conclude that a majority of the present Canton
Council of Government is opposed to a settlement of the boycott except upon terms which would humiliate
Great Britain and which would, therefore, be even
more prejudicial to the future of British interests
in China than a continuation of the existing
boycott. The obvious remedy would be to upset
the present Canton Government, which has many
enemies in other provinces of China. But there is
no Chinese force at hand which could do this; and
British action, such as a blockade of Canton by
naval and military force, might only aggravate the
situation by by rallying nationalist feeling in
other parts of China to the support of the present Canton Government and would certainly embitter future relations between Hongkong and Canton as well as between British and Chinese generally. There is,
moreover, good reason to believe that General Feng
Yu-siang, who appears at the moment to be in
authority at Peking, is on friendly terms with General Cheung Kai-shek: and the shadowy Cabinet just constituted in Peking is perhaps also favourably disposed towards the men who compose the Canton Council of Government. The moment would, therefore, be very inopportune for action in Kuang-tung by British force alone and I am by no
means sure that a blockade of the West River Delta would even temporarily end the boycott: for the Canton Government, although it would cer- tainly be hard hit by a blockade, might (if national and popular sentiment were behind it) hold out for months, much as Hongkong has done against the boycott.
7.
Page
Page
7.
14he
I have, therefore, come to the conclusion,
in which the Executive Council unanimously agrees, that the only possible course at present is for Hongkong to hold out perseveringly until either the present Canton Government is overthrown by some hostile Chinese General, a contingency which for the time being is unlikely, or until the lapse of time and the increasing inconvenience to the Canton Authorities of tolerating an "imperium in imperio", such as the Strike Committee, results in the dissolution of the boycott organisation. Such a war of attrition will be very serious in its effects upon Hongkong; but Canton will also suffer, and this Colony has the assistance of the Trade Loan which I shall endeavour so to use that
it may mitigate the financial difficulties due to the approach of Chinese New Year (13th February). Canton merchants will have no such financial backing and I hope that the contrast between the position of the Hongkong Chinese and the Cantonese February next may prove to be a salutary object- lesson and shake the belief prevalent among the Canton officials that they have a stranglehold on this Colony. If this is to be achieved, I must be
in a position to give liberal help to British and Chinese merchants in Hongkong and I trust that H.M's Government will insure that such help is forthcoming.
8.
in
In conclusion I may say that the failure of the negotiations attempted as the result of Mr. Fletcher's visit to Canton is not, in my opinion, entirely to be regretted. I have grave doubt whether a permanent settlement of this Colony's present
troubles could be secured by payment of blackmail
to Canton and I personally attach great weight to the
objections
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