CO129-585-6 Sino-Japanese conflict- shipping on Pearl River 7-8-1940 - 26-11-1940 — Page 8

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Dip. Mission, Chungking No. 24 B.E., Tokyo No. 47

Governor HongKong No. 82

C. in C. No. 35

Commodore Hong Kong No. 26.

British Consulate General,

Canton.

30th August, 1940.

SETTLEMENT OF S.S. "FATSHAN" QUESTION

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Sir,

In continuation of my despatch No. 185 of August 14th, any full report necessary on subsequent developments must await a more convenient season. I am under the impression that any material changes are before Your Excellency and the Hongkong Government in subsequent telegrams. All that is now necessary is to enclose the documents which form enclosures 1, 2 (under a formal cover which is not sent) and 3 in this despatch which constituted the agreement reached this morning in settlement of the S.S. "Fatshan" question. In addition my Japanese colleague handed to me by prior agreement (for explanation see paragraph 2 below) the memorandum which forms enclosure 4 in this despatch. It was my original intention to present to him, in the form of a counter-memorandum, the substance of paragraph 2 of my letter to him of today's date, which forms enclosure 5 in this despatch, but I agreed with Mr. Kita that, as agreement on the points involved (which cover various aspects of this shipping problem which have arisen in the course of conversations and, in particular suggestions (d) and (e) contained in Hongkong telegram No. 43 of August 24th) could not certainly be reached with the Japanese Naval authorities without controversy, it would be better to treat this communication as the first act in the second stage of this Pilotage controversy (i.e. agreement as to pilotage rates and smoother future relations generally) rather than as a final controversial document in connexion with the release of the S.S. "Fatshan". While our case regarding the S.S. "Fatshan" on paper looks worse in consequence, I hope that this method of handling this document has Your Excellency's approval. Originally I had added to (d) on paragraph 2 the following words:

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but

and consequently Japanese vessels under the Blunt- "Okazaki Agreement may be fairly entitled to expect at "Hongkong similar treatment in all respects (except as "provided in the text of the Agreement) to that accorded "to any British vessel or vessels under the same Agreement

texcept stoves Forrin

The additional words were purposely vague; they might have been interpreted as a threat which the Hongkong Government might not have felt able or willing to implement. They were drafted prior to receipt of Lieutenant-General Norton's telegram No. 43 of August 24th. Incidentally neither Mr. Kita, nor before him Mr. Okazaki, have ever questioned to me the equity of

according/

His Majesty's Ambassador,

British Embassy,

Shanghai.

Canton."

Pag

Pag

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according parallel treatment to the Japanese vessels concerned at Hongkong to any treatment accorded to British ships here. It may be difficult at this stage to find a formula closing the 0.8.K. Wharf to Japanese vessels from Canton and compelling then to use (say) Kowloon wharves, as a parallel to the persistent refusal to the British vessel to use her own West Bund wharf and compulsion to use the distant wharf of Messrs. Butterfield & Swire. But I venture to suggest that those in Hongkong who have known this question from the beginning will agree with me that it was unfortunate that these Japanese vessels were not "ab initio" treated no better and no worse than the British vessel here and that the facility of the wharf might well never have been accorded. I have no knowledge of Japanese mentality, but the (unexpected) suspension by the Hongkong Government of the sailings of Japanese vessels during the past month has in my opinion served definitely one useful purpose - an appreciation that the Canton-Hongkong service is at least useful to them, and not, as claimed by the Japanese Navy, a kindly benefit done to the foreign community at Canton. It may be that the British Shipping Companies are right in supposing that the balance of advantage is in favour of the Japanese. This remains to be seen.

2. I must confess that the inner meaning, and even the outer meaning, of all but the last paragraph of enclosure 4 is not clearly understood by me. The Japanese Navy wished me to omit the clause quoted. It seems to me immaterial. It was agreed in advance that the last paragraph of the letter, which forms enclosure 1 in this despatch, should be worded to permit a refund to Messrs. Butterfield & Swire, but that in practice I would not request it. It would have been impossible to get a settlement short of actual payment of full pilotage fees for the period up till July 31st. This understanding was embodied in the "memorandum" (which was not intended to be an aide memoire!).

3.

I think I should take this opportunity to comment on two points which have been quoted by the Shipping Companies.

a) I am advised: (1) that the S.S. "Fatshan" has not been run at a loss unless the cost of repairs due to a stranding on a rock in Hongkong waters ( 50,000?) is included; (2) more especially as the vessel could hardly have been used for other purposes or on another run.“

b) The use of the West Bund wharves has not been practicable for the past 2 or 3 months. They have been under repair. This period happened to coincide with the first occasion when wharves in that neighbourhood were used for purely commercial vessels thus constituting discrimination in favour of Japanese vessels. Doubtless this discrimination is intentiomland will be difficult to overcome, but from that period, the Japanese consular authorities admitted our good reason. Purposely however I omitted to press the question, since the wharves are only now beginning to be ready for use.

I have, etc.,

(signed) A. P. Blunt

Consul-General.

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