Ambassador Wright to the Secretary of State .

No. 11.]

Sir: I have the honor to transmit herewith a translation of an imperial ordinance published on the 8th instant promulating regulations for the establishment of the South Manchurian Railway Company, for the purpose of operating the railways and adjacent mines in southern Manchuria.

According to these regulations, the company’s shares are to be held only by the Governments and subjects of Japan and China. The Japanese Government may put in its share of the capital in the form of the railways and mines that it now possesses in Manchuria, notably the southern section of the Chinese Eastern Railway Company and the coal mines at Fushun and Yentai. The shares may be divided into several issues, the first to be not less than one-fifth of the whole capital stock, and the first payment need not exceed one-tenth of the face value of the shares. The company is to have its head office in Tokyo and a branch office in Dalny. The regulations further provide for the appointment of a commission to take all the necessary measures for the establishment of the company.

In an informal conversation recently it was stated that the capital of the new company would at first be 150,000,000 yen, of which it was the new company would at first be 150,000,000 yen, of which it was estimated that the Japanese Government would subscribe one-half in the shape of its Manchurian railways and mines. The remaining half will be divided among Japanese subjects and the Government and subjects of China, thus insuring a preponderating proportion of the stock in Japanese hands. It was thought that the portion of the shares taken by the Chinese would be small.

It is evident from the foregoing and from a perusal of the regulations themselves that it is the policy and purpose of Japan to own a controlling interest in and direct the operations of all the railways in Manchuria in much the same way as the government roads in Japan.

[Page 196]

I also inclose herewith translations of some interesting comment upon the new company by the Japanese press.a The Jiji Shimpo points out that the restriction of the shares to the two nationalities was insisted upon by China in her negotiations with Japan at Peking, following the Portsmouth peace treaty. The paper regrets that the new company has been compelled to organize upon the narrow lines of its Eussian predecessor, which was so opposed to the principle of the “open door” and equal opportunity; but inasmuch as the new company is to operate not only the present line, but also the branch lines to be newly constructed, it will have to make use of foreign capital, thus giving foreign capitalists an interest in the company little short of owning the shares. Commenting upon the question of gauge, the Jiji Shimpo remarks that the most important thing for the South Manchurian Bailway is to connect Japan with the various other lines of Korea and China, all of which have the standard 4 foot 8.5 inch gauge, rather than to connect with the Eussian railway of the north.

I have, etc.,

Luke E. Wright.

imperial ordinance.

We hereby sanction the organization of the South Manchuria Railway Joint Stock Company and cause the following ordinance to be promulgated.

[privy seal.] (Signed) Manual.

Marquis Kimmochi Saionji,
Minister President of State
Isaburo Yamagata,
Minister of State for Communications.

imperial ordinance no. 142, june 7, 1906.

  • Article I. The Government shall cause the organization of the South Manchuria Railway Joint Stock Company for the purpose of engaging in railway traffic in Manchuria.
  • Art. II. The shares of the company shall all be registered and may be owned only by the Japanese and Chinese Governments or by subjects of Japan and China.
  • Art. III. The Japanese Government may offer its Manchurian railways and their appurtenances, and its coal mines in Manchuria, as the capital to be furnished by the Government.
  • Art. IV. The company may divide the new shares to be raised into several issues to be floated at different times, but the amount of the first issue shall not be less than one-fifth of the whole amount.
  • Art. V. The first payment upon the shares need not exceed one-tenth of the value of the shares.
  • Art. VI. The company shall establish its head office at Tokyo and a branch office at Dalny.
  • Art. VII. The company shall have a president, a vice-president, four or more directors, and from three to five inspectors.
  • Art. VIII. The president shall represent the company and manage its affairs.
  • The vice-president shall perform the president’s duties when the latter is prevented from discharging them, and shall act as president when the latter post is vacant.
  • The vice-president and directors shall assist the president in his duties and shall take charge of various departments of the company’s business.
  • The inspectors shall examine the business of the company.
  • Art. IX. The Government, subject to the imperial sanction, shall appoint the president and vice-president, whose terms of office shall be five years.
  • The Government shall appoint the directors from among those shareholders who own 50 or more shares. The term of office shall be four years.
  • The inspectors shall be elected from among the shareholders at a general meeting of the latter. The term of office shall be three years.
  • Art. X. The amount of compensation and allowance of the president, vice-president, and directors shall be fixed by the Government.
  • Art. XI. The president, vice-president, and directors of the company shall not engage in any other business or trade, under any name whatsoever, during their terms of office except by special permission of the Government.
  • Art. XII. The Government shall appoint a superintendenta for the South Manchuria Railway Joint Stock Company to supervise the business of the company.
  • The superintendent may at any time examine the company’s business and inspect their safes, books, documents, and any other articles belonging to the company.
  • The superintendent, whenever he may deem it necessary, may order the company to report on the various accounts and the condition of the company’s business.
  • The superintendent may attend the general meetings of the shareholders of the company, or any other meetings, and express his opinions, but shall not be entitled to vote.
  • Art. XIII. The Government may issue such orders as may be necessary to superintend the business of the company.
  • Art. XIV. In case the decisions of the company or the conduct of its officers are in violation of laws and regulations or of the object of the company or are detrimental to the public welfare or fail to carry out the orders of the government office under whose jurisdiction the company is, the Government may cancel the said decisions or dismiss the officers concerned.
  • Art. XV. When the Government deems it necessary, it may apply to the company the provisions of the laws and regulations relating to the railways in Japan.
  • In the case referred to in the preceding paragraph the Government shall inform the company in advance as to the laws and regulations to be so applied.
  • Art. XVI. When not otherwise provided for in this ordinance, the provisions of the commercial code and its supplementary laws and regulations shall be appplied.
  • Art. XVII. The provisions of imperial ordinance No. 366,b of 1900, shall not be applied to the company that is to be organized in accordance with this ordinance.

supplementary rules.

  • Art. XVIII. The Government shall appoint a commission to transact all business relating to the organization of the South Manchuria Railway Joint Stock Company.
  • Art. XIX. The organization commission shall draw up the company’s articles of association, and after the said articles have been approved by the Government shall open the subscription for the first issue of shares.
  • Art. XX. When the first issue of the company’s shares has been subscribed, the commission shall present to the Government the subscription list and apply for permission to organize the company.
  • Art. XXI. When the permission referred to in the preceding article has been given, the organizing commission shall, without delay, call for the first installment upon each share.
  • When the first installment referred to in the preceding article has been paid in, the commission shall, without delay, call a general meeting for organization.
  • Art. XXII. At the close of the first general meeting the organizing commission shall turn over its business to the president of the South Manchurian Railway Joint Stock Company.
  1. Not printed.
  2. Superintendents?
  3. Relates to the construction of railways in foreign countries by Japanese companies.