Confidential.
Enclosure 2.
Dear Sir Frederick Lugard,
H. B. M. Consulate-General,
Canton, July 26th, 1909.
29843 lacce REG? 6 SEP
Referring to our recent conversation on the subject of the "Fatshan" case, I gladly avail myself of your invitation to place the opinions I expressed to you on that occasion in writing.
I cannot understand why Messrs. Butterfield and Swire, the largest and probably the wealthiest British firm in China, a firm who have, for the past twenty-five years, taken a prominent part in the development of British mercantile enterprise in the Far East, a firm who have, on more than one occasion, deliberately suffered financial loss in order to maintain a principle or defend their Treaty rights (I instance their successful efforts to inaugurate steam navigation on the West River and inland waters of China), should, by reason of the threats and at the bidding of a small band of irresponsible and unscrupulous agitators in Canton, headed by a man who is a notorious blackmailer (Li Kai Hi, banished from Hongkong in 1908 for complicity in the Japanese Boycott Riots), entirely abandon a position in the "Fatshan" case, which they themselves, with the assistance of the British authorities, have successfully...