enteritis , an d othe r maladie s suc h a s malari a whic h ar e sprea d b y mos quitoes , durin g th e summer . Epidemic s o f typhoi d an d para typhoi d feve r brea k ou t generall y durin g th e autumn . Case s o f recurren t feve r ar e mos t frequen t durin g th e spring . Th e pneumoni c plagu e generall y originate s i n Easter n Inne r Mongolia . Manchuri a i n th e pas t ha s bee n th e los s o f numerou s live s du e t o th e plague . Durin g th e seriou s pneumoni c plagu e o f 1912-13 , 50,00 0 peopl e succumbe d t o th e epidemic , an d 2,500,00 0 ye n ha d t o b e spen t t o preven t th e sprea d o f thi s dreadfu l disease . Anothe r grea t epidemi c o f pneumoni c plagu e whic h swep t th e country , i n 1920-21 , claime d 10,00 0 mor e lives , an d entaile d a direc t financia l set-bac k t o th e countr y o f 530,00 0 yen , representin g th e tota l expenditur e — 77 —

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fo r anti-plagu e precautions . Th e S . M . R . Hygieni c Researc h Institut e ha s contribute d muc h t o th e preventio n o f th e plagu e fro m spreading , b y discoverin g it s plac e o f origi n an d classifyin g th e animal s connecte d wit h th e epidemic , an d b y preparin g a n anti-plagu e vaccine . Thank s t o th e Researc h Institute' s efforts , th e plagu e ha s practicall y bee n conquere d i n Manchuria , n o seriou s outbreak s bein g reporte d i n recen t years . Th e Institut e ha s als o show n goo d result s i n treatin g case s o f inflammatio n o f th e thyroi d glan d i n Jeho l Provinc e an d i n preventin g th e sprea d o f th e caus e o f a strang e endemi c i n th e Kosha n distric t o f Nort h Manchuria . Choler a doe s no t originat e i n Manchuria , bu t i n Shanghai , Tientsi n an d othe r near-b y port s i n China . Nevertheles s *i t i s a seriou s menac e t o Manchuria , a s thes e Chines e citie s ar e ver y clos e t o Manchuria . I t i s estimate d tha t a n averag e o f full y 7 5 pe r cen t o f th e Manch u worker s ar e sufferin g fro m intestina l worms . Amoeboi d dysenter y i s anothe r commo n diseas e i n Man churia . Becaus e o f it s wid e prevalence , i t ha s take n o n th e semblanc e o f a n endemi c peculia r t o Manchuria . Result s o f investigation s recentl y showe d tha t 2 1 pe r cen t o f th e worker s wer e carrier s o f thi s disease . Face d wit h suc h a n arra y o f virulen t diseases , an d unsani tar y conditions , th e Sout h Manchuri a Railwa y Compan y fro m it s ver y outse t has , unde r a consisten t policy , strive n t o promot e th e healt h an d welfar e o f th e masse s o f Manchuria . I t woul d no t b e a n exaggeratio n t o sa y tha t cultura l advance men t o f th e countr y lie s i n th e improvemen t o f it s publi c health . I n dar k Afric a th e endemi c disease s wer e brough t unde r contro l throug h th e openin g o f ne w railway s fo r th e developmen t o f th e continent . Manchuri a to o wil l doubtlessl y ultimatel y witnes s a marke d bettermen t o f publi c healt h i n — 78 —

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al l part s o f th e land , bringin g wit h i t th e ligh t o f civiliza tio n t o it s masses . 18 . TRANSFE R O F ADMINISTRATIV E RIGHT S I N TH E S.M.R . ZON E AN D TH E SOUT H MANCHURI A RAILWA Y COMPAN Y Th e Sout h Manchuri a Railwa y Zone , a s th e narro w stri p o f lan d o n bot h side s o f wha t wa s onc e th e Chines e Easter n Railwa y wa s formerl y known , wa s th e lan d belongin g t o th e C . E . R . whic h Japa n gaine d fro m Russi a a s par t o f he r spoil s i n th e Wa r o f 1904-05 . Thi s lan d wa s hande d ove r t o th e Sout h Manchuri a Railwa y Compan y a s par t o f th e Govern ment' s investmen t i n th e sam e Company . Withi n thi s S . M . R . Zon e Japa n possesse d absolutel y exclusiv e administrativ e rights , whic h consiste d o f th e followin g fou r kinds , eac h exercise d b y a differen t agency : 1 . Militar y administratio n b y th e Kwantun g Army ; 2 . Polic e administratio n b y th e Kwantun g Bureau ; 3 . Juridica l administratio n b y th e Japanes e consula r authoritie s i n Manchuria ; an d 4 . Al l othe r loca l administrativ e right s b y th e S . M . R . Th e administrativ e right s exercise d b y th e S . M . R . repre sente d a mandat e fro m th e Government , base d upo n th e Governmen t Decre e o f Augus t 1 , 1906 . Th e administrativ e function s i n th e Railwa y Zon e entruste d t o th e Sout h Manchuri a Railwa y Compan y b y th e Govern men t relate d t o publi c works , educatio n an d publi c health . Suc h function s a t presen t actuall y exercise d b y th e S . M . R . ma y b e classifie d int o th e followin g divisions : 1 . Th e managemen t an d contro l o f lan d an d buildings ; — 79 —

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2 . Th e managemen t o f citie s (cit y planning , bridges , lan d adjustment , parks , riparia n works , municipa l markets , cemeteries , crematoria , an d slaughter-houses) ; 3 . Healt h establishment s (hospitals , " publi c doctor s hygieni c researc h institutes , water-work s an d sewers) ; 4 . Educationa l institution s (school s an d libraries ) ; 5 . Fir e brigades ; 6 . Establishment s an d undertaking s connecte d wit h agri cultur e (encouragemen t o f farming , agricultura l ex perimenta l stations , th e Veterinar y Institute , nurseries , farm s fo r breedin g domesti c animals) ; 7 . Establishment s an d undertaking s connecte d wit h commerc e an d industr y (th e Centra l Laborator y an d encouragemen t o f commerc e an d industry) ; an d 8 . Facilitie s an d undertaking s connecte d wit h minin g (th e Geologica l Researc h Institut e an d encourage men t o f mining) . Amon g suc h varie d enterprise s conducte d b y th e S . M . R. , th e expenditure s fo r roads , sewers , parks , primar y schools , smal l libraries , publi c health , fir e brigades , cemeteries , an d crematori a ar e defraye d fro m levie s an d fee s collecte d fro m loca l residents , an d an y defici t i s born e b y th e S . M . R . Bu t al l expenditure s fo r th e managemen t o f th e hospitals , second ar y school s an d othe r educationa l institution s abov e th e grad e o f secondar y schools , th e Daire n an d Mukde n Libraries , water-works , lan d an d building s ar e pai d b y th e S . M . R . On'Decembe r 1 , 193 7 extraterritoria l rights , however , wer e abolishe d i n Manchoukuo . Fo r th e hal f yea r precedin g tha t dat e th e tota l expenditur e fo r th e variou s administrativ e enter prise s conducte d b y th e S . M . R . withi n th e Railwa y Zon e amounte d t o 19,290,00 0 yen , an d th e tota l revenue , t o 8,750, 00 0 yen . Th e annua l expenditur e born e b y th e S . M . R . — 80 —

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fo r th e administratio n o f th e Railwa y Zon e average d abou t 10,500,00 0 yen . Administrativ e expenditur e i n th e Railwa y Zon e durin g th e firs t fisca l yea r o f th e S . M . R . amounte d t o onl y 6,80 0 yen . Som e thre e decade s later , i n 1937 , th e tota l amoun t expende d b y th e S . M . R . fo r loca l administratio n ha d soare d t o th e tremendou s su m o f 182,000,00 0 yen , represent in g 2 1 pe r cen t o f th e Company' s entir e expenditure . A stud y o f th e purpose s fo r whic h thi s hug e su m wa s spen t wil l als o bea r witnes s t o th e fac t tha t th e cultura l progres s o f Manchuri a i n th e pas t thre e decade s i s du e chiefl y t o th e far-sighte d initiativ e an d enterpris e o f th e Sout h Manchuri a Railwa y Company . Considere d fro m th e standpoin t o f nationa l policy , th e Sout h Manchuri a Railwa y Zon e ha s serve d a s th e basi s no t onl y fo r th e developmen t o f Manchuria , bu t als o fo r th e executio n o f Japan' s continenta l policy , an d fo r th e fosterin g o f he r nationa l power . I n th e matte r o f cultura l an d eco nomi c developmen t o f Manchuri a th e Railwa y Zon e adminis tratio n ha s a t al l time s followe d a consisten t polic y dedicate d t o th e attainmen t o f it s loft y aims . Upo n transfe r o f loca l administrativ e right s i n th e S . M . R . Zone , a larg e staf f o f abl e me n engage d b y th e S . M . R . wer e als o transferre d t o th e Manchouku o Governmen t t o strengthe n th e foundation s o n whic h th e indivisibl e relation s betwee n Japa n an d Manchouku o ar e established . Wit h th e abolishmen t o f extraterritoria l right s i n Manchoukuo , suc h agencie s a s th e agricultura l experimenta l stations , th e Geo logica l Researc h Institute , th e Hygieni c Researc h Institut e an d th e Veterinar y Institute , whic h ha d playe d suc h a n im portan t rol e fo r man y year s i n th e industria l developmen t o f Manchuria , wer e cede d eithe r t o th e Manchouku o Gov ernmen t o r th e Kwantun g Burea u o n April , 193 8 fo r th e — 81 —

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unificatio n o f al l kindre d establishment s i n th e country . Th e Railwa y Guard s wer e als o transferre d t o Manchouku o i n Januar y th e sam e year . 19 . EDUCATIO N AN D TH E S . M . R . Durin g th e thirt y od d year s o f it s existence , th e S . M . R . investe d a stupendou s su m o f •200,000,00 0 i n th e manage men t o f th e forme r Sout h Manchuri a Railwa y Zone . O f thi s sum , n o les s tha n •20,000,00 0 wer e spen t o n school s an d libraries . A t th e tim e o f th e Company' s organization , ther e wer e onl y tw o primar y schools , on e a t Liaoyan g an d th e othe r a t Fushun , whil e th e tota l numbe r o f pupil s i n 190 7 wa s 34 4 boy s an d girls , bu t i n March , 1936 , ther e wer e 4 3 primar y school s wit h a tota l enrollmen t o f 29,444 . Th e effort s o f th e S . M . R . i n educatio n wa s no t confine d t o elementar y school s alon e fo r th e Compan y ha s establishe d an d maintaine d a medica l college , highe r technica l schools , hig h school s fo r boy s an d girls , commercia l schools , agri Cultura l schools , technica l schools , 1 0 publi c school s fo r Chosenese , an d school s fo r Manchurians . 20 0 Manchuria n student s ar e accommodate d i n th e medica l schoo l alone . I n March , 1936 , th e gran d tota l o f al l pupil s an d student s o f kindergartens , primar y school s o n u p t o th e medica l colleg e unde r th e managemen t o f th e Compan y wa s 49,799 , includ in g Japanese , Manchurians , Chosenese , an d Russians . Heretofore , al l educationa l wor k ha d bee n carrie d o n b y th e S . M . R. , bu t wit h th e transfe r o f administrativ e right s i n th e Sout h Manchuri a Railwa y Zon e o n Decembe r 1 , 1937 , practicall y al l school s wer e transferre d ove r t o th e Man — 82 —

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chouku o Government , leavin g onl y th e Sout h Manchuri a Hig h Schoo l fo r Manchurian s locate d a t Mukden , Sout h Manchuri a Highe r Technica l Schoo l a t Dairen , an d th e Manchuri a Medica l Colleg e a t Mukden , unde r th e S . M . R . I n addition , ther e ar e vocationa l school s stil l unde r th e Company' s management , namely , th e above-mentione d Sout h Manchuri a Highe r Technica l Schoo l an d th e Vocationa l Schoo l attache d t o it , th e technica l schoo l a t Penhsihu , th e commer cia l schoo l a t Yingko u an d th e railwa y trainin g institute s a t Dairen , Mukde n an d Harbin . 20 . RESEARC H ORGAN S O F TH E S.M.R . I n practicall y al l moder n enterprise s scientifi c researc h an d stud y becom e th e basi s fo r rationa l management , bu t whe n i t come s t o operatio n a specia l compan y lik e th e S . M . R . th e activitie s o f whic h cove r variou s fields , th e necessit y o f havin g a n extensiv e researc h organizatio n i s undoubtedl y greater . Therefore , th e Compan y establishe d researc h organ s i n variou s department s t o conduc t studie s i n th e respectiv e specia l field s whic h ar e directl y connecte d wit h th e Company' s operations , bu t o n th e othe r hand , thes e organ s wer e instructe d t o stud y economi c question s i n genera l fro m th e standpoin t o f nationa l policy . Furthermore , natura l scienc e researc h organ s wer e als o created . Thes e organ s hav e contribute d muc h towar d th e Company' s operation s a s wel l a s t o pur e scienc e i n general . Th e Researc h Burea u (Chosabu) , Eas t Asi a Economi c Re searc h Burea u (To a Keiza i Chos a Kyoku ) an d th e Economi c Researc h Associatio n (Keiza i Chos a Kai ) an d man y other s wer e organize d a s genera l economi c researc h organs , whil e — 83 —

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th e Geologica l Researc h Laboratory , th e Centra l Researc h Laboratory , Agricultura l Experimenta l Stations , Veterinar y Researc h Institute , Healt h Researc h Institut e an d th e Man churi a Resource s Museu m wer e create d a s scientifi c researc h institutions . However , th e nee d fo r researc h an d studie s o n socia l science , economics , culture , natura l science s an d other s i n Eas t Asi a i s becomin g ijior e an d mor e stressin g wit h th e progres s o f th e curren t Chin a Incident , an d indeed , constitute s a proble m o f majo r importanc e fo r Japa n whic h i s i n th e positio n o f guidin g an d reconstructin g th e Fa r East . I n consequence , th e researc h divisio n o f th e S . M . R . underwen t a drasti c revisio n o n Apri l 1 , 1939 , wit h th e resul t tha t i t becam e on e o f th e thre e importan t branche s o f th e S.M.R.' s undertakings , nex t i n importanc e t o railway s an d mining . Wit h this , th e plan s formulate d b y th e forme r Presiden t Yosuk e Matsuok a wer e realize d an d Mr . Seijir o Tanaka , a n adviso r o f th e Compan y wa s appointe d hea d o f th e grea t Researc h Bureau , whic h ha s unde r it s supervisio n th e Researc h Burea u o f th e Genera l Directorat e o f Railways , th e researc h office s attache d t o th e Hsinking , Shangha i an d Toky o branc h offices , th e Eas t Asi a Economi c Researc h Bureau , Nort h Manchuri a Economi c Researc h Institute , Nort h Chin a Economi c Researc h Office , Centra l Researc h Laboratory , Manchuri a Resource s Museu m (Dairen) , an d th e Daire n Library . Th e dutie s o f al l thes e researc h organization s ar e (1 ) t o conduc t basi c researc h an d studie s o n politica l science , eco nomics , law , cultur e an d natura l science , necessar y t o th e constructio n o f Eas t Asia , (2 ) conduc t studie s an d researc h necessar y t o th e establishmen t o f a n Eas t Asi a transportatio n syste m an d t o th e operatio n o f th e Company' s innumerabl e — 84 —

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undertakings , an d (3 ) th e collectio n o f materia l o n th e positiv e activitie s essentia l t o th e reconstructio n perio d i n Eas t Asia . Th e appropriatio n fo r th e whol e researc h syste m i s abou t • 7,000,00 0 (no t includin g th e Centra l Researc h Laboratory) , bu t th e appropriation s fo r th e variou s researc h office s alread y i n existenc e i n 193 8 totalle d •5,500,00 0 (exclusiv e o f th e Centra l Researc h Laboratory) . Th e Centra l Researc h Laborator y Th e Centra l Researc h Laborator y (Dairen ) wa s transferre d fro m th e Kwantun g Governmen t t o th e Compan y i n May , 1910 . A t firs t i t wa s entruste d wit h researc h an d studie s dealin g wit h production , industries , an d sanitation , bu t a t th e presen t time , i t i s divide d int o th e inorgani c chemistry , or gani c chemistry , fue l an d agricultura l chemistr y division s whic h mak e experiment s o n physica l an d chemica l industries , genera l physic s an d chemistry , an d o n machiner y an d materi al s fo r th e S . M . R . an d others . Th e industrie s th e inauguratio n o f whic h wa s base d o n th e result s obtaine d fro m experiment s conducte d b y th e Centra l Researc h Laborator y ar e th e shal e oil , coa l liquefac tio n an d stee l manufacturin g undertaking s o f th e S . M . R . a t Fushun , soy a beans , th e Manchuri a Ligh t Meta l Manufactur in g Company , Fushu n Cemen t Company , an d th e Japan Manchuri a Magnesiu m Company . 21 . SUBSIDIARIE S O F TH E S.M.R . A t th e en d o f th e fisca l yea r 1937 , th e numbe r o f sub sidiar y companie s o f th e S . M . R . wa s 7 4 an d thei r combine d — 85 —

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authorize d capita l wa s • 844,000,00 0 o f whic h • 554,000,00 0 wer e pai d up . Th e S . M . R . ha d underwritte n 3 1 pe r cen t o r •263,000,00 0 o f th e tota l authorize d capita l o f whic h • 196,000,00 0 wer e pai d up . Wit h th e establishmen t o f th e Manchuri a Heav y Industr y Corporation , th e numbe r o f S . M . R . subsidiarie s dwindle d t o 6 7 includin g 6 undergoin g liquidatio n (a t th e en d o f March , 1939 ) du e t o th e transfe r o f shar e holding s t o th e ne w corporation , bu t i n spit e o f th e decreas e i n th e tota l numbe r o f subsidiar y companie s th e tota l authorize d capita l o f th e 6 7 remainin g companie s ha s rise n t o • 1,368,490,000 , o f whic h •771,514,00 0 hav e bee n pai d up , th e S . M . R . havin g underwritte n • 266,748,000 , o f whic h paid-u p share s amounte d t o • 207,949,000 . O f th e 6 7 subsidiar y companie s 8 ar e connecte d wit h transportation , 1 9 wit h industries , 4 wit h mining , 1 0 wit h trad e an d commerce , 7 wit h industria l encouragement , coloni zation , agricultur e an d forestry , 4 wit h rea l estat e an d engineer in g works , an d 3 wit h publicit y an d new s service . Further more , th e Compan y ha s smal l holding s i n 6 companie s an d 6 mor e ar e bein g liquidated . Al l o f thes e companie s com bine d tota l 67 . Th e S . M . R . hold s al l share s o f th e Daire n Kise n Kaish a (Daire n Steamshi p Company) , Manchuri a Warehousin g Com pany , Daire n Municipa l Transportatio n Company , Interna tiona l Expres s Company , Fuchan g Company , Daire n Doc k Company , Japa n Paraffi n Refinin g Company , Daire n Cerami c Company , Daire n Agricultura l Company , Manchuria-Chose n Min e Pos t Company , th e Manchuri a Rea l Estat e Company , o r 1 1 companie s i n all . Th e S . M . R . hold s fift y pe r cen t o r mor e o f th e share s o f 1 8 companies . Wit h th e establishmen t o f th e Manchuri a Heav y Industr y Developmen t Corporatio n i n December , 1937 , al l heav y in — 86 —

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dustr y enterprise s o f th e S . M . R . wer e transferre d t o th e ne w firm . Th e Manchuri a Heav y Industr y Developmen t Compan y wa s organize d a t Hsinkin g wit h a capita l •450, 000,00 0 t o engag e primaril y i n iro n an d stee l manufacturing , ligh t meta l manufacturing , automobil e an d aircraf t manu facturin g an d coa l mining , bu t th e minin g o f gold , lead , coppe r an d othe r mineral s als o come s unde r th e activitie s o f th e corporation . Th e subsidiarie s o f th e Manchuri a Heav y Industr y Developmen t Compan y ar e th e Show a Stee l Work s a t Anshan , Manchuri a Coa l Minin g Company , Manchuri a Gol d Minin g Company , Dow a Automobil e Manufacturin g Company , Manchuri a Ligh t Meta l Manufacturin g Company , Manchuri a Lea d Minin g Company , Manchuri a Aircraf t Manu facturin g Company , Manchuri a Minin g Compan y an d th e Tungpienta o Developmen t Company . Th e S.M.R . transferre d 5 5 pe r cen t o r ove r 100,000,00 0 ye n o f th e share s whic h i t hel d i n th e Show a Stee l Works , th e Manchuri a Gol d Minin g Compan y an d th e Manchuri a Ligh t Meta l Manufacturin g Compan y t o th e Manchuri a Heav y Industr y Developmen t Corporation . Du e t o th e capita l in creas e o f th e Show a Stee l Work s t o •200,000,00 0 i n 1939 , th e percentag e o f th e S . M . R . holding s fel l t o 22. 5 pe r cent . 22 . TH E MANCHURIA N INCIDEN T AN D TH E S . M . R . Withi n te n days , th e inciden t precipitate d b y th e Chines e soldier s whe n the y ble w u p th e track s o f th e Sout h Man churi a Railwa y i n th e suburb s o f Mukde n o n Septembe r T 8 , 1931 , sprea d throughou t Manchuri a an d develope d int o a n inciden t o f hug e dimensions , a n inciden t whic h Japa n ha d — 87 —

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t o stak e he r nationa l fate , bu t thank s t o th e dauntles s effort s o f th e Japanes e force s whic h carrie d ou t thei r operation s wit h lightnin g speed , th e entir e countr y wa s soo n pacifie d an d withi n a year , th e ne w stat e o f Manchouku o base d o n Wangtaois m wa s founded . However , th e worl d mus t b e awar e o f th e fac t tha t behin d th e courageou s militar y cam paign s o f th e Japanes e arm y la y th e clock-lik e precisio n wit h whic h th e railway s wer e operate d i n transportin g me n an d supplies . Durin g th e nigh t i n whic h th e Manchuria n Inciden t brok e out , th e Railwa y Burea u o f th e S . M . R . a t Daire n assemble d al l executiv e official s i n a n emergenc y meeting , an d fo r th e purpos e o f carryin g ou t emergenc y function s create d temporar y office s a t Dairen , Changchu n (no w Hsinking) , Mukden , Ssupingkai , Taonan , Tsitsihar , Harbin , Yingko u an d Chin hsie n o n th e followin g day . Furthermore , a temporar y railwa y offic e wa s opene d i n Mukde n an d fort y wireles s station s wer e establishe d i n variou s place s a s a mean s o f meetin g th e stringen t situation . A larg e numbe r o f employee s wer e sen t t o th e fron t t o assis t militar y plans , t o facilitat e militar y movement s b y train , an d t o assemble , prepar e an d distribut e tracks , cross-ties , communicatio n apparatus , implement s an d variou s urgen t materials , whil e railwa y repai r corp s wer e organize d t o con struc t bridge s an d repai r tracks . Furthermore , th e S . M . R . buil t armore d cars , fitted locomotive s wit h armo r plate s an d othe r protection , an d dispatche d the m t o variou s point s o f necessity . Wit h th e progres s o f th e Inciden t railway s outsid e th e Company' s operatio n wer e graduall y take n ove r an d operated , bu t wit h th e adven t o f Manchoukuo , th e S . M . R . wa s offi ciall y entruste d wit h thei r managemen t an d operation . I n — 88 —

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all , th e S . M . R . dispatche d 7,67 6 employee s i n 193 1 an d 8,80 3 i n 1932 . O f thes e employee s 4 me n sacrifice d thei r live s an d 5 5 wer e wounde d i n 1931 , an d 1 0 kille d an d 3 8 wounde d i n 1932 . 23 . TH E CHIN A INCIDEN T AN D TH E S . M . R . Th e S . M . R . ha d create d economi c researc h organ s i n Nort h Chin a fo r th e purpos e o f assistin g i n economi c develop men t eve n befor e th e outbrea k o f th e Chin a Incident , bu t wit h th e commencemen t o f hostilities , i t organize d th e Hsing chun g Compan y fo r economi c developmen t an d th e Nort h Chin a Railwa y Compan y t o facilitat e transportatio n t o mee t th e demand s o f th e situatio n i n a positiv e manner . Simultaneousl y wit h th e outbrea k o f th e Chin a Inciden t i n July , 1937 , th e S . M.R . upo n receivin g th e reques t o f th e Japanes e militar y forces , too k ove r th e managemen t o f rail wa y line s t o facilitat e militar y movements , an d t o pacif y th e genera l masse s a s wel l a s t o conduc t economi c activities , sen t ou t 15,00 0 o r 16,00 0 employee s selecte d fro m thos e statione d a t variou s office s i n Nort h Chin a an d th e Compan y i n general . I n addition , th e Compan y supplie d variou s material s t o th e fighting force s an d contribute d muc h towar d th e carryin g ou t o f militar y operations . Th e activitie s an d contribution s o f th e S . M . R . helpe d a grea t dea l i n consoli datin g th e basi c economi c foundatio n o f a ne w Chin a an d i n th e formatio n o f th e Nort h Chin a Developmen t Compan y an d th e Nort h Chin a Transportatio n Company . Sinc e th e outbrea k o f th e Chin a Inciden t u p t o Jun e 1 , 1939 , n o les s tha n 39 0 employee s o f th e Compan y los t thei r live s whil e carryin g ou t thei r duties . 12 0 o f the m wer e kille d b y enem y bullets . — 89 —

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Th e Nort h Chin a Transportatio n Compan y wa s formall y establishe d o n Apri l 17 , 1939 , bu t th e forme r Nort h Chin a Offic e o f th e S . M . R . wa s transferre d an d incorporate d intac t int o th e ne w Company . I n othe r word s th e fiftee n thousan d employee s whic h th e S . M . R . ha d sen t t o Nort h Chin a becam e employee s o f th e Nort h Chin a Transportatio n Company . Th e Nort h Chin a Transportatio n Compan y whic h i s a juridica l perso n incorporate d unde r th e law s o f th e Republi c o f Chin a i s capitalize d a t •300,000,000 , • 150,000,00 0 o f whic h i s subscribe d b y th e Nort h Chin a Developmen t Com pany , • 120,000,00 0 b y th e S . M . R „ an d • 30,000,00 0 b y th e Provisiona l Governmen t o f Peking . It s primar y function s ar e th e managemen t o f al l railways , moto r ca r transportation , waterway s an d relate d enterprise s i n Nort h China , an d th e managemen t o f railway s an d affilitate d enterprise s thereo f entruste d t o i t b y th e Mongolia n Government . 7,00 0 kilo metre s o f railway s an d 4,00 0 kilometre s o f automobil e line s ar e unde r th e operatio n o f thi s company . Th e employee s o f thi s compan y tota l 75,000 , o f whic h 18,00 0 ar e Japanes e fro m th e S . M . R . an d th e Ministr y o f Communication s o f Japan , Manchurian s formerl y unde r th e S . M . R . an d 57,00 0 employee s o f th e forme r Chines e railways . Th e presiden t o f th e Nort h Chin a Transportatio n Compan y i s Mr . Kanj i Usam i wh o ha s show n exceptiona l abilit y a s a directo r an d chie f o f th e Railwa y Burea u o f th e S . M . R . whil e mos t o f th e highe r executiv e official s ar e als o forme r S . M . R . men . — 90 —

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(PRINTE D I N JAPAN ) BSm+M^jL^H+S B P P M Wfn+W+J J — 0 S I T ffiffifflftstfl^^tt m^snfr&nrHftWr ; n P P m # & # ^ u mSifrHwrEft^Br-/ ' P P JR W Jjf r g g ~ ? * K i t PRINTE D A T TH E HERAL D PRESS , LTD. , HIBIY A PARK . TOKY O