The Vice Consul in Chargé at Canton ( Price ) to the Secretary of State
[Received June 2.]
Sir: I have the honor to report on political conditions in this Consular District.
Preparations are under way for the inauguration of Dr. Sun Yat-sen as President on May 5, 1921. There have been parades and some street speech-making, but whether the moderate display of enthusiasm is simulated and stimulated it is hard to say at this juncture.
The constitution of Dr. Sun’s Cabinet is still indefinite. It seems practically certain that Dr. Wu Ting-fang will remain as Minister for Foreign Affairs, and possibly conjointly Minister of Finance. General Ch’en Ch’iung-ming will remain, if he remains at all, Civil Governor of Kwangtung, and possibly Minister of the Interior and of Military Affairs. There is a strong rumor that owing to the very serious financial situation he will follow Tang Shao-yi into retirement. [Page 331] There is no attempt made in any quarter to minimize the seriousness of the financial situation, made acute by the necessity of repelling the invasion of Kwangtung by Kwangsi which has already begun. This I reported to the Legation in my telegram of April 29, 1921, 5 p.m.9 I believe it is indicative of the determination of General Ch’en Ch’iung-ming not to fight if he could help it [and?] that the actual commencement of hostilities has caused him real dismay. He has realized better than Dr. Sun that with the revenues of the Province barely sufficient for peace time administration the Province would have extreme difficulty in financing a military campaign. He is nevertheless meeting the situation and troops are now moving toward Linshan, the scene of the Kwangsi foray. It is a most precarious situation that Kwangtung now finds itself in, however, and the local authorities are making desperate attempts to find money Up until this situation arose the local administration had been carrying on with a fair degree of success without outside money, but now they are trying to get funds from outside sources. Up to date I understand that they have not succeeded. The Bank of Taiwan loan of $1,000,000, reported in my despatch of April 20, 1921 (unnumbered),10 has not yet been completed. An organization which I believe is called the “Société Missionnaire”, the financial agency of the French Catholic Church in Hongkong headed by Père Robert, is believed to be prepared to negotiate a loan of from $3,000,000, to $10,000,000, with the development of the island of Daishatow, within the limits of the municipality of Canton, as security, but this also has not yet been accomplished. The local Government did get $1,000,000 from Chan Lim-pak, compradore of the Hongkong and Shanghai Banking Corporation, Canton, as a consideration for the appointment of Chan Lim-chung, Chan Lim-pak’s brother, to the post of Director of the Canton Mint. The “consideration” undoubtedly involved a monopoly for the supplying of silver bullion to the Mint by the Hongkong and Shanghai Banking Corporation. No doubt, with this hold on the Mint, the Banking Corporation will fare better than did the American Metal Company whose account with the Mint for the supplying of silver bullion is still unsettled.
If the present situation leads to the collapse of the local Government in Kwangtung it will be a genuine misfortune to American interests. The present group of leaders is all that is keeping the British from getting the confirmation of the Cassell “Kwangtung Collieries” Agreement, which, all Americans are agreed would close the door to us in South China. It is interesting in this connection to learn that the Governor of Hongkong and Sir Robert Hotung, compradore [Page 332] of Jardine, Matheson & Co., Ltd., Hongkong, are on a trip to Peking, and are reported to have had interviews with the British Minister and with President Hsu Shih-ch’ang. It is currently believed that this visit is connected with the Cassell Agreement. It is also interesting to cite in this connection the obstinate rumor that arms and ammunition are going from Hongkong to Kwangsi under British flag. I mentioned this rumor to the British Vice Consul here today, and found it noteworthy that he did not attempt to deny it, but merely stated that he understood that most of Kwangsi’s supplies of arms and ammunition were coming into Kwangsi across the Tongking border.
The consensus of opinion in Canton seems to be that if the local Government can get enough funds to carry on the Kwangsi enterprise, Kwangtung will win, and that if Kwangtung does win against Kwangsi the resulting confederation will undoubtedly comprise, besides those two Provinces, the Provinces of Hunan, Yunnan and Kweichow. If, on the other hand, they cannot get the money, Kwangsi will find an open road in Canton.
If Kwangsi gets back into Kwangtung, the future looks dark for American interests and for China. It will mean the displacement from Kwangtung, its last stronghold in China, of the opposition to militarism. With militarism rampant throughout all of China, I am personally frank to admit that I see no alternative to an international receivership for China. For the sake of the future peace of the world we cannot afford to see China revert to a scramble for concessions.
One thing more is of interest at this time. The Japanese Consul General paid an official call to express the congratulations of his Government to Dr. Sun Yat-sen. Dr. Sun told me two days ago that at that call the Consul General stated that he was instructed to tell Dr. Sun that he would receive recognition as soon as Dr. Sun agreed to the Twenty-one Demands. I give this report for what it is worth. …
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