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 concerning the Hsinmintun-Fakumen-Railway project, Prince Ching, representing the Chinese Government, stated to Baron Hayashi, the Japanese Minister, in a communication dated April 7th, 1907, that the Japanese plenipotentiaries in the Peking Conference, while refusing to agree to a definition of the term "parallel line" in terms of specific mileage from the South Manchuria Railway, declared that Japan "would do nothing to prevent China from any steps she might take in the future for the development of Manchuria". It would seem, therefore, that the Chinese Government during this period admitted in practice that there was, on their part, an obligation not to construct railways patently and unreasonably prejudicial to the interests of the South Manchuria Railway, though they have always denied that Japan had any valid claim to a right to monopolise railway construction in Southern Manchuria.

There has never been a definition as to what would constitute a parallel railway, although the Chinese desired one. When the Japanese Government opposed the construction of the Hsinmintun-Fakumen Railway in 1906-1908, the impression was created that Japan considered a "parallel" railway one within approximately thirty-five miles of the South Manchuria Railway, but, in 1926, the Japanese Government protested against the construction of the Tahushan-Tungliao Railway as a "competitive parallel line", noting that the distance between the proposed railway and the South Manchuria Railway would be "no more than seventy miles on the average". It would be difficult to make a thoroughly satisfactory definition.

From a railway-operating point of view, a "parallel" line can be considered a "competing line": one which deprives another railway of some part of the traffic which naturally would have gravitated to it. Competitive traffic includes both local and through traffic and, especially when the latter is considered, it is not difficult to see how a stipulation against the construction of "parallel" lines is capable of very broad interpretation. Nor is there any agreement between China and Japan as to what constitutes a "main line" or a "branch line". These terms, from a railway-operating point of view, are subject to change. The Peiping-Mukden Railway line from Tahushan extending north was originally considered by that administration as a "branch line", but, after the line had been completed from Tahushan to Tungliao, it was possible to regard this as a "main line ".

It was only natural that the interpretation of the undertaking in regard to parallel railways should lead to bitter controversy between China and Japan. The Chinese attempted to build their own railways in South Manchuria, but in almost every case met with a protest from Japan.

A second group of railway issues which increased the tension bet ween China and Japan before the events of September last were those which arose from the agreement under which the Japanese advanced money for the construction of various Chinese Government Railways in Manchuria. Japanese capital to the present value, including arrears and interests, of 150,000,000 yen had been expended in the building of the following Chinese lines: the Kirin-Changchun, the Kirin-Tunhua, the Ssupingkai-Taonan, and the Taonan-Angangchi Railways, and certain narrow-gauge lines.

The Japanese complained that the Chinese would not pay these loans, nor make adequate provision for them, nor carry out various stipulations in the agreements, such as those respecting the appointment of Japanese railway advisers. They made repeated demands that the Chinese should fulfilfulfill [sic] the alleged promises made by their Government that Japanese interests should be permitted to participate in the construction of the Kirin-Kwainei Railway. This projected line would extend the Kirin-Tunhua Railway to the Korean border, and would make available for Japan a new short sea-and-rail route from her seaports to the centre of Manchuria, and, in conjunction with the other railways, shorten the communications with the interior.