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that there will be acute financial trouble among the Hong Kong Chinese; and although I should use the trade loan as far as possible to save any reputable business from bankruptcy, the trouble might possibly be too widespread to be successfully alleviated by such means. I need not say that such a crisis would be direct encourage- ment to the Strike Committee and to the Bolsheviks to tighten their strangle-hold on Hong Kong, and to demand terms of settlement more extravagant than are likely to be put forward at present.
6. The chief benefit to be hoped for from a settlement is the resumption of normal trade relations between Hong Kong and Canton. The boycott has shown that it is possible for Canton to make itself to a certain extent independent of this colony; and the longer the boycott lasts, the greater is the probability of a permanent loss of trade to Hong Kong; for Hong Kong cannot make itself independent of Canton. Indeed, the reason for the wonderful growth of Hong Kong is to be found in the fact that it is the best deep-sea port for the commerce of a province inhabited by more than 40 millions of Chinese. There are, however, other ports-though none are so good or so conveniently situated and it is not in the interests of this colony that trade should be diverted to them. I am convinced that the prosperity of Hong Kong depends mainly upon the maintenance of friendly, and even intimate, relations between this Government and the Government of Kuang-tung; and the sooner the present sore which is festering and may become chronic can be healed, the better it will be for British interests not only in Hong Kong but throughout China.
7 As regards the proposed payment of blackmail, I may say that, however repugnant such payment is to British habits of thought, a settlement on the lines now contemplated is customary in China and would not be considered by the Chinese to be unusual. It is the amount to be paid, rather than the fact of payment, which will exercise the minds of Chinese merchants both here and in Canton.
8. After a full discussion of all these considerations which I presented to the Executive Council very much in the manner in which I have set them out in this despatch, it was unanimously agreed that the Hong Kong Government would not be justified in obstructing a settlement on the following lines. The Chinese members of the Legislative Council-Mr. Chow Shou-son and Mr. Kotewall--will arrange that the prominent Chinese merchants of Hong Kong should elect from among their number delegates (other than Mr. Chow and Mr. Kotewall) to visit Canton and bargain with representatives of the Strike Committee and of the Cantonese merchants as to the sum of money to be paid to end the boycott. The delegates from Hong Kong will then return and report both to the Chinese and the European merchants of Hong Kong the sum agreed upon as the result of their bargaining. The merchants will then decide whether the payment should be made.
9. I have made it clear that the Hong Kong Government cannot be a party to negotiations such as these, and that the trade loan cannot be made available for such a payment to the Strike Committee.
10. This afternoon Mr. Chow Shou-son and Mr. Kotewall met all the Chinese Justices of the Peace, the Executive Committee of the Chinese Chamber of Commerce, representatives of the twenty-four mercantile guilds, the members of the District Watch Committee, the senior members of the Tung Wa Hospital Committee, bankers and other responsible merchants, who decided unanimously that the boycott should be settled as soon as possible, that the Chinese merchants should elect five to nine representatives to go to Canton to find out the sum to be paid and to reduce it if possible, and that a meeting of all important institutions, trade guilds, &c., should be held at 10-30 A.M. on the 26th December to elect representatives to go to Canton.
11. This despatch confirms and amplifies the telegraphic message which I sent to you to-day on this subject..
I have, &c.
C. CLEMENTI, Governor, &c.
Diary of a Visit to Canton, December 20 to 23, 1925.
Mr. T. V. Sung and I left Hong Kong at 9 A.M. in H.M.S. "Tarantula." We got into conversation regarding the situation almost immediately, and our discussion continued during the greater part of the voyage. Mr. Sung appeared to me to be a well-educated man, with a thorough grasp of the situation, and holding most decided views which he was able to express to good advantage.
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Mr. Sung agreed that the strike and boycott were political in origin and that it was Hong Kong's misfortune rather than her fault that the brunt of the trouble fell on her. The roots of the matter were deep in the past. The foreigner had come to China largely against China's will. He had forcibly established himself in all the great centres of trade and he had fenced himself in with settlements and extra-territoriality. He had refused her autonomy, and had regulated tariffs to suit his own convenience. The incident at Shanghai and subsequent events were an outward and visible sign that China's patience was strained to breaking point. A new nation was being born and the Chinese would never again consent to tolerate the old order of things. China was disunited and powerless to assert herself by force of arms, and so she used the only weapons available, the strike and the boycott. The action taken against Hong Kong, whatever the immediate cause, was a method chosen for the expression of an intense conviction on the part of the masses that China was not getting fair play.
The terms put forward by the strikers were discussed in some detail. Mr. Sung admitted that they had never been formally recognised or supported by his Govern- ment, and he thought that the strikers had no intention of insisting upon any of the points affecting the British sovereignty in Hong Kong. He wished, however, to point out in a friendly way that there was a real feeling among the working- classes that the two Chinese members of council represented merely a small minority of the wealthy merchants, while the labourers had no means of making themselves heard. The ordinary channel of the Secretary for Chinese Affairs office was not sufficient. He suggested that the appointment of a labour member by the Governor would do much to strengthen the Government's position vis-à-vis labour.
There were only two matters which stood definitely in the way of a settlement: the reinstatement of strikers and the grant of strike pay. The question of reinstate- ment admittedly bristled with difficulties, and it might be got over by extra payment. The labourers looked at the matter from the following point of view: They came out from patriotic motives. They gave up everything, and it was impossible that they should now be left in the lurch. Under strike conditions they were fed and housed and clothed and they had a little money. But, if the strike ceased, they would be destitue. The merchants, it was true, had suffered heavy losses, but these losses did not amount to destitution and it was fair that the merchants should bear their full share in the burden of patriotism by providing the labourers with the means for their future livelihood. The Hong Kong merchants were, after all, Chinese, and the strikers were, taking a long view, striking partly in their interests. It was logical that the Canton merchants should share the burden, but it was no longer possible to use the old method of a compulsory levy, and it was doubtful whether the Canton merchants could be persuaded to pay any substantial sum, Mr. Sung concurred that the logical conclusion from his line of argument was that there was no possible ground for payment by British merchants. He hoped that the British merchants would join in, in order that a sufficient sum might be raised, but it was immaterial where the money came from.
Two things should be very clearly understood. Firstly, the Canton Government could never, under any circumstances, let labour down. Labour had helped them to their present position, they depended largely upon labour for their future main- tenance in power, and the movement which they were heading was one for the government of the whole of China by the people. The power of labour in China was not properly understood. It was now very great indeed. In September last Chang Tso-lin had forcibly closed the Shanghai unions and had shot certain strikers in Tien-tsin. The Canton authorities were at once certain that his fall must be a matter of weeks only. The event had proved them right. A few defections might he explained away, but the only possible explanation of the wholesale desertions by the rank and file was the fact that he had offended labour.
The second point regarding which there should be no misunderstanding was the definite fact that, if it was merely a question of finance, the strikers could carry on indefinitely, Mr. Sung was not prepared to say that the Government would tolerate the levying of squeeze or that subscriptions would continue to come from abroad, but still there must be no mistake. The necessary funds would never fail. (I gained a strong impression that Mr. Sung wished to convey a hint that the Government was subsidising the strikers.)
If no settlement was reached, the strike would not gradually peter out, at least not for a long time to come. The organisation required to keep it going was not large nor particularly difficult to maintain, and the strikers were very much in
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