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 should be discussed separately, in this case also, if so agreed, with the help of neutral observers.

Finally, we suggest that the results of these discussions and negotiations should be embodied in four separate instruments:
 * 1) A Declaration by the Government of China constituting a special administration for the Three Eastern Provinces, in the terms recommended by the Advisory Conference;
 * 2) A Sino-Japanese Treaty dealing with Japanese interests;
 * 3) A Sino-Japanese Treaty of Conciliation and Arbitration, Non-Aggression and Mutual Assistance.
 * 4) A Sino-Japanese Commercial Treaty.

It is suggested that, before the meeting of the Advisory Conference, the broad outlines of the form of administration to be considered by that body should be agreed upon between the parties, with the assistance of the Council. Among the matters to be considered at that stage are the following:


 * The place of meeting of the Advisory Conference, the nature of the representation, and whether or not neutral observers are desired;
 * The principle of the maintenance of the territorial and administrative integrity of China and the grant of a large measure of autonomy to Manchuria;
 * The policy of creating a special gendarmerie as the sole method of maintaining internal order;
 * The principle of settling the various matters in dispute by means of the separate treaties suggested;
 * The grant of an amnesty to all those who have taken part in the recent political developments in Manchuria.

When once these broad principles have been agreed upon heforehand the fullest possible discretion as regards the details would be left to the representatives of the parties at the Advisory Conference or when negotiating the treaties. Further reference to the Council of the League of Nations would only take place in the event of failure to agree.

Among the advantages of this procedure, it is claimed that, while it is consistent with the sovereignty of China, it will enable effective and practical measures to be taken to meet the situation in Manchuria as it exists to-day and, at the same time, allow for such modifications hereafter as the changes in the internal situation in China may warrant. Notice, for instance, has been taken in this Report of certain administrative and fiscal changes which have either been proposed or actually carried out in Manchuria recently, such as the re-organisation of provincial governments, the creation of a central bank, the employment of foreign advisers. These features might be retained with advantage by the Advisory Conference. The presence at the conference of representatives of the inhabitants of Manchuria, selected in some such way as we have suggested, should also facilitate the passage from the present to the new regime.

The autonomous regime contemplated for Manchuria is intended to apply to the three provinces of Liaoning (Fengtien), Kirin and Heilungkiang only. The rights at present enjoyed by Japan in the province of Jehol (Eastern Inner Mongolia) would be dealt with in the treaty on the subject of Japanese interests.

The four Instruments can now be considered seriatim:

The final proposals of the Advisory Conference would be submitted to the Chinese Government, and the Chinese Government would embody them in a Declaration, which would be transmitted to the League of Nations and