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?mmg ' \ i DOCUMENT IS THE PROPERTY OF HIS BRITANNIC MAJESTYS GOVERNMENT

Printed for the Cabinet. March 1949

SECRET Copy No.

C P . (49) 67 17th March, 1949

CABINET

SIR W I L L I A M STRANG'S TOUR IN SOUTH-EAST A S I A AND THE F A R EAST

NOTE BY THE SECRETARY OF STATE FOR FOREIGN AFFAIRS

I attach, for the information of my colleagues, a report prepared for me by Sir William Strang on his recent visit to South-East Asia and the Far East.

- E. B. Foreign Office, S.W. 1,

17th March, 1949.

R E P O R T BY S I R W I L L I A M STRANG

I.—Introductory

I give below some notes on my recent journey in South-East Asia and the Far East. They are not exhaustive. I t would be tedious to set down all that I heard ov noted. What I have tried to do is to pick out the more important trends and note the more significant facts, not for the benefit of the specialist Departments, but as being of possible interest to the general reader, who will, I hope, draw from this paper some impression of current preoccupations and the play of forces in this important region. In the present introductory section I make some more general observations. If I have, in places, strayed beyond the strict limits of Foreign Office concern, I hope I may be excused.

2. I had no other mission than to educate myself, to meet His Majesty's Representatives in the foreign countries visited, to tell them about developments at home, to give them a picture of the foreign situation as seen from Europe and, generally, to demonstrate the interest of the Foreign Office in Far Eastern and South-East Asian affairs. I spent some days each in Karachi, Delhi, Rangoon, Singapore, Kuala Lumpur, Batavia, Bangkok, Hong Kong, Shanghai and Tokyo, and spent nights in transit at Alexandria and Calcutta. I had talks with the Heads of Missions and with their chief advisers, political, economic, financial, labour and information. I was received by the leading Ministers in each of the countries visited. I made a point of meeting and talking to the representatives of Commonwealth countries, the United States, France, Benelux and China. I saw leading members of the British Community in each place. The British Chambers of Commerce at Hong Kong and Shanghai entertained me, and I addressed them. I walked through the offices of each of His Majesty's Missions and spoke to as many members of the staff as possible, of all grades. At the request of the Heads of the Mission I gave a talk to the members of the staff at Delhi and Tokyo; and at the request of the Commissioner-General for South-East Asia, Mr. Malcolm MacDonald, I did the same at Bukit Serene to a party of British, Malayan and Chinese notables.

3. I t will be observed that my journey, undertaken mostly by flying-boat,, covered the central and eastern parts of the sea-girt periphery, or what the

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geopoliticians call the Rimland, which skirts the Heart land of Europe and Asia which is at present in large measure under Soviet control, and the fate of the western par t of which is now at issue in the current battle for Berlin. I was interested to find that the significance of that battle is not diminished but rather enhanced when looked at from the Far East.

4. The importance of our maintaining control of the periphery, which runs round from Oslo to Tokyo, of denying it to communism, and, if possible, defending it against military attack, needs no emphasis. Nor is it less important, from the point of view of the framing of policy, that we should try to look on the periphery as a whole. I found the germ of this thought in the minds of many of our representatives, and also the thought that there should not only be a United Kingdom policy, but, if possible, a Commonwealth policy (in spite of divergencies of outlook); and that that policy should, if possible, be concerted with the United States, since American resources would be indispensable.

5. In all this, the Indian sub-continent has a special importance. I t lies at a place about half-way round the periphery. If India tends to look eastwards, Pakistan looks both east and west. The sub-continent should not be regarded in isolation as a separate section. India, in particular, has an important role to play in peripheral politics1—as a Great Asian Power; as a possible member of the Commonwealth; as a country with whom the United Kingdom has now an opportunity to develop relations on a new basis; as a country with political, cultural and economic interests in South-East Asia, which we should try to carry with us in the framing of policies and the development of action in that region. The Delhi Conferences on Indonesia and Burma may be pointers to the future.

6. From this peripheral point of view, the establishment of the Middle East Office in Cairo and the Commissioner-General's Office in Singapore were moves in the right direction. The need for them has not diminished. I found the minds of some of His Majesty's Representatives turning in the direction of, say, yearly regional meetings of Heads of Missions, and of the association of Commanders-in-Chief, Colonial Governors, and United Kingdom High Commis­sioners or their representatives in some measure, if possible, with such conferences. The suggested groupings for this purpose might be first, from Greece or Turkey round to Pakistan, and secondly, from Pakistan to Japan. For the first group or par t of it, the suggestion would be for a meeting in London next summer. For the second, a meeting similar to that recently held in Singapore, but with more extended membership than before, and some co-ordination with the similar conference of Colonial Governors. This would carry with it close contact between the Foreign Office, Colonial Office and Commonwealth Relations Office in London. I t would also be useful if senior.officials of the Foreign Office could visit South-East Asia and the Far East from time to time, possibly about the period of the Singapore meetings.

7. There is a good deal that is dark in the Far Eastern picture, but there are some brighter features. On the darker side are—1

(a) the ever-present food shortage, which will be a long-term problem for India and Japan and may be an immediate one for Shanghai if United States assistance is cut short;

(6) the present disorders in Burma, Malaya, Indonesia and Indo-China; (c) the revolution in China and the menace that it brings for South-East

Asia with its great Chinese communities and for foreign interests in the whole area;

(d) the need of all these countries, in greater or lesser degree, for outside financial assistance;

(e) the population problem in Japan, which the war has done nothing to cure but, indeed, has tended to intensify, and any attempt to solve which must, a t the best, mean strong and growing competition with United Kingdom exporters and may, at the worst, in the long run, bring some new Japanese explosion.

On the brighter side we may note— (/) the success of the International Emergency Food Council and the

Commissioner-General's Office in securing fair allocation and due delivery of the rice crop, thus making the most of available resources;

(g) the buoyancy of rice production in Siam and of tin and rubber production in Malaya;

(h) the easing of tension between India and Pakistan; (i) the demonstration by Singapore, Hong Kong, and Japan that, given peace

and good order, a settled administration and a reasonably stable currency, the great productive and trading aptitudes of the population come into play. Siam points in the same direction;

and from a more specifically British point of view— v (j) the maintenance of our good name, political influence and economic

interests thanks to the example set to the world by the British people in their efforts towards recovery; to our act of policy in India; to our policy of non-intervention and unperturbed watchful waiting in

China; to the zeali demeanour and resource of our representatives, whether of

the foreign, Colonial, Commonwealth or armed services, and the growing spirit of collaboration among them, matching the endeavours of our people at home; and to the integrity, experience, enterprise and flexibility of reactions to new conditions shown by our business communities, the growth of a team spirit among them, and of confidence between them and the official side.

8. This would suggest that we have a par t to play in this area which can be played by no other Power, though we clearly cannot play it alone. I t can be best played by a combination of British experience and United States resources.

9. Finally, I would express my sincere thanks to you Sir, for making my journey possible; to my colleagues of the Foreign Service whose generous and thoughtful assistance multiplied the benefit and lightened the burden of the tour; and to His Majesty's High Commissioners at Karachi and Delhi, the Commissioner-General at Singapore, the Governors of Singapore and Hong Kong and the High Commissioner of the Federation of Malaya and their staffs for all the courtesies and the very great kindness which I received at their hands..

II.—Notes on Tour

A.—Alexandria: 12th January, 1949

I stayed the night with the Consul-General. His Majesty's Ambassador,Sir J. Troutbeck (British Middle East Office) and the two Commander s-in-Chief (General Sir J . Crocker and Air Marshal Sir W. Dickson) came from Cairo to see me and spent the night also. We had talks before and after dinner.

2. The following are some of the points made :— Palestine. (At this date, His Majesty's Government had not yet recognised

Israel.) (a) Agreement between Israel, Trans Jordan and Egypt should be promoted; (6) The frontiers of Israel should satisfy the condi t ions ­

(i) of being not too unsatisfactory from the point of view of the defence of the Canal Zone. The G.O.C. stressed the vital importance of the Canal Zone and of Egypt generally from the point of view of the defence of the whole Middle East;

(ii) of being likely to gain the acquiescence, in the long run at any rate, of the Arab States;

(c) Israel should be drawn into the orbit of the Western Powers and denied to Soviet influence; for this reason the moderate Israeli parties should be supported. This is vital from the point of view of defence.

(d) To this end, a joint United Kingdom-United States policy should be worked out. Diplomatic action should be taken both with Israel and the Arab States. The United States taking the lead in appropriate cases, in agreement with the United Kingdom.

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3. Middle East generally.—Once the Palestine question is settled, (a) Defence arrangements should be worked out between the United Kingdom

and the Arab States. (6) The United States should be associated with these, the object being (i) to

build up a Middle Eastern front against the Soviet Union; (ii) to safeguard Middle Eastern oil supplies.

(c) Special attention should be given to the economic rehabilitation of the Arab States, particularly I raq and Persia.

(d) A meeting should be held in London next summer attended by His Majesty's Representatives in the Middle East, the Commanders-in-Chief and representatives of the London Departments concerned. A time could be chosen when some of our representatives would normally be on leave. This was thought preferable to a meeting in Cairo or elsewhere in the Middle East.

(e) Commanders-in-Chief should have greater liberty to discuss defence matters with His Majesty's Representatives. At present, while they may talk to Sir J . Troutbeck, they may not open themselves fully to His Majesty's Ambassador at Cairo.

(/) Special attention should be given to the relationship between the new United States co-ordinator of plans and (i) our own Commanders-in-Chief (ii) the Governments of Arab States.

B.—Karachi: 14th-16th January, 1949 4. The High Commissioner (Sir L. Grafftey-Smith) kindly made it possible

for me to see the Governor-General, the Prime Minister and the Foreign Minister of Pakistan, some of his foreign and Commonwealth colleagues, and members of the British business community. At Karachi, as at other posts, I made a point of seeing as many as possible of the members of the Foreign Service of all grades, privately or a t their work, paying particular attention at Karachi (as at Delhi and Calcutta) to our new colleagues from the Indian Civil and Political Services.

5. His Majesty's A mbassador at Kabul (Sir Giles Squire) came to Karachi to meet me and I had long talks with him about the situation in Afghanistan, and in particular about the present Afghan-Pakistan difference about the North-West Frontier Province. The Afghan Ambassador a t Karachi (His Royal Highness Sardar Shah Wali Khan) joined us on one occasion and proved as persistent, if more reasonable and moderate, an advocate of the Afghan case as his colleague in London.

6. The Governor-General (His Excellency Khwaja Nazimuddin) was kind enough to ask me to lunch. I t was a cordial and pleasant occasion at which little business was talked. His Excellency mentioned in passing P a k i s t a n i need for arms and other supplies and for assistance from the United Kingdom in getting them. He also alluded to the difficulty of recruiting staff for the Pakistan armed and civil services.

7. A t this lunch I met my opposite number in the Pakistan Foreign Office (Ikramullah). He was anxious to learn what were the functions of the Parliamentary Under-Secretary in the Foreign Office and his relationship with the Permanent Under-Secretary. The Prime Minister was about to appoint a deputy Foreign Minister and wanted to study precedent. I did my best to enlighten him and wrote out a few notes for him.

8. The Foreign Minister (Sir Mohammed Zafrulla Khan) asked me to tea a t his house. We talked no business—he had just concluded some arduous negotiations with the Indian Government about property claims and was on the point of starting on a visit to Lahore. Instead he treated me to a brilliant talk on the topography of Devon and Cornwall and on his adventures in the remoter parts of Sweden and Finland. On this tour he had had no rival as a talker except General Mac Arthur.

9. My talk with the Prime Minister (Liaqat Ali Khan) was another matter. I found him studying a telegram recently received from London about the change in the King's title as a result of developments in Ireland and about the consequent need for legislative action in all Commonwealth countries. The point which was exercising his mind was how to describe in persuasive form for Parliamentary

purposes the advantages for Pakistan of staying in the Commonwealth -when i t was clear that some of the more solid of these advantages would still be enjoyed by Ireland after she went out. We ranged over this question for some time and I suggested that he should discuss it with the United Kingdom High Commissioner who was more competent to help him than I could be.

10. He went on to put the Pakistani case about the frontier question with Afghanistan. The Afghan agitation was the agitation of a Kabul clique and not of the Afghan people. The Afghans threatened that they could make trouble in the North-West Frontier Province but the, t ruth was that Pakistan could make more trouble for Afghanistan than Afghanistan for Pakistan. The people of the tribal areas had no desire to join Afghanistan. He was ready to test this by plebiscite. Pakistan was spending on the North-West Frontier Province as much as the whole Afghan budget. As regards a change of name to Pathanistan, he could not agree to any name which would have a tribal connotation. If he did, there would be the same problem in the West Punjab and in the East Bengal. He added, incidentally, that Pakistan was garrisoning the frontier area with one brigade, while the British had needed fifty battalions in their day. In reply to this uncompromising view, I told the Prime Minister that this frontier question was one to which the Secretary of State had given his personal attention and that he earnestly desired a settlement of i t : i t would be well worth P a k i s t a n i while, in the general interest, to get this controversy out of the way.

11. Other topics touched on by Liaqat Ali were P a k i s t a n i need for supplies and equipment for irrigation developments; and his pet idea of an anti-Communist bloc from Turkey to Pakistan.

12. On Indonesia he spoke a t somewhat greater length and with what I thought was moderation and good sense. The Dutch would not gain but lose by their latest police action. Already they were in military difficulties. They would not be able to maintain their position by force. What they should have done was to model themselves as far as possible on British action in India. The Indonesians, who are not strong enough or experienced enough to march alone, would in the long run then turn to the Dutch again for assistance, as Pakistan and India will do to the British. Old associations will count for much; they have had their beneficial side, as is now readily admitted. Instead of promoting in this way the development of collaboration between East and West on a new basis, the Dutch have poisoned the whole situation in South-East Asia. I found this analysis of great value in talking to the Dutch in Batavia and on other occasions.

13. I had a good deal of talk from time to time with the High Commissioner on such matters as the supply of information on foreign affairs to Commonwealth posts; the future of ex-Indian Civil Service members of the Foreign Service, of whom there are quite a number in Pakistan; the relations between the Missions at Karachi and Delhi, which are excellent, though they do not see all matters in the same light; the advantages and disadvantages of membership of the Commonwealth for Pakistan and India. Some of these were not, of course, my affair, but I was glad to learn about them.

C.—New Delhi: 16th-20th January, 1949 . 14. For reasons which will be plain from the introductory remarks, the

visit to Delhi was one of the high spots of the tour, and an indispensable preliminary to a visit to South-East Asia.

15. The High Commissioner (General Sir Archibald Nye) believes that there is probably greater scope for the development of British influence and the exercise of British action in India at the present time than anywhere else. He thinks that good will between the British peoples and their Governments, following upon the far-sighted and statesman-like action of His Majesty's Government in 1947, can be developed and turned to material advantage. We have an opportunity which ought not to be missed. But we must choose our men well (Sir A. Nye has ideas about this which will be recorded elsewhere) and ^,ct with circumspection. We are tending a delicate plant. The responsibility has sobered Nehru, Patel and other members of the administration, who all feel the need for support and advice. But they are only likely to seek or accept such support or advice, especially the latter, if they have confidence in the sincerity and friendliness with which i t

is tendered. On the Kashmir question, he.had waited for an approach from Nehru and then, but only then, had advised that there should be no military solution but that the Indian Government should make a gesture in the direction of a political solution. He thought his advice, reinforced by the steadiness and wisdom of the Indian Commander-in-Chief, General Bucher, had borne fruit. I n order to exercise such influence at the right moment, particularly in the realm of foreign policy, i t is essential that the High Commissioner should receive full and timely information about events in the foreign field. In this respect, there had latterly been a great improvement. Since Foreign Office telegrams nad begun to be repeated direct to him, on, e.g., Indonesia, he was fully in the picture and had no complaints.

16. General Nye thinks i t likely that, under stress of responsibility, the minds of the Indian leaders will move slowly from some earlier anti-British, anti-Commonwealth and anti-Western positions and see that politically, ideologically and economically, the future of India lies in association with the West, in particular with the United Kingdom, rather than as an independent country, mediating between Western ideas and communism and leading India against the rest. I will not develop here his reasons for this : they seemed to me to be cogent.

17. The High Commissioner and I dined en famille with the Prime Minister (Pandit Jawaharlal Nehru) and his sister (Mrs. Pandit , Indian Ambassador at Moscow) and her two daughters. The splendours of the former Commander-in­Chief's house, where he has now been bidden to live, seemed to irk him. He was unwell and rather silent at dinner, but afterwards he took me into a corner and talked. He chose the topics himself.

18. He spoke first of communism. The results of communism in Russia must in the long run be evil because the means are evil. He said this in spite of the intellectual attraction which Marxism has for him. Marxism supplies a coherent explanation of the march of history and none has tried to do this since Marx. Perhaps it is now possible to compass such a synthesis. The vast develop­ment of scientific discovery has made the world almost incomprehensible to the single mind. Marx may be out of date now, but at least he tried and has had no successors. He added, incidentally, that he though that communism, in whatever country i t might appear, would in the long run be overlaid and transformed by the national character, which must prevail in the end.

19. About Malaya, he wondered why we were finding it so difficult to suppress the Communists and restore law and order. Was this not because the so-called bandits had support from the local population for economic reasons? Would it not be well, therefore, to supplement the measures of suppression with measures to improve the material welfare of the people at large ? As he. had given me an opening, I asked him, given that i t had always been and still was our policy to work towards the autonomy and eventual independence of colonial territories, how he saw the future of Malaya. To this he had no ready answer. He admitted the difficulties of a plural community (in which incidentally he complained that Indians were less well treated than Chinese). He thought that a composite or multilateral state might be the eventual solution. But he did not seem to think the problem an urgent one. He did not mention Indonesia (though this was the eve of the Delhi Conference) except to say that Malaya and Indonesia (unlike Burma) were territories which had had close and sympathetic contact with India in the past and where Indian influence was strong. I repeated this part of the conversation in my various talks at Singapore and Kuala Lumpur.

20. The Governor-General (C. Rajagopalachari) kindly invited me to tea at the former Viceroy's house, which he now occupies. His Highness the Gaekwar of Baroda was present for a short time, but he took his leave and I was alone with His Excellency (as he dislikes being called) for over an hour. .

21. He started (I don't know why) by expatiating on the advantages of monarchy and of the disability of Presidents and elected or nominated persons like Mr. Truman or himself. The absence of monarchy leaves a lacuna in the lives of the people. The Indian people, in particular, need a symbol in their system of government. The princely families, had they not become degenerate and lifeless, might have furnished a constitutional monarch, but there was now small hope of this. Once the great figures of the liberation had passed away, there would be a gap which it would be difficult to fill. He was astonished that the regime had survived as well as it had the bloodbath India had gone through.

22. He was much in favour of the establishment of provinces on a linguistic basis. This would disrupt the unity of India. Nationalism was a disruptive force. Better a rather weaker state based on the toleration of variety. Such apparent weakness was not necessarily such a disadvantage as the apparent strength of the national state. The Europeans would have done better to preserve the Austro-Hungarian Empire.

23. He thought that fear of the atomic bomb was the cause of the present tension in the world and this would lead to war unless the tension could be eased. The best way to ease the tension would be not only to outlaw the use of the atomic bomb but to call a halt to all atomic research, peaceful as well as warlike, for a period. The worloT really didn't need, in a material sense, the fruits of atomic research in industry in the present phase. Better establish peace on a sure footing first. The Soviet "regime might evolve in the direction of moderation and scrupulousness if tension, based on fear, could be removed. But time would be required, and an act of faith.

24. He thought that the British had given great gifts to India. They were : the rule of law, the heritage of a great literature, and the freedom of the individual and an instinct for liberal democracy.

25. He said that the present United States way of life would lead to chaos and would have to be reformed when the time of scarcity arrived.

26. I was much taken by the Governor-GeneraFs shrewdness, wisdom and simple friendliness. He walked with me round the great garden, in this season at its brilliant best, which, with certain adventitious mechanical aids in the matter of the movement of waters, imitates the famous gardens of Moghul days. At one point he stopped and asked: " What am I to do about all this pomp? I employ 5,000 men on these estates."

27. I spent a short while with Sir Girja Shanker Baivai (Secretary-General, Ministry of External and Commonwealth Relations), an old friend. We eschewed speculations and got down to business. ­

28. He did not think that the present system of communicating information on foreign affairs from London to Delhi by telegram was adequate.. More should be done through the High Commissioner and his staff in London. He was arranging to have the High Commissioner^ staff reorganised and reinforced for this purpose. He hoped that the Foreign Office would give the High Com­missioners' office liberal day-to-day information, especially on European affairs, on which the Government of India had no other good source of information. Their missions in Europe were not yet competent to render adequate reports. On matters of current interest, where urgent action was being taken in the inter­national field, it would be useful if information could come through the High Commissioner in Delhi also. He would always be at the disposal of Sir A. Nye, of whom he spoke in very warm terms. He also threw out the suggestion that members of the Foreign Office should come to Delhi from time to time.

29. Like his colleague in Karachi, Sir Girja was anxious to know some­thing about the functions of the Parliamentary Under-Secretary of State for Foreign Affairs, as there was some question of appointing a Deputy Minister. I enlightened him to the best of my ability.

30. As I was taking my leave, Sir Girja went out of his way to say that India was not seeking the leadership of Asia; but that events were forcing this role upon them.

31. I called on Sir Girja 's two. subordinates, the Foreign Secretary(K.P.S. Menon) and the Secretary for Commonwealth Relations (S. Dutt). Nothing of moment passed, but i t may be worth recording that the latter had prepared a series of questions for me (which I did ray best to answer) on our system of posting and promotions in the Foreign Service, how we tackled the problem of specialisation, how we organised the Commercial Diplomatic Service, and how the Foreign Office maintained liaison with the Commonwealth Relations Office.

32. One of my most interesting talks was with H . V. R. Iyengar [Secretaryof the Ministry of Home Affairs), ex-Indian Civil Service and a former Private becretary to the Prime Minister. He spoke first about communism. There are about 100,000 party members in India, about 1,500 of them in prison. There

are no Communist members of tbe legislature. Communism is not banned, except in Bengal. The Communist press is free. The Communists are hostile to the Congress Party. This is the usual situation. Communists support the Nationalist Par ty until i t attains, power, and then try to undermine it. This is one reason why the French and Dutch are unwise in weakening the Nationalist Parties in South-East Asia. This will play into the hands of the Communists.

33. Suppression alone, he thinks, is no cure for communism. There are 12,000 troops acting against the Communists in Hyderabad, but a t the same time remedial economic measures are being taken. Like Pandi t Nehru, he wondered whether some such combination should not be tried in Malaya. The economic life of the people was of a very low standard and should be raised.

34. On the French and Portuguese establishments in India he says that Nehru's policy was not to squeeze them out, but rather to press that the people should decide their future. The Government of India would have patience. But the French and Portuguese were behaving foolishly. However, there were more important questions than these.

35. India, he said, needed economic assistance: not a dole, but a loan and facilities to purchase. India was passing through a very difficult period. Only men of the personal prestige of Nehru and Patel and Rajagopalachari could have pulled her through.

36. He thought it important not to underestimate the importance of the Far East, but he recognised the importance of Europe in the present state of the world. I t was also important to realise that the Americans, for all their good will, could not supply everything that everybody wanted.

37. He made a point of saying that relations between the United Kingdom High Commission, under the present High Commissioner, and the Ministry of External Affairs, were very cordial. There had been a certain coolness at an earlier stage.

38. The High Commissioner and I dined alone with the United States Ambassador (Mr. Loy Henderson), with whom I was already well acquainted. Mr. Henderson is taking his duties very seriously and is showing a good deal of public activity, not always of the most adroit. He is much incensed by Indian criticism of the American way of life and of United States policy, more so, I should have thought, than he need be. Though he has given his staff strict instructions not to express or countenance anti-British sentiments, I think he is rather restive at finding that Indian criticism is so often directed against the United States rather than against the United Kingdom (the same is true of China).

39. I also met Indian journalists, the new Indian Commander-in-Chief (General Cariappa) and his predecessor (General Bucher), and the Canadian, Australian and Chinese representatives.

40. I t remains to touch on the visit of Dr. Burton, Dr. Eva t f s chief lieutenant, who came to represent Australia at the Delhi Conference on Indonesia which opened on the day of my departure. I had several talks with him and the High Commissioner. He is obviously a man of great ability and has the gift of imagination; but we found that he had arrived with a distorted idea of United Kingdom policy on Indonesia and that he had seemed to attach greater weight to press reports and speculations than to official information from London. He seemed to nave convinced himself that the United Kingdom Government had known in advance that the Dutch would take their second police action; that the United Kingdom Government had been consulted by Pandi t Nehru before he had called the Conference; that the United Kingdom Government had assured the Dutch on the quiet that no action would be taken against them and that the Atlantic Pact would take first place; and that the arms which the Dutch were using in Indonesia had been bought with dollars supplied under the European Recovery Programme. That, in fact, there was nothing to be done with the Dutch, except apply sanctions; that Dutch action was a breach of the Charter; and that sanctions should be applied whatever the consequences might be in other parts of the world.

41, General Nye's handling of him could not have been better. He was firm but friendly; and, basing himself on the ample documentation received from London, was able to bring Dr. Burton to see United Kingdom policy in a rather less

jaundiced light. I do not record all this for its own merits, but rather to show, by example, how essential i t is that our High Commissioners in Commonwealth countries should have prompt, ample, first-hand information on foreign questions affecting the countries in which they serve. , .

D.—Calcutta: 20th January, 1949 42. We spent only a short night at Calcutta, but were able to see some of the

staff of the Deputy High Commission and of the business community. What we heard tended to confirm what we had been told at Delhi, namely, that a new and better relationship was tending to grow up between British and Indians, and that prospects for British commerce were promising: we were getting contracts now that we should probably not have got before, in the days of political tension.

JL-Rangoon: 21st-23rd January, 1949 43. Burma presents a much less encouraging picture than India and this

was reflected in all that we heard there. I saw several of the Burmese Ministers, as well as the President. The interview with the last named was purely social and we talked no business.

44. The Prime Minister (Thakin Nu) gave the Ambassador (Mr. Bowker) and myself tea one afternoon in the garden of his house, which, like all Burmese official residences and public offices, was enclosed in a compound protected by barbed wire and closely guarded. Mr. Bowker took occasion to conduct some official business wi th the Prime Minister and from the latter 's demeanour I was able to judge why it is said that, while a man of integrity, simplicity, even of saintliness, he is also suspicious, credulous, stubborn and slow.

45. We found Thakin Nu still intent on leaving the Government at an early date. He thinks he can organise support for the Government among party members and among the people at large from outside better than from inside. I expressed the Secretary of State's misgivings at this prospect.

46. On more general topics, Thakin Nu recalled that he had recently stated in public that he would rather be free than ruled by others; but if he had to be ruled by others he preferred the British. The British had introduced the rule of law into Burma, and the idea of personal freedom. In fact, better the devil you know than the devil you don't. I found this sentiment expressed in India also.

47. He put in a pressing plea for financial aid from the United Kingdom, but did not deny that, for all that, the Government were taking an anti-capitalist line, including His Majesty's Government, in their strictures, and that there was a good deal of anti-British propaganda in the country. He asked about Chinese communism and I gave the view current in London, as expressed in Intels, and confirmed to me by the Chinese Ambassador to India with whom I had a talk in Delhi. He himself was cautious and non-committal.

48. I did not see the Foreign Minister on this occasion, but he came to the Marine Airport to see me for a while on my return journey. Of the other Ministers, I saw most of U Ohn, Minister of Commerce, and Ambassador-Designate to London. He said, among other things that he was contemplating an appeal to the Burmese people for austerity in the use of rice, to avoid waste and reduce consumption, and so increase the amount available for export. An ethical and humanitarian appeal of this kind should be effective with the Burmese people. He also said that he was in favour of developing Burma's other natural resources to the maximum, but for the good of mankind and not for Burmese domestic advantage.

49. His Majesty's Ambassador has excellent contacts with Burmese Ministers and officials and they come gladly to his house. During my visit the formidable U Ba Swe, Secretary-General of the anti-Fascist People's Freedom League and of the Socialist Party, came to the Embassy for the first time.

50. The senior Burmese officials whom I saw were generally in despondent mood. Some of them were inclined to blame us for having handed Burma over to an inexperienced Government which would not face facts or listen to skilled advice, but preferred to rely on outsiders of doubtful integrity. They had got rid of their experienced British and Indian officials, and had not enough good officials to carry

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are no Communist members of the legislature. Communism is not banned, except in Bengal. The Communist press is free. The Communists are hostile to the Congress Party. This is the usual situation. Communists support the Nationalist Pa r ty until i t attains, power, and then try to undermine it. This is one reason why the French and Dutch are unwise in weakening the Nationalist Parties in South-East Asia. This will play into the hands of the Communists.

33. Suppression alone, he thinks, is no cure for communism. There are 12,000 troops acting against the Communists in Hyderabad, but at the same time remedial economic measures are being taken. Like Pandi t Nehru, he wondered whether some such combination should not be tried in Malaya. The economic life of the people was of a very low standard and should be raised.

34. On the French and Portuguese establishments in India he says that Nehru's policy was not to squeeze them out, but rather to press that the people should decide their future. The Government of India would have patience. But the French and Portuguese were behaving foolishly. However, there were more important questions than these.

35. India, he said, needed economic assistance: not a dole, but a loan and facilities to purchase. India was passing through a very difficult period. Only men of the personal prestige of Nehru and Patel and Rajagcpalachari could have pulled her through.

36. He thought it important not to underestimate the importance of the F a r East, but he recognised the importance of Europe in the present state of the world. I t was also important to realise that the Americans, for all their good will, could not supply everything that everybody wanted.

37. He made a point of saying that relations between the United Kingdom High Commission, under the present High Commissioner, and the Ministry of External Affairs, were very cordial. There had been a certain coolness at an earlier stage.

38. The High Commissioner and I dined alone with the United States Ambassador (Mr. Loy Henderson), with whom I was already well acquainted. Mr. Henderson is taking his duties very seriously and is showing a good deal of public activity, not always of the most adroit. He is much incensed by Indian criticism of the American way of life and of United States policy, more so, I should have thought, than he need be. Though he has given his staff strict instructions not to express or countenance anti-British sentiments, I think he is rather restive at finding that Indian criticism is so often directed against the United States rather than against the United Kingdom (the same is true of China).

39. I also met Indian journalists, the new Indian Commander-in-Chief (General Cariappa) and his predecessor (General Bucher), and the Canadian, Australian and Chinese representatives.

40. I t remains to touch on the visit of Dr. Burton, Dr. Eva t f s chief lieutenant; who came to represent Austral ia at the Delhi Conference on Indonesia which opened on the day of my departure. I had several talks with him and the High Commissioner. He is obviously a man of great ability and has the gift of imagination; but we found that he had arrived with a distorted idea of United Kingdom policy on Indonesia and that he had seemed to attach greater weight to press reports and speculations than to official information from London. He seemed to have convinced himself that the United Kingdom Government had known in advance that the Dutch would take their second police action; that the United Kingdom Government had been consulted by Pandi t Nehru before he had called the Conference; that the United Kingdom Government had assured the Dutch on the quiet that no action would be taken against them and that the Atlantic Pact would take first place; and that the arms which the Dutch were using in Indonesia had been bought with dollars supplied under the European Recovery Programme. That, in fact, there was nothing to be done with the Dutch, except apply sanctions; that Dutch action was a breach of the Charter; and that sanctions should be applied whatever the consequences might be in other parts of the world.

41, General Nye's handling of him could not have been better. He was firm but friendly; and, basing himself on the ample documentation received from London, was able to bring Dr. Burton to see United Kingdom policy in a rather less

jaundiced light. I do not record all this for its own merits, but rather to show, by example, how essential it is that our High Commissioners in Commonwealth countries should have prompt, ample, first-hand information on foreign questions affecting the countries in which they serve. , ­

D.—Calcutta: 20th January, 1949 42. We spent only a short night at Calcutta, but were able to see some of the

staff of the Deputy High Commission and of the business community. What we heard tended to confirm what we had been told at Delhi, namely, that a new and better relationship was tending to grow up between British and Indians, and that prospects for British commerce were promising: we were getting contracts now that we should probably not have got before, in the days of political tension.

E.—Rangoon: 21st-23rd January, 1949 43. Burma presents a much less encouraging picture than India and this

was reflected in all that we heard there. I saw several of the Burmese Ministers, as well as the President. The interview with the last named was purely social and we talked no business.

44. The Prime Minister (Thakin Nu) gave the Ambassador (Mr. Bowker) and myself tea one afternoon in the garden of his house, which, like all Burmese official residences and public offices, was enclosed in a compound protected by barbed wire and closely guarded. Mr. Bowker took occasion to conduct some official business with the Prime Minister and from the latter 's demeanour I was able to judge why i t is said that, while a man of integrity, simplicity, even of saintliness, he is also suspicious, credulous, stubborn and slow.

45. We found Thakin Nu still intent on leaving the Government at an early date. He thinks he can organise support for the Government among party members and among the people at large from outside better than from inside. I expressed the Secretary of State's misgivings at this prospect.

46. On more general topics, Thakin Nu recalled that he had recently stated in public that he would rather be free than ruled by others; but if he had to be ruled by others he preferred the British. The British had introduced the rule of law into Burma, and the idea of personal freedom. In fact, better the devil you know than the devil you don't. I found this sentiment expressed in India also.

47. He put in a pressing plea for financial aid from the United Kingdom, but did not deny that, for all that, the Government were taking an anti-capitalist line, including His Majesty's Government, in their strictures, and that there was a good deal of anti-British propaganda in the country. He asked about Chinese communism and I gave the view current in London, as expressed in Intels, and confirmed to me by the Chinese Ambassador to India with whom I had a talk in Delhi. He himself was cautious and non-committal.

48. I did not see the Foreign Minister on this occasion, but he came to the Marine Airport to see me for a while on my return journey. Of the other Ministers, I saw most of U Ohn, Minister of Commerce, and Ambassador-Designate to London. He said, among other things that he was contemplating an appeal to the Burmese people for austerity in the use of rice, to avoid waste and reduce consumption, and so increase the amount available for export. An ethical and humanitarian appeal of this kind should be effective with the Burmese people. He also said that he was in favour of developing Burma's other natural resources to the maximum, but for the good of mankind and not for Burmese domestic advantage.

49. His Majesty's Ambassador has excellent contacts with Burmese Ministers and officials and they come gladly to his house. During my visit the formidable U Ba Swe, Secretary-General of the anti-Fascist People's Freedom League and of the Socialist Party, came to the Embassy for the first time.

50. The senior Burmese officials whom I saw were generally in despondent mood. Some of them were inclined to blame us for having handed Burma over to an inexperienced Government which would not face facts or listen to skilled advice, but preferred to rely on outsiders of doubtful integrity. They had got rid of their experienced British and Indian officials, and had not enough good officials to carry

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on with, and many of these were quitting in despair. Some of them said that if Aung San had lived, Burma might still be in the Commonwealth.

51. According to one of the British advisers still employed by the Burmese Government the most encouraging and stabilising element in the present precarious situation is the administration of law, based on English principles and still applied with integrity by the judges. Another of them, a man of great experience, said that ho wise man could prophesy about the future of Burma. The real obstacle to progress was that the people did not really need to work hard. There was no lack of food; they need never be cold, and clothing was simple; and bamboo and thatch for shelter were there to be picked up.

52. The British commercial community were naturally despondent, but in quite good heart, determined to go on hoping for a turn to better days. One of them thought that the local Chinese, in league with their compatriots in China, were laying plans to take advantage of Burma's present weakness, and that, as this would not be in India 's interest, Nehru should intervene and try to have order restored.

53 Mr. Potter, the Financial Adviser.to our Missions in Karachi, Delhi and Rangoon, was good enough to give me a comprehensive review of the situation which, though it will be familiar to Departments, I will record here.

54. He said the plain fact was that the country was in ruins. I t had been twice fought over and once occupied. The year after the end of hostilities had been disastrous. By collaborating with Aung San, instead of driving him into rebellion, we could have set the administration on the right road. Political parties now had well-armed private armies, with British weapons acquired during the resistance or since. There were three left-wing armies, and lots of things in addition. The rice mills just across the river from Rangoon were still being held to ransom. All this, in addition to the trouble with the Karens.

55. Burma, unlike India and Pakistan, had unwisely dismissed all British officials. This was a mark of inexperience and conceit. The Burmese Govern­ment did not trust its own skilled officials, who were now leaving Government service The administration was pitifully understaffed. The Finance Ministry was on the verge of a breakdown. The banks were in rather better shape. Even if law and order could be restored, the country could not be run with its present staff. In spite of this, the Government were launching into new State enterprises —river shipping, timber, oil. They needed £13 million to balance the budget, £9 million from the Oil Company and several millions more to move the rice crop.

56. If financial help was to be given, i t was essential to provide safeguards, such as the appointment of foreign advisers, especially in finance and banking. There should also be compensation arrangements. The United Kingdom could not conduct this kind of operation alone, if only for political reasons. The Burmese were turning to us, but still regarded us as predatory capitalists who had exploited Burma in the past and now owed Burma something in return. They would not easily agree to safeguards or compensation. On the other hand, it was essential that Burmese Ministers should face the facts and take steps to develop the vast potential wealth of the country.

57. In Mr. Potter 's view, which is shared by His Majesty's Ambassador, the Burmese problem should be tackled jointly by the United Kingdom, India and Pakistan. Pandi t Nehru could speak with authority to the Burmese Minister as ostensibly a non-capitalist. I t was in India 's interest that he should take a hand, since India has a primordial interest in Burma as a supplier of food and a neighbouring State, and since the continuance of the present disorder could only work for the advantage of China or the Communists, the presence of neither of whom would be welcome to India. India had her own material interests too, though Nehru might be chary of supporting them too openly. Even if India could not contribute financially or find advisers, she could be a partner in and sponsor to any scheme which would combine assistance with safeguards. I t was essential to break fresh ground in this way.

F.—Singapore: 24th-28th and 31st January, 1949 58. After the charm, colour, shabbiness and fecklessness of Rangoon,

Singapore makes a striking impression. Itself a monument to British enterprise.

this great seaport, thanks to an efficient British administration and to the purpose­ful activity of its teeming population, largely Chinese, has made a remarkable recovery since the occupation. Wi th Hong Kong, and to a lesser degree, Bangkok, Singapore is a demonstration of the vast economic possibilities that would open out to South-East Asia if only peace and good order could be restored. Even in Malaya, in spite of the disturbances, production of tin and rubber has been maintained.

59. I was fortunate to arrive at Singapore before the dispersal of the Colonial Governor's Conference and was able to meet—in addition to the Commissioner-General (Mr. Malcolm MacDonald) and the Governor of Singapore—the Governors of Hong Kong, Sarawak and North Borneo and the High Commissioner for the Federation of Malaya.

60. I stayed successively with the Commissioner-General, with the Foreign Affairs Adviser (Mr. Scrivener), with the High Commissioner for the Federation of Malaya (Sir Henry Gurney), at Kuala Lumpur, and with the Governor of Singapore (Sir Franklin Gimson).

61. A good par t of our conversations related to purely Colonial problems and to the structure and functions of the Commissioner-Generars Office, and need not be recorded here. But the Colonial Governors have their foreign pre­occupations and I gather that the Foreign Service members of the Commissioner­General's staff have been of assistance to them.

62. The Governor of Singapore and the High Commissioners a t Kuala Lumpur administer territories at the meeting-place of three races, the Indian, the Chinese and the Malay—there has been age-long rivalry between Indian and Chinese in this area and it is not likely to be allayed, but, indeed, rather to be intensified in the present and prospective state of the world. Developments in both India and China may make this an international question of growing importance. Both territories have large Chinese populations, and the two Governors look on the communisatiori of China as a matter of intimate concern. One is conscious of India and of Pand i t Nehru at Singapore and i t is only when one gets round the corner to Bangkok that his shadow seems to grow less. Feeling between Malays and Chinese is strong. The Malayan Federation also has its difficulties with Siam, though there are encouraging signs of growing collaboration between the two administrations in the suppression of Chinese Communist banditry.

63. Singapore, at the crossing of the sea-ways, is also an indispensable link in communications with Australia. One feels oneself there within the sphere of Australian interest, and i t seemed fitting to celebrate Australia Day in Singapore.

64. The focal point for the gathering together of all these strands-defence, foreign affairs, colonial administration, economics—is the Commissioner-Generars office in Singapore. Though some have spoken of i t with less enthusiasm than others, opinion is, I think, unanimous as to i ts utility. With the present rice shortage, the work done by the Economic Section to follow up and see to the fulfilment of the I.E.F.C. allocations is still quite indispensable. In the field of foreign affairs it performs a most valuable co-ordinating function and enables the view of the Foreign Office to be expressed and promoted in places which i t would otherwise not so easily reach. The recent meeting of His Majesty's Representatives in foreign countries in South-East Asia under the presidency of Mr. MacDonald was most successful. I t was hoped that the experiment would be repeated and it is for consideration whether the net should not be spread next time to bring in India, Ceylon, Pakistan and Japan by inviting the attendance of the High Commissioners at Delhi, Karachi and Colombo and the Head of the United Kingdom Liaison Mission at Tokyo. Sir A. Gascoigne told me that he would welcome this.

65. One of the most interesting functions I attended was a dinner given by Mr. MacDonald to which he had invited the Governor of Singapore, the Naval and Military Commanders-in-Chief, the Prime Ministers of five of the Malay States (including Dato Onn Bin Jaa fa r from Johore, President of the United Malay Nationalist Organisation), some prominent Chinese and official and unofficial British from Singapore. After dinner, at Mr. MacDonald's request, I gave a short talk on the world situation, as seen from Europe, and an interesting

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discussion followed. Even here, i t was significant that the claws were out between Malays and Chinese.

66. Mr. MacDonald was good enough to give me liberally of his time and we discussed many things together, but I will confine the record to a few points.

67. He was emphatic that i t would be very bad for our standing in South-East Asia if we failed to support or to press for the execution of the latest United Nations Resolution on Indonesia. We had established a strong moral position in this part of the world by our action in India, and it would be a tragedy if we forfeited it over Indonesia. Nationalism in Malaya was behind the Government in its action against Chinese Communist disorders. In this, Malaya differed from Indonesia and Indo-China, where the Dutch and the French were drawing the Nationalists and Communists together. I t would also, he thought, be a serious blow to our prestige and influence if India entirely left the Commonwealth. In Malaya, neither Chinese nor Indians nor Malays wanted to force the pace of progress towards self-government; but the tempo might be increased by recent developments elsewhere. As regards China, like almost everyone to whom I put the question, he thought that in the long run, though perhaps not in the short run, China would not succumb to communism of the Soviet type.

68. I asked him about Australian policy, in South-East Asia and in particular why the Australian Government were taking so passionate and extreme a line about Indonesia. He said, first, that Australians were temperamentally prone to the use of uncompromising language; secondly, that they believe strongly that the British way in India was the right way, and the more strongly so, in that Australia knew what it was to have to make good her own freedom and had a certain fellow feeling; thirdly, that there was an element of compensation for the " W h i t e Australia Policy"—-here was a chance for Australia to show friendship to an Asian people; fourthly, that the Australian Government were sincerely concerned at the prospect of disturbances in South-East Asia which the Dutch action would provoke; fifthly, they expect that a free Indonesia would be a barrier to Chinese southward expansion.

69. For all Aust ra l ia^ interest in this region, however, he did not think Australia was ready or fit to assume defence or other material responsibilities there, and i t would be best not to press her too hard to do so. On the other hand, Australia 's participation in the Delhi Conference on Indonesia had been a good thing. I t had prevented the Conference from being a line-up of Asia against the West, and to that extent had been of advantage to the United Kingdom in South-East Asia. I think there is great force in this observation.

70. At Kuala Lumpur, Sir Henry Gurney was kind enough to explain to me the various measures he was taking to restore order in Malaya, and I also had a short talk with General Boucher, commanding the military forces, and with the Chief of Police, Colonel Gray. Sir Henry made three points affecting foreign relations. I n the first place, the spread of communism in China was making his task more difficult; the local Chinese, who had been brought to a measure of collaboration with the Government and the Government Forces, were now cooling off. Secondly, i t would be a serious matter if the Chinese deportees, who now by tacit agreement of the Chinese authorities were allowed to sail to Amoy or Swatow without travel documents, were refused entry into China by the Communists. Thirdly, he referred to Siam and relations between the Malayan authorities and the Embassy at Bangkok. There had been some friction, but from what Sir Henry said and from what I have since heard at Bangkok and elsewhere, the situation is now much improved. Jo in t Malayan-Siamese operations have been organised against Chinese Communist concentrations, and a good spirit of collaboration between the local authorities on both sides of the frontier now prevails, and misunderstandings between our own authorities have been removed.

71. A t Singapore, I was informed of the importance of our retaining long­term influence over Malaya and, in particular, possession of Singapore itself. We have a role to play in South-East Asia, which no one else is competent to play, in order to promote collaboration between East and West. In so doing, we should be serving our own advantage by helping to deny South-East Asia to communism, to safeguard valuable supplies of raw material, to safeguard communications with Australia and New Zealand, and to give an impulse to economic recovery.

G^Batavia: 29thh-30th January, 1949

72. The first impression on seeing Batavia is to wonder why the Dutch have not made more of it in the 300-odd years they have been there. I t cannot bear comparison with Singapore or Hong Kong. I am told that the interior of Java, which I did not see, is more creditable to Dutch enterprise.

73. His Majesty''s Consul-General (Sir F. Shepherd), had arranged inter­viewS for me with the High Representative of the Netherlands Crown (Dr. Beel) and, at the latter 's suggestion, with Indonesian leaders, both Republican and Federalist. I also met sundry Dutch officials and businessmen, members of the British Commercial community, and some of Sir F. Shepherd's foreign colleagues. As a curtain raiser, Sir F. Shepherd's military adviser explained to me, with the aid of a map, the extremely difficult military situation in which the Dutch now find themselves.

74. I talked to Dr. Beel in his office and was also his guest at lunch, when I met some of his chief colleagues, civilian and military. Dr. Beel is not impressive. He is dry, rigid and unimaginative and not the man to put through a great political operation, with the need for which the Dutch are now faced. But he spoke with moderation. An agreement about Indonesia was necessary, but time and patience would be required, and international interference would not help. He did not think that the United Nations Resolution, the text of which he had only just received, could be easily carried out, but he had so far had no instructions from The Hague and could not express himself definitely. He thought the three parties were slowly coming closer together. Certainly he and his Government wanted an early solution, and that solution was the earliest possible establishment of the United States of Indonesia. But law and order must be established first. He had no objection to negotiating with the Republic as such, but this must be on the same basis as with the other constituent parts of Indonesia. He was not certain that the present Republican leaders could deliver the goods, and they were not at all as moderate as Sjahrir.

75. Sir F . Shepherd took occasion to press upon Dr. Beel the acceptance of the United Nations Resolution and I told nim what I had heard about Indian views on Indonesia, and drew the parallel of our action in India and its helpful results. Dr. Beel said he was impressed by these arguments, but thought that the Indian parallel was not an exact one. The Indians were much better able to govern themselves than the Indonesians. And in India, no one had arms except the Goverment: in Indonesia, as in other parts of South-East Asia, the Allies had supplied arms to the resistance movements and the Japanese had left dumps when they departed.

76. The Republican leaders, headed by Dr. Sjahrir, came to the Consulate-General to meet me. I was struck by the moderation and lack of bitterness with which, on the whole, they spoke. The Indonesian question seems to have engen­dered more passion outside than inside Batavia. At first, Dr. Sjahrir left his colleagues to do the talking, but later he intervened. He opened with the disarming observation that whereas the British and Indians were both great peoples and could do things in a big way, this was not the case with the Dutch and Indonesians, who were both small peoples. Indeed, the Indonesians had picked up some of the faults of the Dutch. All agreed that a settlement must be reached in agreement with the Dutch. But there was a crisis of confidence. Dutch acts did not match Dutch declarations. Dr. Beel was the author of two police actions, and the first Catholic appointee for 300 years. Van Mook, for all his faults, had been better. The important thing was to make sure, beyond a peradventure, that the United States of Indonesia would soon actually be established. The question of the form of the Union could wait. If this main point was clearly established, immediate practical difficulties could be solved. When a Constituent Assembly was called, Indonesians of all shades of opinions could easily come to a common view on the Constitution. The Dutch must deal with the Republican leaders as representatives of the Republican Government and not as individuals; but it was not practical politics to imagine that, in the interim period, the Republic could be restored in its original glory. The Federalists could help if they would come out in favour of this line. Contact among all three parties was now being promoted.

77. The Federalist leaders were a more miscellaneous collection, from the astute and powerful Prime Minister of East Indonesia (Anak Agoeng Gde Agoeng) to the playboy Sultan of Pontianak from West Borneo. The talk was less satisfactory than that with the Republicans, since the Federalists had not reached agreement among themselves and were inclined to watch each other and stall. Like the others, they said that the objective was the setting up of the United States of Indonesia. They had no objection to dealing with the Republicans as a Government, but the Republic must be treated on a par with the other States and not given a preferential position. Also, there must be free elections in the Republican elsewhere : the Republicans had as yet no popular mandate. They disliked the revolutionary approach and centralist ten­dencies of the Republicans, but thought a Constituent Assembly could, without difficulty, agree upon a Constitution. They resented foreign interference in Indonesian affairs, and also the fact that they had not been permitted to express their views before the Security Council.

78. As Sir F. Shepherd said, in a telegram sent off at the time, the impression given by their talks was discouraging and disappointing. All parties seem to want, broadly speaking, the same thing: yet no one makes any positive move towards it. The Good Offices Committee (as it then was) had neither the capacity nor the prestige for this—in fact its members made a very poor impression on me. And neither Soekarno nor Sjahrir is a Nehru, nor Beel a Mountbatten. Also, the Netherlands Government, unlike His Majesty's Government, are living in another age. The Netherlands diplomatic and consular representatives whom I have seen on this journey are, with one or two exceptions, a poor lot; and they seem to love talking about the days of Queen Victoria.

H.—Bangkok: lst-Ath February, 1949 79. In Siam the teeming tropical life, vegetable and human, seems to reach

a climax. Bangkok, too, has a charm of its own as the centre of a river civilisation. 80. Here, from the point of view of British interests, there is a more cheer­

ful tale to tell. His Majesty's Ambassador (Sir G. Thompson) gave me an outline on the day of my arrival. He believes that the general approach to the Siamese should be one oi friendship and courtesy. Rough measures will not pay. The present Government is well disposed and there have been no real troubles with Siam since the war. British firms are doing well. Contracts are coming our way. 70 per cent, of the cars imported are British. British interests in the import­export trade, in t in and in teak, are on the Whole respected. Our information services obtain ample coverage for British news. Our action in India has enhanced our good name and has opened out the prospect of an extension of British influence in South-East Asia. (Sir G. Thompson was only one of several who made this remark to me.) The country is at present prosperous, though this prosperity may not be very firmly based. A record rice shipment is expected this month. I t was pointed out to me, however, by a number of informants that there are darker aspects of the situation. The Government is a usurping oligarchy, not popularly based. The country i s faction-ridden and both civilian and military elements might cause trouble. There is waste and corruption. And there is the Chinese question, growing Chinese nationalism directed against Siam among other places, acting through the local Chinese communities.

81. The Ambassador does not think that the Siamese are to be counted upon to resist incursion or attack from Communist China. As is their wont, they will bow to the storm and trust to their diplomatic agility to secure their survival, as so often in the past. On the other hand, they could probably deal with an internal outbreak, though they may need arms from abroad. There was little Communism among the Siamese themselves. I t was through the Chinese Community that Communism would come. All Sir G. Thompsons colleagues whom I consulted on this point share these views.

82. I asked a number of people, including foreign representatives, what was or would be the reaction of the spread of Communism in China on the Chinese community in Siam. The general view was that the rich Chinese would have primary regard for their own interests and would sit on the fence as long as they could. If the Siamese Government took a strongly anti-Communist line, they might support the Government, but that support would be precarious because the

rich Chinese depended in the last resort on the coolies and other workers, and these would be under strong Communist influence. There are signs that the spread of Communism in China will bring about a new wave of Chinese nationalism among the Chinese Communists in South-East Asia, and that the Chinese in Siam will take this opportunity to get back at the Siamese in revenge for past slights and oppressions. His Majesty's Ambassador suspects that the Siamese are conscious of this, and that it is this that has recently brought the Siamese Government to collaborate actively with the Malayan authorities against Chinese bandits on the Siamese-Malayan frontier.

83. I was entertained to dinner by the Foreign Minister (His Serene High­ness Prince Pride Debyabongs), who was profuse in his asseverations of friendship for Great Britain. I also met, both in his office, and at dinner at the Embassy, the Prime Minister (Marshal Phibun Songgram), whose mild and disarming manner masks a ruthless ambition. At his suggestion, after dinner, we had a long talk with Mr. Norman Young of His Majesty's Treasury (also on a tour of the Far East) and Mr. Doll, Financial Adviser to the Siamese Government about the vexed question of the Siamese gold and compensation claims.

84. In order to see something of the mainstay of life in South-East Asia, I went to see a rice-mill by the riverside. Here paddy was coming in by boat as it leaves the farms; sampled for quality; dehusked; cleared of the bran; polished; graded for quality, whether for export or home consumption; put up in 240 lb. sacks and carried by coolies down to the river again for despatch. In heat and dust and among perspiring humanity the machinery has been chugging away since it was shipped from Glasgow in 1895.

I.—Hong Kong: 4th-8th February, 1949 85. Hong Kong, like Singapore, gives an intense feeling of pride in British

achievement. I t has made a remarkable recovery in prosperity since the occupa­tion. I t s entrepot trade is about three, times the value and about the same in volume as before the war, though statistics are difficult to evaluate since so much of the trade with China passes through illicit channels. Trading, lawful or un­lawful, is in the Chinese bones. Hong Kong is an example to show what can be done in the economic field in this region if law and order prevails, if there is a just and efficient administration, a stable currency, and facilities for the expedi­tious and safe handling of goods. I t has re-established and extended its trading connections throughout the Far Eastern area. A good many Shanghai firms are now moving to Hong Kong. So long as there is no rival free port in the area— and there is no prospect of this—and so long as political troubles leave it untouched, Hong KOng's commercial future seems secure.

86. In Hong Kong, as in South-East Asia, the thought is all of China. Mr. Sebald, General MacArthur 's Political Adviser, asked me in Tokyo whether anyone in South-East Asia was thinking of Japan. I said that most people seemed to have put Japan firmly in the back of their minds as a problem that did not need to be bothered about for the time being : but i t might be different in Australia.

87. At the suggestion of the Governor (Sir Alexander Grantham) I made a tour of the New Territories on the mainland, accompanied "by Mr. Heathcote-Smith (the Governors Foreign Service Adviser), the District Commissioner and the. Commissioner of Police. We drove round the perimeter along the frontier with China and visited the police posts from which a watch is kept for refugees and smugglers. We also looked at the so-called walled city of Kowloon, a very tumbledown place, the scene of the recent incident.

88. The Governor kindly put us up at Government House (rebuilt by the Tapanese and redecorated in exquisite taste by Lady Grantham). We naturally ;alked about China. The chief danger to Hong Kong would be a united China, whether Koumintang or Communist. So long as China was in turmoil, there was 10 immediate threat. There had as yet been no appreciable influx of Chinese into long Kong as a result of recent troubles, apart from a number of rich men. Since STovember last the population of Hong Kong had increased by no more than 11,000, There had so far been in South China no large movement of armies or displace­nent of peasants from their homes. As to the future; he thought a generally held dew was that the Communists would, in the initial stages at any rate, act with

moderation. I t was not certain that they would depart from this policy, but it would be prudent to assume that they would. Most people who knew China were reluctant to believe that the Chinese people would be communised on the Soviet Russian model. This did not mean that Mao Tse-Tung and his associates were not Kremlin indoctrinated and directed.

89. He drew a contrast between the Hong Kong Chinese and the Straits Chinese. The former had much closer links with China and were less con­sciously or loyally British subjects. As the Governor of Singapore had told me, many Straits-born Chinese as well as Malays had behaved with great courage and loyalty during the Japanese occupation. One of the chief officials of the Colony told me that in Hong Kong the general Chinese view was that Hong Kong should be returned to China, but not for about -forty years, that is to say, ' ' not in my time." If Hong Kong became Chinese, many Hong Kong Chinese would make for the Straits to be under British rule again.

90. The Hong Kong Chamber of Commerce entertained me to lunch and I had talks, then and on other occasions, with leading members of the British Commercial Community. They were rather more optimistic about prospects in China than their Shanghai colleagues proved to be. One of the more cautious said that there were two certainties : first, that Mao Tse-tung and company were Kremlin inspired; secondly, that the mass of the Chinese people were indi­vidualists. What would be the result of the impact? He felt in his bones that in the long run the latter would prevail, and that even in the short run there would be chances for foreign business. Generally, they thought that the decisive factors would be the lack of competent officials; the ineradicable Chinese prone­ness to graft as soon as money passes through their hands; the invincible Chinese determination to carry on private trade, lawful or unlawful; the age-long Chinese spirit of compromise; China's need for foreign trade, foreign assistance, foreign capital, which Russia could not supply; the obstinate refusal of the Chinese to be dominated by foreigners. They agreed that these were long-term considera­tions, but thought that the chances were good enough for us to stay in China and trade so long as we could.

91. His Majesty's Consul-General at Canton (Mr. G. F. Tyrrell) and Mr. Cobhill, His Majesty's Ambassadors representative at Canton, came to Hong Kong to see me on Sir R. Stevenson's instructions. I need not record all our conversation. Mr. Tyrrell thought there was substance in the view of the British Community, but did not think there was much comfort to be drawn for British interests. The Chinese, of whatever cast of thought, would always be nationalist and anti-foreign and there was little ground for optimism. On the other hand, there would in the long run be antagonism between Communism and Chinese nationalism. The Chinese nationalists might perhaps acquiesce in Russian domi­nation of Manchuria, but not of North China. For this reason i t might well be Soviet policy to aim at getting a firm hold on Manchuria, a t securing a Govern­ment in North China friendly to Soviet interests, and not to risk jeopardising these solid results by imprudent adventures in South China. Whatever the Chinese Communists might want to do, he thought that Soviet policy would be to act with caution and by stages.

92. I might record that I paid a call on the veteran Sir Robert Ho Tung (86 years of age by Western computation and 88 by Chinese), frail but still alert, alive to affairs and pleased to exhibit his possessions.

93. The Japanese occupation has left little obvious trace in Hong Kong and South-East Asia. Even in the minds of those Europeans who suffered the rigours and, indeed, horrors of internment, there is less bitterness than one might have expected. I t is in the wider field of Asiatic consciousness that the Japanese have left their mark.

J.—Shanghai: dth^-llth February, 1949 94. Shanghai lives under menace and awaits its fate. The third most

populous city in the world (about 6 million) has been cut off from most of its hinterland. Much of the rice, raw cotton and oil fuel on which i t subsists has been paid for by E.C.A. I f these American supplies are cut off the consequences would be disastrous. The Mayor (Mr. K. C. Wu) knows that he is fighting alosing battle, but professes determination to play his part with all the skill he possesses.

95. I had a full programme at Shanghai. His Majesty's Ambassador (Sir R. Stevenson) came from Nanking to see me, bringing with him his Canadian, Australian and Indian colleagues, with all of whom I had separate talks. We all lunched together as guests of Admiral Madden in H.M.S. Belfast. I had talks with representatives of the Hong Kong and Shanghai Bank, the British Tobacco Company, Unilevers and other British concerns; with various specialist members of the Consulate-General staff, with Mr. Cyril Rogers, Financial Adviser to the Chinese Government, and with Bishop Houghton of the China Inland Mission. The British Chamber of Commerce entertained me to luncheon and I addressed them. I called on the Mayor (Mr. K. C. Wu) and met him again at dinner, with other Chinese notabilities, at the home of Mr. John Keswick of Jardine, Matheson, the leader of the British Community. I made a tour of the port of Shanghai in the Admira l s launch and visited the British-owned dockyard (which is doing good business), the British-owned Shanghai Waterworks (which is bankrupt), and the wool textile mill of Messrs. Paton and Baldwin, a model factory which is exporting products as far afield as West Africa. Such concerns have difficulty in obtaining foreign currency for the import of raw materials and other neces­sary supplies; and none of them can remit their profits (if any) to London.

96. His Majesty's Ambassador outlined the present situation to me and his recommendations for future policy. These will be familiar to the Department. He could not foresee how a Communist regime would behave to foreign interests. The Kuomintang had behaved scandalously in this respect. For this reason the British community had not definitely made up their minds what to do in the event of the transfer of Shanghai to the Communists. He thought they would stay and rely on their experience and skill to pull them through. Mr. Keswick expressed similar sentiments to me and even spoke of the British Community as a kind of fifth column which might apply its skill, good name and contacts to develop and encourage the ineradicable Chinese passion for trade, even if the Communists came in. The Ambassador thought that the Kuomintang was finished and that its leaders would return to their home provinces to try for local settlements. He did not believe that the Chinese would ever finally acquiesce in Russian domination of Manchuria. The Russians had not. yet broken with the Kuomintang and might perhaps be doubtful of their ability to make a favour­able deal with any new regime. I t should not be assumed that the Soviet Govern­

. ment wanted Mao Tse-tung to sweep the country. They might prefer him to concentrate on North China was expressed to me by several of those I talked with. One of the more thoughtful Chinese whom I met thought that the Communists would try to make sure of the rice-producing area round Shanghai before taking over the city itself. By so doing they could ensure good supplies for a few weeks and give themselves time to negotiate for further supplies from abroad. One of my informants thought that the Com­munists would be no better able than the Kubmintang to maintain a stable currency; that without such a currency there could be no proper Government; and that whatever happened there was certain to be a period, perhaps a long period, of great suffering for the Chinese people, and serious loss for foreign firms.

97. I only found three people who believed that the Chinese Communists would succeed in establishing a regime of the Russian pattern in China. They were all Kuomintang officials—the Chinese Ambassador in Delhi (Dr. Lo Chia-Luen), the Ambassador in Bangkok (Dr. Hsieh) and the Mayor of Shanghai. They said i t was wishful thinking to believe otherwise, and had little confidence in the power of the Chinese people to resist the new and ruthless techniques of the Communists.

98. I had an interesting analysis of the position from the Indian Ambas­sador (Sardar Pannikar) and this may be worth recording. This, he said, was the Chinese revolution, the culmination of a long process. I t was a Marxist revolution and would follow a Marxist pattern, but not necessarily on Russian lines. There were three reasons for this. First, Russia had a land-locked economy, while China looked to the sea and depended on foreign trade and had intimate contacts with great Chinese communities overseas. Secondly, the Soviet revolution had been based on the urban proletariat and the leaders had seized the State machine and imposed the regime from above; in China, on the other hand, the revolution was based on peasants' councils, and would establish itself from below. Thirdly, there had been a State bureaucracy in Tsarist Russia, not a very good one, but i t did govern the whole country, and the machine was at the disposal

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of the revolutionaries: there was. no such machine in China to facilitate the assumption of power throughout the country. This special Chinese brand of Marxism would have an appeal in Asia as a whole and would probably set the pattern for South-East Asia and perhaps even India. There was no trace of liberalism in it. Except perhaps in India, liberalism had made no impact in Asia. For this reason, Indian Socialism might differ from Chinese and have affinities with the Labour Party, which was rooted on the liberal tradition of the trade unions and nonconformity. The basic problem for Asia was food, not democracy. I t was worth noting that Mao Tse-tung was better known and more often quoted in South-East Asia than Stalin. (He instanced a recent statement by Thakin Nu.) Mao Tse-tung had recently said that for the next 30-40 years, a bourgeois-socialistkind of revolution would be best suited to China.

99. In view of the above, he thought that the United Kingdom policy of non­intervention and watchful waiting had been very wise. I t was essential to avoid showing hostility to the new regime. Our line should be that we would respect their interests if they would respect ours. Trade and passably good relations should be possible, and our people were right to stay.

100. While I was in Shanghai I heard that the Northern Chinese had put out feelers to Butterfield and Swire and to the British American Tobacco Company for some resumption of trading and industrial operations, and that a barter deal (coal for flour) had been concluded between the Kailan Mining Administration and Shanghai. The Peking branch of the Hong Kong Bank was open and doing business, and in touch by telephone and telegraph with the office in Shanghai. These are possibly straws in the wind.

.101. His Majesty's Ambassador told me that in reply to questions from British firms, he said that there could be no objection to the resumption of trade, with the North, but that i t was for the firms themselves to assess the risk and take their own decisions. They were in the best position to judge.

102. Mr. Keswick made two main points when I talked to him. The first Was the necessity for Anglo-American collaboration in the Far East and South-East Asia, and the marriage of resources and brains. This was as essential as in Europe. The second was that the British community in Shanghai were traders first and foremost, and proud Of it. They would stay in Shanghai as long as they could and use every resource of skill and experience to maintain British interests and prestige. They would maintain a united front for this purpose. If they wanted help, they would ask for it, and he thought they deserved it.

103. Within a few weeks of his arrival and although new to China, His Majesty's Consul-General (Mr. R. W. Urquhart) has established himself as the trusted leader of the British Community and of the Consular body in Shanghai. From all sides, I heard the warmest tributes paid to him.

K.—Tokyo: 12th-2lst February, 1949

104. The United Kingdom is represented in J a p a n : — (I) On the Allied Council, now moribund, by Mr. Patrick Shaw (Australia),

who speaks for the Commonwealth. Mr. Shaw was away in Korea and I did not see him, but I had a long talk with his assistant; and Mrs. Shaw kindly gathered some people together to meet me. . I had some talk with the Russian member (General Derevyanko), and the Chinese (General Shang).

(2) In the occupation, by Lieut.-General Robertson (Australia), commanding British Commonwealth Forces, now exclusively Australian. Wi th the reduction of this force to between 2,000 and 3,000 men, General Robertson is over-graded for his job and has now little to do. This somewhat colours his outlook. I saw something of him in Tokyo.

(3) Directly vis-a-vis S.C.A.P. (Supreme Commander for the Allied Powers), General Douglas MacArthur, by the United Kingdom Liaison Mission, headed by Sir Alvary Gascoigne, who is generally spoken of as the British Ambassador. Sir A. Gascoigne and his staff have established very cordial relations with S.C.A.P. and his assistants. General MacArthur and others spontaneously spoke to me in the warmest terms

of him. Sir A. Gascoigne has no official relations with the Japanese Government. These are conducted exclusively by S.C.A.P. The United Kingdom Mission do, however, meet Japanese unofficially, with S.C.A.P.'s entire approval. Some members of the Government and others were invited by Sir A. Gascoigne to meet me, but 1 was prevented by indisposition from seeing them.

105. With Sir A. Gascoigne, his Service advisers and other members of his Mission, I attended a " briefing" lecture at S.C.A.P. Headquarters, given in the absence of General Willoughby (Head of the Intelligence Section of S.C.A.P.) by Lieut.-General Miller, a member of his staff.

106. The lecturer explained the present dispositions of the Soviet and United States Armed Forces in the Far East. The Russians, with forces extending from Dairen through Manchuria to Kamchatka and the Kuriles, have great superiority on land and in the air over the United States forces in South Korea, Japan and the United States bases near to it. In addition, Russia has trained considerable armed forces in North Korea. On the other hand, the Soviet forces depend for supplies and communications mainly on the Trans-Siberian railway, which is at many points vulnerable to air attack.

107. Strategically the United States position is regarded as very unfavour­able, particularly in view of the Communist successes in China, which would, in the event of war with Russia, make available to the Soviet Air Force valuable air bases in China. This could render untenable the United States position in South Korea, Japan, the Ryukus and the Philippines. The lecturer, however, added that there were no signs of any Soviet preparation for war in the Far Eastern area.

108. The lecturer did not draw any conclusions of policy from this analysis, and indeed a similar review of the present military situation in Western Europe would probably not be any more favourable. But the line taken by the lecturer lends point to General MacArthur 's remark to me a few days earlier that it was the soldiers, " m y own flesh and blood," who had been putt ing ideas into Mr. RoyalFs head. * "

109. I met General Mac A rthur twice: once at an intimate lunch at his house and once in his office. Sir A. Gascoigne has already fully reported on these conversations, but I will make a few notes. Like most great public men, General MacArthur has a strong sense of the theatre, and he has it in supreme degree. He is also an indefatigable and unsparing talker. But these idiosyncrasies should not blind one to his really massive if somewhat unsubtle abilities. He is undoubtedly a great figure. He received me most cordially. I believe that he has a sincere admiration for Great Britain, for the part we played in the war and the part we are playing now. Sir A. Gascoigne assures me that the General has treated United Kingdom interests in J apan with scrupulous fairness, if not indeed with some favour. United States business men, who have no Ambassador to represent them, sometimes complain that we are given the better of the deal.

110. The two chief questions which people are asking a re : what are the Japanese going to be like after the occupation? and how are the Japanese going to feed or otherwise dispose of their growing population (now increasing by 1^ million a year) ?

111. As to the first, General MacArthur seems convinced that the brand of democracy introduced under his auspices has come to stay; that the Japanese have seen the error of their ways and understand being made to pay for their misdeeds; and that their policy will be to regain the respect of the world by­good behaviour. I found few in Tokyo who shared this optimism. Those who knew most about Japan were the most cautious in expressing opinions. But some of them thought that something good from the occupation period might be retained and bear fruit in the future, though no doubt in a specifically Japanese form. The least optimistic forecast was that the communisation of China would open the way for the resumption of the policy of the greater East Asia Co-Prosperity sphere (which the Japanese had never in their hearts abandoned) under joint Japanese-Chinese Communist direction. This would be the only

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basis on which Sino-Japanese collaboration would be possible and the Japanese would think i t worth while going Communist in the hope of achieving it. This forecast was held by some to be unlikely, since Communist regimes are not neces­sariiy like-minded, nor a Chinese Communist regime likely to be willing to be led by Japan.

112. As regards the food problem, the Economic Adviser to the United Kingdom Mission observed that Japan will in years to come need to import increasing quantities of rice. There is little margin for increased home production. Exports will have to be increased by five or six times the present amount. This is bound to mean increased competition with United Kingdom exporters. The United States are unlikely to agree to any long-term fixing of the level of industry. They are already pressing for relaxation as regards ship­building and ocean shipping. At present, United Kingdom firms are doing good business. Their properties are being gradually returned and there is less discrimination against them and other Allied firms in favour of the Japanese. Banking, insurance and shipping got away with a good start. Export and import business came along later. Sir A. Gascoigne told me that he thought they were adapting themselves well to the new situation and showing a spirit of enterprise and collaboration among themselves.

113. The war has not solved the Japanese population problem, and no one can suggest any solution except increased industrial production and exports in order to feed them. There are no substantial outlets for emigration. Japanese are even less wanted abroad than Chinese. Yet the population pressure from both is bound to assert itself in the long run. This is one of the great question marks of Far Eastern politics. There can be little doubt that the Japanese will again do their utmost to establish predominant economic influence, to put i t no higher as a first step, over those areas which they seized in 1941 and 1942 as being necessary to their economic existence, and, which they were unable to hold against Allied counter-attack. The facts of their economic situation have been burned into their consciousness.

114. General MacArthur's view, from what he said to me, seems to be that for the solution of the problem of raising the Japanese standard of living, which will soon become among the most pressing of our time, continued foreign assistance will be needed, and that less assistance would be needed to produce decisive results than in Europe. But at the same time he seemed to be opposed to any separate appropriation for rehabilitation, as distinct from supplies to prevent disease and unrest, and to think that the latter should be progressively reduced, in order to stimulate the Japanese to help themselves.

115. General MacArthur spoke to me about the Far Eastern Commission in Washington. Though he still professes to regard it, and not the United States Government, as the framer of the policies which he executes, he thinks that once it has settled the policies as regards reparations and level of industry, i t should go out of commission. Policy should then be settled by Governments through the diplomatic channel. Unti l this was done, there would be no policy to speak of. The United States Government had not framed theirs and were inprovising from day to day. I t had never been intended that S.C.A.P. and the F.E.C. should continue so long or that a peace treaty should be so long delayed. Even now, he did not think it impossible to reach agreement with the Soviet Union.

116. The absence of a policy in Washington was confirmed to Sir A. Gascoigne by Mr. Max Bishop of the State Department, who accompanied Mr. Secretary Royal! on his recent visit.

117. I t looks, however, as though developments in China and increasing demands on United States resources, economic and military, throughout the world might now bring the United States Government to take stock and establish priorities on a world-wide scale. Mr. Royall's alleged lucubrations in Tokyo (the general sense, of which, namely possible United States withdrawal from Japan in case of war, General MacArthur strongly repudiated to me) and the fact, which the General volunteered to me, that he would probably have soon to go to Washington to testify before Congressional Committees about the Far East, suggested some such review of policy may be in progress. General MacArthur, for his part , agrees that the Far East would be a secondary theatre in the

£event of war, but he maintains that it should be held. To make no attempt Bto do so would be an unnecessary strategic surrender and an immense gain to

the enemy. I t would, therefore, be a mistake to denude the Far East and 3oncentrate all military measures on Europe.

, 118. If so, it is Sir A. Gascoigne's view that an attempt should be made to co-ordinate British and American policies in Japan, the Far East and 3outh-East Asia. In this he echoed the views of Mr. Keswick in Shanghai. As a first step, he suggests a visit by Mr. Malcolm MacDonald or one of the Commanders-in-Chief at Singapore to General MacArthur. The General will lot discuss strategic matters with him or any of his advisers. He might open up a little more to a visitor from Singapore. Sir A. Gascoigne also suggests that he or someone from Tokyo should attend the next conference of His Majesty's Representatives at Singapore. This would help us to see the Far East and South-East Asia as a whole (the presence of the High Commissioners at Delhi, Colombo and Karachi would also tend to the same result) and he thinks this essential if we are to have a coherent policy suited to our interests and resources md to the conditions that now prevail in those areas. With this suggestion, I jlose the present record.

W: STRANG.

Over the Mediterranean,27th February, 1949.