, that the Chinese Government are
borrowing foreign capital for putting up the above-mentioned
constructions or establishments. I shall be much obliged if the
Chinese Government will inform me whether or not these reports are
well founded in fact.

Reply to be addressed by the Chinese Minister of Foreign Affairs to
the Japanese Minister.

Excellency: I have the honour to acknowledge the receipt of your
Excellency's Note of.... In reply I beg to state that the Chinese
Government have not given permission to foreign Powers to construct,
on the coast of Fukien Province, dock-yards, coaling stations for
military use, naval bases or other establishments for military
purposes; nor do they contemplate to borrow foreign capital for
putting up such constructions or establishments.

Within forty-eight hours of this passage-at-arms of the 1st May it was
understood in Peking that Japan was meditating a serious step. That
vague feeling of unrest which so speedily comes in capitals when
national affairs reach a crisis was very evident, and the word
"ultimatum" began to be whispered. It was felt that whilst China had
held to her rights to the utmost and had received valuable indirect
support from both England and the United States, the world-situation was
such that it would be difficult to prevent Japan from proceeding to
extremities. Accordingly there was little real surprise when on the 7th
May Japan filed an ultimatum demanding a satisfactory reply within 48
hours to her Revised Demands--failing which those steps deemed necessary
would be taken. A perusal of the text of the Ultimatum will show an
interesting change in the language employed. Coaxing having failed, and
Japan being _now convinced that so long as she did not seek to annex the
rights of other Foreign Powers in China open opposition could not be
offered to her_, states her case very defiantly. One significant point,
however, must be carefully noted--that she agrees "to detach Group V
from the present negotiations and to discuss it separately in the
future." It is this fact which remains the sword of Damocles hanging
over China's head; and until this sword has been flung back into the
waters of the Yellow Sea the Far Eastern situation will remain perilous.

JAPAN'S ULTIMATUM TO CHINA

Japan's Ultimatum delivered by the Japanese Minister to the Chinese
Government, on May 7th, 1915.

The reason why t