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power of the Firm, however anxious they might be to do so,

to guarantee the action of the Portuguese Consul and saying

)

that they could not offer more than they had already done.

Mr. Law informed me that if the Government would guarantee

to indemnify them for all loss he was willing to fight it

out, otherwise he could not expose the Firm to the

enormous loss which an effective Boycott would entail.

9.

I consider that Messrs. Butterfield and Swire ought to have kept me fully informed of

these serious developments, seeing that the attitude

adopted by Chinese Merchants in Hongkong is a matter of

serious concern to the Government. A stage has now been

reached in which it is exceedingly difficult for the

Government to intervene.

10.

I told Mr. Law that in the

circumstances I could neither advise him to send or to

withhold his draft letter. It was not what I would have

written myself, and I did not like it. The action of the

Self-Government Society towards a Firm wholly innocent of

any culpability is of the nature of Blackmail and surrender

will only place them under the heel of the Blackmailer.

Still it was wholly impossible for this Government or any

Government to guarantee them an indemnification of loss if

they

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