The report of the Nanking-Shanghai Railway for the year ending June 30, 1937, has now been issued, and a perusal of its contents shows what a tragic blow has been given to a remarkably promising undertaking. The revival of trade in the early part of the year under review had become apparent, and with it the fortunes of the railway prospered to such an extent that the revenue for the year amounted to $17,009,928 and consequently exceeded that of all previous years. Indeed there was every reason to believe that, with the expansion of Nanking, and the national programme of railway development, a higher level of earnings had been established. The general feeling of optimism created by this state of affairs which existed in June, 1937, was in a very short while to be proved short-lived. With the opening of Sino-Japanese hostilities a deplorable condition came into being, and that after plans for further expansion had been prepared, and, in some instances, actually put into operation. With the advent of fighting around Shanghai the business of the railway was redüced to nothing, and even though there has been no fighting in this area for well over a year, whatever business which is now being conducted is neither for the benefit of the line itself nor those bondholders who have invested so much money in it. It is not even possible to compare the condition of the railway now with what it was in 1937 at the end of the financial year. The officials representing the bondholders are not allowed access to the railway for the purpose of ascertaining its present state, no information is available es to its earnings now that Japanese controlled passenger and freight traffic are being conveyed over the line, and in general the rights of the foreign investors in this promising undertaking have been completely ignored, and a very important third party interest disregarded. In this respect it might be emphasized that there is no earthly reason why British and foreign interests laboriously, honourably and legitimately built up in the last 90 years should be undermined and smashed up, just because the temptation presents itself to Japan to attack a weaker neighbour.
Yet that is what is being done. In the absence of that information, which would be available were the representatives of the bondholders given access to the line, it is impossible to say to what extent the line has suffered, and the security of the investors reduced. Nor is it possible to ascertain what it will be necessary to do in the future to restore the railway to its former position, but it must be quite clear that thg damage which has been done, and repairs which will be necessary in the course of rehabilitation are important facts in connection with which the virtual owners of the railway—the bondholders—should be apprised as soon as possible. It is common knowledge that the representatives of the bondholders have made repeated requests to the Japanese authorities to be allowed to inspect the line. In each case that has been refused on the ground of "military necessity," that monotonous phrase which has been used to excuse so many infringements by the Japanese of their own undertakings. It has been suggested in some Japanese quarters that through the fortunes of war they have become proprietors of the line in question, a very simple adaptation of the doctrine of voe victis which cannot be accepted, and will undoubtedly be resisted if it is ever officially put forward. The property rights of the investors in the railways of China are just as real now as they were when the Chinese Government was in control of them. If the Japanese contend otherwise they will have admitted that, far from these present hostilities being justifiable under the high sounding phrases they are continually using, they have been engaged on nothing but a freebooting expedition. There should be no doubt about the British position with regard to their investments in the Nanking-Shanghai Railway and. the others to which they have advanced the necessary money to bring them into being and to maintain them. The rights thus established are quite definite. The railways virtually belong to British interests unti! the. large sums of money advanced repaid. To disregard that very patent and to continue the present Japanese policy is to act contrary to the specific undertakings which the Japanese have repeatedly given:
The peculiarity of existing conditions in no way modifies that contention, for questions of principle are involved which can be subjected to no alteration. Naturally it may be asked what can be done to meet British requirements. The very first seems to be formal recognition of British rights in the matter. The second is the granting of permission of the representatives of the bondholders to ascertain the condition of their properties, and the third is undoubtedly the making of some sort of arrangement whereby those representatives should be allowed to resume their-very important functions. With these three. points as @ basis it should be possible to come to some arrangement whereby the railway could be carried on under the supervision of those concerned under a temporary arrangement. That would be something in the nature of a compromise, and in all truth the situation is Such as requires some solution of that nature. There are, naturally, other points to be considered, such as to what indemnification Japen is prepared to pay for the diversion of the line to its own uses. That is obviously a matter for future negotiation, but the present demands that the recognition of established rights should be made by meeting the above minimum requirements. And if they are met it will not necessarily mean that everything will be plain sailing in the future, or that the line will easily regain its former prosperity. The devastation which has been caused in the area which the line supplies must necessarily mean that the fortunes of the railway will depend upon the degree of rapidity with which rehabilitation can be brought about. That, however, should prove no obstacle to a temporary arrangement being come to between the Japanese authorities and the representatives of the bondholders, while the effecting of such an arrangement would be one of the best proofs of Japanese bona fides which is so frequently and so unconvincingly being claimed.
Text read from the printed page and cleaned; old type leaves the occasional error.