Correspondence on political situation in Hankow, where Pei Chung-hsi has joined with Cheng Chien against Chiang Kai-shek; little prospect of peace between North and South in China; appointment of new chief of Chinese Coast Guard Administration; Edwardes to be appointed Inspector General of Customs, Peking; return of General Li Chai-sum to Canton, which may group with Kuangi, Hunan and Hupei against the Chiang Kai-shek party in Kiangsu, Chekiang and Fukien; Canton Government's bank reserve said to have been deposited in Hong Kong during Chang Fa-kuei's regime; political report on situation in Canton, General Li Chai-sum having had a conference with Clementi; suggestion of League of Nations' action to end civil strife in China, but Lampson sceptical about potential for success; political report on situation in Canton; resumption of train services to Canton; difficulties surrounding proposed League of Nations' action are very great, but otherwise no end to civil strife seems possible; decision by British Government to invite a League of Nations' commission to investigate opium smuggling from China; Nanking requests Hong Kong to hold (Canton) government funds until Ministry of Finance agents can investigate.