The much-controverted Currency Bill, fixing the ratio of the rupee at 1s. 6d., as recommended by the Hilton Young Commission, was passed in the Assembly on March 22 by a narrow majority, an amendment to make the rate 1s. 4d. having been rejected on March 8 by 68 votes to 65. A Joint Select Committee of both Houses gave prolonged consideration to the Indian Reserve Bank Bill in the interval between the Delhi and Simla sessions, and decided by a majority that instead of a shareholders' bank, the capital should be subscribed by Government. Sir Basil Blackett raised strong objections, and in the autumn session a plan was propounded for a stockholders' scheme, with a territorial distribution of the capital, and power of the stockholders to elect trustees. On September 8 the Bill was withdrawn, owing to difference of view with Whitehall. In November Sir Basil Blackett came to London on a three weeks' visit on special duty to discuss with the India Office arrangements for a fresh Bill (drafted on his return to Delhi) for a shareholders' bank on lines of a territorial distribution of capital and limitation of individual holdings.

What is known as the Indian Sandhurst Committee, presided over by Sir Andrew Skeen, Chief of the General Staff in India, and consisting mainly of members of the Indian Legislature, signed a report on November 13, 1926, which was issued on April 1. The committee recommended a substantial and progressive employment of Indians in the higher ranks of the army in India, in order that by 1952 half the total cadre of officers should be Indians. The ten annual vacancies allotted to Indians at Sandhurst should be doubled, and thereafter should be increased progressively until a military college on the lines of Sandhurst was established in India. The report was accompanied by an intimation that neither Government had formed their conclusions, and that these would necessarily take account of certain factors of which it was not within the province of the committee to undertake a complete survey. The views of the Government of India were forwarded to Whitehall before the end of the year, and were considered by the Committee of Imperial Defence.

An Act of the Imperial Parliament provided for a Royal Indian Navy, to be used only for the purpose of the defence of India, save in grave emergency. As a beginning, the units will consist of four sloops, two patrol vessels, and two ships for surveying. The training of Indian cadets on the R.I.M. Dufferin at Bombay began at the end of the year.

In the autumn the Viceroy visited the States of Kathiawar, and at Rajkot on November 22 announced the decision of the Secretary of State to appoint a committee to report upon the relationship between the Paramount Power and the States with particular reference to the rights and obligations arising from treaties, engagements and sanads, and usage, sufferance and other

causes, and to inquire into the financial and economic relations between British India and the States, with a view to recommendations for their more satisfactory adjustment. On December 16 it was announced that the committee would be presided over by Sir Harcourt Butler (who a few days later completed his successful tenure as Governor of Burma, and handed over charge to Sir Charles Innes) with Professor W. S. Holdsworth, K.C., and Colonel the Hon. Sidney C. Peel (son of the first Viscount Peel) as members. The need for an inquiry of the kind had been indicated earlier in the year by acute differences between the Government and certain maritime States of Kathiawar in regard to Customs administration at their ports. A conference on the question held at Mount Abu in July broke down, and Government re-imposed the Customs cordon at Viramgam (where British India is entered) which had been abolished in 1917. In the summer a deputation from the Indian Princes, consisting of Mr. L. F. Rushbrook Williams (Foreign Secretary, Patiala State) and Colonel K. N. Haksar (Gwalior State Council), came to London to seek legal opinion on the constitutional position of the States.

The Bombay Back Bay Committee, presided over by Sir Grimwood Mears, signed the report at the close of 1926, and it was issued on January 17. It stated that the programme of reclamation had broken down, and if continued under present conditions could not be finished for many years to come. A very considerable reduction of the area to be reclaimed was proposed, and it was recommended that the work should be carried out, not departmentally as hitherto, but by direct agency.

The year was marked by great activity in other important public undertakings. During his autumn tour the Viceroy inaugurated a dozen sections of the Sutlej Valley irrigation project, and laid the foundation-stone of the Lloyd Barrage project at Sukkur in Sind-undertakings which, when completed, will irrigate close upon 12,000,000 acres, an area nearly twice the whole of cultivated Egypt. The further provision of railways went on apace, the mileage of new lines to be opened in 1927-28 being

914.

An Act of the Imperial Parliament, which received the royal assent on December 22, repealed the law under which the Bishop of Calcutta, as Metropolitan of India and Ceylon, has been subject for nearly a century to "the general superintendence and revision " of the Archbishop of Canterbury. Earlier in the session both Houses had assented to a complimentary Measure passed by the National Assembly of the Church of England in July to provide for the dissolution of the legal union between the two churches, and to make provisions consequential thereon. When the "date of severance" is reached in 1930 the Anglican Church in India will be a voluntary association entitled to manage its own affairs, like the sister churches in the self-governing dominion.

A satisfactory feature of the year was the mitigation of the Indian problem in South Africa by means of an agreement published on February 21 reached at the Round Table Conference held at Cape Town between an Indian delegation and members of the Union Government. (See under South Africa.) At the suggestion of Mr. Gandhi, the Government of India selected as its first agent in South Africa the Right Hon. Srinavasa Sastri, and it is generally agreed that an excellent beginning has been made in removing the problem of Indians in the Union from the category of acute inter-Imperial questions.

The work of removing the reproach of slavery under the British flag in the unadministered Kachin country in Burma was brought near to completion. Sir Harcourt Butler held a durbar at Myitkyina on January 10, and made it clear to the 120 chiefs or their representatives present that slavery must be abolished. The expedition into the "Triangle," in the upper reaches of the Irrawaddy, which followed, effected the release of some 4,000 slaves; but unhappily, on March 26, a party under Captain E. M. West, I.A., was ambushed, and he was killed. Arrangements were made for a final expedition early in 1928 for the release of the remaining slaves, estimated to number about 600.

On March 28 Sir Stanley Jackson succeeded Lord Lytton as Governor of Bengal. The reformed system of Government was already functioning again, and though the Ministry was defeated Sir Stanley Jackson was able to maintain "dyarchy" throughout the year. The question of persons interned under the Bengal Criminal Law Amendment Act continued to agitate the province, and the men released included, on grounds of health, Mr. Subbas Chandra Bose, a prominent politician. It was announced in March that Government was convinced that a terrorist conspiracy was still in active existence, and that consequently it was not possible to release those about whom there was no reasonable doubt that they would utilise their liberty to resume their previous activities. About fifty were still under detention at the end of the year, many of them having been transferred from gaol to less strict forms of supervision.

Heavy floods in July in various parts of the country, and notably in Gujarat, did serious damage to the cotton and other crops, and Ahmedabad and Baroda were among the towns which suffered; but on the whole the monsoon was satisfactory. The Royal Commission on Agriculture continued its Indian tour in the early part of the year, spent the summer in London in further investigation, and returned to India in the autumn to complete the taking of evidence and prepare the report.

CHAPTER VIII.

CHINA-JAPAN-THE DUTCH EAST INDIES.

CHINA.

AT the beginning of the year, the Revolutionary army had occupied the greater part of Southern China. General Chinag Kai-shek was fighting against the Northern army under Marshal Sun Chuan-fang on the Kiukiang-Nanchang railway, and by the end of January had captured the provinces of Kangsi and Anhwei. In February his troops, under the command of General Ho Yin-ching, were marching from Foochow to Hangchow, and on March 10 they had occupied all the cities between Hangchow and Shanghai.

With the advance of these victorious troops, the opposition between the right and the left wings of the Kuomintang became accentuated. General Chiang Kai-shek and his lieutenants were moderates, but the Nationalist Government which had moved from Canton to Hankow was in the hands of Radicals directed by Bolshevik advisers. The object of the former was to complete the campaign and unite China under the Nationalists before taking steps to restore China's rights lost to foreign Powers, whereas that of the latter was to embroil the foreign Governments at once, so as to compel them to surrender their rights and privileges. On January 4 a mob attacked the British Concession at Hankow, and on the 7th had taken possession of the consular and municipal buildings. Two days later a similar riot had broken out at Kiukiang. Encouraged by the conciliatory attitude of the British Government, which resulted in a formal return of the concessions to China under the Chen-O'Malley agreement signed on February 19, the Government began to issue orders to generals not on good terms with Chiang Kai-shek to attack foreigners. On March 24, when the troops of General Cheng Chien entered Nanking, a systematic attack on foreigners was carried out. Foreigners were subjected to personal insult and violence and six of them were killed. Entry was forced into the different consulates, the missionary schools and the foreign business properties. The British and the Americans gathered at the Standard Oil Company plant, from whence they were taken to foreign warships on the river. As soon as the soldiers threatened to force their way into this compound, the warships commenced a barrage on the city which lasted for twenty minutes and killed six Chinese. The object of the attack was, indeed, not so much to kill foreigners as to provoke a foreign bombardment of Nanking, with the expectation that it would stir up a nation-wide antiforeign feeling, overwhelm General Chiang Kai-shek and the

moderates, and so sweep the extreme Nationalists into complete control of the party. By this time the evacuation of foreigners from the territory under Nationalist control had begun, and a British expeditionary force of 20,000 men had arrived at Shanghai. The American, the French, the Italian, and the Japanese Governments had also strengthened their naval forces in Chinese waters. The situation was so tense that a break with the Powers seemed imminent, but the caution and restraint with which they handled the Nanking incident afforded the Chinese elements who were by no means anti-foreign the opportunity of asserting themselves. At the end of March, the Chambers of Commerce and many other public institutions had cabled the Governments concerned to apologise for the Nanking incident and ask for non-intervention in China's domestic affairs. At the same time, they showed their confidence in General Chiang Kai-shek by giving him financial and other aid.

General Chiang Kai-shek now proceeded to organise, with the support of the moderate members of the Kuomintang, a government of his own at Nanking. He suppressed Communist risings by summary executions and ordered the arrest of Mr. Borodin and other Soviet advisers responsible for intrigues and agitations. Further, he declared war on General Tang Shen-chi, a supporter of the Hankow régime. As it was beyond his power to carry on the anti-North and the anti-Hankow campaigns simultaneously, he concentrated the major portion of his forces on the TientsinPukow railway for eventual attack on Peking, taking a defensive position on the Hankow front. He came to terms with Marshal Feng Yu-hsiang in Honan for a concerted attack on the Northern line on the Peking-Hankow and the Lunghai railways. By May 30 he had advanced as far north as Hsuchow, the junction of the Tientsin-Pukow and the Lunghai railways, and threatened an invasion of the province of Shantung. General Tang Shenchi, having now severed all connection with the Communists made plans with the Peking Government for military co-operation against General Chiang Kai-shek, and moved troops eastward as far as Wuhu with a view to cutting him off from his base of operations at Nanking. The Northern army, under Marshal Sun Chuan-fang, made desperate efforts to recapture Hsuchow, and 50,000 men lost their lives in the siege. As a last attempt to defend the city, General Chiang Kai-shek reinforced himself by moving more troops from Wuhu to the Hsuchow front, but the refusal on the part of his lieutenants to obey his orders made this step useless. He withdrew from Hsuchow on July 24 and from Pengpu on July 30. On August 13 he resigned from the command and retired into private life. For a time there was confusion in Nanking, and his colleagues, Generals Li Tsung-jen and Ho Yin-ching, both refused to take over his duties. The advance of the Northern army on Pukow and its occupation of the outskirts