HL Deb 15 February 1938 vol 107 cc653-73

VISCOUNT ELIBANK had given Notice that he would ask His Majesty's Government what steps they are taking to protect British interests in China in view of the situation in the Far East, and move for Papers. The noble Viscount said: I had some hesitation in raising this Motion to-day in your Lordships' House as I am aware—as indeed we are all aware—of the delicate situation which exists in the Far East; but the interests of this country are so great, and they have been so long bound up with that part of the world, that it is quite impossible for any British citizen not to take an intense and anxious interest in what is transpiring there. Our investments, our trade, and other interests are of such magnitude that we cannot afford to take a passive attitude towards these affairs in the Far East. I do not wish to be provocative in any utterances that I am going to make, either to Japan or to China, and I am far from blaming His Majesty's Government for the position in which we find ourselves, because, after all, we all admit that they have had little or no control over the circumstances which have arisen. What I wish to do, however, is to ask for certain definite information, and I shall do that as I go on with my speech.

First of all, will you permit me to analyse very broadly the situation which has developed in the Far East? On the one hand we have Japan, over-populated —indeed with a population to the arable square mile greater than that of any other country in the world. I find on looking at statistics that Japan has a population of 2,774 to the arable square mile, as against 2,170 in the United Kingdom, 8o6 in Germany and about the same number in Italy, and 229 in the United States of America. Japan also has a large deficiency of raw materials like wool, cotton, oil, coal, iron ores, scrap iron, tin, bauxite, and agricultural fertilisers. Moreover she finds that all the doors for emigration of her surplus population are closed without the China seas. She feels that she can dominate her next-door neighbour, China, and even if she does not find outlet there for her surplus population, at least she can make up for her lack of raw materials. On the other hand, there is China with a more or less stationary population of 400 to 420 millions—one-fifth of the human race —kept stationary by disease and natural conditions, and therefore with a population problem which is just as acute as that of Japan. Notwithstanding that, China finds herself being forcibly deprived by Japan of certain of her largest coastal Provinces, and being overrun and laid waste by Japanese armed forces. Is it surprising that China should resist this form of aggression or that a national spirit should be aroused within her? I venture to say that it is not surprising, and my sympathies are all with China in that matter.

But there is still another factor which is dominating this conflict, and in this respect I have more sympathy perhaps with Japan than I have with China, and that is the advance of Russia, with her creed of Communism, with which she is trying to embrace all China. Japan obviously cannot look on at this advance without anxiety or even passively, and one could perhaps from that point of view condone the Japanese occupation of Manchukuo in order to resist that advance; but when she goes on to make war in several other Provinces as well it seems quite out of keeping with the actual situation. Unfortunately, not only is Japan's ambition directed towards control of China in that respect, but her ambition seems to lie also in directing China's trade in such a way as to squeeze out all competition by other foreign nations. We have already had examples of this in Munchukuo, and more recently it was reported that China's Provisional Government at Peking, under pressure by the Japanese, had reduced the duties on imported articles in favour of Japan whilst increasing the duties against other countries. In addition Japan's actions in and around Shanghai have been most reprehensible, and in spite of many apologies that have been made these still go on; and, like the sands of the shore, they are apt to leave a gritty taste in our mouths.

Moreover, it is in Shanghai that the most important seat of the trouble lies. Here is situated probably the largest entrepot for international trade in the world and here is the centre for the investment of many millions of pounds of capital in various undertakings in Shanghai and other parts of China. This country holds the largest share of those investments, aggregating something like£150,000,000. Thirteen foreign countries, including ourselves, are definitely in terested under treaty powers in the maintenance of the integrity of Shanghai, whilst peoples of forty-two nationalities, together with many thousands of Chinese, live within its borders. The population of Shanghai to-day is 3,500,000 people. Shanghai is composed of an International Settlement, a French Settlement, and a Chinese Settlement. The International Settlement is administered by a Municipal Council of which the head is an American, like the Secretary-General and the Municipal Advocate. Therefore three of the most important offices of the City are held by Americans. The other members of the Council are British, Japanese, and Chinese.

What has happened quite recently? The Japanese have put forward demands which are categorically these: First of all, that there should be a large increase of the Japanese police branch; secondly, that a Japanese Commissioner of Police should be appointed; thirdly, that Japanese should be in control of positions in all the Council's departments; and, fourthly, that the post of Secretary-General (the chief post in the Council's administration) should be occupied by a Japanese. It is perfectly obvious that if these demands were granted the Japanese would acquire complete control of the International Settlement and the international character of that Settlement would be destroyed. What would ensue from such a control? So far as I can see this would happen. Shanghai is the key to the valuable trade of the Yangtze Valley, a very rich territory, and any single Power having Shanghai in its control would be able to injure the business interests of other nations far beyond the boundaries of Shanghai right into the centre of China.

The same argument applies to the Customs. Shanghai is the head office of the Customs, where some 50 per cent. of the revenue is collected, and control there would also necessarily imply control of every other Customs station in the Yangtze Valley. If the Customs in Shanghai were dominated by Japanese there is little doubt that it would be run principally in Japanese interests; what has happened in Manchukuo vividly illustrates that belief. What have the Japanese done with regard to the revenue which they have taken over elsewhere, in Tientsin, Tsingtao and other places? They have paid this revenue into the Yokohama Specie Bank. What guarantee is there, if they do the same with the Customs revenue in Shanghai, that they will not, as time goes on and their funds for war purposes get lower and lower, appropriate to their own purposes the amount which is required to pay the services of the foreign loans? Finally, I should like to know what is to become of Sir Frederick Maze, the present Inspector-General? If he were to leave that post, what is to become of British prestige; or, if I might put it in this way, if he is to leave that post and no British Inspector-General is to be appointed in his plats, what is to become of British prestige in China? These are no hypothetical questions because, apart from the Japanese requests to the Municipal Council which I have just outlined, little more than a fortnight ago General Matsui, the Japanese Commander at Shanghai, was reported to have said that he was growing tired of the long discussions and might be compelled to take over the Customs.

There is another important point on this question. The Customs building at Shanghai stands in the International Settlement, which is neutral ground. Should not, therefore, all the other Treaty Powers, thirteen in number, who are concerned, combine with us to resist any attempts by the Japanese either to take over the Customs in Shanghai or to control the Municipal Council? I should like to ask His Majesty's Government whether they are in communication with the other Powers in regard to resisting any attempt on the part of Japan to do either the one or the other or both of these things, and if not what steps they are taking to secure our interests and to prevent an act of aggression on the part of Japan which if carried into effect would never be forgiven in this country. I hope your Lordships will forgive me dealing at this length with such matters, but it is very important that you should be in possession of hat is actually happening in that unfortunate City.

There are two other matters in connection with Shanghai that I will deal with very shortly. Japanese troops are still occupying Hongkew and Yangtze-Poo, which are the northern and eastern parts of the International Settlement and which contain most of the mills, warehouses, docks and wharves of Shanghai. It is very important that the Japanese troops should be withdrawn from these particular areas as soon as possible and that they should be replaced by municipal police, in order that the ordinary business of those sections of the City may be restarted, and also that the thousands of industrial refugees now inhabiting an area to the south of the river should be able to return to their work in those factories. The inability of traders to get to their property in Hongkew and Yangtse-Poo has been strangling trade and causing immense loss in many directions. The other matter to which I wish to call attention is that the Japanese have placed censors in the foreign cable office. By what right, I should like to know, do they scrutinise the cables of foreigners sent or received en clair in the neutral territory of the International Settlement? Why was this claim not resisted in the first instance? And if Japan insisted on putting in their censors for their own cables, would it not have been quite open to British and Americans to put in theirs for the handling of their own nationals' cables? Perhaps His Majesty's Government may be able to give a reply to this question.

I should also like to ask what is the position with regard to Canton, for if Canton were taken by Japan communications between Hong Kong and probably the whole of the South China field would be blocked to British trade, and this is where British trade largely lies in China. I venture once more to ask how far His Majesty's Government are in touch with other European Governments to maintain the status quo in the International Settlement in Shanghai and how far the United States of America, who have such large interests in China—not so large as ourselves in investments, but infinitely larger in trade—are collaborating with ourselves in the whole situation. I know that in the ordinary way there is no intention, as I understand it, on the part of this country or the United States of America to interfere in the war between Japan and China, but in these days it is an understood thing by all civilised nations that, if one country attacks another country, then so far as possible it respects the interests and rights of foreigners residing or doing trade there. Japan, on the other hand, seems to be disregarding these ethics of war, and, although she has not yet done so in Shanghai, in other parts of China where she has gone she is laying all waste behind her, and trade and commerce in North China and in Shanghai are gradually coming to a standstill.

I have here some figures showing the position with regard to the losses of the textile trade in China. Compared with the last four months of 1936 our exports to China fell in the last four months of 1937 by nearly 4,000,000 pounds of tops, 24,000 pounds of yarn and 148,000 square yards of woollen and worsted tissues. This is obviously a blow to the wool exporters in the United Kingdom, and it can be multiplied in a good many other directions. In Shanghai itself in the first four months of 1937 imports amounted to£14,000,000 sterling. Those imports fell in the last four months of 1937 to£2,500,000. Surely here is a case where public opinion ought to have some effect upon the policy of Japan. She is gradually rousing against her the public opinion of almost every nation, and even if Germany and Italy appear to condone the way she is behaving, because of their own attitude towards Russia, nevertheless the people of those two countries cannot in their hearts agree with the way that this war is being carried on.

If Japan continues in this way she will not only have public opinion against her, but she will make it extraordinarily difficult in the future for those countries who would wish to help her in finance to provide that finance at a time when all her resources are exhausted and she is bound to go outside for that purpose. At any rate I feel I have done a duty in raising this case before your Lordships' House and in asking this Question of His Majesty's Government, because I believe there is such great interest in this country on this question that it is necessary that a debate should take place in Parliament in order that we may hear what the Government have to say upon the matter. I beg to move.


My Lords, my noble friend Lord Snell is unable to be here this afternoon and he has asked me to put the Labour point of view on the very important matter raised by the noble Viscount before your Lordships. I want first of all, if I may, to say that I think it is a very good thing that so staunch a Conservative supporter of the Government should have raised this question. It shows that this is not simply an attack by the wicked Socialists upon a reactionary Government in Japan. Indeed, I think that opinion in this country is as near being unanimous in horror and condemnation of what is going on in China as it has been on any great subject within the lifetime of any noble Lord present to-day.

This matter has very much exercised the Labour Party and the trade union movement in this country, as the noble Viscount the Leader of the House and the noble Earl, Lord Plymouth, know quite well. We have given the matter very anxious thought. I want to say at the beginning that I recognise that we are al present passing through a very difficult period in international relations generally. It is because of that, in the opinion of many people, that this present aggression against China has taken place. The Japanese General Staff and the Japanese politicians have apparently reckoned on the fact that Europe was so divided, that there was such a menace from certain aggressive Powers in Europe, that they could do what they liked in Asia. Just because of that existence of tension in Europe I recognise that His Majesty's Government and those Governments with whom they usually work in these matters have to exercise caution, and I do not wish to say anything that would lead anyone to suppose that I advocate violent courses.

The noble Viscount in his Question refers only to British interests, and I quite agree and the Party for whom I speak quite agree, that British interests must be furthered in China. Our trading interests are very great and much employment depends on the continuance of our trade in China. We are not behind any other Party in demanding that our prestige and repute in the East should be upheld. At the same time, that seems to me rather the short view. In the long run what will maintain British trade everywhere is the restoration of respect in the world for International Law and the discouragement of the breakers of treaties, the violators of their pledged word. In the very few words which I shall venture to address to your Lordships I would like to stress that point more than the noble Viscount thought it advisable to do. He rather stressed British interests. There I support him; but I would also draw your Lordships' attention to what I would call the long-range policy of restoring respect for International Law.

On the point of prestige, I would like to take this opportunity of saying that I think the British Navy in China, in its work on the inland rivers, has behaved magnificently throughout a most difficult situation. I am particularly glad of that because one of the most prominent of our senior officers, Admiral Holt, is an old shipmate of mine. I served with him for three years in China. He knows China thoroughly, and I always prophesied a brilliant future for him. I am glad that my prophecy has come true and that when put to the test he has behaved not only as a very brave man but as a great diplomat. And in this connection I can also permit myself to pay a tribute, in a very humble way, to the leaders of the French community in the French Concession. They have stood up magnificently to provocation and threats, and they have succeeded. They have maintained the French Settlement inviolate. The "victory march" took place through the International Settlement, where our interests and American interests, as the noble Viscount has reminded your Lordships, are predominant; hut the French would not have the aggressors in their territory, and they kept them out. I am very glad that has happened, but I should also like to say how very magnificent have been the services of the Americans, especially in Nanking—of the official Americans, the missionaries and others—in attempting to moderate the terrible excesses that have taken place or to prevent some of the atrocities that have stained the reputation of a brave people, the Japanese.

The point of view of the Party for whom I am speaking this afternoon is that international action should have been taken long ago to bring pressure to bear upon Japan to observe her treaty obligations. We do not suggest unilateral action. We have never suggested single-handed action by this country. As the noble Viscount has said, all the trading nations in the world are deeply concerned, and all nations are deeply involved, in enforcing respect for International Law. But where we have suggested that His Majesty's Government should take action, even if others are not prepared to do so, is in discouraging the sending of munitions to Japan. We think it is unbearable that implements of war should be leaving British ports for Japan, or that financial assistance should be given to Japan—if any one in the City is so rash or so imprudent as to suggest doing so!I am happy to think that the financiers in the City, with whom I do not always see eye to eye, are on this occasion exercising a more than usual prudence, and I hope they will continue to do so. If, however, they do not, I hope that His Majesty's Treasury will exert the most active discouragement, through the usual channels, against any financial assistance to Japan, whatever other countries may do.

The noble Viscount, Lord Elibank, spoke of our prestige as a great Power in Asia. Many of your Lordships here know the East very well; many of your Lordships have held very important positions in the East; and I think I shall carry consent when I say that prestige in the East is everything, and that our prestige as a great Power has suffered, since the present Government came into office in 1931, all over the East because of our weakness and our wobbling. We are now, in 1938, reaping the harvest that was sown in 1932 by the present Chancellor of the Exchequer, Sir John Simon, then Foreign Minister, in his action in practically supporting Japan at Geneva when the first Manchukuo aggression took place. What harvest are we going to reap in the future, my Lords, from what is going on now in China? Do any of your Lordships think that if the Japanese are allowed to continue their present long-range policy they will stop at China, or at Chinese China? We have British territory under our flag in China; we have thousands of Chinese fellow-subjects who are as much entitled to protection as members of your Lordships' House, as subjects of His Majesty. What will be the harvest F this policy of Japan is allowed to continue without check?

I believe that at the time of the Manchurian aggression there was a section of the then Government—practically speaking the Cabinet of to-day—and certainly a very large section of those who supported it in active politics and outside, who argued like this: "Well, the Japanese have got to do something, they have to have an outlet somewhere" —we had a hint of that point of view from the noble Viscount this afternoon—" let them get into Manchuria; it is a huge country, it is twice the size of France; and they will have their hands full and be so occupied that they will not make any trouble elsewhere." I am sure your Lordships have heard that argument. Well, they got into Manchuria; then it was Jehol; and then, as the noble Viscount says, they made an attempt to detach the five North-Eastern Provinces, the five great Northern Chinese Provinces. Again we heard that argument: "Let the Japanese go into North-East China and they will be so busy there, so occupied, that they will not make trouble elsewhere." We see what are the results of that cynical and, if I may say so, that wicked argument. I could not help overhearing the noble Viscount who leads your Lordships' House ask who had used that argument. It has been used very frequently by supporters of His Majesty's Government. It has not been put officially at that Box or in another place by spokesmen of His Majesty's Government, but it is an argument which I have heard used by prominent supporters of the Government.


May I interrupt the noble Lord for a moment? I did not say that Japan should go into Manchuria, or that I agreed with their going into Manchuria in the way in which they did. I said that I had a certain sympathy with Japan in going into Manchuria in order to resist the Russian advance and the advance of Russian Communism throughout China.


I quite understand what the noble Viscount said. He put it, as he always does, very lucidly, and I was able to understand it exactly. This anti-Communist argument is used by every aggressor to-day everywhere. It is used in Spain, I believe it is even used in Abyssinia, and it is certainly used in Manchuria and China. No, the noble Viscount on this occasion only expressed sympathy with Japan; but the argument has been used: "Let the Japanese involve themselves in North-East China (and before that in Manchuria), and they will not be able to make trouble elsewhere." Now they are making trouble in the Yangtze valley, the great main artery of trade in China. They are making a great deal of trouble on the West River, on which stands Hong Kong and which leads up to Canton, a very great artery of trade as well. And where else will they make trouble? I suggest to your Lordships that this policy of acquiescence in Japanese aggression in China and in the violation of her pledges and treaties is exposed as foolish and wicked, and certainly as very dangerous to the peace of the world and the welfare of the British Empire.

I am going so far as to say that on what happens in Asia in the near future will depend the future of our influence throughout the East and ultimately our position in the East Indies and even in the Indian Empire itself. I am taking long views. It is necessary to take long views when we are discussing the future of the interests of a great Empire like ours. In the meantime the British Labour Party, I am glad to say, are advocating the individual boycott of everything Japanese, and I hope that boycott will spread throughout all countries. Even if Governments will not move, let public opinion move. I believe that the Japanese are sensitive to public opinion. They are sensitive people; I know them well; they have many good points and they are sensitive to outside opinion. This boycott policy will also hit their pockets and may cause them to hesitate and think again. In this whole business in China I believe that public opinion is well ahead of the Government, in this country and in other countries as well, but particularly in this country. It is not the first time that in matters of this kind public opinion has been ahead of Governments.

We British people pride ourselves on being a hard-headed lot, but we are really very much swayed by fine sentiment, and we are often touched by something which does not immediately concern our interests. May I give you two examples from the history of our times? There was a brutal dictator in Hungary acting for the Habsburg dynasty, General Haynau, who among other savageries made a habit of flogging women. There has been much ill-treatment of women by the Japanese forces in China in the recent events. General Haynau, however, was received in this country with every mark of honour by the Government of the day when he came here, and amongst other official visits which he made was one to the brewery of Barclay Perkins. Many of your Lordships will remember the story. The brewers' workmen remembered his misdeeds in Hungary, and the flogging of women in particular, and they took the draymen's whips and whipped him out of the brewery. They were undoubtedly expressing the views of the people of this country towards that brutal Dictator, General Haynau.

Now let me allude to a more pleasant episode, and I am glad to mention it in view of the better, as I hope, future relationship between His Majesty's Govern-merit and the Government in Rome. When Garibaldi, the great Liberator, first came to this country after his great achievements he was cold-shouldered by the Government of the day, and ostracised by the then all-powerful London society. He landed, however, at Hull, and I know the story well because I represented Hull in the other House for many years. At Hull he was received with tremendous enthusiasm by the common people, and everywhere in Yorkshire and in Lancashire he was received with great enthusiasm and admiration for his great services to liberty. Public opinion was ahead of the Government then, and today I believe that public opinion is ahead of the Government, and is more ripe than that of the Government in this particular matter. Of course I make all allowances for the difficulties of His Majesty's Government, but to-day public opinion in this country is, as I believe, represented by the dockers at the ports on the Humber and the Tyne and at Southampton, and on the London River, where they are refusing to handle Japanese goods. They are representing the real heart of the British public, and I believe it is one more example of public opinion being right. I believe that public opinion in this country would respond if given a lead, as it should be, by His Majesty's Government in this difficult matter.


My Lords, I think we shall all agree that the noble Viscount had every justification for raising this matter to-day. It is undoubtedly of the very greatest importance, and it merits every possible attention. I would not wish to follow the noble Viscount in his analysis of the events which have led up to the present situation in China. I have no doubt that that analysis was a perfectly correct one, but I would, if I may, prefer to confine myself mainly to dealing with the specific questions to which he alluded during the course of his remarks. I need hardly say that His Majesty's Government have always made it one of their main duties to do everything within their power to protect British interests in China. Those interests, as the noble Viscount pointed out, are very large indeed. They are enormous, and are very varied in character and cover practically the whole of that country. I could not attempt to enumerate those interests in this House to-day.

The noble Viscount has alluded to a very large number of them, but these varied interests, these great interests, have all of them been affected in some degree or other by the hostilities which are now taking place in that country. His Majesty's Government have given their constant attention to the question of their protection, and how best to achieve it. I may say that at the very outbreak of hostilities His Majesty's Government informed both the Japanese and the Chinese Governments that they would be held responsible for damage to or loss of either life or property incurred by British subjects as a result of any action taken by their respective armed forces. His Majesty's representatives in China were directed to receive and file claims for compensation. They were told to send preliminary lists to the local authorities concerned at once, and, furthermore, to prepare detailed statements for subsequent presentation to either the Japanese or the Chinese Government. Then again, His Majesty's Government are constantly bringing to the attention of those Governments cases in which British subjects or interests have been injured, and they have always insisted that proper respect must be paid to British rights. In dealing with these matters we have on occasions acted independently, but usually we have acted as a result of close consultation with the foreign Governments most interested, especially those of Franc? and the United States of America.

May I, my Lords, refer to some of the ways in which His Majesty's Government have attempted, and are attempting, to protect the interests of British nationals. I would like to say a word in the first place about the question of safety zones—safety zones where it would be possible for British communities and British shipping to take refuge in case of danger. We have tried to arrange with the Japanese authorities for zones such as these in various towns, such as Shanghai, Nanking, Hankow and other places on the Yangtze River. I must admit that these efforts have only partially succeeded, but we have accomplished a certain amount, and in connection with the question of British communities in the interior of China I would like to point out that His Majesty's ships, both on the Yangtze and the Canton Rivers, have rendered quite invaluable assistance both in their evacuation and in their protection as well. For the time being, as your Lordships are aware, hostilities have almost completely stopped shipping traffic on the Yangtze River, and we understand that there is practically no trade to be done. At the same time His Majesty's Government are watching this question very closely, and they are insisting with the Japanese that British merchant vessels shall be allowed to resume full trading rights as soon as the situation permits.

The noble Viscount then made reference at some length to the position in the International Settlement at Shanghai. The British colony at Shanghai is a very large one. It consists of some 9,000 persons, and for their protection we have had in the first place the forces of the Royal Navy in the ports, and in addition a British garrison of three battalions of infantry who have been stationed there during the last five months. They have, in co-operation with the armed forces of other neutral States, maintained the neutrality of a very considerable part of the International Settlement, and so provided a considerable measure of security for its inhabitants. The administration of that International Settlement, although it contains a number of nationals of other countries, is very largely British in character. It is perfectly true that the Japanese have for some time made it clear that they are dissatisfied with their representation in the administration of the Settlement, and particularly in the Police force. They have been pressing their claims particularly strongly quite recently on the Municipal Council, and they have done so through the channels of their naval and military authorities, and through that of the Consul-General as well.

As the noble Viscount mentioned, these authorities on January 4 presented a demand to the Council to raise the position and authority and increase the numbers of the Japanese branch of the Shanghai Municipal Police, and to place Japanese in controlling positions in all important organs of the Shanghai Municipal Council. They further demanded that the Japanese branch of the Police should be amalgamated to the foreign branch. The British, French, and United States authorities have been in close consultation in regard to this matter, and they have all agreed that they should support the Council in opposing any attempt on the part of the Japanese to interfere with its functions and any attempt that might be made to alter the character of that administration. Nevertheless there does appear to he some force in some of the Japanese contentions, and I think there is a very large measure of agreement to the effect that their representation in this administration is hardly commensurate with their numbers and their interests. The position now is that the matter is under consideration. It will be considered quite impartially, and the Council are giving their attention to it in consultation with the British, French and American representatives. The Japanese have also pressed their claim for increased representation on the Council itself, but that is quite a different matter. The Council is an international body, which is not under the control of any particular Government. It consists of nine foreigners and five Chinese, and of these nine foreigners five are British, two are American, and two are Japanese. It was the Japanese Consul-General who raised this matter unofficially with His Majesty's Consul-General but he was informed that in present conditions it would not he possible to do anything with regard to this claim.

Another matter referred to by the noble Viscount was the question of access to property. In certain parts of the International Settlement—those parts north of the Soochow Creek, Hongkew and Yangtse-Poo. It is perfectly true that in the course of military operations the Japanese authorities closed these areas to all non-Japanese, with the result that British subjects and other nationals were compelled to leave their residences and their properties and take refuge elsewhere. These areas are now gradually being reopened to the general public, but only under very severe restrictions, which are inconvenient in every way and extremely obstructive to business. But His Majesty's Government are doing everything they possibly can by means of representations, both locally and at Tokyo, to have those restrictions removed at the earliest possible moment.

Another matter to which the noble Viscount referred, and which is clearly of the very greatest importance, is that of the administration of the Chinese Maritime Customs. Their maintenance is without doubt a major British interest. The Customs administration is an internationally staffed organisation, which administers those Customs under a single tariff for the whole of China, and I think everybody will agree that it is an extremely efficient organisation and its work is done extremely well. But here we are faced with the difficulty with which we have been faced in respect of a number of other matters as well, that is, that the Japanese are now occupying in many cases the position which was occupied by the Chinese authorities. That really is at the root of all our difficulties. The fact that a considerable and rich part of China is temporarily in the military occupation of the Japanese has complicated the situation very seriously, and I do not think it can be wondered at that a certain number of difficulties have consequently arisen. The Japanese are desirous, first of all, of increasing the Japanese element in the administration of the Customs, and, in the second place, they are determined to ensure that none of the revenue derived from these Customs Duties shall reach the Chinese Government. On the other side our main object is to prevent the disruption of that administration, for the value of that organisation generally, and particularly to the trading community, I think can hardly be over-estimated. Our object is, in the first place, to prevent its disruption and, in the second place—and equally important—to ensure the maintenance of the service of the foreign obligations. His Majesty's Government are working in close consultation with the Governments of France and the United States of America once again in connection with this matter, and are doing their best to achieve these objects.

The present position is, as the noble Viscount has pointed out, that Mr. Myers, who is the Customs Commissioner at Tientsin, agreed last autumn, under the threat of seizure of the Customs by the military authorities, to bank all Customs revenues in the Yokohama Specie Bank. It was understood that in due course remittances would be made from that bank to Shanghai to meet the service of the loan, but no remittance has so far been made, and I understand no remittance is likely to be made until the position at Shanghai has been cleared up. In the meantime a Provisional Government was set up at Peking and, as the noble Viscount pointed out, this Government ordered various reductions in the tariff. Mr. Myers was compelled to enforce these under duress. Similar developments have taken place at Chefoo and Tsingtao. The position is undoubtedly a very difficult and anxious one, but this can still be said, that so far the integrity of the Customs administration has been maintained.


May I ask the noble Earl, as these Customs are pledged to a large number of British owners as security for money borrowed by China, what is the good of his saying that the integrity of the Customs still exists if the money is taken by the Japanese and is not handed over for the purpose for which it is intended? Can the noble Earl give us some assurance on this subject of the Chinese Imperial Maritime Customs other than merely saying that the position is a difficult one?


It is perfectly obvious that that difficulty exists. No one denies that, and that is one of the points we are arguing about. What I was alluding to in this particular case was the fact that the administration had been maintained. It was the integrity of the administration I was referring to, and that is a very important element indeed. The position in Shanghai is somewhat different from that which exists further North. Here the Japanese once again are demanding that the whole revenue shall be banked in a Japanese bank. This demand is being firmly resisted by the Inspector-General, Sir Frederick Maze, and by the Commissioner, Mr. Lawford. The statement which was recently made by the Japanese military authorities in Shanghai to the effect that they will not respect even foreign obligations secured on the Customs has naturally aroused great anxiety and is very disturbing indeed. In our view the Japanese have no right whatsoever to disregard the interest of other Powers in these revenues. I can only say at the moment that that is our view, that it is a view we hold very strongly, that negotiations are still in progress, and that the Japanese demands in this respect continue to be resisted, and strongly resisted, by those who are concerned. The noble Viscount asked me a certain number of questions. He asked, for instance, what is going to happen to Sir Frederick Maze if the whole Customs administration is disturbed and the Japanese virtually take it over. He said that that was no hypothetical question. I venture to differ from him on that point because it seems to me an essentially hypothetical question, for Sir Frederick Maze, so far as I know, has no intention whatsoever of resigning from his position.

May I pass on for a moment to another point that was referred to by the noble Viscount, and that was the question of Japanese censors in the foreign cable offices? I should remind your Lordships that formerly Chinese censors worked in the offices of these foreign cable companies, and as far as I know we never attempted to question their right of doing so. Some little time ago these Chinese censors, as the situation developed, left, and the Japanese authorities then put in their place a number of Japanese censors. They claimed that they had the right to do that in view of the de facto situation that had arisen at Shanghai. As I say, this is the difficulty recurring again and again. Their claim was that the Japanese had, as it were, replaced the Chinese de facto in control of the situation in that town. Even if the Japanese rights as military occupants of that part of the country were admitted—and they have not been admitted—His Majesty's Government maintain, and maintain firmly, that they would be entitled to object to such an exercise of the censorship as could not be justified on certain special grounds. The grounds I have mainly in mind are those of military necessity and the maintenance of order and good government in the area. Consequently we made a formal protest to the Japanese Consul-General at the end of last month in connection with the censorship of a particular message, and I understand that the United States Consul-General made a similar protest. The situation is this: that censorship of commercial telegrams has not actually commenced yet, and, furthermore, I understand that the Japanese censors pro- pose to pass telegrams in code if covered by consular certificates such as those which have been given to firms and individuals in the past to meet the requirements of the Chinese censors.


Are Press messages censored?


Yes. The noble Lord towards the end of his speech made some reference to the position further south, to the question of Canton, and he said that our interests would be very seriously jeopardised if the Japanese were to land in South China and capture that City. The Government are fully aware of those dangers, but I ought to say that the information at our disposal is to the effect that there is no indication that the Japanese are preparing a landing in South China in the near future, and certainly we have no reason at all to suppose that they would make any direct attack upon our territory. The Japanese Government have, on a number of occasions, been made aware of the strong views which we hold in regard to this matter. In this connection I do not think I can do more than refer the noble Lord to the reassuring statement which was made recently about Anglo-Japanese relations by Mr. Hirota, the Japanese Foreign Secretary, but that, I am afraid, is all the information I am able to give him on that subject now.

I can reassure the noble Lord once again in regard to the last matter which he raised—that was, collaboration with the United States and other Governments interested in the Far East in connection with all these matters. I think he will realise from what I have said that His Majesty's Government have been in constant consultation with the Government of the United States of America on the great majority of the questions which have been discussed to-day. Action has usually been taken independently, but, as the result of that consultation, it has almost invariably been on parallel lines.

I feel I must say a word or two now about the remarks of the noble Lord opposite (Lord Strabolgi). The noble Lord stated at the commencement of his speech that he did not wish to say anything that might prove to be embarrassing in what was admittedly an extremely difficult situation, and I certainly appreciate that. He argued that the present position was largely due, or perhaps almost entirely due, to the policy of our Governments in the past in the Far East. It is very easy to make an assertion of that kind for the simple reason that it will never be put to the test and it cannot in the essence of the situation be put to the test. I mean that it is a matter of argument. There are other people who no doubt might be prepared to hold an entirely different view on the subject, and indeed the fact that there is so much doubt as to the right policy to be pursued now shows, I think, quite definitely that there must have been the same kind of difficulty present to the minds of all people when former difficulties in the Far East had to be faced.

The noble Lord said that the most certain way of restoring the prestige of our country and protecting our interests in China was by the restoration of respect for International Law. With that general proposition I most certainly agree, but by saying that you have not got over the difficulty. The real difficulty is what practical measures you are going to take in order to achieve that object. The noble Lord himself said that he was not suggesting that we should take unilateral action in regard to this matter, that he was not indeed advocating any risky or rash action. We agree on that. So far as I could make out, he made no constructive proposal other than could be, as it were, operated by unilateral action to deal with the present situation. I can only assure him that the position is constantly under review and under the consideration of the Government. The Government are fully aware of the dangers and anxieties aroused by the position which does exist in the Far East, and as I have said, that situation is constantly under review.

Before I sit down there is just one further point which I should like to mention and it is this. The noble Lord made a comparison between the attitude adopted by the French and by ourselves at Shanghai. He pointed out that the Japanese marched through the International Settlement of Shanghai, but when they proposed to do the same thing through the French Settlement, the French showed a firm attitude and resisted it and the march did not take place. That is not really a very fair comparison or contrast, for this simple reason, that the French were able to keep the Japanese out of their concession because no other nationals but the French have any right to be there at all, whereas in the International Settlement the position is quite different as all nationals have equal rights there. Therefore the Japanese could not be prevented from holding what they called, I think, a "victory march," however foolish and however provocative the march may have been. That is really the position, and I merely say that because I do not think the comparison is a very fair one. I have attempted to deal with the main points which have been raised during the course of this discussion, and I hope that your Lordships may be in some way satisfied by the answers that I have been able to give.


My Lords, I wish to thank the noble Earl who has replied on behalf of the Government for what he has told us this afternoon. I fully realised when I opened this debate the difficulty with which the Government were faced in regard to the whole matter. I had no misapprehension about that at all. I feel that the noble Earl has given us, so far as he is able, a very fair and frank explanation of the whole facts and of what the Government are doing, and I feel further that the statement he has made will to a certain extent allay the anxiety amongst those who are so concerned about this matter. Before I sit down I should like to say this. The noble Lord, Lord Strabolgi, gave his tribute of praise to our sailors and others who have been serving in these waters during very anxious times. I did not refer to them in my speech, it is perfectly true, but, having been given this opportunity, I should like now to add to that tribute of the noble Lord and to say how much I, and all those to whom I have spoken, appreciate the admirable manner in which the British Navy and other nationals in Shanghai and elsewhere have upheld the traditions of our race. One would feel also that one would like to pay a special tribute to that British Ambassador who suffered so severely and who nearly lost his life. I was glad to see him in your Lordships' House to-day and to see that he is practically fully recovered. I beg leave to withdraw my Motion.

Motion for Papers, by leave, withdrawn.