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would involve a loss of prestige outweighing the immediate advantages to be gained from this step. We reserve a final opinion on the military aspects of this question until we know in greater detail the views and intentions of the Naval Commander-in-Chief, both as regards action at Hankow and the mainten- ance of the lines of communications, in the face of possibly hostile forces on both sides of the Yangtse.
(d.) We recommend that the men on the spot should be given authority to destroy the Hankow Arsenal if and when they think the right moment has arrived for this step, but they should be warned that the selection of the moment for this will depend upon the circumstances attending the reoccupation of the Hankow Concession. For example, if the reoccupation of the British Concession is successful, the need for this operation may not arise. On the other hand, it may be expedient on military grounds to destroy the arsenal before reoccupying the Concession or for its retention. Should it be unnecessary to destroy the arsenal before reoccupying the Concession, its subsequent destruction might serve as an adequate sanction for the purpose of saving face' should the Concession eventually have to be evacuated. These are matters which the men on the spot alone can judge. When referring to the men on the spot,' we mean the Naval Commander-in-Chief and the British Minister at Peking, together with the Senior Naval Officers and Diplomatic Representatives of the Powers ready to associate themselves in sanctions."
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22. The Reports dealing with Possible Sanctions referred to in paragraphs 19, 20 and 21 above, as well as the Note by the Secretary of State for Foreign Affairs referred to in paragraph 22, were considered by the Cabinet at its Meeting held on the 27th April, 1927 (Reference Cabinet 28 (27), Conclusion 1). At this meeting Lord Beatty reported that while the Cabinet was assembling he had taken the opportunity for a short consultation with his colleagues on the Committee of Chiefs of Staff, and that they had unanimously agreed to recommend the proposalst of the Naval Commander-in-Chief, on the understanding that the two Battalions. embarked from the Shanghai Defence Force should be regarded as landing-parties used in the same manner as Marines. The following Conclusions were reached by the Cabinet :-
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(a.) That, on the receipt of a reply from Sir Miles Lampson to the Secretary of State for Foreign Affairs' telegram (Appendix III),* the Secretary of State, in consultation with the Prime Minister, and after consideration of any further information which the Committee of Chiefs of Staff might be able to furnish regarding the holding of the Concession during the period of low river, should have authority to authorise the reoccupation of the Concession and its return to British administration, unless, having regard to all the circumstances, the Prime Minister thought it necessary to summon a Cabinet for further con- sideration of the question.
(b.) That the Committee of Chiefs of Staff should consider further the question of the practicability of holding the British Concession at Hankow during the period of low river.
(c.) That the Admiralty should instruct the Naval Commander-in-Chief to repeat the telegrams in Appendices I* and II* to these Minutes to the British Minister at Peking.
(d.) Not to adopt, in present circumstances, the proposal in the Second Report of the Chiefs of Staff (Paper C.P.-128 (27)) in favour of greater powers being given to the Naval forces not merely to fire on, but to counter- attack with all their power, those who fired on ships flying the British Flag on the Yangtse. The question whether this proposal should be adopted on its merits, not as a sanction but as a measure of security, was reserved.
23. The Chiefs of Staff met on the 29th April to consider further the practicability of holding the British Concession at Hankow and also the destruction of the Hanyang Arsenal, and submitted a Report (C.I.D. Paper No. 795-B), fron which the following Conclusions and recommendations are an extract :—
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(1.) From a military point of view the reoccupation of the British Concession at Hankow by Naval forces, supplemented by two Battalions from
* Printed as Annexure to No. 4 to this Paper.
† See Telegram from the Commander-in-Chief, China, dated April 26, 1927, printed as Appendix II to Annexure No. 4 to this Paper.
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