CO129-501-4 Chinese situation- correspondence concerning Shamoan steamship service- running between Hong Kong and Canton 8-1-1927 - 27-7-1927 — Page 15

- 2 -

15

come into armed conflict with their own Nationals and

expose the hollowness of their claims to the support of patriotic Chinese even in Canton.

3.

The losses of the Companies for the 18

months from 1st July, 1925, to 31st December, 1926, are

estimated at well over 14 million dollars. The bulk of

this loss must of course be accepted as the inevitable

consequence of the times and no claim on the imperial or Colonial Governments in respect thereof is admissible.

But the Imperial Government has finally found it necessary

for the mere protection of British lives in China to despatch large and costly forces to the Far East. Was it then necessary to haggle, as His Majesty's Government has done, over the payment of a small sum as compensation to

these Companies for keeping the British flag flying on the

Canton River?

4.

The attitude of His Majesty's Government in

this matter has created a very unfavourable impression in

business circles in the Colony and the treatment of these

Companies is already bearing bitter fruit in Hong Kong. The Canton Seamen's Union is a political organisation,

aptly called by the Kuomintang the spearhead" of its

attack on British Imperialism. It is now all powerful on

the West River and is attacking the coastal services and

even the big liners. Its first assault was naturally on

the Companies which had defied for so long the anti-British

policy of its parent body. The Companies having realised

that hopes of assistance from the Imperial Government were

vain could not afford to face another boycott, and

capitulated (see paragraph 3 of my Secret Despatch of 24th December, 1926). This was followed by the disgraceful scenes

3000167 (In care;

on