CO129-501-8 General policy in China 30-11-1926 - 30-11-1926 — Page 118

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(c) that it necessitated the consent of the Chinese

Maritime Customs, failing which the Canton Soviet

would establish its own Custom House.

(d) that it involved the grant of practical tariff

autonomy to Canton, because the new taxes would be contrary to treaty, and could be increased by the

Canton Government at pleasure:

(e) that the taxes collected would go into the

Canton war chest and would be a material assistance

to the South in the campaign against the North:

(f) that other War Lords would doubtless follow

suit and impose similar taxes on the Yangtze and at

northern treaty-ports:

(g) that all the Signatory Powers of the Washing-

ton Treaty were concerned:

(h) that no quid pro quo was offered except #

the removal of a boycott which itself was a defiance

of our treaty-rights; that the Canton Soviet believed.

itself to have found in the boycott a very successful

weapon and would be confirmed in this belief, if

concessions were extorted from us by it such as no

Chinese Government had hitherto obtained; that we

might, therefore, if we acquiesced in the new taxes,

expect the repeated use of this weapon for extorting

concessions and destroying treaty-rights; and that

the outlook for British trade in China and for this

Colony would in such an event be black indeed.

11. In these circumstances His Majesty's

Government decided that Mr. Brenan should be in-

structed to reply to Comrade Ch'ên's note of the

18th

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