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that a new policy should be adopted, it would appear to be our plain duty to explain frankly our objections to the old policy and our reasons for recommending the new one. A memorandum for this purpose han altenaf een prepared and ie
annexed.
12. If this memorandum is handed to the Powers it will quickly become public property. Therefore, whether we state in the memorandum that we propose to break away from the Powers and follow our new policy alone, or whether the memorandum contains no hint of any such intention, the result in practice will be very much the same. The mere fact of the publication of the memorandum will be taken as an indication that we have already broken away from the Powers, and it would, in practice, be impossible for us to continue to pursue a policy in China when, in a document of such importance, we had publicly condemned it and proclaimed our faith in a diametrically opposite policy.
13. The decision we have to take therefore resolves itself to this: shall we attempt to persuade the Powers to adopt what we consider to be the only wise policy in China, or shall we stifle our convictions and continue to concur in their policy, which we believe to be wrong and morally indefensible? For, having once stated our own policy, we shall be publicly committed to pursue it, and by the fact of stating it we shall have already broken away from the Powers.
14. The objections to breaking away from the Powers should not be minimised, but the only alternative is to pursue reluctantly a policy which we believe to be wrong. The mistrust and suspicion to which this has already given rise has been alluded to above. We offend both the Chinese and the Powers, and it seems hardly possible to continue on so unsatisfactory a course any longer. On the other hand, if we adopt a policy of our own the rift in the solidarity of the Powers may only be for a time. There is at least a chance that the Powers may appreciate the force of our arguments and decide to follow our lead. The only two Powers that really count in China are America and Japan. American policy has recently been guided by Wall Street, but if our appeal for justice and generosiy gains the ear of the Middle West the State Department may have no option but to follow. The Japanese have already abandoned all idea of coercing China, and they may be quick to see that the real alternative to coercion is not ineffective protests, but a sympathetic adjustment of treaty privileges to the claims put forward by the Chinese authorities at different times and in different localities.
15. On the whole, therefore, we are inclined to think that the chief danger to be feared from a public statement of our new policy is not that it will break up the solidarity of the Powers but that it may encourage the Chinese in a general Wassault upon all the treaties. This is a very real danger, and great care has been taken to guard against it in the memorandum which is being prepared for communication to the Powers.
II.-The Canton Boycott.
Canton is the headquarters of the Kuo Min-tang, the Chinese Nationalist party, which was founded by Sun Yat-sen. The city has a long tradition of restlessness, turbulence and anti-foreign feeling. The Canton Government regards itself as independent of Peking and in fact as the rightful Government of all China, though it has not yet so far claimed formal recognition by the Powers either as an independent Government or as the Government of China. It declines to regard itself as bound by the so-called "unequal treaties" concluded by the Powers with China, and ignores them in many respects, though it has made no direct attack on some of their main provisions.
From July 1925 to October 1926 the Cantonese boycotted British trade. No goods of whatever origin coming via Hong Kong were allowed to enter the Province of Kwangtung, of which Canton is the capital, and no goods exported from the province were allowed to go via Hong Kong. No British vessel was allowed to discharge cargo and no vessel, of whatever nationality, that had called at Hong Kong was allowed to unload. In addition, the life of British residents was made most unpleasant by the intimidation of their servants and by the difficulties in maintaining their food supply. Such trade as was conducted by foreigners other than British was heavily mulcted for the necessary permits.
The boycott arose out of the shooting incidents at Shanghai on the 30th May, 1925, and at Shameen (the Anglo-French concession at Canton) on the 23rd June of the same year, the latter of which was deliberately provoked by Communist
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influence. Chinese fired on the Anglo-French concession; the British and French 522 troops replied, and some fifty Chinese were killed.
The three forces behind the boycott were:-
1. The Canton Government, who, though they denied responsibility, neverthe
less connived at and encouraged the boycott and took no steps to terminate it. In time they became tired of the boycott, which incommoded the local Chinese merchants only less than Hong Kong, and they began to find the Strike Committee an embarrassment, a kind of imperium in imperio; yet they did not feel themselves strong enough to proceed against the boycott organisation,
2. The boycott organisation manned by an army of unemployed from Hong Kong and Canton, and at one time numbering more than 100,000; this organisation maintained its own courts and prisons, and its members made a living out of permits, fines and confiscated goods.
3. The Soviet advisers of the Canton Government, who, though they cannot be said to have created the boycott, yet certainly to some extent guided it, and directed the Nationalist anti-foreign movement into anti-British channels. Neither the Cantonese Government nor the Kuomintang, whose organ it is, is Communist, though there is a left wing which is in sympathy with the Communist doctrine. They have turned to the Russians because the Russians alone were prepared to treat them on The equal terms and to provide money, advisers and equipment. Chinese Nationalists are using the Russians for their own ends, and it may be expected that if the Kuomintang establishes itself as the Government of China and enters into relations with the Powers its need of Russian support will decrease and the influence of the Russians will wane. The Soviet Government, however, has some right to claim the Canton boycott as its most outstanding success outside its own borders since it came into existence. The loss to British trade and to the colony of Hong Kong, in particular, has been very great.
Several attempts were made to settle the boycott question by negotiation, but they broke down on every occasion, chiefly owing to the refusal of the Hong Kong Government to pay compensation or to countenance the payment of compensation, i.e., blackmail, to the strikers, which the Cantonese negotiators made the sine qui non for a settlement. In March 1926, the Cantonese authorities, who had hitherto refused to regard themselves for the purposes of negotiation as anything more than intermediaries between the strikers and the Hong Kong Government, proposed direct negotiations, but these came to nothing for the reason given above. Negotiations wore reopened at Canton on the 15th July on the proposal of Eugene Chen, the newly appointed Minister for Foreign Affairs of the Canton Administration. Mr. J. F. Brenan, His Majesty's acting consul-general at Canton, was a member of the British delegation. Negotiations were suspended on the 25th July, the two delegations desiring to refer to their respective Governments the proposals made to each of them by the other. The Cantonese proposal was for an enquiry into the facts of the Shameen incident of the 23rd June, 1925. The British proposal was for a loan for port and railway construction at and around Canton. These proposals, however, came to nothing, and by the beginning of September the situation had been changed by two further developments.
In the first place the increased activities of the strike pickets in Canton harbour and their shooting upon British subjects moved His Majesty's Government to take forcible action to put a stop to these piratical activities. On the 4th September the picket boats were driven off the harbour; the pickets were driven off British-owned wharves and a gunboat was moored along the strike examination shed. This rendered the enforcement of the boycott of British shipping much more difficult than it had previously been.
About the same time the Cantonese northern expedition obtained unexpected success and advanced into Central China, occupying Hankow, where there are foreign concessions, and Hanyang, where there are iron works and an arsenal. They had thus established themselves in the Yang-tsze Valley, and had almost eliminated Wu Pei-fu as a military force. It was feared that the extension of Cantonese influence to the Yang-tsze would be followed by a boycott of British goods on the familiar Cantonese lines, but although there was some anti-British and anti-foreign agitation, no serious boycott developed. There was some firing
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