CO129-502-7 China- general situation 4-3-1927 - 26-4-1927 — Page 50

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British Concession at Hankow. If this operation were undertaken it would be necessary to place a military garrison in the Concession, and this new military commit- rent would be undertaken in the heart of China 600 miles

up the Yangtse. Having regard to existing commitments we do not consider this a feasible operation.

We

5. In the circumstances, the only sanctions which are able to suggest are:

(i) The seizure of the Cantonese Fleet:

(ii) The seizure of Custors revenues:

the Dane Island and

(iii) The destruction of Bogue Forts at Canton. On these proposals we offer the following preliminary

observations.

6. The seizure of the fleet is undoubtedly

feasible operation which should exercise some effect on

the Cantonese. We feel bound to mention, however, that

at Amoy, where disturbances were reported a short time

ago, the situation is now peaceful, "chiefly due to efforts of Chinese Naval Authorities" (Commander-in-

Chief's telegram No. 949 of April 7th).

7. The seizure of Customs revenues can hardly be

described as a "military" sanction, but appears to us one the possibilities of which ought to be explored.

In

this connection we draw attention to Sir Miles Lampson's

telegram No. 674, of April 11th, on the subject of sanctions, in which the following remarks occur:

"As regarde reparation, Consul-General's estimate may seem very large, but it is clear from reports of looting that very extensive damage has been done: American estimate of their losses is I believe even greater. I think it can be accepted as quite certain that Nationalists will never voluntarily produce amount of required compensation. On this head I suggest we should at once consult His Majesty's Consul-General at Shanghai to ascertain whether proceeds of surtaxes at Shanghai can be impounded and what steps should be

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