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It has made them feel that things will not be allowed to go on

as they are and that the Government must make another effort to reach a settlement, or worse may befall.

I have been to see Eugene Ch'ên two or three times at his request, and I came to the following arrangement with him this morning :-

1. He is to write me a private letter undertaking that the Canton river and the British wharves will be policed by This will mean Chinese police and order preserved. (although he will not say so in so many words that the strike pickets will not be allowed to function on the wharves or the river, and that they will not be permitted to interfere on the river with the carriage of passengers and cargo to or from the British steamers.

I will reply, also in a private letter, that on the under- standing that the above undertaking is implied in his letter. the recent British naval activity in Canton will cease tem- porarily. I shall add, however, that liberty of action is reserved in the event of the undertaking not being carried out or the boycott negotiations not being resumed within a reasonable time. The Senior Naval Officer concurs in the above.

2. I am to try and secure an early reply to the international inquiry proposal and will telegraph to London for that pur pose.

3. On the receipt of the above, the Minister for Foreign Affairs undertakes to give an immediate answer to our inquiry counter-proposal and to our industrial loan proposal.

4. If both of these are unacceptable (as they will be), he promises immediately to make further practicable sugges tions for the resumption of the boycott negotiations on other lines.

I have not yet received his letter, and until I do, I am not going to telegraph or take any step whatsoever, as he may let me down However, he seemed genuinely anxious to get on with the busi ness, and really afraid that some incident in connection with the gunboats might intervene to spoil it all.

I also shall not be sorry to get the gunboats away from the front reach again. It has been all right so far, but somebody might want to start something by sniping at them, and it is rather like sitting on a powder magazine.

The great thing is to get the negotiations going again and. we achieve that, I shall feel that I have accomplished my original object in suggesting these naval measures.

I am keeping no copy of this as it is Saturday afternoon and my staff is away, so please regard it as a private letter. I thought you would like to know without delay how things are moving.

The Wanshien battle was a dreadful affair, with a ghastly loss

of good lives, all about nothing. It does not so far seem to have had any effect down here,

Yours, &c.,

J. F. BRENAN.

P.S.-Will you please explain things to Admiral Stirling.

ENCLOSURE 2 IN NO. 32.

Ministry of Foreign Affairs, Canton.

DEAR MR. BRENAN,

11th September, 1926.

It is necessary as well as highly expedient that the unusual situation created by the British naval action of 4th September should be terminated, and control taken by the Chinese police authorities.

This can best be done by the withdrawal of the British gun- boats from the wharves of the Longkong, Canton & Macao Steamboat Co., which are to be guarded and protected by Chinese police, and the cessation of British naval activities in the river. which is to be patrolled by extra Chinese police in order to pre-. vent breaches of public peace and order.

ENCLOSURE 3 IN NO. 32.

Yours, &c.,

EUGENE CH'EN.

H.B.M. Consulate-General, Canton, 12th September, 19267

DEAR MR. Ch'en,

I beg to acknowledge the receipt of your letter of 11th September, stating that the wharves of the Hongkong, Canton & Maçao Steamboat Co. are to be guarded and protected by Chinese police and that the river is to be patrolled by extra Chinese police in order to prevent breaches of public peace and

order.

I take this, in conjunction with our conversation of yesterday, to mean that the boycott pickets will not be allowed to re-occupy the wharves or to function on the river, and in particular that they will not be permitted to interfere with the carriage of passengers or cargo to or from the British steamers.

1

PUBLIC RECORD OFFICE

Reference :-

TREENICO.882/11

PUBLIC RECORD OFFICE, LONDON

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