and sea, the absence of import duties, and coal within easy reach, cheap money is all that is needed to make industrial undertakings a paying investment.

The Central Laboratory is doing good work in investigating the industrial potentialities of the country and, as mentioned in the trade report for 1908, it indicates the following as being specially adapted to the resources of the Kwantung Peninsula and South Manchuria :

1. The distilling of spirits from kaoliang

2. The spinning of wild silk

3. The manufacture of bean cake and bean oil

Since the results of the laboratory were published in the spring of 1908, steps have already been taken to establish factories to carry on operations in one or two of these undertakings. The manufacture of soap from bean oil has been commenced on a very small scale by three different firms in Dairen, but the excessive price of bean oil since the end of 1909 is proving a great handicap.

The distilling of spirits has attracted the attention of a manufacturer in Mukden, and a factory, wherein the latest improvements suggested by the laboratory will be put into practice, is to be established there in 1911.

The possibilities of the glass industry, too, have attracted a large glass manufacturing company in Japan, and, should investigations prove satisfactory, a glass factory will be erected in the near future.

The silk spinning industry is to be taken up by the South Manchurian Railway Company in the spring of 1910 and the necessary machinery is being installed. Reference to this will be made later on under the heading of exports.

The laboratory has now been brought under the control of the railway company, and it is probable that, in the absence of private enterprise, the company will take the lead in developing manufactures in the peninsula. In 1909 the laboratory, besides continuing its work of the previous year, carried its researches into new fields and demonstrated that in North Manchuria there are good prospects for the beet sugar industry and that the soil in certain parts of the leased territory is well adapted for the manufacture of porcelain.

The South Manchurian Railway Company.-In view of the large share which the South Manchurian Railway Company takes in the development not only of the Kwantung Peninsula but of South Manchuria as well, it is proposed to give here a resumé of its work during the past year.

The main line. The work of doubling the track on the main line between Dairen and Suchiatun, a distance of 238 miles, was completed and the new line brought into use by the end of the year. The original aim was to facilitate the conveyance of coal from the Fushun mines to Dairen, Port Arthur and Newchwang, but the double line will have the additional effect of relieving the traffic over the whole system. The time table was altered on May 1 in order to increase the facilities for

through passenger traffic with Europe, and express trains were made to run three times a week instead of twice a week as formerly. The time taken for the journey from Changchun to Dairen was shortened by three hours, and it is proposed to reduce it by another hour in 1910, viz., to 17 hours. The freight rates were revised in October, and, generally speaking, reductions were introduced all round. The rebate system was abolished and the forwarding business taken over by the company itself. Newchwang obtained further relief, and rates to and from that port are cheaper than to and from Dairen as far as Kungchuling, a distance of 399 miles, whereas formerly they were identical beyond Tiehling, 2923 miles north.

Antung-Mukden line.-The relaying of this line, which entails the conversion of the light railway into a broad gauge, was commenced on August 7. Work was also begun on the tunnels and bridges and it is expected to finish the whole undertaking by the end of 1911. By October, 1910, it is hoped to be able to reduce the journey, which at present takes two days (one night being spent in hotel at Tsao-ho-kou) to one day, as work will have been sufficiently advanced from both the Antung and Mukden ends. The light railway will still be used in the central portion.

Other works of the railway company. Harbour works, wharves, &c.Work at the extension of the east wharf at Dairen was continued last year and the foundations for an additional 909 feet have been finished. This portion will be completed and made ready to accommodate vessels by the end of 1911, berthage being thus afforded for three steamers of 4,000 tons. The total accommodation of the wharves will then be about 20 vessels.

At the breakwaters there was very little done, but it is anticipated that the east breakwater, which is an extension of the east wharf, will be finished by the end of 1910. When completed its total length will be 1,220 feet. The north breakwater, which is to be 2,850 feet long, will not be finished until 1912.

The complaints regarding congestion at the harbour, which were so loud in the winter of 1908-09, are no longer heard, and shippers are generally satisfied with the expeditious manner in which discharging and loading are carried on. Various measures have been taken to overcome the defects which existed during the previous winter, when during the busy exporting season-December to March-there were sometimes as many as 20 vessels lying in the bay waiting their turn to come alongside. Many improvements have been introduced into the manner of shifting goods to the quayside, additional rails have been laid down and goods are transferred by steam power instead of by the old method of carting. The exporting capacity has been doubled and is now as much as 8,000 to 10,000 tons per day. When the east wharf is completed at the end of 1910 it will be possible to ship as much as 15,000 tons. The installation of grain elevators, which is also under consideration, will bring this figure up to 20,000 tons per day.

Warehouses capable of storing over 100,000 tons of cargo have been constructed at the wharves and further buildings to receive 80,000 tons will be erected in 1910. If the outdoor storage be included, the present accommodation is about 250,000 tons.

The addition of an ice-breaker to the harbour equipment, in December, greatly facilitated the berthing of ships during the winter months. In the winter of 1908-09, owing to the accumulation of ice at the quayside, four or five hours were frequently required for a vessel to come alongside, but now the operation can be carried out in less than two hours during the coldest season. With the view of further diminishing the time taken in berthing steamers, a system of compulsory pilotage may be brought into force this year. The system of loading from lighters will also be rendered possible in a few months; 10 lighters have been ordered, and, when not in use at the harbour, it is intended to utilise them for the conveyance of Fushun coal to Chefoo. Five of the lighters will have a carrying capacity of 250 tons and the other five will take 100 tons each.

Steamship service.-A second passenger steamer was chartered in 1909 to improve the facilities for through traffic between Shanghai and Europe, thus allowing of a service twice a week both ways. The steamers so far have been run at a loss, and as the Hamburg-Amerika Linie has decided to make Dairen a port of call for its steamers running between Shanghai, Tsingtau and Tientsin, the chances of making a profit are rendered still further remote, although the route is rapidly becoming a popular one with residents in the Far East.

Electric lighting.-At Dairen there is at present a power of 1,500 kilowatts, of which 400 are required for the electric tramway. The supply is not as yet equal to the demand, and applications for installation continue to be refused, but with the addition of 2,000 kilowatts in the course of 1910 the power-house will be able to meet all calls. The number of lights has now reached 16,000. Of the machinery added in 1909 and to be laid down in 1910, the generators and engines are of American make, while the boilers, rotary convertors and steam condensers have been secured in the United Kingdom. At Changchun all the plant was laid down and the settlement will be lighted from the beginning of 1910. At Mukden there is to be a further extension in 1910, and the engine, boiler and dynamo have all been ordered from the United Kingdom. The lamps used by the company throughout are of German make, the fittings being supplied locally.

Electric tramway.-The tramway system in Dairen was completed and opened in September, the total length of the track being 14 miles. So far the cars are being run at a loss, but it is hoped to remedy this in the spring. The rails and 40 of the cars came from the United Kingdom, 10 cars were made in Japan, while the motors, wires and poles were supplied by Germany. An extension of 3 miles may be made in 1910.

Gas. In order to supply Dairen with gas for cooking, heating and lighting purposes, a plant was laid down in 1909 and was almost completed by the end of the year. The plant (horizontal retort system) was obtained from Germany and has a capacity of 280,000 cubic feet, which will be sufficient to supply 3,000 houses. The number of applications so far is 700. Pipes made in the United Kingdom are to be put down for a length of 23 miles. Cooking ranges, stoves and lamp mantles have been secured from Germany. Fushun coal is used and is said tɔ have produced satisfactory results. The by-products-coke,

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tar and ammonium sulphate-will find a market locally or in Japan.

Coal mining and silk spinning.-The company's enterprise in these directions will be dealt with under the heading of exports.

Other works. The work undertaken by the company in connection with the railway settlements along the line includes the construction of roads and parks, houses for employés, schools, hospitals, &c.

General trade.-Hitherto in the returns issued by the Kwantung Government values alone have been given. Last year, however, a record of quantities was kept, so that in future it will be easier to arrive at a proper conclusion as to the progress of the port. For this year values, which, considered by themselves, are frequently misleading, alone can be compared, thus rendering an accurate conclusion of the state of trade somewhat difficult. This difficulty is further increased by the disparity which appears in the figures published by the harbour, customs and Government offices, and it is doubtful if full reliance can be placed on either the weights or values contained in the statistics appended to this report, although relatively they no doubt give a fair indication of the import and export of the various commodities.

The total trade of the port for the year 1909 amounted, according to the official returns, to 6,876,4911. as compared with 6,745,8631. in the previous year. The trade was divided as follows:

A better idea of the rapid growth of Dairen may be gained from the fact that whereas in 1908 the port stood seventeenth, in point of annual revenue, on the list of ports where Chinese customs stations are established, last year it rose at one bound to eighth place.

Export trade. Thanks to the very large increase in the export of beans, the export trade is in a very thriving condition, showing, as it does, an increase of 825,4461. over the previous year.

Beans and bean products.-The most striking feature in the exports is the enormous increase in the shipment of beans and bean products, viz., oil and cake. As will be seen from the returns appended hereto, there was an increase in value as follows:

Out of a total export of 4,370,4207., beans and bean products claimed 3,012,0347., or very nearly 70 per cent.

Beans. It is to be regretted that the official returns for the previous

year do not give quantities but merely values, and further that no return by countries is published. The wharf returns, although differing from the official returns to the extent of 25,000 tons, will furnish some idea of the destination of the beans:

Of the amount sent to Japan, probably some was re-shipped to Europe; while of the quantity sent to Europe about 90 per cent. went to the United Kingdom.

The figures above quoted speak for themselves. The crop of 1908 turned out to be even larger than was anticipated and the shipment of beans to Europe, chiefly to the United Kingdom, which had only begun at the end of 1908, advanced by leaps and bounds. Shipments continued far into the summer, and indeed only ceased just prior to the arrival of the new crop on the market. Early in the year prices were low, viz., about 51. 18s. per ton landed in the United Kingdom, but along with the increasing demand, the price rose towards the end of the year and by December it was 17. 58. per ton higher than in January. There was also every indication that the figure would mount still higher, and, at the time of writing (early in 1910), beans are 21. per ton dearer than at the corresponding period of the previous year, a result probably brought about by a combination of causes.

In the first place there has arisen a huge demand in Europe occasioned, perhaps, by the partial failure in the crops of other oil-producing materials, but more probably owing its origin to the discovery of the seemingly endless number of ways in which the Manchurian bean and its products can be utilised in the industrial world. In the Orient, beans have long been used for making soy, miso, bean curd and also for lighting purposes, but the recognition in the United Kingdom of their value in the manufacture of soap, sauce, biscuits, paint, &c., of very recent date.

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In the second place the 1909 crop does not appear to have come up to expectations, owing, it is said, to excessive rain just before harvest, the result being that the quality of the beans is not up to the standard of the previous year. Nevertheless, it is impossible to place any reliability on the reports from the interior as no statistics of the crop are compiled. It is not unlikely that the deficiency in the crop per acre will be more than compensated by the additional area brought under cultivation, as fields formerly used by the farmer for kaoliang and other grain were last year planted with beans, but it is questionable whether sufficient importance is attached in Manchuria to the rotation of crops, and the deterioration in the harvest per acre may, to a certain extent, be attributed to this cause.

The exportation of beans to Europe being quite a new business,