CO537-3707 — Page 77

you would also tell us whether, if the

ultimate decision were to be that we should

not go either to Court or arbitration, you

would favour a compromise solution (and,

if so, which of the several which have been

suggested) or whether you would favour the

letting

alternative of letter sleeping dogs lie and

doing nothing at all, a possible course which,

if you remember, was discussed when you and

Stevenson came to see us in September and

was again referred to at our meeting on the

26th October.

(287)

5. We have not yet had a reply from the

Governor to Puskin's telegram No. 1115 of the

(294)

30th October, but it is not essential

to wait for this. It seems to us that we should

now inform the Governor of the ultimate

decision about the International Court or arbitration

(it is not yet taken of course, but for the

purpose of considering our future course of action,

we can perhaps assume that it will be against

going to Court or arbitration), at the same time

giving him an indication of our views as to

the remaining choices open to us,

6. We realise that it is perhaps impossible

to formulate a view on this question in the

present uncertain state of affairs in China and,

if indeed you feel this is so, you will no doubt

and

tell us the present state of affairs (which

is in fact a state of doing nothing) will continue

for the time being (unless the Chinese think otherwise!).

But