CHINA has always considered that the wording and spirit of the agreements between Soviet Russia and China for the joint administration of the Chinese Eastern Railway purported to put the management on a fifty-fifty basis between the two parties. In spite of the erroneous impression which the coup of July 10, 1929, might have created, China's only purpose, so far as the railway is concerned, is to have the 1924 agreements carried out and respected both in letter and in spirit. As the Minister of Foreign Affairs and the local authorities have repeatedly declared, China does not intend to possess the railway by seizure nor does she seek any preponderance of management. But she does believe that the 1924 agreements give her a fifty percent voice in the interest and management of the railway, and that she will insist upon.

First let us look at the organization of the directorate of the railway. Under the 1920 agreement it was composed of five Chinese (including the president) and five Russians (including the vice-president). Some commentators [i] seem to think that in the event of a tie vote the president had a casting vote in addition to his vote as a member of the board. This is a blurred impression, but it is a natural one, because, according to that agreement, the president did have two votes while the other nine members of the board had only one vote each. That extra vote of the president, however, was not intended to be, nor ever actually became, the casting vote. For in another place of the same agreement it was provided that each decision of the board of directors must have seven votes in order to be effective. This "joker" made it impossible for the voting in the board of directors ever to reach a tie vote which would enable the president to utilize his extra vote. This is not such a complicated mathematical problem when we examine it closely. With ten members on the board and seven votes to pass any decision, the nearest tie-voting approaching the effective margin was five votes on each side. In that case the president's extra vote could break the tie but could not carry the decision, for his extra vote only brought the number of votes to six on one side and five on the other, which was just one vote less than necessary to be effective. Therefore, the president's extra vote had only a complimentary and numerical value instead of any casting force.

As a matter of fact, it would appear that the four Russian members of the board usually voted as led by the Russian vice-president, while the Chinese members usually voted in the same way as the Chinese president. This was only natural under the circumstances. In actual practice the decisions of the board of directors under the 1920 agreement were usually arrived at by discussion or "negotiation" between the two sides. During my connection with the railway from January 1920 to October 1924, we seldom thought of calling for a formal vote in our meetings. We always endeavored to arrive at some conclusion upon each proposal by a thorough discussion of the pros and cons, and usually knew whether any question was to be acted upon or postponed for further consideration. Thus, practically all the decisions of the board during that period were unanimously approved by all the directors present at the particular meetings. Though it sometimes took considerably more time than one would expect, we seldom failed to arrive at some conclusion.

Now in regard to the two 1924 agreements. These agreements, which allowed for the same ratio of representation as did the 1920 agreement, are silent on the point whether or not the president has a casting vote in case of a tie. We have already analyzed the way in which prior to 1924 the board of directors conducted its business. This system should still apply under the 1924 agreements. For in view of the fact that the regulations governing the working and administration of the Chinese Eastern Railway give the board of directors very extensive powers over the activities of the railway, and that all such powers have to be exercised through the president of the board, China, with her four directors in addition to the president, may certainly be considered to have a fifty percent responsibility over the railway.

It is sometimes said that since the board of auditors is composed of three Russians and only two Chinese, this would constitute a plain departure from the principle of parity, even though one of the two Chinese was to be chairman. On the face of it this is correct, for two Chinese members are certainly less than three Russians. Let us, however, look at the regulations governing the working of the board of auditors to discover the reason why China accepted this apparent departure from the principle of parity. The fact was that the regulations governing the working of that board stipulated that all decisions of the board must bear the signature of the chairman. Thus, no matter how many Russians there might be on the board, so long as the chairman is a Chinese, China's voice on that board cannot be less than fifty percent. This was the reason why China preferred to appoint only two members including the chairman, rather than three without the chairman.

Then there is the clause providing that the general manager was to be a Russian, with one Chinese and one Russian assistant manager. On the face of it, this arrangement might be taken as giving a certain margin of superiority to the Soviet. But we must consider the different branches of the railroad as a whole and not form any conclusions on any single phase or department. It may be pointed out at once that by this arrangement it was intended to balance the apparent margin of superiority which the "allotment," so to speak, of the first positions in the board of directors and board of control seemed to give China, so as to arrive at a proper balance of power between the two parties. Therefore, this article of the 1924 agreement stipulates that the manager and assistant managers shall be appointed by the board of directors -- that is, candidates for these positions must be agreeable to both parties -- and, what is more, "the rights and duties of the manager and assistant managers shall be defined by the board of directors." With the board of directors constituted as it was, the intention was that the "rights and duties of the manager and assistant managers" should be so defined as to have the whole organization properly balanced in accordance with the "principle of equal representation" between the two parties.

It is also said that the agreement gives the Soviet a certain margin of superiority in the appointment of the department chiefs and assistant chiefs. The exact words of the two consecutive articles dealing with this point are:

Art. IV. The chiefs and assistant chiefs of the various departments of the railway shall be appointed by the board of directors. If the chief of department is a national of the Republic of China, the assistant chief of department shall be a national of the Union of Soviet Socialist Republics, and if the chief of department is a national of the Union of Soviet Socialist Republics, the assistant chief of department shall be a national of the Republic of China.

Art. V. The employment of persons in the various departments of the railway shall be in accordance with the principle of equal representation between the nations of the Republic of China and those of the Union of Soviet Socialist Republics.

In this connection, we need only call attention to the fact that: 1, the stipulation concerning the chiefs and assistant chiefs of departments first mentions the nationals of China -- and not those of the Soviet; and 2, the phrase, "employment of persons in the various departments," seems clear enough to cover persons of all grades, including the chiefs and assistant chiefs. If the interpretation of the two articles excluded the chiefs and assistant chiefs, then it would seem that China would have just as much right as, if not more than, the Soviet in claiming some margin of superiority, for the simple reason that the articles concerned mention the nationals of China first.

Concerning the main issue between China and the Soviet, it seems that often-times both parties are wrong. With the world's longest frontier between them, which cannot be guarded by force, China and Russia must realize that they must endeavor to be good neighbors. Little advantages and petty gains should never be allowed to enter into consideration in conducting their neighborly affairs. When their permanent interest is considered, they should at once realize that the Chinese Eastern Railway neither justifies nor is worthy of the present conflict. The only course to follow is to emulate the healthy example set by Canada and the United States.

To be precise: 1, the ghost of the Tsarist contract and Statutes of 1896 should be driven out of the body of the 1924 agreements by the immediate adoption of some clear and definite regulations governing the functions and working of the Board of Directors and the important executive officers of the railway; 2, a standing rule should be adopted for settling all disagreements between the two sides by arbitration; and 3, a railway expert of some neutral country should be selected by the board of directors as General Manager of the railway.

The fundamental principle of the 1924 agreements requires that the Chinese Eastern should be managed as a purely commercial enterprise, to be shared in equally by China and Russia. The only way to do that without interfering with the efficiency of the railway seems to be to take the management of the railway out of politics and place it in the hands of a neutral expert. Considering the temperaments of the Chinese and the Russians, and with the whole experience of the Chinese Eastern to guide us, we see that it would be extremely difficult to reach the desired object with either a Chinese or Russian as General Manager of the Railway, and it would therefore seem that the adoption of the "city manager" plan, as it has been introduced in American cities, is the only one likely to prevent the Chinese Eastern from getting into its old habits and once more becoming the center of a whirlpool of diplomatic squabbles.

[i] See especially "The Russo-Chinese Conflict in Manchuria," by K. K. Kawakami, FOREIGN AFFAIRS, October 1929.

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