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a suspicious manner or any one wanted could often be got, or his movements and doings kept under closest observation.

Being himself in Chinese military service and known to many of the yamên people, the informant's presence here and contact with foreigners would cause him to run a great chance of being noticed.

The most curious statement, however, was that even more to be feared than native spies were the Japanese, who, the agent states, come in considerable numbers to Hong Kong, and there assume many rôles and disguises. That being in intimate touch with the people, and besides their own observation employing many Chinese for purposes of general espionage, they would probably have their suspicions aroused, and would be likely to give information to the officials.

The man stated that the Japanese who assume disguises generally profess to be natives of northern provinces, as it would be very difficult for them to pass as Cantonese, their command of that dialect not being so perfect as is their grasp of "Mandarin." Several, he says, are located in more remote villages here, whence they carry on their work of what he called "measuring the land," by which I took him to mean made surveys.

All this is given for what it is worth, and it must be remembered that the Chinese have an intense fear of Japanese actions and intentions, thus giving full rein to their imagination and characteristic invention. Again, this man comes from Fukien, where he is serving, and there, undoubtedly, is accustomed to see very great numbers of Japanese coming and going, making surveys, and generally exercising the functions of what is probably the most perfect and well-organized secret service in the world. Here, as at Foochow, it seems futile to attempt to prove to the Chinese that the Japanese, like ourselves, are pledged to preserve the integrity of China, and least of all would be likely to do anything hostile to or in British territory. When a Chinese believes a thing he does not hesitate to manufacture circumstances, or assert as facts what often is only the lively effects of a preconceived line of thought. All this may have given rise to the state of fear or suspicion that appears to actuate my informant and many other natives with whom I have come in contact; but the condition and reports emanating from it are possibly sufficiently interesting, and so may be thought to justify my mentioning same as an item of information not out of place in a general intelligence Memorandum such as this purports to be.

W. WYKEHAM MYERS.

December 1907.

(Confidential.)

Sir,

(Signed)

Inclosure 4 in No. 1.

Lieutenant-Commander Vaughan to Admiral Sir A. Moore.

"Moorhen," at Samshui, January 1, 1908.

IN accordance with your Confidential Memorandum of 6th December, I have the honour to make the following Report, as a month to all intents and purposes has elapsed since the establishment of the augmented patrol.

It is my opinion that the Viceroy did not for one moment believe that you were going to place any additional vessels on the river and when the patrol was established, it is also my belief that he did not accept as true your statement that the vessels were sent up solely on patrol duties, but gained the impression probably that the British contemplated the annexation of the two Kwang Provinces.

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The Viceroy has, I expect by now, learnt one of the lessons of his life, and must feel rather at sea after coming into contact with an officer who speaks the truth, and uses none of the methods adopted by the ordinary Mandarin of China in their diplomatic dealings, where the truth is handled craftily, and a broken promise is a matter of every-day life.

So nervous was the Viceroy on the arrival of our vessels that for the first fortnight our ships were shadowed everywhere, and whenever one came into contact with any officials they were ill at ease in their demeanour, but withal inquisitive, and I have before reported on the offers to protect me.

On the arrival of Admiral Li Chun about the middle of the month he did much to assure the Viceroy that our pressure did not indicate territorial acquisition, and he has from the very start endeavoured to show things in their true light.

He has been from Canton to Wuchau with six gun-boats and a motor-boat, and returned to Canton yesterday, and this cruise has been attended with great activity in military circles, and with much of the banging of gongs and firing of guns so dear to the heart of a Chinaman.

The guard-boats are being replaced rapidly and under revised conditions; they are frequently to be seen on the move, and the old order is altered. Previously a guard-boat having been appointed to a certain station, proceeded there and picked out the snuggest spot to lie in. They then fenced in some land close to their boat, cultivated it with cabbages, and comfortably settled down to enjoy life.

The attention of the Chinese seems to be principally occupied in increasing the patrol from Wuchau to Chu Tau San, as was outlined in the Viceroy's scheme, and they have not done much in the creeks. I cannot understand why they attach so much importance to this stretch of main waterway, 160 miles in length.

It looks rather as if the Chinese considered that the main trade route claimed all attention for the protecting of steamers, and that out-of-the-way launch routes were of small account.

The small gun-boats are continually on the move, and, what with our own vessels incessantly patrolling, trade in the West River is enjoying a sense of security that it has whether or not never felt before since the opening of the river to foreign commerce.

The Chinese will continue their praiseworthy activity when our vessels are removed it is difficult to forecast, but the reform under the energetic Admiral Li Chun is organized on such thoroughly different lines to the old methods that one has every reason to hope that it will not turn out to be pro tem, only.

The Chinese are taking to themselves credit for the fact that no piracy has occurred since the 10th November, but this is not due entirely to Chinese activity, and as long as our patrol is continued in its present strength the highway robbery will certainly be kept in check; to wipe it out perpetually is not to be expected.

The Chinese press have, of course, done a lot of harm with their inflammatory articles conveying false impressions. That, however, was to be expected, and no one imagined that we could put a strong patrol on the river without some one being inconvenienced and many being annoyed.

China is not the only country that suffers from an antagonistic and bombastic press; we had some experience of this in our South African war and in India.

The bad feeling, if it really deeply exists, is entirely against torpedo-boats, and the regular river gun-boats seem to escape any animosity that one would expect to be shown against all foreign vessels for the sake of four.

I cannot notice any difference in the demeanour of the natives, but, as I say, no one objects to our three regular gun-boats.

One heard a lot of British launches hauling down the British flag and flying the yellow dragon, but during the month only three have been struck off the British list, viz., the "Chin Hung," "Kai Lee," and "Lee Yik" (the two former are owned by Tavares, a Parsee, the other by Mr. Fisher), and four building are shortly to be added to the list.

A Chinaman is no patriot where his purse is concerned, and the benefits that are gained by British registration are too good to be thrown away for a matter of national sentiment. It is even worth while enduring the unpleasantness of continual scrutiny by British men-of-war.

Whilst so much protest is in the air it is pleasing to know that some of the merchants have a good word to say for us, and I have been told that they welcome a strict British patrol, as China without coercion will watch peaceful traders being robbed day by day without taking any preventive action, and they hope that now the Government are at last waking up to their responsibilities.

I have, &c.

(Signed)

ROBERT E. VAUGHAN,

Lieutenant and Commander, Senior Officer, West River.

Inclosure 5 in No. 1.

Agreement signed at Canton, January 4, 1908, by Consul-General Mansfield and Two of the Viceroy's Secretaries.

IT is hereby agreed that his Excellency the Viceroy of the two Kwang will pay to His Britannic Majesty's Consul-General the sums of 6,000l. and 17,790 taels, being the sum allowed as compensation to the sufferers by the piracy of the British steam-ship "Sainam" on the 13th July, 1906.

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