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24. In this connection we would point out that the Governor of the Straits Settlements opposed the withdrawal of even so small a force as two Companies of Infantry at the present time, owing to the possible repercussion on the Straits Settlements and Federated Malay States of events in China.
25. In present conditions the only emergency reserve existing in the Far East is in India. The cost of obtaining troops from India is so great that we think this source should only be drawn upon in the last resort. They may not always be available.
ECONOMIC PRESSURE.
26. At an earlier stage of the development of events in China, on our recommendation, the Advisory Committee on Trading and Blockade reported on the value of a blockade of Canton (C.I.D. Paper No. 681-B).
27. Our attention has been drawn to telegrams from China indicating that already the Chinese Nationalist Government is apprehensive in regard to the economic pressure which can be exerted by British banks. We recommend that the Trading and Blockade Committee should be assembled at once to report on all the possibilities of economic pressure on the Nationalist Government of China in the conditions which now exist, whether by international action or, in the last resort, by the British alone. Although British action perhaps deserves examination in case we may be driven to it, we would emphasise the great importance of securing international co-operation in any steps that may be taken to bring economic pressure to hear.
CONCLUSIONS AND RECOMMENDATIONS.
28. Our conclusions and recommendations may be summarised as follows:
(1) The Smaller Concession Ports:-
The protection of the smaller Concessions must, as indicated in our first Report (C.I.D. Paper No. 617-B) devolves upon the Naval Forces. The Navy, however, can only afford protection against mob violence. If it is a question of dealing with military forces evacuation will usually be the only course. (2.) As regards the particular ports, our conclusions are as follows:-
(a.) Hankou and Kiukiang.-Even if these Concessions are returned to their proper owners, we do not recommend any plans based on the assumption that they can be defended against Chinese Nationalist forces or against anything more than mob violence.
(b.) Amoy. The arrangements for the protection of the Concession of Amoy should be left to the Naval Commander-in-Chief in consultation with the Military authorities and the local Consular representative.
(c.) Canton. The problem as to the defence of the Shameen is as set forth in paragraph 10. Its evacuation should be the necessary preliminary to the institution of a blockade. The measures to be taken for the protection of Shameen or for its evacuation, can only be decided in accordance with the situation at the moment and must be left to the men on the spot.
(d) Chinkiang. At Chinkiang the Naval Forces available are sufficient for the maintenance of order, but in the event of the arrival of Chinese Nationalist troops the Concession might have to be evacuated.
(e.) Tientsin.—At Tientsin the Allied Forces are sufficient only for the maintenance of order in times of popular disturbance, and would be in a position of grave danger if exposed to attack by a large organised Chinese force. It is doubtful if they could keep open communications with the Legation at Peking in any grave circumstances. In the event of serious trouble threatening, reinforcements can only be obtained from Japan. Our Naval Forces cannot co-operate, as Tientsin cannot be reached by water.
(3.) In cases where evacuation of Concession ports is necessary, the Navy will undertake the arrangements. The moment of evacuation or of prepara- tion for evacuation must be left to the men on the spot, who will act in accordance with the circumstances prevailing at the moment.
(4.) Shanghai.
To protect the Concessions at Shanghai by military means against Nationalist troops that might be brought against it in the near future, a force of at least one division and one squadron of aeroplanes would be necessary, and would have to be despatched without delay. This should be an international force, with a preponderance of Japanese, and commanded by a Japanese Officer, in view of the fact that Japan alone can provide large forces at short notice. In the present circumstances we must in fact rely primarily on Japan to protect our interests in Shanghai. Owing to the magnitude of British interests, British participation on the scale of a mixed brigade, with a proportion of naval aircraft, although it may be late, is essential. These forces should be additional to those required to control the population.
Such steps for the protection of Shanghai might involve war with China, the consequences of which cannot be foreseen.
(5.) Military Reserve in the Far East.
The present situation clearly shows the necessity for a strategic military reserve in the Far East, which, we think, should be at Singapore.
(6.) Economic Pressure.
It is recommended that the Advisory Committee on Trading and Blockade should be assembled at once to report on all the possibilities of economic pressure on the Nationalist Government of China, whether by international action or in the last resort by the British alone.
(7.) General.
The importance of securing international co-operation in any action against China, whether economic or military, cannot be too strongly emphasised.
2, Whitehall Gardens, S.W. 1,
January 11, 1927.
BEATTY.
G. F. MILNE. H. TRENCHARD.
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