د
€
necessary If they can, we might consider at once pressing for this being done. Nationalists are reported to have railway loan 5,000,000 dollars in Chinese banks on their security but there is no reason why we should allow this money to be used for further military operations when they have thrown off all semblance of anything but open hostility to us. In this connection we have today reports of Kiukiang Consulate being occupied and looted, and of Chinkiang Consulate also being seized".
It has to be borne in mind that the impounding of the
proceeds of the surtaxes would probably react immediately
on General Chiang Kai-shek's position and would probably
impair his financial resources. We venture, however, to
recommend that the Secretary of State for Foreign A ffairs
should consult the Consul-General at Shanghai on Sir Miles
Lampson's proposal as quoted above, inviting his views
at the same time on the bearing of the proposed action
on Chiang Kai-shek's position.
The third possible sanction is the destruction
of the Dane Island and Bogue Forts vovering the main
approaches by water to Canton. This course was
recommended by the Governor of Hong Kong in a telegram
dated March 26th, and was concurred in by the local
Naval and Military authorities. In our Report of
March 29th (C.0.S. 69) we rejected the proposal on
grounds explained in the following extract.
TY
This operation would involve the use of military forces and the occupation of Chinese territory. Insufficient troops for the purpose are available at Hong-Kong, and those surplus to the garrison of that fortress form part of the Shanghai Defence Force and ought not to be committed to any other operation. In fact, generally we are opposed at this juncture to any action which would involve an additional commitment of unknown scope in China involving the land forces."
-6-