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PUBLIC RECORD OFFICE

Reference :-

TITLICO. 882/11

PUBLIC RECORD OFFICE, LONDON

| ALLY WITHOUT PERMISSION OF THE

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firm my telegram of the 23rd October.* It will be seen from this telegram that there are many indications of a reviving trade with Kwang-tung Province. There is, as must be expected, a con- tinued reluctance on the part of the Chinese merchants to under- take any large business enterprise until they are quite sure that it is safe for them to do so. As, however, their interests lie in the direction of re-establishing trade, it is to be hoped that they will soon regain confidence. At any rate there is an optimistic feeling abroad and it seems wise policy to assume that the boy- cott is really lifted.

2. I enclose reports for the weeks ending on the 10th and 17th October from the Assistant Superintendent of Police, New Terri- tories, regarding the position on the frontier. The report of the 17th October, it will be seen, is very satisfactory.

3. I enclose also copies of statistics of passengers and cargo carried by the s.s. Lungshan," of the Hongkong, Canton & Macao Steamboat Company, Limited. These reports bear out the statements in iny telegram concerning passenger and goods traffic by the river boats. Statistics are not available of the numbers of passengers and the amount of cargo carried by the Chinese river boats which are again on the run, and this must form a large pro- portion of the total traffic.

4. On the 16th October, the Superintendent of Imports and Exports reported that practically no cargo was coming from Canton except fish and vegetables, and that no cargo was being shipped up. On the 22nd October, he reported the arrival of a consignment of tobacco from Canton, and also the arrival of transhipment cargo intended for Singapore, which up to the last few days would certainly not have come to Hongkong. Messrs. Jardine, Matheson & Company's representative arrived from Canton on the 22nd October, and reported that there was a demand for British picce-goods in Canton and that small con- He considered that the signments were being accepted there. prospects for the re-establishment of trade were good.

5. The Manager of the Asiatic Petroleum Company in Hong- kong states that trade in oil is being re-established with Canton and the outports, more particularly the latter, as agents who formerly obtained their supplies through Canton seem anxious to obtain them direct. In some of the smaller out stations, where machinery for the special tax on oil had not been set up, Chinese were afraid to take delivery of any oil lest the Government should punish them for breach of the new regulations. He was, how- Former ever, hopeful that conditions would steadily improve. employees were going back to their posts unconditionally.

6. Another encouraging sign is that the Chinese authorities are making arrangements for the resumption of through trains on the Kowloon-Canton Railway. Objections were raised by Canton to the division of fares on the scale laid down in the

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working agreement, but it has been decided to commence the service and to reserve question of division of fares for discussion later.

7. I enclose copy of a minute* by the Harbour-master concern- ing the re-opening of communications with places in the delta other than Canton. This traffic has the additional difficulty of contending with pirate gangs which are very active in parts of the delta through which these ships pass. The naval authorities are giving every possible assistance by arranging convoys and naval patrols so as to reduce the risk of piracy to the minimum.

8. The position in Swatow is not so good, as the agitators do not seem to have been brought under control to the same extent as in Canton. I enclose a copy of a telegram* from the Consul, Swatow, to the Consul-General at Canton which indicates the position obtaining at Swatow on the 19th October.

9. I enclose a copy of a letter from the Canton representative of Messrs. Harry Wicking & Company, a well-established Hong- kong firm, which is much less optimistic in the view put forward as to the removal of the boycott. It is impossible as yet to decide which view is most likely to prove correct.

10. In my despatch of the 16th October‡ I enclosed a copy of the speech which I delivered at the Legislative Council on the 15th October. I now enclose a copy of a translation* of a lead- Mr. de Kat ing article in the Min Kuo Jih Pao, of the 20th October, which would appear to be inspired by the Russians. Angelino, a Dutch official, who was passing through Hongkong on his way from the Extraterritoriality Commission in Peking, paid a visit to Canton in the beginning of this week and inter- viewed Mr. Brenan and Mr. Eugene Ch'ên. Mr. de Kat's view is that the trouble is by no means over and that the present cessa- tion of active measures against the British is due merely to the fear that any incident might lead to a naval blockade of Canton by the British, and does not represent any true change of policy towards the British. He holds that the Russians, so long as they continue to have influence in China, will do all they can to extend the boycott as far as they can to the rest of China, and to the goods of other western nations and of the Japanese, with the object of destroying all other international trade in China and thereby making it a preserve for Russian trade. So long, there He considers, fore, as Russian influence remains paramount there will be no return to a friendly policy with other Powers. further, that the real problem centres in Moscow, and that the anti-British boycott of the past eighteen months is merely an incident of a much wider movement.

11. Mr. de Kat's view may well be true; but it does not, of course, follow that the Chinese will indefinitely allow themselves to be influenced to the extent desired by the Russians when so many of their own interests are directly contrary to the policy which the Russians would desire to impose on them. It is also

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