to recognise agreements entered into with the present
Chinese Government. Even in this case of course we
should be in a better position both morally and legally
if we had, in fact, got an extension of the lease from the
present Government. It was very possible that the
present did not offer a good chance of approaching the
Chinese Government, but at least they felt it was more
favourable than any other time was likely to be.
He felt it was important, however, that up to
now we had received no suggestion from the Chinese
Authorities that our lease should be extended in return
for a large loan or grant, though they had put forward
many other schemes, some of them quite fantastic, for
giving us some return for such a loan or grant. It was
probable that such a possibility had occurred to them,
and he could not but feel that it was significant that no
mention of it had been made so far.
An extension of the lease for such a large sum
would of course be most unfavourably received by the
Japanese, as had been shown when the recent currency
loan to the Chinese Government had been under discussion.
Mr. Cowell asked whether the reason for the
Cabinet's refusal to grant that loan had been the fear of
the Japanese reactions, or the fact that we might have
been making a bad bargain.
Sir John Brenan replied that
it was difficult to say. Mr. Wardley pointed out that
the wording of the Cabinet resolution laid emphasis on
the possibilities of Japanese retaliation rather than on
other grounds, but it was felt that, particularly in view
of the memorandum submitted to the Cabinet by the
Chancellor of the Exchequer, there had been other grounds
for the Cabinet decision, e.g. the fact that we might be
making
5.