CO129-538-1 Hong Kong University 31-12-1931 - 6-8-1932 — Page 141

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CHINA REPORT

delegation, will be found in the published Report, pp. 159-161. The Board was to consist of eleven members, of whom six were to be Chinese and five British, the members to be appointed in the first instance by the Chinese Government after consultation and in agreement with Great Britain". Vacancies were to be filled by co-optation. The proportion of Chinese and British members was to be maintained till 1945 (the year of the final amortisation of the indemnity), after which the Board should have power, if it thought fit, to replace any or all of the British members by Chinese. The Board was to have "complete power" to apply the funds under its control to such educational and other purposes, and to make such investments for the perpetuation of the fund", as it

might from

time to time determine, in accordance with the general scheme and principles" recommended by the Willingdon delegation and accepted by the Advisory Committee. After the end of each financial year, the Board was to prepare a report of its receipts and expenditure in that year, and a copy of this report was to be submitted to each of the Goverments of Great Britain and China for its information. Each Government was to be entitled to send an observer to attend the meetings of the Board, but neither of them was to take any part in its proceedings or deliberations.

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Perhaps the most important of the recommendations of the delegation was to the effect that all the indemnity funds, capital and interest, should pass to the control of the Board of Trustees, and that the British Government should cease to exercise any control over the funds or the disposal thereof". This proposal was of fundamental significance, because it involved the surrender of the right of ultimate control hitherto vested in the British Foreign Office. At a very early stage in their proceedings the members of the Willingdon delegation found it necessary to make this recommendation in order to satisfy public opinion in China and to dispel unpleasant suspicions regarding British good faith. Without waiting, therefore, to complete their investigations and prepare their Report they communicated with the British Government by telegraph and pointed out that what mainly aroused hostile criticism in China was the very existence of the Act of 1925, which left the funds in the ultimate control of the British Secretary of State for Foreign Affairs". (The Act in question is quoted on pp. 46-7 of the Report of the Advisory Committee.) They therefore informed him that a definite recommendation to the effect that the funds should be withdrawn from British control and placed in the hands of a Board of Trustees in China would be included in their final Report, and requested him, if he approved of this recom-

SITUATION CREATED BY EXCHANGE OF NOTES

II

mendation, to authorise them to issue a public announcement to that effect.

The Secretary of State gave his provisional approval of the proposal, subject to Parliamentary sanction, and the announcement was therefore duly issued in China, under his direct authority, on May 26th, 1926. It is unnecessary to quote the whole statement here, as it is printed in full in the Delegation's Report (pp. 161-2), but its conclusion, which is of special importance for our present purpose, must not be omitted. The Secretary of State, while desirous of further demonstrating British goodwill to, and trust in, the Chinese nation as a whole, feels that it must be made clear that, as this change will make it necessary to amend the Act, his assent must be expressed as subject to the approval of Parliament, which he will do his best

to secure.

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Obviously, then, it was clearly understood on both sides that the withdrawal of the control of the indemnity funds from the Secretary of State for Foreign Affairs would involve the repeal of the Act of 1925 and the enactment of a new statute authorising the ultimate control of the funds to be vested in the Board of Trustees-a body exercising its functions in China and comprising a predominantly Chinese membership.

We have reason to believe that an amending statute on the desired lines was actually drafted. Apparently it was never intro- duced into Parliament, partly on account of the political chaos in China of which the mob attack on the British Concession at Hankow and the "Nanking Incident of 1927 were probably the most outstanding symptoms.

Of the meetings of Lord Buxton's Advisory Committee which presumably took place between the date of the presentation of its Report (including and endorsing the Willingdon proposals) on October 18th, 1926, and the date of the Exchange of Notes of Sep- tember, 1930, we have no direct knowledge; nor are we aware of the nature of the consultations and negotiations which must have taken place both in London and in China during the period that immediately preceded the Exchange of Notes and the Act of 1931. We are there- fore unable to offer any authoritative explanation of the important change in policy which took place between 1926 and 1930, beyond that contained in the Memorandum of November 14th, 1930, issued by Mr. Arthur Henderson (then Secretary of State for Foreign Affairs) as a preface to the Exchange of Notes. A cursory perusal of the Exchange of Notes hardly reveals the deep significance of the departures from the policy that underlay the accepted Willingdon recommenda-

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