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foreigners in Canton. I have no doubt, however, that if the Cantonese thought they could push us out of the concessions without too much difficulty the mob would be encouraged to make the attempt. It is only the fear of the consequences which prevents the attempt being made. The Nationalist Government cannot run the risk of having their base blockaded whilst their northern campaign is still in the balance.
4. It is obvious, however, that this is neither a safe nor a desirable basis on which to continue the possession of Shameen. It was originally the desire of the Chinese authorities themselves that foreigners should be set apart in concessions. Their residence in the cities was strongly resented. In Canton it was for a long time. absolutely prohibited, and the seclusion of the "foreign devil" in special areas was considered by the Chinese as the best way of dealing with an apparently necessary evil. Moreover, in order to secure this seclusion, they were willing to allow the foreigner to have municipal control over the area which had been set apart for him. The Chinese attitude of mind on the subject has undergone a great change in recent years. In Canton they no longer object to foreigners residing in the city. In fact a number do reside there and in the suburbs, but, on the other hand, the Chinese now strongly resent foreign municipal control over any part of Chinese soil as an infringe- ment of their country's sovereign rights. For this reason they are determined to regain possession of the concessions, and, as things are shaping at present, it looks as though they will succeed, in one way or another, before very long, at all events so far as the smaller places are concerned.
5. To return to Shameen, although, owing to the fact that it is an island, it could probably be held against a mob, or perhaps even for some time against a military attack, it is clear that if the Nationalist Government are determined to resume control over the concession area they could, by more peaceful means, speedily make our continued possession of the island impossible, or at least unprofitable. It would not be difficult to reimpose the boycott and blockade of Shameen in a more stringent form than before. The electric light, which is derived from a Chinese company in the city, could be cut off. This was not done during the recent troubles, and although there is an emergency dynamo in the concession, I am told that it would only be sufficient for street lighting. The island has its own waterworks, but a few shots through the water- tower would put it out of commission and we should be reduced to drinking boiled river water, which near Shameen is practically liquid sewage. Moreover, whereas during the last boycott British subjects were permitted to move freely about the city and were so enabled by surreptitious means to do a certain amount of business, it could be made dangerous for them to leave the shelter of the island, and their trade would then really come to an end. All this could be done without any overt act on the part of the Canton Government, who would, as before, assert that they were unable to suppress a patriotic inanifestation of national feeling. A mob attack repulsed with bloodshed would almost certainly bring about such a state of affairs.
6. If, then, the Chinese are determined to get back the concessions, their wishes will have to be met sooner or later, and I venture to suggest that it is better to start negotiations voluntarily to this end whilst we are still in possession, and so get better terms than we could obtain after we have been driven out. In this connection please see Foreign Office telegram to me No. 1 of the 15th January. As such negotiations are contemplated in your telegram to the Foreign Office No. 6 of the 3rd January, I presume that you will wish to have my views on the extent to which our control over the British concession in Shameen can safely be relinquished to the Chinese authorities.
7. Full information regarding the origins of the concession and the title by which we hold it are in the possession of the Legation and the Foreign Office, and it is not necessary for me to go over that ground. It may be useful, however, to explain once more that Shameen is a small flat island, about a mile and a quarter round, bounded on one side by the river and separated from the mainland on the other by a creek about 100 feet wide. A plan of the island is enclosed.* The British concession occupies four-fifths, whilst one-fifth at the eastern end constitutes the French concession. The two areas are only divided by an imaginary line. The island is rather like a London park, with its cement walks, avenues of trees and grass lawns, although of course it has more houses. It is joined to the mainland by two bridges with steps which prevent the passage of wheeled vehicles, and, in fact, no wheeled vehicles, except bicycles, are allowed on the island by the concession bye-laws.
8.
There are a number of fine buildings, including banks, offices and residences, and there are several warehouses, mostly belonging to the banks, in which raw silk in
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large quantities is deposited against loans. At the present moment there is between 8,000,000 and 9,000,000 dollars' worth of silk on the island. There are no industrial concerns beyond a small Boda water factory belonging to A. S. Watson and Co. (Limited), and no Chinese other than the servants and employees of foreigners are allowed to reside in the concessions. Chinese, however, can come in and out freely, and the restrictions on their use of the bund and the bund seats have been tacitly dropped since the boycott without any noticeable inconvenience to the residents.
9. I enclose a memorandum supplied by the Municipal Council giving detailed figures regarding the population and value of property in the concession and the personnel of the administration. There is a total population of 1,230, of whom 116 are British and 126 are Japanese. The total value of land and buildings is about 19,536,405 dollars, of which 9,753,170 dollars is held by British subjects, 1,708,075 dollars by Japauese and 1,041,788 dollars by Americans. The administrative machine consists of five counsellors, who are local merchants and give their services gratis, with a staff of one paid British secretary and thirty-one Chinese employees, whilst the police force comprises one English captain superintendent, nineteen Indians and twenty-three Chinese.
10. It will thus be seen that, while the British concession on Shameen contains valuable property, its administration is not a very large or complicated affair, and that it is not beyond the ability of the Canton Government, who after all administer a large city not too badly, to take it over and run it, if they wish, in a manner sufficiently acceptable to the foreign residents. The danger would not be, as in Shanghai, a general deterioration all public services, because there is none to speak of on Shameen, and the substitution of Chinese for foreign police need not, I think, cause any serious alarm so far as the protection of life and property against ordinary crime is concerned.
11. Provided satisfactory arrangements can be made for the exchange of Chinese perpetual leases for the existing Crown leases, it seems to me that the chief dangers to be apprehended after the surrender of the concession are the imposition of heavy taxation on real property and the exposure of the residents to mob violence in times of anti-foreign disturbance. As regards the former, the Canton authorities are now demanding the re-registration of all title deeds for land outside the concession, for which a fee of 2 per cent. ad valorem is charged, and thereafter it is their intention to collect an annual land tax of considerable amount. I have not yet got full particulars of the scheme, but hope to obtain them shortly. This procedure would also be applied to concession properties once they came under Chinese control, unless the matter were made the subject of special agreement at the time of the surrender. Moreover, in course of time, an attempt would be made to levy business and other taxes from which foreigners living in concessions are now free, but I gather from your telegram to the Foreign Office, No. of the 3rd January, that the subjection of British subjects to Chinese municipal taxation, if regularly imposed, is in any case contemplated. Nevertheless, I think an effort should be made to secure a very definite understanding regarding the taxation to be levied in the concession area, as otherwise property owners will be subjected to all sorts of extortion in legal guise. On the other hand, it is thought by the well-informed that land values in the concession will increase as soon as Chinese are allowed to buy and a free market is opened to property owners. Land on the Chinese bund adjacent to the concession is worth more than on Shameen.
12. The question of mob violence in times of trouble is also a serious one, but now-a-days it is a moot point whether in an anti-foreign agitation it is safer to have a concession or not. The concession, it is true, provides a place which can be defended for a while against the mob whilst women and children are evacuated, but on the other hand it forms a target for attack and is a standing provocation to all the agitators and extremists who preach the abolition of foreign privilege. Moreover if, as at Hankow and in a lesser degree in Canton, many of the foreign residents live outside the concession, the use of firearms in the defence of the latter imperils the lives of the people outside. Questions of national prestige also invest the protection of these areas with an importance unwarranted, in some cases at least, by their intrinsic value.
13. I have long been of the opinion that the smaller concessions are a danger in the present state of Chinese feeling, and that we should be wise to return them to Chinese control. If this were done voluntarily, it would be easier to stipulate for sufficient foreign, and preferably international, participation in the municipal govern- ment to prevent the undue misappropriation of the municipal revenues, and to secure such other safeguards as may be considered essential. Things would not be so
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