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[This Document is the Property of His Britannic Majesty's Government.]
CHINA.
CONFIDENTIAL.
[F 2783/1/10]
No. 1
231
July 12, 1926.]
SECTION 1.
Acting Consul-General Brenan to Sir Austen Chamberlain.—(Received July 12.) (No. 37.) Sir,
Canton, May 31, 1926. WITH reference to my despatch No. 33 of the 24th May, I have the honour to forward herewith, for your information, a copy of despatch No. 58 to His Majesty's Minister, Peking, dated the 31st May.
I have, &c.
J. F. BRENAN.
The ties Loans, other
✔ciul tre
« make HE
(No. 58.) Sir,
£1,000,000 seams altogether examão.
If this test of the consumerisques
is not here by Monday 26th And better litegraph for it.
24.7.26
GG
alous
L
Enclosure in No. 1.
Acting Consul-General Brenan to Sir R. Macleay.
Canton, May 31, 1926. WITH reference to my despatch No. 52 of the 24th May, I have the honour to report that I have, at the request of Mr. Eugene Chen, the Acting Minister for Foreign Affairs in the Nationalist Government, twice been to see him on the subject of the settlement of the Hong Kong boycott.
2. I should perhaps explain here that all my interviews with the Canton officials have to be at their offices in the city. They will not come to the consulate, and they have not even returned the formal official calls which I made on taking over charge of this post. They excused themselves on the ground that they could not enter Shameen during the continuance of the boycott. I have had to accept this humiliating state of affairs, which places the British authorities in the position of suppliants, but the only alternative is a rupture of relations rendering impossible the conciliatory policy you desire me to pursue.
3. My first interview with Mr. Chen, on the 26th May, is described in my semi- official letter to Sir Cecil Clementi, of which a copy has been forwarded to the Legation. Two days later the Minister for Foreign Affairs asked me to call again, when he spoke at considerable length on the subject of the boycott, without, however, giving much indication of the present intentions of the Canton Government in respect to a settlement. He spent at least an hour in going over old ground regarding the origin of the trouble, and his intention evidently was to impress me with the great concession that would be made if the demands for compensation to the strikers were withdrawn and a loan, which had to be repaid, were to be substituted as a condition of settlement. He said it would be regarded as a defeat, which might imperil the position of the Government.
4. Eventually he got to the point, and asked what the Hong Kong loan proposals were. I replied that so far they were indefinite, and I was not prepared to put forward any definite projects without previous reference to the Governor. I then referred him to the conversations which Mr. Kemp had with Mr. C. C. Wu in April, and said I understood that the Hong Kong Government would be willing to make a loan of about 10 million dollars for a constructive purpose of mutual benefit, that there must be effective safeguards for proper expenditure, and that the money would be paid in instalments as the work progressed. On the other hand, in view of the reason for the loan, I thought they would get it on easier terms than in the open market.
5. Mr. Chen asked what was meant by effective safeguards, and I said presumably it would mean a certain amount of foreign supervision, as in the case of railway loans, and I referred him to the railway agreement signed by Dr. Sun Yat-sen in 1923 and witnessed by himself (see my despatch No. 57 of the 28th May).
6. Mr. Chen retorted that that contract was one they had sought for their own benefit. This loan would be in a different category, as it would take the place of strike compensation in the boycott settlement, and he was afraid foreign super- vision would not be acceptable to the Cantonese in their present frame of mind. He
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