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In November the business of the Manshu Nichi Nichi Shimbun was transferred to Mukden, and the English-language Manchuria Daily News will be removed to Hsinking early in 1939.

17. On the 10th November Major-General T. Furujo (retired), president of the Manchuria Daily News, died by his own hand. Although he had no knowledge of journalism and had forgotten most of his English, and was probably unable to restrain the gutter scurrility of his newspaper, his death was a mis- fortune to the British community, with members of whom he had always been on friendly terms. Through him it was occasionally possible to secure publication His of press articles describing British activities in a favourable manner. successor is Mr. T. Ono, who was formerly a representative abroad of the Rengo News Agency.

18. Official rejoicings were organised to celebrate the capture of Hsuchow and again to celebrate the capture of Hankow and Canton. On the earlier occasion the arrangements were ruined by heavy rains, but on the latter thousands of Chinese and Japanese school-children were marched through the streets waving Japanese flags to order, and at night there was an elaborate lantern procession, in which, also, Chinese were required to participate. Spontaneous enthusiasm seemed to be lacking, save on the part of Japanese youths.

X. ARMY AND NAVY.

194 On the 25th July Lieutenant-General Y. Ito assumed command of the Port Arthur Fortress in succession to Lieutenant-General M. Suyama, and on the 20th November Vice-Admiral I. Sato succeded Vice-Admiral M. Maeda as Commandant of the Port Arthur Naval Base. At periods throughout the year military movements on an extensive scale have been observed, the most notable being the inward movement at the time of the clash on the Manchukuo-Soviet border in August, and the outward movement in the last week in September, prior to the Japanese attack on Canton.

20. The military authorities continue to keep a close watch on all civil activities in the Territory, and there is concrete evidence that Japanese employees of British firms are regularly subjected, both by the military and the civil police, to inquisitorial examination regarding their employers' business. All business houses are compelled to submit translations of their code telegrams at the time of despatch, but there is no evidence of discriminatory treatment of British firms in this matter. Newspapers, especially from Shanghai and Tientsin, are still being censored, and, in some cases, confiscated.

21. During the five days ending the 29th October a practice "black-out" took place over the whole Territory. All residents were compelled to cover their windows with black paper and were subjected to thorough inspection, but happily there was no untoward incident involving any British subject.

22. The work of constructing a large military aerodrome was commenced early in the year at Sankianpu on the Dairen-Port Arthur north road.

23. In the early hours of the 21st July His Majesty's Consul and his wife were held up in their car by an inebriated sentry and subjected to insulting questioning, in the course of which the sentry thrust the point of his bayonet into the car within a few inches of the consul's face. Later in the day the officer commanding the Dairen military police detachment tendered an apology for the incident and afterwards had the sentry brought before him for admonition.

XI. CIVIL AVIATION.

24. The passenger air services to and from Dairen, many of which were suspended in July 1937, have returned to normal during 1938. There are daily services between Dairen and Tokyo, and a link service to Seoul to connect with the express service between Hsinking and Tokyo, and daily services also between Dairen and Hsinking, Dairen and Mukden via Antung, and Dairen and Tientsin. The last-mentioned service is not available for foreigners, and the passengers are almost exclusively military.

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علیه السلام

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