[Anglo-Japanese tension in North China reached a peak on 14 June 1939 when Japan instituted a blockade of the British and French concessions at Tientsin and proceeded to obstruct British business and inflict indignities upon British residents. The immediate cause was the refusal of the British to hand over to the Japanese four Chinese, alleged by the Japanese to have murdered an official of the Japanese-sponsored regime in North China. The accused Chinese claimed that the only evidence against them had been obtained by torture.]
Tientsin. Dominions Office and Stirling's cables  have informed you of the facts. Difficult to express definite views as to wisdom of course pursued to date probable developments and policy which should be pursued. On original issue namely the handing over of four men without production of evidence by Japanese authorities, two opposite views were exposed. The Consul-General on the Spot  was strongly of the opinion that sufficient evidence provided and recommended that the men should have been handed over. This view supported by Ambassador to Japan  and local British community. The Ambassador to China  tended to oppose advice on both points. In my view Consul-General was right and the Ambassador to China who at the time was visiting Chinese areas and in personal contact with Chiang Kai-shek' was too much influenced by atmosphere and representations made to him that the men should not be handed over.
Whether wise or unwise the Foreign Office decision was that the men should not be handed over and it now seems impossible to do so save as a result of an impartial examination such as has been suggested without a serious burden in loss of prestige and encouragement to the Japanese to further action.
Both British Ambassador to Japan and Consul-General at Tientsin now agree that under present military pressure Government's decision must remain unchanged.
The issue has now however become much wider and the question of future British interests in North China if not throughout the Far East may well depend on strong action being taken in present situation.
As indicated in Stirling's cable possible (group mutilated) action now being fully examined.
Present indications are that statement will probably be made at the beginning of the week setting out the United Kingdom position in such a way as to appeal to neutral opinion especially United States making clear the United Kingdom will not submit to force and if persisted in retaliatory action will be taken but indicating that if Japan modifies her present attitude, the United Kingdom Government is fully prepared to make amicable arrangements for the settlement of the terrorist issue.