Subsequently Japan made in vain definite proposals as to railway
construction designed to satisfy China while prevent- ing competition with the South Manchurian Railway. Her contention was that the dispute could be settled by direct negotiations, and that there was no case suitable for arbitration. We must wait to know more before forming a judgment on a very difficult matter. Every dispute between China and Japan affects British interests, and might do so seriously. The essential issue in the railway dispute is whether the Fa-ku-menn line would really compete with the South Manchurian line, and on that point we are offered no evidence. It seems a suitable case for arbitration. But the Japanese argue that China is not so much concerned about the railway as about the Chien-tao frontier question, and that she hopes to get what she wants in this respect by arbitration "on all pending questions." They think that if it had been generally known that China was masking one question with the other, British opinion would have recognised that the Japanese were in the right.—On Friday it was announced that China had consented to resume direct negotiations with Japan.—The special correspondent says that the Japanese are most anxious to remove all misconceptions as to their loyalty and reasonableness, and that on previous visits he was never so much impressed by proofs of the importance which is attached to British friendship.