l resources of the banks in the
Consortium for the economic development of China itself. By an
ironical coincidence, the Hong Kong-Shanghai Bank, which is the
financial power behind the contract and the new company, is the
leading British partner in the Consortium. It is difficult to see how
the British can henceforth accuse the Japanese of bad faith if any of
the banking interests of that country should enter upon independent
negotiations with any government in China.

By the time the scene of action was transferred to Peking in order to
secure the confirmation of the central government, the Anfu regime was
no more, and as yet no confirmation has been secured. The new
government at Canton has declined to recognize the contract as having
any validity. An official of the Hong Kong government has told an
official of the Canton government that the Hong Kong government stands
behind the enforcement of the contract, and that Kwantung province is
a British Hinterland. Within the last few weeks the Governor of Hong
Kong and a leading Chinese banker of Hong Kong who is a British
subject have visited Peking. Rumors were rife in the south as to the
object of the visit. British sources published the report that one
object was to return Weihaiwei to China--in case Peking agreed to turn
over more of the Kwantung mainland to Hong Kong as a quid pro quo.
Chinese opinion in the south was that one main object was to secure
the Peking confirmation of the Cassell contract, in which case
$900,000 more would be forthcoming, $100,000 having been paid down
when the contract was signed with the provincial government. Peking
does not recognize the present Canton government but regards it as an
outlaw. The crowd that signed the contract is still in control of the
neighboring province of Kwangsei and they are relied upon by the north
to effect the military subjugation of the seceded province. Fighting
has already, indeed, begun, but the Kwangsei militarists are badly in
need of money; if Peking ratifies the contract, a large part of the
funds will be paid over to them--all that isn't lost by the wayside to
the northern militarists.[1] Meantime British news agencies keep up a
constant circulation of reports tending to discredit the Kwantung
government, although all impartial observers on the spot regard it as
altogether the most promising one in China.

[1] Since the text was written, the newspapers have stated
that the Peking Govern