1. Further to my 239 in response to your 166.  I have discussed the position with the British Ambassador.  He agrees that immediate danger is not serious but does not discount the ultimate danger. So much so that he has arranged with the Commander-in- Chief of the Pacific Fleet with the approval of the British Government to send a small naval force possibly consisting of a cruiser and two destroyers to Shanghai on direct approach from him or the British Consul-General in Shanghai and the naval force may bring some arms for local volunteer force in the event of an emergency.
2. In Nanking there is no protection apart from possible reserve of arms the American Advisory Group may have. Whilst student and labour unrest has no anti-foreign bias at present my view is that in an emergency, reactionary elements in the Government would attempt to divert Chinese resurgents to traditional attack on foreigners. In this event it would be necessary for the whole Legation staff to shelter in one house but we have no protection other than Chinese police who are unreliable. In addition to two pistols now held we should have some arms in store for such an emergency and our Military Attache should be here to keep us in closer contact with the military and local situation.
3. While I am not apprehensive at present there is no doubt that the situation is explosive and may ultimately take an ugly turn against which possibility we should be prepared. I have not informed the Shanghai Office of these discussions and will not do so pending your reaction. In the event of real difficulty the British Ambassador thinks the evacuation of women and children would be possible by sending a destroyer to Nanking, or flying boat from Hong Kong. In such an event we would have the co- operation of the British Embassy. There is no immediate solution of the Government's difficulties and partial success of its repression measures may well give it unjustifiable confidence in the strength of its position.
Despatch 71 being forwarded June 10th deals with these matters and I should like it brought to the Minister's personal notice.