aware of any protest made, but, on the contrary, there were several groups of foreign interests which had formed companies and registered them under those laws. There was another point making it necessary why there should be a Chinese corporation created in conformity with Chinese law; the coal mines of Shantung would stand in such close relations with the Shantung Railway. The railway must depend to a large extent on their output for the fuel used on the line. The mines would be dealing mainly with Chinese people, so the people in charge of the administration of those mines should be Chinese. He should think that all contracts this mining company would enter into for the sale of the coal would have Chinese as parties thereto.

Baron Shidehara said that he did not exactly understand what was the legal obstacle which stood in the way of the Chinese delegation agreeing to the Japanese plan, at least so far as the coal mines were concerned. They had said that the Chinese laws permitted foreign capital to the extent of 50 per cent of the capitalization. The Japanese draft was made exactly in that sense. În the mining operation China would be placed on an entirely equal footing with Japan.

Dr. Koo said that so far as the coal mines were concerned the Chinese delegates were prepared to meet the Japanese point as far as possible by modifying their formula. He would suggest putting after the words "Chinese Government" the phrase "to be conducted on a basis permitting the investment of foreign as well as Chinese capital." He would then suggest adopting the second paragraph of the Japanese draft, excepting the words "joint enterprise," and substituting therefor "such foreign investment." In making those suggestions he did not desire to be understood as modifying the attitude of the Chinese Government concerning the application of the Chinese laws, but, on the other hand, the suggested form would not commit the Japanese views on the subject either.

Baron Shidehara wondered how the following simple formula would strike the Chinese delegates:

"The Japanese Government will hand over to a combination of Chinese and Japanese capital the mines of Chinlingchen, Tsechuan, and Fangtse."

He suggested striking out from the Chinese formula the phrase "all the mines and mining properties, etc.," and mentioning instead the three mining districts. He did not quite like to use the broad terms of the Chinese formula, because the phrase seemed to imply that there were a great many mines in Shantung occupied and operated by Japan. That was not at all the case, there being practically only three mines which were in question. He also modified the second paragraph of the original Japanese formula, as follows:

"The mode and terms of such arrangement shall be determined by the Chinese and Japanese commissions, which are to be appointed for that purpose and which shall meet immediately upon the coming into force of the present agreement."

Dr. Koo said that, in the first place, he had no objection to omitting the general phrase concerning the location of the mines, since it had been stated that there were only three mines. In the second place, he wondered whether, in using the phrase "combination of Chinese and Japanese capital," Baron Shidehara meant that the mining properties should be handed over from the Japanese Govern

ment directly to this group. He wondered how that could be done. It would be better that these properties should be handed over to the Chinese Government, to be conducted by Chinese and Japanese capitalists. The handing over must be to the Chinese Government first.

Baron Shidehara said that the mines would then become the property of the Chinese Government.

Dr. Koo wondered whether investment of capital would not carry with it some interest in the property. The mines were to be conducted by Chinese and Japanese capitalists.

Baron Shidehara said that his idea had been to turn it over, not to the Chinese Government, to be made part of the Government property, but to a combination of Chinese and Japanese capital. It was entirely different from the case of the Shantung Railway.

Dr. Koo said that the Chinese plan did not mean to turn the mines over to Government enterprise.

Baron Shidehara said that if turned over to the Chinese Government they would naturally become Government properties.

Dr. Koo said that they would be turned over first to the Government in order to be conducted by Chinese and Japanese capitalists. Baron Shidehara said that the word "conduct" might not be appropriate. In any case, it would mean conducting business only. Dr. Koo said that that word could have a broad meaning.

Baron Shidehara said that he thought that conducting mines might not be a happy phraseology. He had used the word "capital" advisedly in order to leave room for the Governments to conduct the business for the time being. The word "capitalists" (Dr. Koo had suggested using "capitalists" in place of "capital" in Baron Shidehara's draft) implied private concerns.

Dr. Koo said that the word "conduct " might mean both Government or private enterprise, though it might not be good English. Baron Shidehara said that the point of difference between the Chinese and Japanese drafts was that the Chinese draft provided that the mines should become Chinese Government property first, while the Japanese draft simply proposed that the business should be conducted on the basis of equal share and equal interest.

Dr. Koo said that, in proposing that the mines should be handed over to the Government, he had done so only because he could see no other way. If the mines were to be handed over to a combination of capital, the group would have to go to Tokyo to deal with the Japanese Government.

Baron Shidehara said that that was not the case at all. It would be the commission to be set up that would determine the mode and terms of the combination. The seat of the group could be fixed in Shantung, Tokyo, or Peking.

Dr. Koo said that he had not yet clearly understood Baron Shidehara. He wondered whether the Japanese proposal was to leave open the question whether it should be a Government enterprise or private enterprise, or whether a private enterprise was preferred by Japan.

Baron Shidehara said that on that question he was not quite prepared to express a definite opinion. Perhaps it might be a wise policy to turn the mines over to private enterprise, but for the time

being they might be worked as a joint Chinese-Japanese Government enterprise. In any case, that question could best be decided by the commission. He preferred not to say one way or the other just now. He simply proposed to determine the general principles as to how those mines should be worked in future.

Dr. Koo proposed another formula, reading:

"The Japanese Government will hand over the mines in Shantung to the Chinese Government to be conducted by Chinese and Japanese cooperation whether as a Government or private enterprise."

Baron Shidehara, said that Dr. Koo still insisted upon handing the mines over to the Chinese Government. That was the point he had objected to. The Japanese proposal was that the ownership and operation of the mines should rest with a combination of Japanese and Chinese capital.

Dr. Koo said that he could not see who were to hand over the mines to the combination.

Baron Shidehara said it would be the Japanese Government, which was actually operating those mines,. that would hand them over to the combination or group.

Dr. Koo wondered whether that group would hold the mines by charter from the Japanese Government.

Baron Shidehara said that that would be effected by the present agreement. The agreement would have the character of a charter. The terms and the conditions of the financial combination would be determined by paragraph 2 of the draft under consideration.

Dr. Sze said that it was now nearly 1 o'clock and he would prefer to study the draft overnight, and see if the Chinese delegates could bring forward new formulae. He hoped the Japanese delegation would in the meantime think the matter over.

Baron Shidehara said that he had no objection to the adjournment of the meeting. He wanted the Chinese delegates to understand that he placed much importance on Chinglingchen mines. Those mines were supposed to be very promising. It would not be possible for Japan to give up those mines, the concessions for which had been given to German interests.

Dr. Sze said that the operation of the mines would naturally be continued, and as to the supply of the iron ore, the Chinese delegation had said that due consideration would be given to the Japanese demand.

Baron Shidehara said that that would not meet the Japanese purpose. Japan had been desiring that an equal share and interest should be retained in those mines.

Dr. Sze said that financial participation would be allowed to Japanese nationals.

Baron Shidehara wondered whether Dr. Sze admitted that financial participation would be allowed in relation to the iron mines. Dr. Sze said that he had meant the coal mines.

Baron Shidehara thought that they had just been referring to iron mines.

Mr. Hanihara said he believed that in adopting the Japanese formula, the legal difficulty mentioned by the Chinese delegates could be avoided. Matters of detail could be left to subsequent arrangement by the commission, which would work out some suitable scheme.

The meeting took an adjournment at 1 o'clock p. m. to meet tomorrow at 10.30 a. m. if the delegates were disengaged; if not, tomorrow afternoon.

JAPANESE DELEGATION,

Washington, D. C., January 17, 1922.

SJC-28.]

[For the press.]

JANUARY 17, 1922.

Issued by the Chinese and Japanese delegation.

The twenty-eighth meeting of the Chinese and Japanese delegates took place at 10.30 o'clock this morning in the governing board room of the Pan American Union Building.

The question of mines was discussed and the meeting adjourned at 1 p. m. until 10.30 a. m. Wednesday morning.

TWENTY-NINTH MEETING.

The twenty-ninth meeting, held in governing board room, the Pan American Union Building, Washington, D. C., at 4 o'clock in the afternoon of Wednesday, January 18, 1922.

PRESENT.

China. Dr. Sao-Ke Alfred Sze, Dr. V. K. Wellington Koo, Dr. Chung Hui Wang. Secretaries: Mr. Hawkling Yen, Mr. T. F. Hsu, Mr. C. H. Zee, Mr. Chuan Chao, Mr. T. H. Koo.

Japan.-Baron K. Shidehara, Mr. M. Hanihara, Mr. K. Debuchi. Secretaries: Mr. S. Saburi, Mr. E. Kimura, Mr. H. Saito, Mr. T. Shiratori.

Also present as observers:

The United States of America.-Mr. John Van A. MacMurray, Mr. Edward Bell.

The British Empire.-Mr. M. W. Lampson, M. V. O.; Mr. F. Ashton-Gwatkin.

MINES.

Dr. Sze said that yesterday the conferees had left unfinished the question of the mines. The Chinese delegation had since drawn up a new formula which he hoped Baron Shidehara would find entirely acceptable. Dr. Koo would read it to the baron.

Dr. Koo said that in the drafting of the formula the Chinese delegates had found it necessary to separate the coal mines from the iron mines, for the reason he had stated yesterday and the day before. The formula for the coal mines read as follows:

ANNEX "A.”

"The coal mines of Tsechuan and Fangtse, for which the mining rights were formerly granted by China to German interests, shall be

operated by a Chinese company to be formed, in which Japanese capital may participate to an extent not exceeding 50 per cent of its total capital. The mode and terms of such participation shall be determined by the Chinese and Japanese commissions which are to be appointed for that purpose and which shall meet immediately upon the coming into force of the present agreement."

He might point out that the words "the Chinese company were put in there again because that was the most convenient form to describe who was to operate the mines. It did not necessarily mean a private concern. It might be a company organized by the Government. There was nothing in that draft which would preclude any agreement by the two commissions as to the character which it should assume, whether private or public.

Baron Shidehara asked whether Dr. Koo had any proposition as to the iron mines of Chinlingchen.

Dr. Koo said that it was a very difficult question. The Chinese delegates had tried and tried to find some formula which would at once meet the difficulties confronting the Chinese delegates on the one hand, and on the other hand satisfy the Japanese desire as far as possible. He could not say that the Chinese delegates had altogether succeeded, but, under the circumstances, they had found a formula which he would read to the Japanese delegates, as follows:

ANNEX "B."

"The iron mines of Chinlingchen, for which the mining rights were formerly granted to German interests, shall be handed over to the Chinese Government, which will pay to Japan their appraised value.

"One-half of this amount will be paid to the Japanese Government on the taking over of the said mines and the other half will be paid in installments over an agreed period of years.

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Pending the completion of the said installments the Chinese Government will enter into an arrangement with the Japanese Government concerning the supply to Japan of the iron ore produced by the said mines.

"The duration of the period for the completion of the payment referred to above, the arrangement for the supply of iron ore, and other details shall be determined by the Chinese and Japanese commissions to be appointed for adjusting the details of the question of the coal mines of Tsechuan and Fangtse."

Dr. Koo said that the main idea underlying the draft was to meet the legal difficulties, which appeared to be almost unsurmountable, on the one hand, and on the other to meet the Japanese wishes of having an interest in those iron mines, to the production of which Baron Shidehara attached so much importance. He would add that the draft had been hastily gotten up and was not in the very best form. He hoped, however, that it would serve as the basis upon which they might come to an agreement.

Baron Shidehara said that he was afraid that it would be very difficult to come to an adjustment upon the lines now suggested. Having regard to the history of the matter, he hoped that the Chinese delegates would find a way to treat the three mines as a case entirely independent of the general application of the Chinese