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also sent a telegram to the Consul-General at
Canton based on the later Report of the Chiefs of
Staff Committee (Paper C.P.8(27)). This Report he
pointed out was based on the political assumption
that war with the Chinese National Government must
be avoided, as well as on military considerations.
The Japanese Government had agreed to military
conversations on the subject of the defence of
Shanghai, which were taking place. The Japanese
Press news indicated extreme reluctance to take any
action, but this might perhaps be interpreted in the
light of our Ambassador's report that "The Japanese
Government are opposed to any loud noise".
The most serious question, however, for
the Cabinet to consider, was the position at
Shanghai. If it was impossible to come to terms with
Eugene Chen, the smaller Concessions might have to
be given up, but the position of Shanghai was
very different. Owing to the magnitude of our
interests there, its loss would have lasting
disastrous consequences on our position in Asia,
and would have most serious reactions in India and
on Japan. The opinion of the naval, military and
civil authorities in the Far East was that Shanghai
was the proper place where we should make our stand.
Sir Austen Chamberlain read a communication
he had received from Sir Arthur Hirtzel covering a
telegram from the Viceroy indicating that the
Government of India was prepared, if necessary, to
send a mixed Erigade or even the equivalent of a
Division to Shanghai.
Before, however, it was decided as
inevitable that resistance must be made at Shanghai,
it was important to continue the conversations at
Hankow
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