Encl. No. 1.
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Communist' gangs out of their refuges in the
mountains to rob and murder the country folk; in
the citics too, much propaganda is being carried
on under the surface; many essential public works
exist only on paper while the small resources
available are too often diverted to purposes
more ornancnted than useful. The military are
still living on the country and attempts to unify
taxation and pass all receipts and payments
through the Central Treasury have broken down;
The organisations, which by the use of every form
of intimidation maintained the Anti British
boycott long after its real force was spent, still
exist ready to resume their activities at the
first opportunity; The Government while clearly
disapproving is helpless to interfere with the
operations of the Japanese Boycott Committee
whose members are busy enriching themselves in
the old familiar manner. On the balance however
there seen to be grounds for optimism which
will be strengthened should Marshal Li Chai-sum
decide to prolong his stay in the South. I
enclose a newspaper report of one of his recent
specches the good sense and moderation of which
are much to be commendoa.
4.
In paragraph 7 of my despatch of
30th November, 1928, I referred to the activities
of the Seamen's and Mechanics' Unions in
absorbing all lesser organisations which could by
any stretch of imagination be included under
those two heads. The process has since
continued though not entirely without opposition.
Meanwhile the Seamen's Union has officially
recognised