It is but natural that holders of Chinese Government Railway Bonds, and especially the British, should feel that anxiety' concerning the future which was expressed by Mr. Harold Reynell, in the correspondence columns recently, and a general survey of the position indicates that something will have to be done quickly to preserve the Interests which are being threatened by Japanese action. Outstanding foreign in vestments in China's railways amount over £21,181,000 and of this sum it is reporled that approximately 75 per cent. re-Presents British money. Considerable inforest attaches to the position of the Shanghai-Nanking Railway in connection with which the outstandings are:—S.N. Railway 5 per cent. loan of 1903, £2,784,000; net profit certificates £580,000 and S.N. Materals and Improvement Loan of 1937, £800, 000. On the Shanghai Hangchow 'Railway of the Completion Loan of 1936 there is £1,100,000 unpaid, and in connection with the' Canton-Kowloon Railway the amount still "outstanding is €1,284,822. These Agures do not exhaust the list, for there are other lines, such as the Peking-Mukden, and the Tientsin-Pukow Railways to be taken {into consideration, as well as others, but they are quoted for the purpose of indicat ing how very substantial are the British interests in the Chinese railways. For the most part these lines are now in the occupa~ tion of the Japanese and are being to a great extent operated by them. Thus there plenty of evidence to show that commer= cial and not military traMe is being carried fon the Shanghai-Nanking and Shanghal-Hangchow Railways, freight and passage being charged in Yen. It has been reported that the Tientsin-Pukow Railway has been ut into operation again, whilst the Peking Mukden line has been working throughout the whole of the hostilities, not only for military purposes, but also for commercial. Requests by the' representatives of British interests to be allowed to inspect the lines, and ascertain the material damage done, have been consistently refused by the Japanese on the time-worn excuse of military necessity, British officials on the Peking Mukden Railway are still retained on the payroll but not permitted to carry out their duties, and there is every indication that the Japanese are not disposed to meet the obligations which the Chinese Government assumed when the various loans were made.
Under the Shanghai-Fengching loan agreement secured on the surplus earnings of the Peking-Mukden Railway a specified amount used to be deposited in a bank towards the liquidation of the loan. This since the Japanese assumption of control has been suspended, while no payments have been made in connection with the Shanghai-Nanking and Shanghai-Hangchow Railways. In this connection it should be pointed out that the former of these two lines has been mortgaged in its entirely to the British and Chinese Corporation, and though the Japanese are working the line, its representatives have been denied the right to make an inspection. The Japanese authorities for a change appear to be remarkably frank with regard to their attitude in the matter. They claim that by right of conquest they stand in the shoes of the Chinese government, the railways being trophies of war, and that they do not intend to be bound by'any agreements under which the railways were pledged to the bondholders for the very money which enabled them to be brought into existence. The proposition is a wholly untenable one. In many' instances the loans were made years ago, in' circumstances which permit of no allegation that they were effected for the purpose of preventing their falling into Japanese hands, and until the large sums of money which have been secured on the railways are repaid there can be no doubt that ownership Is largely vested in the bondholders who provided the necessary finance. Viewed in this light the British investments in Chinese railways amount to a very substantial interest, reatment to Japanese interests similar to] and one which it cannot be conceived for one that which is "being applied to neutral moment will be allowed to pass to the Japanese without very serious opposition, It is obvious that the British Government should take the necessary steps to protect the interests of the British bondholders in this matter, and that it should be made quite plain to the Japanese that this freebooting will not be permitted. There might be something to be said for the Japanese contention that when the lines were being used for military pur poses, access of British representatives could be denied them. But even that is not strong, for if the Britons concerned were prepared to take the risks it should have been regarded ax solely their own affair.
Conditions have changed so completely in the course of the Fast few months thatthe Mimsy excuse that necess is being dented because of "military necessity" carries weight whatever, and is looked upon tunconvineing example of tergiversation, The fact is that on the Shanghai-Nanking Railway {in particular, and some of the others. in general, military trample has been reduced to minimum, mainly because the Yangtze gives 4 more convenient means of revictualling the Japanese troops in the interior. That is the Yeason why they have been opened to com= mercial and civilian tref, and it is claimed that now that this has been done—quite apart from the question of whether the Japanese should pay for the carriage of their men and material over these lines—the revenue so obtained should again be used for the service of the loans in question. But the fact is that not one penny has as yet been paid into the appropriate banks for such service, and the Japanese are operating the lines for thelt own profit, The situation is undoubtedly a serious Jone, and one which reflects gravely upon Japanese bona des. Where in such stance fs to be found anything to show that often-repeated Japanese assurances of scrupulous regard for tie interests of foreign neutrals are in any way real? Obviously the fads are at complete variance with such un= dertaking, and the ridiculous excuse of "military necessity" a very patent untruth, It is satisfactory to learn that continual representations have been made to the Japanese Kovernment, but most regrettable. to Jearn that up to the present they have been without any appreciable effect, In the circumstances it should be quite plain to the Japanese that this matter cannot be allowed to rest where itis, and that sooner or later a settlement will have to be arrived at in accordance with Japanese honour, which has been so definitely pledged, but which at the moment seems to bbe under a cloud of Japanese manufacture.
Text read from the printed page and cleaned; old type leaves the occasional error.