- 5 -
to stave off at the moment any further direct action by the British Navy in Kuangtung, as the military situa bior of the Canton Soviet during last September was very precarious (see paragraphs 5-8 of my secret despatch of
the 25th September, 1926). But his ulterior object was more subtle and is now equally clear. Hong Kong had
refused to pay blackmail to the Canton Strike Committec,
but could not His Majesty's Government be induced to
buy off the boycott in another way by subjecting British
subjects to taxation imposed by the Canton Soviet for
the professed purpose of liquidating the boycott? And
might not dissension be provoked between Great Britain
and other Foreign Powers by arranging that an anti-
British boycott should be bought off by means of taxa--
tion to which not British subjects only, but all foreign
trade would be liable? And might not such taxation be
so camouflaged as to disguise the defiance of treaty-
rights which it involved? And might it not also be so
contrived as to provide the Cantonese revolutionary forces with the sinovs of war, while denying such re-
sources to their northern enemics? Unhappily all these
purposes were successfully achieved by means of the
"special consumption taxes" on imports.
5.
Those taxes were precisely equivalent to the
surtaxes set out in articlo IV of the Nino Power Troaty
signed on the 6th February, 1922, at Washington, the
grant of which was already four years overduc. But the
Washington Treaty contemplated the collection of those
surtaxes by the Chinese Maritime Customs throughout. China, not by the regional authorities of a part of China only, and it also laid down that a Special
Confcronco,
115