CO885-11 — Page 123

PUBLIC RECORD OFFICE

ཀ །

Reference :-

C.O.882/11

PUBLIC RECORD OFFICE, LONDON

ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC-

COPYRIGHT PHOTOGRAPH-NOT TO

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funds, and further agrees to make a loan, upon terms hereafter to be settled, for the development of the port of Whampoa. Moreover, if the Canton Government at once puts an end to the boycott and to all other anti-British manifestations throughout the territory which it controls, and if it assumes full responsibility for all liabilities which have hitherto devolved upon the Chinese Government in respect of the territory now controlled by the Canton Government, His Majesty's Government will be prepared to give the Canton Government both de facto and de jure recogni- tion in the area over which it actually exercises undisputed authority."

11. As regards a grant from Boxer Indemnity funds for con- structing the loop-line railway at Canton and as to the suggestion that the Hongkong Government should make a moderate loan for the development of the port of Whampoa, I refer to your You will see from the telegram* to me dated the 23rd July. enclosed proceedings of the Boycott Conference that the British delegation has already made an offer of a loan of about $10,000,000 for the development of the port of Whampoa condi- tional upon the construction of the loop-line railway at Canton.

12. As regards recognition of regional Governments in China, this is a matter upon which I have already expressed my views fully in my secret despatch of the 27th June; and a similar pro- posal was also made on the 23rd and 24th June at a meeting in Shanghai by the heads or local managers of all British concerns in China and Hongkong, with which the members of the China Committee in London are associated, and it was telegraphed from Shanghai to the China Committee on the 28th June. Mr. Bernard, head of the firm of Messrs. Jardine, Matheson and Com pany in Hongkong, and now acting as unofficial member of the Hongkong Executive Council, was present at this Shanghai meeting as representative of British merchants in Hongkong. I and my Executive Council fully understand the difficulties involved in the recognition of the present Canton Government and of other regional Governments in China, but we agree in considering those difficulties to be less formidable than are the palpable dangers due to maintaining the fiction that a central Chinese Government exists at Peking.

13. The effect of a counter-proposal such as that above sug- gested will depend very largely on the degree of success or failure attending the Cantonese and their allies in Hunan. But I believe that such a counter-proposal would be very tempting to the present Canton Government and I further think that, if accepted and carried into effect, such a policy would be beneficial to British trade in South China.

14. This despatch amplifies and confirms my telegram of the 26th July, which was unanimously approved by the Executiv Council.

• Not printed.

† C 15072 26; not printed.

C 14832-26; not printed.

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15. Since writing the preceding paragraphs, I have received a copy of Sir R. Macleay's telegram No. 255, dated the 26th July. addressed to the Foreign Office, stating that he had received a memorandum from the Wai-chiao-pu in Peking, dated the 23rd July, in the following terms: " Newspaper reports state that in Hongkong-Canton negotiations British are disposed to accede to demand of Kuang-tung for recognition as an independent Wai-chiao-pu has, therefore, the honour speci- government. fically to declare to His Majesty's Minister that Central Govern- ment will entirely decline to recognize any arrangement made between Hongkong and Canton other than an amicable settle- ment of anti-British questions, which injures rights of China as a whole. I quite understand the alarm of the War Lords who rule Peking at realizing that His Majesty's Government and probably other foreign Powers also may at long last decide to abandon the fiction of there being a central Government of China and that, therefore, the occupation of Peking may not in future give the occupant control over the general revenues of China. But the reply to these War Lords is surely-

(a) that by its own admission the Peking Government is unable to exercise any control in Kuang-tung, and

(b) that, if China should hereafter again be unified under a central Chinese Government, which exercised undisputed control over Kuang-tung, the Canton Government would ipso facto be merged in such a Government, and there would be then no need for direct diplomatic intercourse between His Majesty's Government and the Canton Government.

I have, &c.,

C. CLEMENTI,

ENCLOSURE 2 IN NO. 29.

NOTES OF PROCEEDINGS, No..4

Governor, &c.

The fourth meeting was held at the Foreign Office at 10.30 a.m.

on Wednesday, the 21st July. Arrangements as before.

Mr. Ch'ên stated that he proposed to read a statement and an Aide Memoire. He then read the statement, a copy of which is attached.

At the conclusion of reading the statement, the Consul-General asked whether Mr. Ch'en proposed to publish, and Mr..Ch'ên replied that he proposed to publish all three statements together.

The Consul-General (Mr. Brenan) asked that the British dele- gation might see this last document before publication, not for

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