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On the basis of this agreement some sort of
British service with Canton has been maintained from Hong Kong, but it has been subject to frequent interruption either by reasons of military operations in the area, by the outbreak of cholera in Hong Kong, or by the dispute over the pilotage fees, to which reference is made below.
In March 1940, the Japanese authorities unilaterally proposed an extension of the agreement as a first step towards the opening of the river to normal trade. Under this they offered to permit the loading of cargo on the British vessels covered by the Blunt Okazaki Agreement on certain conditions
that
partentowin
that pilot fees should be paid at the rates applicable in Japan. These were regarded on the British side as being contrary to Treaty provisions, and the 1868 Pilotage Regulations with China. They were in fact about seven times higher than these rates. Moreover, they were regarded as discriminatory in that they were only applied to vessels over 500 tons; the Japanese Government chartered vessels were exempt from them; and that shipping to Wangpoa, where the Japanese were believed to be constructing consideráble shipping works outside the control of the Chinese Customs, ware excluded. Further grievances were felt in that the Japanese were insisting on the lending of cargo through lighterage organisations belonging to a local Port Organisation set up by the Japanese themselves (i.e. that in fact the Japanese were establishing a monopoly), and through Japanese insistence on stationing armed guards on wharfs which were British property.
Messrs. Butterfield and Swire, the owners of the "Fatshan" the British ship which was making the journeys to Canton under the Blunt - Okazaki Agreement, were not prepared to pay the pilotage fees demanded by the Japanese authorities, and the Japanese naval authorities for the month of August detained the "Fatshan" at Canton. Agreement on this point was reached by Messrs. Butterfield and Swire paying the full pilotage sums demanded under piletage, and pending discussion between the British and Japanese authorities on a final settlement of the pilotage fees.
No agreement has been reached on what constitutes a "reasonable" pilotage fee, and Messrs. Butterfield and Swire have now protested that the alleged opening of the river is purely farcical, and that they for their part are not prepared to agree further to their vessel, the "Fatshan", calling at Canton, saying that they have allowed it to do so so far only for the purpose of keeping the British flag showing there.
The Acting Governor of Hong Kong has given as his view that the present service, except for slight convenience to a few passengers who must otherwise travel via Macao, is of little benefit to Hong Kong, and certainly not of such benefit as to allow us to waive the principles of general importance involved in the Japanese insistence on coupling the negotiations on pilot fees with the lighterage arrangements which would sacrifice all independent action on our part in the handling of cargo if and when the existing prohibitions are removed.
The
Messrs. Butterfield and Swire have suggested that our remedy lay in closing Hong Kong to Japanese tonnage as the Japanese have closed the China ports to British. Acting Governor of Hong Kong's view is that such a step is impossible under Article No. 6 of the 1911 Commercial Treaty with Japan, and that in any case it ignores our need of Japanese ocean tonnage, and the remedy which he and the Consul-General at Canton suggest is that the Blunt Okazaki Agreement should be suspended by mutual consent. This has
been
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