HL Deb 20 July 1936 vol 102 cc5-35

My Lords, I have placed on the Notice Paper a Motion to call attention to the present position of affairs in Northern China, and to move for Papers. I admit that European affairs are absorbing enough and perhaps may monopolise the attention of our Foreign Office, but with our world-wide interests our Government must now have a thousand eyes. Events in Northern China and in China generally, I submit to your Lordships, demand our constant and serious attention. I should like to refer first to a very important statement, reported in the China Review for July, 1936, by Sir Frederick Leith-Ross, the Economic Adviser to the Government. He there discusses among other subjects the great changes that are imminent in China. Large questions of railway financing are there being discussed, the question of the import of capital goods into China, so closely affecting, of course, our own trade, and further—I think a new development in Chinese matters—the great activity which the municipalities are showing with a view to the development of public utility schemes.

Of course, all these schemes must depend upon the rather changing fortunes of the Chinese currency and the general financial situation in China. They must depend, first of all and foremost, on the maintenance of order, and secondly, on the special situation that has arisen in North China. Sir Frederick Leith-Ross is impressed—as, indeed, are all of us—by the importance of the Customs revenue to the Chinese finances, though he admits that these difficulties can only be removed by a better understanding between Japan and China. However, on his second visit to Japan—and I lay stress rather on that second visit—he was assured that there was no desire in that country to interfere with the internal situation in China.

This, then, brings me to the situation that now exists in Eastern Hopei, which we used to know, of course, as the Province of Chihli. I need only refer in one or two words to the historical or previous situation, as it were, in the North of China and the attempt to set up the five Northern Provinces adjoining Manchuria and Inner Mongolia as an autonomous State independent of Nanking. As your Lordships know, this scheme failed, and arrangements were set up to establish the two Provinces of Hopei and Chahar with a political council appointed by Japan. Before this scheme was realised, however, the whole of the demilitarised zone set up in 1933 had been proclaimed an autonomous Anti-Communist State under Japanese protection. It is here, as many of your Lordships are aware, that the smuggling takes place.

Up to the end of last year smuggling into China was not extensive and was controlled by the Chinese, but last September the Japanese asserted that the carrying of arms by the Chinese officials was contrary to the Tangku truce. The fact that they could no longer bear arms of course opened the floodgates, as it were, for goods coming in without paying the Customs duties, and within the last two months smuggling has gone on in that country on a scale that can hardly be called smuggling at all. Smuggling does import, surely, some degree of secrecy, but there is no secrecy about this smuggling at all; it is open, palpable, obvious to anybody in that country. For the three weeks ending on May 17 smuggled goods arrived at Tientsin comprising, among the heavier items, 448,000 kilograms of artificial silk yarn, 21,000,000 kilograms of white sugar and 243,000 gallons of kerosene oil. The duty lost in those three weeks is estimated at about $6,000,000, which would equal $100,000,000 a year, or one-third of the gross Customs revenue. I think your Lordships will agree that this is smuggling on a really noble and Imperial scale.

Again, smuggling is not confined to high-class expensive goods of small size, but is now extended to goods of low cost for almost every kind of business. The huge imports of kerosene oil are sufficient to destroy altogether the revenue from Customs on this head. There have been two consignments of armaments and munitions, and no doubt drug traffickers have taken the opportunity to pour their stuff into China. I need hardly say that a very large proportion of this illicit cargo arriving at Tientsin is of Japanese manufacture or origin, but this, of course, has not gone without protest. It is not very hard to foresee what must be the result on Chinese finances of smuggling on this scale. It must, I think, defeat the very object of the smuggling because the disturbance caused to Chinese trade is such that we can hardly imagine how China is ultimately going to pay for all these goods coming in on those terms, and when we remember not only the disturbance of trade but the extent to which Chinese loans are secured upon the Customs, your Lordships will easily see the deplorable effect that this may have upon the whole Chinese system of government, and also on the currency system as well.

During the last ten weeks I understand that many appeals have been made by the British and American Ambassadors to the Japanese Government to stop the smuggling or allow the Chinese to stop it, but very little notice, or very little practical notice, has been taken of these representations. What I am going to submit to your Lordships is that this smuggling is really only one aspect of the general relations of Japan to China, and through China to the Western Powers. The whole Japanese problem, as it were, at the present time is based upon suspicion, economic pressure, and a general feeling of isolation from the rest of the world. In particular, I regret to say, or in some degree, Japan seems to be at loggerheads with us, and fears that our assertion of our great historic interests in China may prove detrimental to her own interests. At the same time there is a great deal of traditional pro-British feeling in Japan, and, as I hope to be able to show in the course of my speech, lately there have been many feelers thrown out by Japan in the direction of getting a general understanding between Japan and Great Britain. Is it not possible for the Government carefully to test the value of these feelers, to approach Japan quite frankly and find out precisely what she wants, and to reach, let us hope, an agreement which would not only deal with Japan but embrace Chinese rights and welfare, and go far to dispel the cloud of suspicion which hangs over the whole of the Far East?

May I try to put before your Lordships one or two points with respect to the Japanese point of view? Dr. Akagi, a leading modern historian of Japan, says that from the Meiji Restoration in 1868 equality and security have been the constant main principles of Japanese policy. She attained security, anyhow security for the time, by her victories over China in 1894–5, and over Russia in 1904–5. She attained equality by the Anglo-Japanese alliance, and I certainly would like to pay tribute to the immense value which for over twenty years that Anglo-Japanese Alliance had for the peace of the world in the Far East. Those points are on the credit side, but one has to make certain deductions on the debit side. Your Lordships will remember that at Versailles the demand of Japan for racial equality was rejected by President Wilson. The American Immigration laws, of 1923, pointedly discriminating against Japan, have left a sore feeling in that country which has not yet been dispelled. I am not going in detail, of course, into the whole question of Manchuria, that very controversial subject, but I think we must remember that practically all the Japanese were absolutely convinced of the righteousness of their cause. They had not, perhaps, a sufficient historical sense, and they did not realise that what we and other countries have perhaps done in previous centuries was somehow or other inapplicable to the new century. If they had done so, perhaps they would not have acted in that spirit, but the point is that, rightly or wrongly, they have felt that the West has two standards of morality, one applicable to itself and the other applicable to Japan, and therefore marking out an inferior status. In addition to this, all these external troubles, fomented and heated by internal troubles, have bred much natural discontent.

It is impossible to review the situation of Japan without reference to the great influence of the Army. The position of the Army in Japan is of course rather peculiar. They have strong views on many subjects which the Armies in other countries would he ready to pass over. They viewed with great dislike and displeasure the growth of industrialism, the influence of capitalists on politics, the Diet's neglect of the bankrupt and overtaxed farmers, the spread of luxury, and the inroads of Western fashions. To the Army, a good Conservative influence, it seemed that the old spirit of Japan, was being undermined, corrupted and destroyed by these modern Western innovations, and it was to this feeling, as much as any, that the "Showa Restoration" movement, the aim of which is to destroy modern forms of government and reinstate the Emperor as the source and arbiter of all action, is largely due. I need not remind your Lordships of how the Army, dissatisfied with Baron Shidehara's conciliatory policy towards China, took command of Japanese policy in Manchuria and has really kept command over it ever since. There was one declaration by Japan of the greatest possible significance, and that was its declaration in 1935 of a Monroe doctrine for China, which claimed to have the last word in China's transactions with the West. In other words, this was a claim to the Japanese overlordship in the whole of the Far East.

In the summer of 1935 General Hayashi, Minister for War, determined on a purge of the more politically minded officers. General Nagata, head of the Military Affairs Bureau, was entrusted with the duty of carrying out this purge. He was murdered in cold blood by Colonel Aizawa, who, after the murder, put forward the usual claim of murdering from patriotic motives. Colonel Aizawa's trial, which dragged on through the autumn and winter, largely contributed to that growing temper which exploded in the mutiny of February 26, when three of the most eminent statesmen were killed and others barely escaped. At that time there was a great risk that Japan might experience another Satsuma rebellion. Mr. Hirota was called on to form a new Government, but he was only able to do this so far as the Army was satisfied with his arrangements. In view of these facts, as I have given them in this short narrative, it looks as if the Army were really the final arbiter in every question of Japanese policy, and if that is so the difficulty of coming to an arrangement with Japan is obvious.

On the other hand, some very remark able events have occurred which put the position of the Army in rather a different light. May I call attention to the Emperor's reproof on May 4 at the opening of the Diet. His words were: We regret the incident which occurred in February. We expect our faithful subjects, Government and people, civil and military, to unite as one to advance the nations's wellbeing". This statement, I believe, was un-parallelled in Japan and caused great emotion in the breasts of many of the Japanese Generals and naval men. This mutiny shook Japan to the depths. Even before the Emperor's speech several Generals had been retired for connection with the mutiny, and in the past three weeks seventeen officers have been executed and about 100 officers, n.c.o's. and civilians imprisoned, and—most remarkable of all—Colonel Aizawa, the murderer of General Nagata, has been executed. Patriotic assassinations have in the past been rather common in Japan, but very rarely have they been punished. There is, further, in the last few years a good deal of evidence to show that the position of the Army is not so supreme as might be expected. In 1922, following the allied expedition to Siberia in support of Admiral Kolchak, the Japanese Army was anxious to seize Eastern Siberia and the Russian Maritime Provinces, but this was most unpopular in Japan, and the whole scheme was broken off in deference to popular clamour. There was another case, too, in 1928, when popular opinion seems to have won the day against the Army. At that time General Baron Tanaka was Premier, and a similar expedition into Shantung, in North-East China, had to be withdrawn in consequence of popular opposition.

Turning for a moment to the relations of Japan and Russia, for at least 140 years or so Russia has been the bugbear and great cause of anxiety to Japan. In recent years these feelings have been revived by the complete hold Russia has acquired over Outer Mongolia and Chinese Turkestan. As a result of this the Army has made great efforts to get control of Inner Mongolia and Northern China and form a buffer state between Russia and Manchukuo. I only ask the question as to whether on the Far East side Russia is really in an aggressive mood. One might suppose that she had enough difficulties, both internal and on the West, not to court war in the Far East, and it may be that in this respect the fears of the Japanese are as much hereditary as real. But one thing, I think, emerges quite clearly from this situation, that the aggressiveness of the Japanese Generals towards China is well calculated to drive China into the hands of Russia, and certainly not to separate China and Russia.

As regards the case of China during the last four years, most remarkable progress has been made in that country. There has been economic development, road and railway building, a commencement of agrarian reform and the reestablishment of the position of the peasantry. Undoubtedly if a little peace could be provided for that country the present Government would probably make good. But the fear of Japan keeps her in turmoil and doubt, and checks any development that she may desire to bring about. The main requirements of Japan in China must—necessarily, because of her economic position—be markets and raw materials, and she could get these by friendly agreement. But the Chinese say with some justice that it is very difficult to make agreements with Japan because, owing to her military ambitions, they probably would not be final. So here again it is the feeling of distrust that blocks the way to an economic arrangement between China and Japan.

But it is remarkable, in the last few months even, that suggestions have come from Japan in the direction of a peaceful arrangement. I have one or two quotations. There is the statement on March 25 by Mr. Hirota, the Prime Minister, in which he reiterated his pledge that there would be no war while he was Foreign Minister and that that would hold good while he was Prime Minister. On March 5 there was a very remarkable statement made by Mr. Arita, the Japanese Foreign Minister. I quote one passsage: There is a number of questions in various parts of the world which affect our mutual interests and which await settlement in one way or another. If Great Britain and Japan, keeping their own friendship and their common responsibilities towards world peace in mind, give full consideration to each other's special needs, adjustment of their interests should not, I believe, prove too difficult. I commend that to your Lordships as a very remarkable statement. A little earlier, on January 7—this is not from the Minister but from the Japanese Foreign Office spokesman—it was stated that Japan was ready to negotiate on all outstanding questions affecting her relations with the British Empire, but was unwilling to discuss the question of China alone. And when the new Ambassador in London, Mr. Yoshida, arrived last May, there was a good deal of comment in the Japanese papers, and many of these influential papers stated that many influential Japanese dislike the present isolation of their country, and his (Mr. Yoshida's) efforts to revive former friendship with Britain have military as well as official and popular support. To sum up very briefly what I conceive to be the position, although we may have read all these statements about a Monroe doctrine being laid down by Japan, Japan herself is not very happy in her position of isolation. She has her own difficulties to meet. She has vast budgetary expenditure. This year the Budget amounted to 2,305,000,000 yen—I leave out the other figures—of which 705,000,000 yen must be met by borrowing; and her naval and military expenditure amounts to 1,058,000,000 yen against only 442,000,000 yen in 1930–31. Your Lordships will have seen recently the statement as to the £175,000,000 sterling that is to be expended by Japan on armaments in the next six years. The risk, of course, is that with this feeling of isolation and this intense desire for greater security, and with the sense that equality is denied her, she will be forced into further expenditure which, to a comparatively poor country, must be very severe. She sees further that Manchukuo and North China are really her life-line for markets and raw materials. She perhaps has some difficulty in seeing that the West is not inimical to her interests in China and that there is ample room for all in trade in China, if China could be relieved from the fear that Japan wants to swallow her up. The Japanese problem is, therefore, a very complicated one, made up not only of her economic situation but from the different feelings that have been aroused in her by the events of the last twenty years and the treatment she has received from the West.

The question is whether, in the strong position that we certainly had in Japan, much of which remains, we are not the people to tackle the problem. I do not think anybody else can. No one, of course, would suggest that the League of Nations should rake a hand, and the influence or effect of the Nine-Power Treaty is, I am afraid, sadly decaying. Unfortunately, the relations of Japan with the United States are not of the best, and it is really for us, if we can, to take the matter in hand. It is extremely significant too—referring again to Sir Frederick Leith-Ross—that he was not perhaps so warmly received in Tokyo when he called on his way to China nine months ago, but later, at his second visit, he found them, I understand, far more ready to discuss matters with him. It is said sometimes by those who are not very much in favour of agreement that it is quite hopeless; that the foreign policy of Japan is fixed; that she is determined, whatever happens, to establish herself as a dominant Power in the Far East. But it is remarkable how outside ideas of the foreign policy of a country often represent a false picture of what that policy really is.

It is equally a matter of observation that it is very rarely that the foreign policy of a country is so direct and straightforward and unmoved as we suggest is the policy of the Japanese, and that the foreign policy of most countries is much more the resultant of a number of forces, many of which act with more or less intensity at different times. If, then, the situation is such, and if perhaps Japan is not so self-confident in her isolation as some may have thought, is there not a great opportunity for us now to accept and welcome those feelers that have been put forward by Japan in the last few months and to see if we can discuss with her, not one, but many questions into which we could enter into relation with her, not of course forgetting the Chinese problems as well? If that could be done, and if we could reach an understanding with Japan, which would of course be helpful to other countries besides ourselves and Japan, I do not think this Government could make a greater contribution to the peace of the world than to try and settle all these troubles and difficulties which, largely arising out of the historical situation, embarrass our relations with Japan. I beg to move for Papers.


My Lords, I intervene for a moment or two only to say a word from the point of view of the Opposition. I think that your Lordships owe a debt of gratitude to the noble Earl, Lord Peel, for introducing this very vital subject and giving us such a useful historical survey and valuable analysis of the present position. I say that with very real sincerity, because the moderation with which the noble Earl introduced the subject, and the wealth of accurate information that he has given to us, are of real value as a contribution to the solution of the great difficulties surrounding this trouble. In my opinion the time has come when it is not really possible to consider the Far East as a separate problem from the rest of the world. It has become very much more closely associated with the European situation, as I shall try to show in a moment, and therefore we cannot consider it as a separate problem. And it is becoming less and less a separate problem as time goes on, as we get better means of communication, a more rapid exchange of accurate information, and a linking up of the various Powers, not only in Europe but throughout the world.

The Japanese Government are in a difficult position. They are, as the noble Earl pointed out, a militarist, semi-Fascist State, and they demand expansion, aggressive expansion, on the mainland, aggressive expansion in the Pacific. The excuse they usually give is, in the first place, that they demand an outlet for their population. But it is a fact that the Japanese have never succeeded in colonising any country. The few Japanese who have gone to Korea are comparatively insignificant; the number of Japanese who have gone to live in Manchukuo since September, 1931, apart from the actual Army of Occupation and those engaged with the Army, is quite negligible. The farming community whom it was hoped would establish Japanese settlement for agricultural production in Manchukuo have not in fact responded to the suggestion, because they do not like the type of agricultural production which would be necessary. They are not used to it; they are not accustomed to it.

There was an interesting suggestion that perhaps the production of the soya bean in Manchukuo, which is one of the great centres of its production, might receive a new lease of life by the discovery of Mr. Henry Ford that the soya bean could be used for the bodies of motor cars. It is a fact that the idea has been tried out by Mr. Ford. I understand that you take the soya bean and press out the oil, which is useful in connection with the propulsion of motor cars, and the remaining material can be pressed into motor car bodies giving a motor car body which is stronger than steel and much lighter. The result is you get that remarkable acceleration in American motor cars which is so noticeable a feature of their production. I believe that, according to the National City Bank of New York, this idea has passed the experimental stage, and that we now may have new Ford bean motor cars on the roads very shortly. That may bring a considerable addition to the prosperity of Manchukuo, but it will not need more Japanese population, so that one of the Japanese claims in respect of an expansion of population is not a justifiable claim.

They also, of course, claim that they want food and raw materials for their people, but in this connection an interesting fact is pointed out in the last Report of the Department for Overseas Trade which has carried out very valuable studies in connection with both Japan and China. I think the last Report, speaking from memory, was published about September or October of last year. In that Report it is pointed out that Japan is an exporter of food on balance and is not an importer of food; that Japan actully grows more of the stable foods than she can consume; and that she is an exporter of rice and other food products. With regard to raw materials, it has been pointed out by a great many publicists that any nation in the world wanting raw materials can buy them almost anywhere, that most nations are engaged in destroying the raw materials which they cannot sell, and that they would be only too thankful to sell at a very low price any raw materials if only Japan would let them know what she wants. I do not think the raw materials claim really holds water. There is, of course, the question of markets, and in that case I think there is justification for the claim to control markets for the sale of products of a given country because of the unhappy circumstances throughout the world arising from the closing of markets. For this Great Britain must take some share of responsibility. Our Ottawa Agreements have in fact tended—and I think all recent economic reports would support this—to bring about a drop in foreign trade and have contributed greatly to the fall in prosperity of the world which is largely due to this attempt to maintain exclusive markets for the products of a given country.

The Japanese, then, were probably only justified in their expansionist demands on the question of markets. And here, of course, there is no doubt that the China market, as the noble Earl, I think, pointed out, is the most accessible market for Japanese products. In a way the Japanese have rather "missed the boat" in part of their expansionist policy. They made a mistake, if they really wanted to extend by military means, in not attacking, if they wanted to attack, Siberia and the Eastern part of Russia in the Far East a good many years ago, because, from their point of view, it is most unfortunate that since then the Russians have become remarkably strong. They have developed a Far Eastern Army which probably has a strength of 300,000 and is so equipped and developed that it can continue to exist and function with the minimum of communication with the European part of Russia. There is also the fact that the Trans-Siberian Railway has now been practically doubled throughout its length, and a new railway has been constructed to the north of Lake Baikal which renders communication better. The fact is that the Russian Far Eastern Army to a very considerable extent can exist without communication with European Russia, and is exceptionally strong.

One of the interesting developments in this connection was the decision of the Soviet Government to reduce the taxes on all those engaged in production in the Far East territory; in the Maritime Provinces to abolish them altogether; and in the inland part of the Far East territory to reduce the taxes by half so as to encourage settlement and production, and to give the soldiers, when they have completed their period of service with the Red Army, free land in the Far East if they choose to settle down there. This has been very widely accepted, and the result is that the food production of the Far East as well as the construction of huge metallurgical works and light productivity is proceeding at a rate suggesting that the Far East must become almost economically and militarily independent. There is one further factor which must have made the Japanese General Staff, so to speak, sit up and take notice, and that is that the Russian Far Eastern Army has been equipped with new high-speed long-distance bombing planes. These have brought the Japanese centres of population within three or four hours of the Maritime Provinces. From a Russian point of view the Japanese are conveniently aggregated into large populous centres surrounding the factories and production centres of Japan, so that from the point of view of bombers they present an ideal target in which the maximum effect could certainly be obtained with the minimum of effort.

It is true, therefore, that if the Japanese intended to attack Russia, they have made a mistake in putting it off so long. Outer Mongolia has, fortunately, solved its problem temporarily by what. I venture to suggest, is a very good example to other countries. A statement was made by Stalin to an American journalist, that if the Japanese encroached upon Outer Mongolia the Russians would consider it as a reason for operating a defensive and offensive alliance with Outer Monogolia, so that the Japanese know beforehand what will happen if they advance into Outer Mongolia. It is a great thing to know beforehand what is to happen. It has often been said, with what truth I know not, that, had the nations participating in the 1914 Great War known beforehand what would be the action of Great Britain, that War might never have taken place. It is easy to say that after the event, and I do not know whether it is so, but I cannot help thinking that there is some advantage in the general proposition that it is better to state beforehand what one intends to do. Certainly the effect of such a statement beforehand in relation to the Far East has been to stabilise the position, to make much more clear what will happen, and to restrain Japanese aggressive tactics as far as Outer Mongolia is concerned.

The result has been that Japan has turned her eyes southwards, as the noble Earl pointed out, and has initiated the series of advances into North China which have caused so much concern to those who are watching the situation. I think we may say, further, that we have this new situation, that Russia, instead of being an aggressive force in the Far East, is to-day a great force for peace, not only on idealist lines, which I would not dream of suggesting to your Lordships as regard Russia, but on practical, common-sense lines, because Russia neither needs more territory nor more raw materials nor more markets. She has markets enough to keep her busy for the next fifty or hundred years among her own people, who are growing at the rate of something like three and a half millions or four millions a year. She has an inexhaustible supply of raw materials, probably the greatest supply in the world, and more territory than she can possibly populate, even at the rate of growth of four million people a year. So I think we may really put Russia as a great force for peace in the Far East. It is quite natural, and I feel sure the noble Earl will not disagree when I say that if in fact Japanese aggression does continue the Chinese would rely on the friendship of Russia to resist aggression.

Another factor in this connection is that there have been some disturbing rumours during the past few years, going back certainly as far as December, 1933, when I had a disturbing statement from a very prominent member of your Lordships' House, that there was a very close understanding between Germany and Japan. We must therefore realise that the connection between the European situation and the Far East may be more close than we suspect, if there is in fact an understanding, not necessarily an understanding between the Governments, but an understanding between those dominating military forces, to which, as regards Japan, the noble Earl referred, and which are also suspected to be in control in Germany at the present moment. In the last number of the North China Daily News I came across an illustration of this in a very clever cartoon by the well-known cartoonist Sapajou, showing Russian officers at work and a telephone underneath connecting Tokyo and Berlin. I think that is a matter which must be watched. The recent agreement which has been come to between Germany and Austria has freed the German Government to act along the shores of the Baltic, which she already controls thanks to the Anglo-German Naval Agreement, and that gives her access through the Baltic States to the Russian frontier. That is something of which I think we should do well not to lose sight.

Finally, I want to say a word about British interests in China. The noble Earl drew attention to the enormous increase in smuggling. Smuggling is not a new factor, but as he pointed out it has grown enormously during the last few months. I remember talking to a prominent Chinese diplomatic representative here about a year ago. He told me of a ease in which the Chinese authorities discovered a smuggler. I forget what he was smuggling, but let us say it was $2,000 worth of goods. The Chinese Customs authorities confiscated what he was smuggling and imposed on him a fine of $500. This was immediately followed by action on the part of the Japanese military authorities, and the Chinese were forced to return the goods they had confiscated, to repay the fine which they had imposed and to pay the smuggler a number of thousands of dollars in compensation for the disturbance of his trade. That is the sort of thing which makes impossible continuance of the control of the Customs which has so long resided in the hands of British-appointed officers. Our interests are affected because, as I think the noble Earl pointed out, the Customs form the security for British and other loans for the development of China. We therefore are vitally affected when we see the value of our investments going down.

There has grown up in China, especially among the British community, a feeling of helplessness in this matter. For instance, in Shanghai there is an expectation that the Japanese will assume control of the Shanghai Municipal Council at an early date. There seems to be among the British community a sort of readiness to accept this, and that I think is to be deplored when we are considering British interests in these matters. British trade, of course, has been going down enormously in the past few years. I notice in the reports of the Department of Overseas Trade that considerable blame is attached to the British traders themselves; it is said that they are not prepared to meet the requirements of the Chinese either as regards immediate delivery or as regards price. If that is so we cannot put all the blame on to the Japanese for unfair competition. Some blame for the drop in British trade must be placed in those circumstances on the shoulders of those representing British firms in Shanghai. What we want is a continuance of fair agreement in this matter, and I think the suggestion for solving this problem by some form of conference is of vital importance.

I do not rule out the possibility of utilising the League of Nations in this matter. I think it would be the greatest mistake, because the League of Nations and the policy of collective security has suffered a setback in the recent events in North Africa, for us to say that the whole thing is dead and done with. It is not. The right line surely is for us to say that we have made a mistake, and we have had a failure, but having learned the lesson, we will attempt to strengthen in the future the forces making for peace which are still enshrined within the League. I think I shall perhaps receive a considerable amount of agreement among your Lordships, and in the country as well, if I suggest that the reason we failed in the attempt to apply sanctions in the Italo-Abyssinian difficulty was that so many members of the League had not a vital self-interest in what was going on. They were not vitally interested in North Africa. If we collected together the States Members of the League who are vitally interested in the maintenance of good relations and peace in each different area of the world we might do much more to maintain peace and good relations and remove the causes of war.

A regional pact within the framework of the League entered into by all those nations concerned in maintaining peace and good relations in the Far East would in that case be the line on which we should develop, and we should invite non-members of the League to participate in such a pact. We have two possibilities in this connection. There is the Nine-Power Conference, which now consists, I think, of thirteen or fourteen Powers or possibly more, because a considerable number have joined since it was started. That Conference is still in being and could be called together. There is another Conference available. I cannot remember the exact name of it, but the noble Earl, Lord Stanhope, with his knowledge of these matters, will know the one I mean. I think it was called the Committee of Nineteen, which was formed while the Lytton Inquiry was going on at Geneva.


The Committee of Thirteen, I think it was.


I have forgotten the exact number; we have so many Committees with such large variations in number that it is difficult to remember them. But at any rate the Committee was formed at the time the whole Lytton Report was being considered at Geneva, and I think that Committee was asked to keep an eye on what was going on and from time to time to report to the League and to make suggestions. I do not know if this ever was done, but might it not be worth considering that that Committee should be reconstituted, called together, and asked to inquire into the position and into what steps are necessary to maintain peace and good relations in the Far East? I venture to think that the suggestion put forward by the noble Earl, Lord Peel, is a very valuable one, and I am certain that we are indebted to him for the contribution he has made to this difficult problem.


My Lords, the noble Lord who has just sat down expressed gratitude to my noble friend Lord Peel for his historical summary of the situation. I think I could, more especially for the benefit of the noble Lord opposite, produce an historical summary which shows that the case for the Japanese is infinitely stronger than people realise. We hear a great deal of complaint, and we are not the only people who complain, of Japanese penetration into China and damage to their commerce and other interests. But what reason have the Japanese to be grateful to Europe? The Japanese have been extremely badly treated by Europe for the last forty years. Let me recall to the noble Lord the circumstances in 1894 and 1895. The whole trouble arises from what took place in those years. The Japanese having, as a result of the war with China, obtained a footing on the mainland, three European Powers—Russia, France and Germany—united in order to force the Japanese to restore this territory to the Chinese, and then, with almost incredible cynicism, a year or two afterwards seized these places themselves. I forget what the French took, but the lion's share of course fell to Russia, who occupied the Liutung Peninsula, turned Port Arthur into one of the strongest fortresses in the world, and proceeded to settle down there permanently. The Japanese were forced to submit.

In 1902 the Anglo-Japanese Alliance took place. Then in 1904 and 1905, as a result of the Russian action, came the war with Russia, which was really a war of self-defence on the part of the Japanese, although it took the form of aggression. The result of that war was, as everybody knows, that the Japanese inherited the Russian possessions in Manchuria and established themselves there permanently. Then came the Great War of 1914 and the Japanese, being allied to this country, entered the War on the Allies' side, took part in the campaign and took the district of Kiaochau. It is true that we also participated nominally in the conquest of this district, but we were actually little more than spectators. At the end of the War the Japanese were not allowed to keep this district but were made to hand it back to the Chinese. Then, in 1922, came the repudiation by us and the termination of the Anglo-Japanese Alliance. I venture to say, and I am not ashamed to say it, that I believe this to have been one of the most fatuous actions we have perpetrated in recent years. The Japanese Alliance cost us nothing at all, not a man nor a ship; it secured our position in the Far East, and would have enabled us to exercise a moderating influence upon the Japanese themselves in case they showed too much of the spirit of aggression.

The consequences of the termination of the Treaty of Alliance were particularly unfortunate. We failed conspicuously to attain the object at which we were aiming. The Alliance was repudiated in order to obtain a better feeling with America. The political feeling between America and ourselves has not improved in the least; there has been no change at all. That, however, is not the only case in which the determination of the Treaty was unfortunate. It was also unfortunate because it hardened the Dominions in what I believe to be that extremely short-sighted policy of definitely excluding all Japanese from the immense tracts of the world which are in their possession. I believe that this is a short-sighted action on their part for which some day they will pay dearly.

On the whole, therefore, what have the Japanese to thank Europe for? Why should they feel any gratitude towards this country or any other? The Japanese, who were at one time our Allies, are now as a matter of fact, in certain quarters represented by noble Lords opposite, regarded literally as enemies. Things have gone so far, thanks to our ill-advised and unfortunate interference in trying to eject them from Manchuria a few years ago, that I should think that on the whole we are probably more disliked by the Japanese than by any other country. For my part I can only say that I look upon this as a most unfortunate development, and I would even characterise it as something in the nature of a real disaster. We have turned a powerful nation, which was a nation really friendly to us, into a potential enemy, and there is nothing on earth to show on the other side as a result of our action.

I do not think I am using too strong language when I say that I look upon this as a disastrous development. Of course, when I say "a disastrous development" I am bound to admit that there is a certain amount to complain of. It must be admitted that the Japanese have infringed treaties; it must also be admitted that they have committed acts of aggression. But on the whole we are not absolutely guiltless in the matter. It is partly owing to the conduct of ourselves and other European nations that the Japanese have been driven into these acts of aggression. I would further point out that these acts of aggression on the part of Japan bear no resemblance to the aggression committed, for instance, by Italy in Abyssinia. In the case of the Italians in Abyssinia there was no question of protecting their own interests at all; it was a war of aggression. All the aggression by the Japanese has really been, although it may sound paradoxical, in the nature of self-defence. They have, as has been pointed out by my noble friend and, I think, by the noble Lord opposite, always regarded the possession or the control of what used to be called Manchuria as absolutely essential to their existence. I would maintain that the creation of what is called the puppet State of Manchukuo is really necessary for the safety of Japan. The creation of the State of Manchukuo has led inevitably to the Japanese control in Northern China. It is a natural development.

After all, what is the basic fact? The bed-rock fact is that the Nanking Government is incapable of governing Northern China. The events of the last year have shown it. If the Nanking Government is incapable of controlling this vast district, what are the alternatives? There are only two alternatives. It must pass either under the control of Soviet Russia or under the control of Japan. No doubt if the noble Lord opposite was able to decide the matter he would have no hesitation in saying that it would be for the benefit of all concerned that Soviet Russia should play the controlling part. Personally, I take the opposite view—that if we had to choose it would be better not only for us but for the world in general that it should be under Japanese control. Whether you like the Japanese or not, whether you approve of the Japanese or not, the fact remains they are a civilising power and stand for stability and settled conditions. Nobody who has over been to the Far East, and seen what has been known as Manchuria, will think of denying that assertion.

Now I would like to ask this question: Is Northern China a question of vital importance as far as we as a nation are concerned? I am inclined to think not. I should think our commercial and economic interests in Northern China are very slight. Our interests, as everybody knows, are further south, and if a serious attempt were made by the Japanese to interfere with our trade in Middle or Southern China we should find friends who would support us in resisting them. But how do your Lordships propose, or how does anybody propose, however much he may dislike the Japanese, to arrest their present progress? How can it be done? If anybody asked me, I should say that I do not think it can be done, and if you put the question to His Majesty's Government I think they would reply not in those exact words but in the same sense. It seems to me to be one of those cases in which we ought to avoid any precipitate action at all. I am, as a rule, not in favour of delay, but I think it would be exceedingly rash if we made any decisive effort to stem violently Japanese penetration in Northern China at the moment. It seems to me a case in which we ought to exercise patience and negotiation. As Lord Peel has pointed out, opportunities have arisen and I sincerely hope they will be attended to. Therefore my advice to the Government, if I were in a position to give advice, and if I thought they would listen to it, would be to make use of a familiar suggestion to which we have been so long accustomed—to wait and see. That is the sort of advice which I should think is palatable to every Government, and which for once in a way is likely to be acted upon.

I have spoken for longer than I had intended, but there is just one minor question to which I wish to allude, and it is with regard to the change of our diplomatic representative from Peking to Nangking. It is unavoidable, but it is a change which everybody must deplore, especially those who have had an opportunity of visiting Peking. The British Legation, or what used to be the Legation, and now the Embassy at Peking, is a place of great tradition and interest to all of us, but these changes, however unfortunate in certain cases, become a necessity. You have the same thing in Turkey, where our unfortunate diplomatists have to leave one of the most attractive cities in the world and go to Angora. Any one who contemplates the change from Peking to Nangking will regard it as very unfortunate and very expensive, but unfortunately it cannot be avoided. Here again, I would suggest that there is no occasion for hurry. Even using the utmost despatch it is not possible to effect the change in less than three years' time. What I suggest, and I expect the suggestion will be received favourably, is that there should be no question, so to speak, of scrapping the Peking Legation, but that it should continue as a kind of rival Embassy to the one at Nanking, and that there should be no needless acceleration about the transfer. In what is ironically called the "Changeless East" changes do occur much more rapidly than anywhere else, and some convulsion might occur with the result that Peking would regain its ancient splendour and become not again the capital of China but of a North China Kingdom.


My Lords, having lived five years in China, I also am grateful to the noble Earl for having brought forward this Motion. I would like to emphasise again the importance of the maintenance and improvement of normal trade in North China, the preservation of the Chinese Customs and revenue, and the continuance of those services and foreign loans in which Japan herself is also interested. I also wish to support the plea that we might meet the feelers which have been put out by Japan for co-operation and friendship with her. Further, I would also like to agree that there is really room for all in the Far East, and that the interests of Japan, China and ourselves do not conflict, but that in a prosperous and united China all our interests lie—those both of the nations of the Far East and of the West. I believe it is in such co-operation and in the building up of the prosperity of China that Japan will find her true outlet, and she will also find that her true security will lie in the esteem and gratitude of her neighbours.

I think there are signs that both in China and Japan the rulers are becoming aware of the ultimate issues on which peace and prosperity depend. The patriotic movement in Japan has in it the seeds of an exemplary spirit of self-sacrifice and devotion. The New Life movement in China aims at the creation in the individual of a more responsible and constructive attitude towards the affairs of the State, and the position is, I think, treated in a fresher angle in a cable recently received from Dr. H. H. Kung, Minister of Finance in the Central Government of China: The world to-day is in a state of chaos, degeneracy and disintegration, because men are dominated by selfishness, jealousy and materialism. Only the inspiration and guidance of a higher will can change human nature and conciliate men and nations, so that there may be peace on earth and good will among men. The Oxford Group is a movement which transcends geographical divisions, racial distinctions, party differences and class conflicts. I believe the principles and discipline of the movement will help to bind the nations of the Far East and of the world together in a common moral and spiritual awakening, which is urgently needed to evolve a new and better social order. I hope the Government will do all in their power to promote and facilitate cooperation between China and Japan and in the creation of such a better social order as will smooth away any differences and difficulties which may arise.


My Lords, I think your Lordships will agree that once again this House has shown that we have experts who can deal with manifold subjects, and in this case with real knowledge of the situation in the Far East. The historical sketch with which my noble friend Lord Peel opened the debate was one that I certainly cannot hope to improve upon, and all that I wish to say to-day is that there are just one or two small points that I should like to add to that statement in order to make it quite clear to your Lordships. My noble friend remarked on the East Hopei Anti-Communist Council. May I remind your Lordships of what happened before? After the armistice signed at Tangku on May 31, 1933, the Chinese Government were requested to withdraw all their troops south of the area between Tientsin and the Great Wall, which became the demilitarised zone. The next move was that negotiations were opened not only for the restoration of free communication between Manchukuo and North China, but also for the recognition of Manchukuo and the modification of the Chinese tariff in favour of Japanese trade. Of those three subjects only the first made any progress, and there have been very unsettled conditions in the northern area between Peking. Tientsin and the Great Wall.

The result was that in June, 1935, the military party of the Japanese in Manchukuo and North China presented demands for further control in North China and they supported that by a concentration of their troops at the Great Wall. Then they endeavoured to have set up what is an ostensible autonomy of the five Northern Provinces—in China, Hopei, Shansi, and Shantung, and in Mongolia Chahar and Suiyuan. That scheme failed to fructify, with the result that there was only established the Hopei-Chahar Political Council—established with the endorsement of the Central Government of China but which had Japanese advisers attached. The Chinese forces as a whole retired south of the Yellow River, which runs southwest through Shantung and then westwards through the north part of Honan. Then, contrary to the desires of the Hopei-Chahar Political Council, and in fact in direct opposition to it, the East Hopei Autonomous Anti-Communist Administration, to give it its long official title, was set up, and this Anti-Communist Administration was not only against the Hopei-Chahar Council but also opposed to the Central Government of China. Its importance is that it holds that very vital district of North China through which communications between China and Manchukuo pass, and also controls the seaboard from the Great Wall down to the river which runs down from Tientsin a little way inland.

It has been made extremely difficult for China to take much action in that part of the world because Japan has recently increased her garrison in North China under the provisions of the International Boxer Protocol of 1901. That enables any Power signatory of the Protocol with an Embassy or Legation in Peking to have a garrison in that part of the world, but it is supposed to be limited to what is necessary for the protection of the Embassy and for the maintenance of communications between Peking and the coast. There is no actual limit to the forces which any signatory nation may employ for that purpose, and the Japanese have increased their forces very materially in that area. When my noble friend Lord Newton says that North China has to go under either Russia or Japan I am afraid I must entirely disagree with him, because, after all, what many of us who are friends both of China and of Japan would desire is that that part of China should remain under the Central Chinese Government. He told us that no one would deny that Japan stands for stability and settled conditions. Undoubtedly that is true in areas which are directly under Japanese control, but looking at the situation as it exists at the present moment in North China, when he suggests that that is under settled conditions or in a condition, in fact, which any friends of either China or Japan can really approve of, there I am afraid we must disagree with him.

As a matter of fact, the conditions there are so far from being settled that the increase of smuggling, not only in East Hopei itself but right down into China, is having an immense effect. Indeed, its effects, I have been told, are felt right down as far as the Yangtse. Vast masses of goods are pouring in, chiefly supplied by Japanese or Korean nationals, and the Chinese Customs Service have not been allowed to carry arms, with the result that there is no method of cheeking this smuggling. Indeed, as my noble friend Lord Peel pointed out, it is hardly to be described as smuggling, because it has been given recognition by the East Hopei Administration, who now impose a tariff at a reduced level on these smuggled goods and keep the proceeds for their own purposes. I think everyone will agree that that is unfortunate, not only for China but for every country which does trade with China.

I entirely agree with what was said by Lord Peel and Lord Marley and I think by the noble Lord, Lord Addington, too, that there is ample room for all countries to trade with China. May I remind your Lordships of a part of the statement that was issued by Sir Frederick Leith-Ross, who is now on his way home from China and who, we expect, will arrive in this country later this week? He said: I fully agree with the observations of the American Economic Mission, viz., that a vast change is coming over China, a modernisation that, as compared with ten or even five years ago, marks many centuries. He goes on to say: I believe that this change will make China not a less but a more fruitful field for British enterprise—commercial, industrial and financial. Our principal interest here is to promote the peace, the prosperity and the trade of China, and in working for this, it seems to me we are working in the interests of all countries trading with China. The reconstruction of China is a vast task which will take years to accomplish and there is room for all to assist her in this task. I think that is an expression of opinion with which those who know China and the Far East will cordially agree.

My noble friend Lord Peel asked if Russia was in an aggressive mood in the Far East, and in the noble Lord, Lord Marley's interesting speech, giving rather the Russian side of the situation, I think he probably had his answer, which was that Russia is not in an aggressive mood and is merely taking up a defensive position. As my noble friend knows, a great deal of the frontier all along Mongolia and Manchuria is very ill-defined except where it actually runs along the course of the three big rivers—the Aigun, the Amur, and the Ussuri. Whore these rivers run, the frontiers were defined, but proposals have been made between the U.S.S.R. and the Manchukuo Government to define their common frontiers, and I understand that the Outer Mongolian and the Manchurian Governments are also hoping to define the frontiers between them too. If that can be agreed upon, we hope that the incidents which have been occurring somewhat frequently of late, some of which have reached dangerous dimensions, may be prevented from recurring hereafter, and thereby that there may be eliminated one of the dangers that exist in those parts of the world.

My noble friend Lord Newton regretted the move of the British Embassy from Peking. I am sure we all agree with him in that view but, as he said, it is undoubtedly necessary that we should get our Ambassador, or at any rate some of his staff, in a position in China more in touch with the Central Government. I can, however, relieve his apprehensions in one respect by saying that it is not proposed to give up the Embassy at Peking, but merely to have a second one at Nanking, and the Ambassador and his staff will operate between the two. We have important interests in North China—more important even than my noble friend realised—and it is necessary that our Ambassador should periodically live in that part of the world and continue to inhabit the historical and delightful residence there, though it is separate from some of the more important trading interests in China. I am not going to follow him into the history which he gave going back to the time prior to the Russo-Japanese War, because there is much other important business awaiting your Lordships' House; but when he regrets the Anglo-Japanese Alliance coming to an end, he must not forget the views of the British Dominions, which were very strong in that respect.


I know, but they were all wrong.


That may be, but at any rate we prefer to act as one unit, as the British Empire, and not to force the views of the United Kingdom down the throats of others of His Majesty's subjects though they happen to live elsewhere; though as a matter of fact some of them live a good deal nearer to the Far East than we do. Canada, Australia, and New Zealand probably have a greater interest in the Pacific question than we can have ourselves. The noble Lord asked if North China was of vital importance to us. I cannot say that North China is of vital importance any more than any other part of the world, but of course we have a very considerable trade with China and also with Manchukuo, and in these hard times we cannot afford to give up British trade in any part of the world. Therefore, although it is not of vital interest, it represents a very considerable interest.

Most of your Lordships who have taken part in the debate have pressed on the Government the view that we should try to come to some agreement with Japan. The view of His Majesty's Government has been strongly throughout that we should endeavour to continue, and indeed to improve, the friendship between this country and Japan, although perhaps we do not go so far as to suggest that we should come to an agreement with them, and for this reason. It would be difficult to come to an agreement with Japan which would really be in accord with our general policy in China—the Open Door and freedom of trade for everybody. The Japanese view appears to be, judging by their action in North China and elsewhere, that they have a sphere of influence, which, of course, is the opposite of the Open Door.

Our efforts to strengthen our friendship with Japan have not been improved by reason of incidents regarding trade in Manchukuo. There the Government of Manchukuo, which of course largely takes its orders from Japan, has closed its doors to our trade and has imposed a monopoly in regard to oil. Recently there has been an unfortunate incident in which a British Indian subject and his wife were taken prisoners in the South Manchurian railway zone, which is quite definitely under the control of the Japanese Government. They were maltreated in prison there and only released quite recently and handed over to His Majesty's Consul. Again, there have been incidents, as your Lordships are aware, in regard to the accusation made against the British Court which tried two British soldiers in Peking. I only mention these incidents to show that they do make the progress of friendship and agreement with Japan more difficult. I am not going to suggest for one moment that they are preventing us from going ahead with that desire, but I submit that, with the best will in the world, we cannot afford to have incidents of this kind if we really wish to improve our friendship and to see if we cannot come to arrangements which are mutually satisfactory not only to ourselves but to Japan and to China too.

The situation in China is one of great difficulty. She had these difficulties in regard to Customs which, as my noble friend pointed out, form the basis of the whole of her trade and credit with other countries. She has had great difficulties in regard to her exchange problem. In passing, I would mention that some years ago, to my horror, I found I had to reply to a debate in your Lordships' House on bimetallism. I was informed that if only the price of silver went up in China all would be well with the rest of the world. Exactly the opposite happened. Following my brief, I said I thought it might be disastrous, and events have proved that my brief was right, because when the price of silver went up in China the export trade of China went down, and China was unable to buy imports from other countries. That situation has now improved. Sir Frederick Leith-Ross shows in his Report that really the Chinese Government have done remarkably well in controlling the exchange, and that through the very difficult times, in part caused, first, by the purchase of silver by the United States and then by their refusal to buy any more, China has nevertheless been able to keep her exchange at a fair level. But whether we live in the Far East or in the West our interest surely is that there should be a strong, stable Government in China, so that the Chinese in all parts of that vast country shall be able to trade and purchase goods and obtain capital. If we can manage to obtain the support of Japan and the United States and other countries in assisting China in that effort, then I believe it would be not only to the benefit of this country but of China, and perhaps most of all to the benefit of Japan, whose trade with that country is so vast.

The noble Lord, Lord Newton, suggested that the policy of His Majesty's Government should be one of "Wait and see". No, that is not our policy. In these strenuous days it is impossible for any Government merely to sit still and wait and see. But we are endeavouring to carry out his other recommendation to exercise patience and endeavour to follow negotiations. There is not the slightest intention on our part—I think he, perhaps, almost suggested it—to take forcible action or anything of that kind in the Far East. We are out, through negotiation and friendly settlement, to endeavour to assist China in her real difficulties, to establish a stable Government, and in so doing to improve the trade of the world.

I do not think I have anything further to say except that Lord Marley, I think, suggested there was some readiness on the part of the Shanghai Municipal Council to take it for granted that Japan would necessarily come into control of that Municipality. Our information is that while the Municipal Council would welcome some further Japanese participation, it does not intend to fall under the control of Japan, whose interests are less than those of several other countries. In regard to the suggestion for a conference, and preferably a League Conference, may I remind the noble Lord that Japan, unfortunately, is no longer a member of the League, and anything that is put forward on behalf of the League perhaps gets a much less favourable hearing from Japan than if the League is not brought into it.


May I venture to remind the noble Earl that I did suggest that both Japan and the United States, neither of whom is a member of the League, might be invited to participate in such a conference?


But that would probably have to come as an invitation from outside the League rather than from inside the League, and such an invitation, I suggest, would be more likely to be welcome by both those countries. At this moment we have hardly reached the position of coming to a conference. We are still endeavouring to see how we can get further agreement, and I am sure the noble Lord opposite will agree, that nothing is more fatal than to call a conference when you have not done a great deal of preparatory work and satisfied yourself that there is more than a reasonable chance of arriving at a satisfactory solution. A conference which fails is worse than no conference at all. Subject to that, I think I can agree generally with everything that the noble Lord opposite has said. I am quite certain of this, that all Parties in your Lordships' House will be agreed that, in the interest of this country, the policy which we should pursue, and which, indeed, is being pursued, is that of friendship with Japan, and that we should endeavour to assist China in any way that we can to enable her once more to gain a position in which she is able to trade satisfactorily and widely with all countries.


My Lords, I am much obliged to my noble friend for his answer. I am glad that he denied that he had accepted Lord Newton's recipe for Government policy, to wait and see, but it did strike me that some elements of it had a strong resemblance to that particular policy. I may, however, have been wrong. But I should like to add this. The noble Earl told us that there were numbers of incidents of various kinds of unfair treatment of our nationals, and things which made it extremely difficult to come to an arrangement with Japan. The whole point of the position that I put before your Lordships was that these irritabilities, if I may so call them, in Japan are very largely due perhaps to the fact that we and other countries have not sufficiently recognised the position of Japan and her status. If we could approach the matter in a large way, as it were, and deal with these matters, I believe that these minor things would disappear. We have had now the policies to which I alluded. I think Japan is trying really to approach us and suggest a general agreement on broad lines, and it would be a great pity if the moment was not seized. I hope that by waiting the Government will not lose the opportunity of coming to a general arrangement with Japan on all these matters. I beg to withdraw the Motion.

Motion for Papers, by leave, withdrawn.