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The result of the sortie, however, dispelled that hope. Long before Rozhdestvensky reached the Far East, he fell into touch with Japanese scouts, and every movement of his ships was flashed to the enemy. That Vladivostok was his objective and that he would try to reach that place if possible without fighting, were unquestionable facts. But by what avenue would he enter the Sea of Japan? The query occupied attention in all the capitals of the world during several days, and conjectures were as numerous as they were conflicting. But Admiral Togo had no moment of hesitation. He knew that only two routes were possible, and that one of them, the Tsugaru Strait, could be strewn with mines at very brief notice. The Russians dare not take that risk. Therefore Togo waited quietly at his base in the Korean Strait and on the 27th of May his scouts reported by wireless telegraphy at 5 A.M., "Enemy's fleet sighted in 203 section. He seems to be steering for the east channel." In the historic action which ensued, Rozhdestvensky had under his command eight battle-ships, nine cruisers, three coast-defence ships, nine destroyers, an auxiliary cruiser, six special-service steamers, and two hospital ships. Togo's fleet consisted of five battle-ships (one of them practically valueless), one coast-defence vessel, eight armoured cruisers, ten protected cruisers, twenty destroyers, and sixty-seven torpedo-boats. Numerically, the advantage was on the Japanese side, although in first-class fighting material the disparity was not remarkable. As for the result, it can only be called annihilation for the Russian squadron. Out of the thirty-eight ships composing it, twenty were sunk; six captured; two went to the bottom or were shattered while escaping; six were disarmed and interned in neutral ports to which they had fled; one was released after capture, and of one the fate is unknown. Only two escaped out of the whole squadron. This wonderful result justifies the comment of a competent authority: "We can recognize that Togo is great--great in the patience he exercised in the face of much provocation to enter upon the fight under conditions less favourable to the success of his cause; great in his determination to give decisive battle despite advice offered to him to resort to methods of evasion, subterfuge, and finesse; great in his use of not one but every means in his power to crush his enemy, and great, greatest perhaps of all, in his moderation after victory unparalleled in the annals of modern naval war. "The attitude of the Japanese people in the presence of this epoch-making triumph is a sight for men and gods. They have the grand manner of the ancients, and their invariable attitude throughout the war, whether in the hour of victory or in that of disappointment, has been worthy of a great people. No noisy and vulgar clamour, no self-laudation, no triumph over a fallen enemy, but deep thankfulness, calm satisfaction, and reference of the cause of victory to the illustrious virtue of their Emperor."* *The War in the Far East, by the Military Correspondent of "The Times." The Japanese losses in the two-days' fighting were three torpedo-boats, and they had 116 killed and 538 wounded. PEACE RESTORED After the battles of Mukden and Tsushima, which were great enough to terminate the greatest war, the Russians and the Japanese alike found themselves in a position which must either prelude another stupendous effort on both sides or be utilized to negotiate peace. Here the President of the United States of America intervened, and, on the 9th of June, 1905, the American minister in Tokyo and the ambassador in St. Petersburg, instructed from Washington, handed an identical note to the Japanese and the Russian Governments respectively, urging the two countries to approach each other direct. On the following day, Japan intimated her frank acquiescence, and Russia lost no time in taking a similar step. Two months nevertheless elapsed before the plenipotentiaries of the two powers met, on August 10th, at Portsmouth, New Hampshire. Russia sent M. (afterwards Count) de Witte and Baron Rosen; Japan, Baron (afterwards Marquis) Komura, who had held the portfolio of Foreign Affairs throughout the war, and Mr. (afterwards Baron) Takahira. The Japanese statesmen well understood that much of the credit accruing to them for their successful conduct of the war must be forfeited in the sequel of the negotiations. For the people of Japan had accustomed themselves to expect that Russia would recoup a great part, if not the whole, of the expenses incurred by their country in the contest, whereas the ministry in Tokyo knew that to look for payment of indemnity by a great State whose territory has not been invaded effectively or its existence menaced must be futile. Nevertheless, diplomacy required that this conviction should be concealed, and thus Russia carried to the conference a belief that the financial phase of the discussion would be crucial. Baron Komura's mandate was, however, that the only radically essential terms were those formulated by Japan prior to the war. She must insist on securing the ends for which she had fought, since she believed them to be indispensable to the peace of the Far East, but beyond that she would not go. The Japanese plenipotentiaries, therefore, judged it wise to submit their terms in the order of the real importance, leaving their Russian colleagues to imagine, as they probably would, that the converse method had been adopted, and that everything prefatory to questions of finance and territory was of minor consequence. The negotiations, commencing on the 10th of August, were not concluded until the 5th of September, when a treaty of peace was signed. There had been a moment when the onlooking world believed that unless Russia agreed to ransom the island of Saghalien by paying to Japan a sum of 120 millions sterling,--$580,000,000, the conference would be broken off. Nor did such an exchange seem unreasonable, for were Russia expelled from the northern part of Saghalien, which commands the estuary of the Amur, her position in Siberia would have been compromised. But Japan's statesmen were not disposed to make any display of territorial aggression. The southern half of Saghalien had originally belonged to Japan and had passed into Russia's possession by an arrangement which the Japanese nation strongly resented. To recover that portion of the island seemed, therefore, a legitimate ambition. Japan did not contemplate any larger demand, nor did she seriously insist on an indemnity. Thus, the negotiations were never in real danger of failure. The Treaty of Portsmouth recognized Japan's "paramount political, military, and economic interests" in Korea; provided for the simultaneous evacuation of Manchuria by the contracting parties; transferred to Japan the lease of the Liaotung peninsula, held by Russia from China, together with that of the Russian railways south of Kwanchengtsz and all collateral mining or other privileges; ceded to Japan the southern half of Saghalien, the fiftieth parallel of latitude to be the boundary between the two parties; secured fishing-rights for Japanese subjects along the coasts of the seas of Japan, Okhotsk, and Bering; laid down that the expense incurred by the Japanese for the maintenance of the Russian prisoners during the war should be reimbursed by Russia, less the outlays made by the latter on account of Japanese prisoners, by which arrangement Japan obtained a payment of some four million sterling $20,000,000, and provided that the contracting parties, while withdrawing their military force from Manchuria, might maintain guards to protect their respective railways, the number of such guards not to exceed fifteen per kilometre of line. There were other important restrictions: first, the contracting parties were to abstain from taking, on the Russo-Korean frontier, any military measures which might menace the security of Russian or Korean territory; secondly, the two powers pledged themselves not to exploit the Manchurian railways for strategic purposes, and thirdly, they promised not to build on Saghalien or its adjacent islands any fortifications or other similar works, or to take any military measures which might impede the free navigation of the Strait of La Pérouse and the Gulf of Tatary. The above provisions concerned the two contracting parties only. But China's interests also were considered. Thus, it was agreed to "restore entirely and completely to her exclusive administration" all portions of Manchuria then in the occupation, or under the control, of Japanese or Russian troops, except the leased territory; that her consent must be obtained for the transfer to Japan of the leases and concessions held by the Russians in Manchuria; that the Russian Government should disavow the possession of "any territorial advantages or preferential or exclusive concessions in impairment of Chinese sovereignty or inconsistent with the principle of equal opportunity in Manchuria," and that Japan and Russia "engaged reciprocally not to obstruct any general measures common to all countries which China might take for the development of the commerce and industry of Manchuria." This distinction between the special interests of the contracting parties and the interests of China herself, as well as of foreign nations generally, is essential to clear understanding of a situation which subsequently attracted much attention. From the time of the Opium War (1857) to the Boxer rising (1900), each of the great Western powers struggled for its own hand in China, and each sought to gain for itself exclusive concessions and privileges with comparatively little regard for the interests of others and with no regard whatsoever for China's sovereign rights. The fruits of this period were permanently ceded territories (Hongkong and Macao); leases temporarily establishing foreign sovereignty in various districts (Kiao-chou, Weihaiwei, and Kwang-chow); railway and mining concessions, and the establishment of settlements at open ports where foreign jurisdiction was supreme. 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