1. The whole of Kiaochow Bay to be opened as a commercial port. 2. A Concession under the exclusive jurisdiction of Japan to be established at a place designated by the Japanese Government. 3. If the foreign Powers desire it, an International Concession may be established.

4. As regards the disposal to be made of the buildings and properties of Germany and the conditions and procedure relating thereto, the Japanese Government and the Chinese Government shall arrange the matter by mutual agreement before the restoration.

As is well known, because of the circumstances under which the Agreements of May 25, 1915, were entered into, and because of their substantive character, the people of China have ever asserted their right to escape from them at the first possible opportunity.

On September 24, 1918, the following letter from the Japanese Minister for Foreign Affairs was sent to the Chinese Minister at Tokyo:

In view of the friendly relations existing between your country and Japan and in pursuance of the spirit of harmony and reconciliation, the Imperial Government considers it proper that the various questions in Shantung should be arranged in the following manner, and has decided to bring the matter to the notice of your Government.

With regard to the Japanese troops stationed along the KiaochowTsinan Railway, all the troops shall be concentrated at Tsingtao except for the stationing of a detachment at Tsinan.

The guarding of the Kiaochow-Tsinan Railway is to be undertaken by your Government by the organization of a police force for the purpose.

The expenditure required for the maintenance of the police force shall be defrayed by the Kiaochow-Tsinan Railway.

Japanese shall be engaged for the headquarters of this police force, at the principal railway stations and at the police training school.

Chinese are to be engaged as employees on the Kiaochow-Tsinan Railway.

When the status of the Kiaochow-Tsinan Railway shall have been established it shall be conjointly worked by Japanese and Chinese. The Civil Administration now in force shall be abolished.

I shall deem it a great favor if you will let me know your opinion concerning the above matter.

MacMurray in his compilation of the Treaties and Agreements with and Concerning China (p. 1445) in a footnote to the text of the foregoing letter, says that, according to an Associated Press dispatch from Paris, February 25, 1919, the Chinese Minister replied to the letter, saying: "I beg to acquaint you in reply that the Chinese Government gladly agree to the proposals of the Japanese Government above alluded to."

By an agreement of September 28, 1918, between the Chinese Minister to Japan and the Industrial Bank of Japan representing a syndicate of Japanese banks, the Chinese Government was represented as agreeing that all money necessary for the construction of railways between Tsinan in Shantung and Shunte in Chihli Province, and between Kaomi in Shantung and Hsuchow in Kiangsu Province, would be obtained from the Japanese banks in the form of gold bonds, with the proviso that, should, after survey, the railways be deemed unprofitable undertakings, the Chinese Government should confer with the banks regarding a change of their routes.

As is also well known, the Treaty of Versailles signed by the Allied Powers with Germany, was not signed by China because it contained the following

provisions regarding the disposition of the former German rights in Shantung:*

ARTICLE 156. Germany renounces, in favour of Japan, all her rights, title and privileges-particularly those concerning the territory of Kiaochow, railways, mines and submarine cables-which she acquired in virtue of the Treaty concluded by her with China on March 6, 1898, and of all other arrangements relative to the Province of Shantung.

All German rights in the Tsingtao-Tsinanfu Railway, including its branch lines, together with its subsidiary property of all kinds, stations, shops, fixed and rolling stock, mines, plant and material for the exploitation of the mines, are and remain acquired by Japan, together with all rights and privileges attaching thereto.

The German State submarine cables from Tsingtao to Shanghai and from Tsingtao to Chefoo, with all the rights, privileges and properties attaching thereto, are similarly acquired by Japan, free and clear of all charges and encumbrances.

ART. 157. The movable and immovable property owned by the German State in the territory of Kiaochow, as well as all the rights which Germany might claim in consequence of the works or improvements made or of the expenses incurred by her, directly or indirectly, in connection with this territory, are and remain acquired by Japan, free and clear of all charges and encumbrances.

ART. 158. Germany shall hand over to Japan within three months from the coming into force of the present Treaty the archives, registers, plans, title-deeds and documents of every kind, wherever they may be, relating to the administration, whether civil, military, financial, judicial or other, of the territory of Kiaochow.

Within the same period Germany shall give particulars to Japan of all treaties, arrangements or agreements relating to the rights, title or privileges referred to in the two preceding Articles.

For the purposes of this chapter it is not necessary to review the grounds upon which the Chinese Government refused to recognize the operative force of

These provisions also played a considerable part in the refusal of the United States to sign the treaty.

the foregoing provisions of the Versailles Treaty. Of course China, not being a signatory party to that treaty, could not be bound by its provisions taken by themselves. This none of the Powers, including Japan, could claim. It was, however, asserted that, independently of that treaty, and prior to it, namely by the Shantung Treaty of May 25, 1925, China had agreed to abide by any disposition that Germany might make of her Shantung rights. As to this it is sufficient to say that the Chinese Government held that, even if it should be granted arguendo that the Agreements of May 25, 1915, were binding upon itself, the Shantung treaty had ceased to have any force in 1919, and, furthermore, that, at the time the Paris Treaty was signed Germany had, in fact, no valid rights in Shantung-that these had disappeared when China declared war against Germany and announced that thereby all treaties between herself and that country were abrogated.

Correspondence Between China and Japan. The statement of the foregoing facts has been necessary in order to explain the impasse that had been reached between China and Japan with reference to the presence of the Japanese in Shantung. Japan wished to negotiate with China with regard to a definitive settlement of the whole controversy, but China could not consistently do this so long as Japan insisted that these negotiations should be predicated upon treaties and other agreements the validity or pertinency of which she, China, did not admit.

In a statement issued at Tokyo on June 15, 1920, the Japanese ministry of Foreign Affairs expressed

the regret that, though it had sought to open negotiations with China for the restoration of Kiaochow to China and the settlement of other matters relating thereto, it had received no reply to its communication of January 24, 1920, until May 22, when the Chinese Government had said (in part):

The Chinese Government have noted that it is the intention of the Japanese Government now that the Treaty of Peace [with Germany] has come into force to restore Kiaochow to China and to prepare for the withdrawal of the troops from along the KiaochowTsinanfu Railway. China, however, has not signed the Treaty of Peace with Germany, and is not therefore in a position to negotiate directly with Japan on the question of Tsingtao on the basis of that Treaty. Furthermore, as the Japanese Minister at Peking is very well aware, the whole people of China have assumed a strongly antagonistic attitude in regard to the question in hand. For these two reasons, and because of the importance they have attached to amity between Japan and China, the Chinese Government naturally felt it inconvenient to make a reply at the time. On the other hand, the Japanese military establishments within and without the leased territory of Kiaochow have been rendered unnecessary and, as it is the hearty desire of the people and Government of China to have the conditions along the Shantung Railway restored to the pre-war footing, the Chinese Government proposes to form at an early date a proper organization to take the place of the Japanese troops in guarding the whole line. However, this proposition has nothing to do with the settlement of the question of Kiaochow and the Chinese Government trust that the Japanese Government will not delay the withdrawal of the troops on account of that question.

To this communication the Japanese Government replied by asserting that the Chinese Government had given its formal agreement to the disposition that might be made, and which was made in the Treaty of Versailles, of the German rights in Shantung. As to the withdrawal of its troops stationed in