Northern Manchuria, of about 450,000 square miles in extent, includes the whole of the Kheilutsianski and the northern part of the Kirin provinces. According to available information, it had before the war only 1,500,000 inhabitants. This works out at three persons per square mile. The Boxer rising of 1900 indicated that, so long as the affairs of the people in Northern Manchuria continued to be controlled from Peking, we must expect risings and attempts to destroy the line, for the Chinese Government always had a ready reply to our protests: “It is the Hun-huses who are the culprits.” Nor could we regard without apprehension the increases to the Chinese forces in Northern Manchuria, and the settling of Chinese on the waste lands adjacent to the Rivers Amur and Argun, where our people had for a long time been settled. It was necessary, therefore, that we should have, in some form or other, the right of control and of generally making our own arrangements in Northern Manchuria. Without this our weakly guarded railway might be a positive disadvantage, as it added to the vulnerability of our frontier line, which makes a large bend to the north between Trans-Baikalia and the Ussuri region, the whole of the Kheilutsianski and the northern part of the Kirin province running wedgewise into our territory. Only by the security of Northern Manchuria could we feel sufficiently at ease about the Pri-Amur region to start its development. Now, Northern Manchuria is not next to Korea, and our permanent occupation of it would consequently not have threatened complications with Japan, nor were there in it important European interests which might have been disturbed. It was, however, undoubtedly important to China, with whom its forcible annexation by us might lead to complications. It therefore devolved upon us to find some method of consolidating our position in this region which would not cause a rupture with China. Thus I was strongly in favour of including Northern Manchuria in some way or the other within our sphere of influence; but I was at the same time absolutely opposed to any quasi-political or military enterprise in Southern Manchuria. This region, up to the Kuan-tung district, includes the whole of the Mukden and the southern part of the Kirin province. Though only one-quarter the size of Northern Manchuria, the population was more than 8,000,000. This works out at more than seventy souls per square mile, as compared with about three for the latter. Mukden, sacred to the Chinese dynasty, might always be a source of misunderstanding with China, and our contact with Korea for 533 miles might easily lead to complications with Japan.