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prepared to support at least by words the policy of a strong centralised Government. A large number of the high provincial authorities have addressed to the President messages of adherence to the established régime, while chambers of commerce and merchants' guilds throughout the country have not been backward in expressing abhorrence of the attempt to overthrow the Provisional President. Even in Kuangtung the commercial elements, a minority of the officials and a proportion of the army have dared to express themselves in the above sense, and it is not, I venture to think, too much to say that the country as a whole strongly favours return to a settled régime, which it believes to be possible only under the guidance of Yuan Shih-kai.
With regard to the military situation, the trend of events during the past week has been favourable to the Northern forces,
In Kiangsi the rebels have been dislodged from the Hukou forts and have withdrawn towards Nanchang, the provincial capital. Reinforcements, numbering 6,000 men and 12 guns, have been despatched to the Northern army since the beginning of the outbreak.
The adjacent province of Hunan has declared its independence, but is apparently adopting an attitude of neutrality, and has despatched 3,000 troops to Yochow with a view to preventing a possible inroad of Northern troops from Hankow. That Hunan will take an active part on either side appears improbable, owing to the recent destruction by fire of the Changsha arsenal together with the arms and ammunition which it contained.
Reports regarding military events in Kiangsu are conflicting, but I gather that the initial success of the Northern army, reported in my despatch of the 21st July, was followed by a considerable accession of strength to the rebel forces, who were enabled to reoccupy Li Kuo Yi and the adjacent hills. On the 22nd July, however, General Chang, who appears to have been strongly reinforced, again dislodged the rebels, and the following day saw the Northern army in possession of Hsuchow-fu, the Southerners retreating to Peng P'u-the point where the Tien-tsin-Pukow Railway crosses the Huai River. At this point the rebel army remains entrenched, and should shortly be attacked by General Chang's army advancing down the railway and by a further Northern force which is converging on the same point from the west.
While the troops at Chinkiang definitely threw in their lot with the rebels on the 18th July, there is reason to believe that the general in command at Yangchow has reconsidered his position and is now inclined to favour the North. His Majesty's consul at Chinkiang has reported that an attack on that place is threatened by the Yangchow troops, and has expressed apprehension lest the small Southern force remaining there should be driven by the Yangcbow troops to take refuge in the British concession. Measures have been concerted with the naval authorities to guard against the entry of refugees into the concession.
The most serious efforts of the rebel forces have been concentrated on an attempt to capture the arsenal at Shanghai defended by Admiral Cheng and some 1,500 Northern troops.
A number of Chinese warships have co-operated with the defenders, who have successfully repulsed attacks made on the nights of the 23rd, 24th, 25th, and 26th July. Hunanese and Chekiang troops are said to have lately reinforced the assailants, while two transports containing 3,000 Northern troops and escorted by five men-of-war are due at Shanghai to-day.
Reports which I have received from His Majesty's consul-general point to heavy fighting in this area of operations. Shells fired by the rival forces have fallen both in the international settlement and in the Chinese city, causing some loss of life and considerable damage to property. Owing to nervousness among the European residents of the settlement and to something approaching panic among the Chinese inhabitants of the native city, it was thought necessary to call out the volunteer force on the opening of hostilities against the arsenal. In view of the possibility of a decisive defeat, followed by the dispersal of the Southern troops and an influx of refugees into the settlement, it has been thought desirable to strengthen the civilian force, and parties from the foreign warships anchored in the river have been landed for this purpose. No loss of British lives or damage to British property has been reported to me as having been caused during the various attacks which have been made on the Shanghai arsenal by the rebel forces. I am happily able to report the same absence of casualties from the other areas in which hostilities have been in progress during the past week. One incident only affecting British property has been brought to my notice. On the 26th instant the British steamer "Kutwo" while proceeding down river was fired on by Chinese troops when opposite Chinkiang. In company with His Majesty's ship "Woodcock" the vessel returned to the scene of the
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