This Document is the Property of His Britannic Majesty's Government
CHINA TRADE.
CONFIDENTIAL.
No. 1.
37918 [October 22.]
SECTION 1, NA JE
669
(A.) Sir,
India Office to Foreign Office.--(Received October 22.)
India Office, October 20, 1904.
I AM directed by the Secretary of State for India in Council to acknowledge the receipt of your letter of the 21st September, 1904, on the subject of a scheme proposed by the Viceroy of Canton for raising additional revenue by means of the taxation of opium.
In reply, I am to make the following remarks :—
If the interpretation placed on the Additional Article in Sir E. Satow's letter of the 4th July, 1904, to Prince Ching be correct, the scheme would clearly infringe the provisions of the Article. But although this interpretation was accepted by the Chinese Government in 1902, apparently on the advice of Sir Robert Hart, when instructing the Viceroy of Canton to withdraw his tax on prepared opium, it seems to be doubtful whether it can be defended in argument, and so long as any doubt on this point exists, Mr. Secretary Brodrick considers that it would not be prudent to make this particular interpretation and its alleged infraction a ground for threatening to terminate the arrangements under the Article.
It is pointed out in Mr. Acting Consul-General C. W. Campbell's letter of the 11th June, 1904, to the Minister that the language of the Article favours the less stringent construction which the Chinese Government have now placed upon its provisions.
A reference to the notes exchanged by Lord Granville and the Chinese Minister in London in 1884,* when the Article was under negotiation, confirms Mr. Campbell's remarks, as they show that the intention of the 5th clause was to secure that in the event of foreign opium being subjected to licence, retail and other local duties after it has reached its destination, native opium would be equally liable to such duties. It seems difficult to establish either from the actual text of the Article, or from the correspondence regarding it, in the papers presented to Parliament, that the Chinese Government are under an obligation to bring the taxation of native opium up to the pitch of the consolidated import and li-kin duties on foreign opium, before local duties of the kind mentioned by Lord Granville can be made applicable to foreign opium which has reached its destination.
It may, perhaps, be inferred from Sir E. Satow's despatch of the 7th July, 1904, that in maintaining "the hitherto accepted view" of the intention of the Article, he is not satisfied that it is correct. It might be well to ascertain from him with reference to the correspondence laid before Parliament in 1885 what evidence there is in favour of that view. If the point remains doubtful, I am to suggest that a case should be prepared and submitted to the Law Officers for opinion.
It appears from the Acting Consul-General's letter above referred to that valid objection can be taken to the proposed tax on the ground that it will not be made effective on native opium.
If Sir E. Satow is of that opinion, I am to say that Mr. Secretary Brodrick sees no objection to his enforcing such a contention by exercise of the discretionary power given to him in the Foreign Office despatch No. 87, dated the 17th March, 1904, should he consider that the circumstances of the case comply with the conditions on which the Government of India have agreed to resort being had to the threat of abrogating the Additional Article.
I am, &c.
A. GODLEY,
(Signed)
* See "China No. 5 (1885)".
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