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PUBLIC RECORD OFFICE

Reference :-

TLC.O.882/11

PUBLIC RECORD OFFICE, LONDON | ALLY WITHOUT PERMISSION OF THE

BE REPRODUCED PHOTOGRAPHIC- COPYRIGHT PHOTOGRAPH—NOT TO |

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in the enclosed* report from the Hongkong, Canton and Macao Steamboat Company. The Companies concerned pointed out that the immediate loss of revenue, though extremely serious,

was by no means the only factor in the case. The strike of 1929 showed the power of the Seamen's Union and that power has been enormously increased by the prominent part played by this Union in the rise of the Nationalist Government. At the same time the Canton Soviet had plainly intimated that it would not take any steps to suppress picketing by this particular Union. The Companies, therefore, could entertain no hope of any early victory over the Union, and in the meantime rival companies were running unmolested and undermining their share in the It must further be borne in mind goodwill of the river traffic.

that about 70 per cent. of the shareholders of the Hongkong, Canton and Macao Steamboat Company are Chinese and, although many of these might relish surrender as little as their British col- leagues, the Directorate would perhaps, if the struggle had con- tinued, have been faced with a demand for the transfer of the Company's fleet to the Chinese flag..

4. For these reasons a subsidy from Colonial funds offered no

real solution of the problem. I then endeavoured to arrange that the profits of the unmolested vessels of the local Chinese com- panies should be pooled and a share allotted to the British Com- panies, the proprietors of the former having professed a wish to break the power of the Union to which, however, they had already surrendered. Conferences to this end started hopefully. but soon broke down; and in any case this arrangement still left untouched the problem of the goodwill.

5. I also considered the possibilities of legislation, giving power to exclude from the port all vessels in whose favour dis- crimination was being exercised by the Canton Seamen's Union. But, apart from the possible complication with foreign Powers which such a course might have involved, it was evident that the injury to the Colony arising from a fresh stoppage or partial stoppage of trade with Canton would be grave in the extreme, while the prospects of any real injury to the Seamen's Union by means of such legislation were, at the best, poor.

6. I therefore decided with great reluctance, after several ful! discussions both in and out-of Executive Council, that it would be wiser for this Government to take no further part in the struggle, and I accordingly caused the Companies concerned to be informed that the Government could offer them no advice as

to their attitude, and that they must act as seemed to them best. 7. In connection with enclosure No. 8t I have to invite your attention to the Sessional Paper enclosed in my despatch No. 404 of the 24th September. The anti-British outburst of Mr. Sun Fo recorded in that paper shortly preceded the announcement by the Canton Government of its intention to remove the boycott,

† Not reprinted. C 20108:26; not printed.

• Not printed.

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and it is, perhaps, not without significance that Mr. Sun's denunciation of the 21st December follows closely on the friendly conversations between His Majesty's Minister and Mr. Eugene Ch'ên, with whom his political relations are said to be strained. The speech may have been merely an ebullition of personal spleen against Great Britain, or it may have been a carefully calculated move designed to provide, in the shape of "public opinion," an excuse for retreating from any rapprochement achieved.

I have, &c.,

(30) Wt. 24504/1591 60 6/27 S.E.B. Ltd. Op 54

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C. CLEMENTI,

Governor, &c.

C