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made a very good shewing, which drew the admiration of all neutral observers. The Japanese soon brought reinforcements and extended their front down towards the Yangtze in an attempt to dislodge the Chinese from their grip on the suburb of Chapei; but despite the overwhelming superiority of the Japanese equipment, especially in the air, the Chinese stuck to their ground all through August and September, until well into October, when they began to crack, and were finally dislodged by a successful landing on the flank in Hangchow Bay,
These operations at first led to a complete breakdown in communications between Nanking and Shanghai. Towards the end of August, however, it was found that cars could cover the 200 miles to Shanghai by turning off the main road at Soochow, and passing through Kashing to the Hangchow road, which entered Shanghai from the south. As I was badly in need of instructions I decided to motor down. On arrival in Shanghai I was astonished at the state in which I found popular foreign opinion. There appeared to be no adequate appreciation of the meaning of these new Japanese encroachments in China, or of the Japanese threat to the "open door" system of trading the Far East, the traditional British policy expressed in Lord Palmerston's instructions to Admiral Elliot in 1840, when he said "You will bear in mind that Her Majesty's Government do not desire to obtain for British subjects any exclusive privileges of trade which should not be equally extended to the subjects of every other power".
Shanghai had for some years been the object of much factious interference and petty vexation on the part of Chinese officials in their campaign to recover their "lost privileges". The municipal council of the International Settlement found itself continuously involved in arguments, mostly sterile, over all sorts of questions of local interest, such as roads, police, taxes, jurisdiction, and so on, providing occasions where the Chinese aptitude for obstruction had full play. The consequence was to alienate the sympathies of many of the leading foreigners in the main stronghold of foreign interests in China. (According to Professor Remer, an American economist who made a study of foreign investments in China in 1931, British business investments were distributed as follows:
In Shanghai £130,000,000
In Hongkong £36,000,000
In the rest of China £30,000,000
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