Ambassador Wright to the Secretary of State .
Tokyo , June 15, 1906.
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.,