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thus in actual fact strengthening their own position and corres- pondingly weakening ours, all in a very pleasant odour of sanctity.

Until, therefore, the Japanese Authorities are prepared to

enter into bilateral discussion with our authorities, we do not

propose to avail ourselves of their "permission" to carry cargo in

"Fatsian", nor indeed to make any alteration in present procedure.

We realise that this may perhaps be a little galling to British

merchant interests at your port, but the question is one which does

not admit of compromise, for restrictions agreed to now are only

too likely to become permanent.

In that connection, you had better keep it firmly fixed in

Mr. Toller's mind that any weakness displayed here may have damaging

repercussions on the ultimate settlement of the Yangtsze question,

and, although we can hardly tell him his own business, he would be

well advised to keep Shanghai closely posted of developments.

e should be rather surprised if the Japanese go ahead with

their ideas as regards their own ships before they have come to

terms with the Colonial Government, but if they do by any chance

load cargo for Hong Kong, please wire at once, and we will endeavour

to get discharge prevented.

Yours faithfully,

p.p. BUTTERFIELD & SWIRE

Agents, China Navigation Co.Ltd.

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