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PUBLIC RECORD OFFICE

Reference :-

TPELLICO. 882/11

ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC- COPYRIGHT PHOTOGRAPH—NOT TO

| PUBLIC RECORD OFFICE, LONDON

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in Hunan; that Marshal Sun Ch'uan-fang has at last decided to take the field against the Canton armies for the sake of protecting Kiangsi and Fukien Provinces; that General T'ang Chi-yao from Yunnan Province in the west is invading Kuang-hsi Province; and that General Ch'an Kweng-meng is planning diversions in the East River valley and in the south of Kuang-tung Province. The military situation seems, therefore, to have taken a turn un- favourable for the Canton Government, although the result can- not yet be foreseen; and, if the Canton armies meet with disaster in the field, it is probable that the attitude of the Canton Govern. ment with respect to the boycott negotiations will become for more conciliatory than it was during the recent Conference at Canton, when Mr. Eugene Ch'ên believed his Government to be on the eve of epoch-making victories. Accordingly the prudent course for us would be to play a waiting game for at least two or three weeks, and to be guided in our further action by the progress of military events.

4. As you are aware, the Conference at Canton has been adjourned pending a reply from the Canton Government on the British loan proposal, and a reply from His Majesty's Govern- ment on the Cantonese enquiry proposal. There appears to be no good reason in existing circumstances why His Majesty's Government should present its reply before the Canton reply is received. On the contrary, it will be an advantage to us to know what is the nature of the Canton reply to the loan proposal before 'framing our own reply to the enquiry proposal: for it is possible that the Canton reply might be such as to obviate the necessity of our making any reply at all. The Executive Council, therefore, unanimously recommends that our reply to the enquiry proposal should be delayed for two or three weeks, by which time the result of the military operations now in progress should be known.

5. We have carefully weighed the observations of His Majesty's Government, conveyed to me in your telegram of the 4th August,* that delay is more likely than not in the end to commit us to accept an enquiry, since we could hardly refuse after some months' interval on grounds which would have been obvious at the outset; and further that, if the enquiry is to be accepted in principle, it would clearly be better tactics to accept at once with- out reluctance rather than after any appreciable delay. But we consider that this objection does not apply to a delay of weeks only, not of months: and also that there is no obligation on us to be more speedy than Canton in our reply.

6. If, meanwhile, the Canton Government should reply to our loan proposal and a prompt reply from us to the enquiry proposal seems called for, then we agree that our answer should be on the lines indicated in your telegram of the 4th August, but we two further stipulations, suggest for your consideration namely:

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•C 14882 26; not printed.

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(a) That both His Majesty's Government and the Canton Government should cach deposit in advance in an agreed bank the full estimated cost of the enquiry: and

(b) that the place at which the enquiry is held should not be Canton, but should be in neutral territory (say) Macao.

7. Unless the former stipulation is made, it is more than likely that Great Britain alone will be left to pay all costs of the pro- posed international enquiry, no matter what decision on the ques- tion of costs may be given by the commissioners who make the enquiry. Unless the latter stipulation is made, the commissioners would sit in Canton where the atmosphere would unquestionably be such as to preclude all possibility of conducting a satisfactory enquiry. The commissioners would, of course; have to view the scene of the Shakee-Shameen incident: but Canton is very easily reached from Macao; and, while there could be no objection to the commissioners themselves visiting and spending as much time as they thought fit in Canton, there would be very grave objec- tion and even risk, if witnesses, whether Chinese or non-Chinese, favourable to the British case, were required to give evidence publicly in a yamên in the middle of Canton.

8. This despatch confirms and amplifies my telegram to you of to-day's date.* It has been seen in draft by Mr. Brenan, who concurs in it.

C 18772/26.

I have, &c.,

C. CLEMENTI,

Governor, &c.

No. 31.

The Governor of Hongkong to the Secretary of State for the Colonies.

Secret.

SIR,

(Received 5th October, 1926.)

Government House, Hongkong, 2nd September, 1926.

In continuation of my secret despatch of the 23rd August, t I have the honour to inform you that the question of the reply to

* C 15607/26; not printed.

† C17870 26; not printed.

t