The danger of acquiescing in the proposed Regulations at Canton is that, diversely the fact became known that we had done so, other provinces would at once start schemes for raising money by taxing opium which probably would not be of such a comparatively unobjectionable character as is the one in question.
Taking all the above considerations into account, I venture to think that for the present, and until I am in receipt of the views of His Majesty's Government, the position assumed by Mr. Scott in his communication to the Viceroy is correct--- viz., that the levy should be suspended until the matter has been considered and decided by His Majesty's Legation and the Wai-wu Pu in Peking.
I am informing Mr. Scott that I approve his action.
3
that the Viceroy would, as stated to me by the Guild, have forced the tax on the direct importers under pain of imprisonment and confiscation of their property.
I have, &c. (Signed) JAMES SCOTT.
I have, &c. (Signed)
ERNEST SATOW,
Inclosure 1 in No. 1.
Consul-General Scott to Sir E. Satow.
(No. 6.) Sir,
Canton, January 31, 1906.
I BEG to inclose herewith copy and translation of certain Regulations recently issued by order of the Viceroy, imposing additional taxation on prepared opium.
These Regulations provide for the levy of a graduated scale of fees on the different shops selling prepared opium, as also the sum of 4 candareens per tael of the article sold---i.e., 4 per cent. I learn that the Viceroy has, during the past year, been pressing the opium importers to undertake the levy of certain additional charges on the opium passing through their hands as a voluntary contribution towards the provincial Exchequer. Strong pressure and even threats were brought to bear upon the merchants in question, but the Opium Guild, as a body, held out. Three of their prominent members called upon me to explain the situation, and expressed the fear that, under threats of imprisonment by the Viceroy, they would be compelled to yield. They specifically asked whether, in the event of their Guild undertaking the levy, I on my part could assure them that British importers would also be liable to pay the tax on demand by their Guild. This I declined to do.
The deputation, on leaving, informed me that they would persist in their refusal to the Viceroy on the ground that compliance on their part, as shown on previous attempts to enforce a prepared opium tax, would throw the import trade into the hands of foreign dealers, and thus increase smuggling. The deputation also informed me that the sole reason for the farming of the tax by the Guild was that in such case there would be less likelihood of opposition on the part of the people, and less ground for complaint on the part of foreigners; and that the rates as stated in the Regulations were valid only for one year, at the end of which time they would be increased, and the whole collection revert into the hands of the officials.
With regard to the present Regulations, I have found myself in a difficulty in protesting against their enactment. The licence is paid by the prepared-opium shops, and the 4 candareens on the prepared drug as sold. But, bearing in mind previous attempts to levy a tax on prepared opium, which has been declared contrary to Treaty, I deemed it my duty to remind the Viceroy of the arrangement which had been made to refer such questions to the high authorities in Peking.
I beg to inclose copy and translation of my despatch to the Viceroy, and of his reply. The Viceroy argues that the tax is paid only after the packages have been opened, and refers to the levy by the Yung An Tang (a voluntary assessment accepted by the Guild many years ago in lieu of a prepared-opium tax) in justification of his action.
I find that the present Regulations have been in force since the 8th December, but that so far no great success has attended their enforcement.
The Viceroy recognizes that unless he can command the levy on the direct importers through the Guild, the boilers will, while paying licence fees (which they cannot escape), certainly furnish inaccurate returns of their business. On the other hand, smokers will purchase the raw drug and secretly prepare it themselves.
At the present moment the Viceroy is not pressing the tax with energy. The quarrel which has recently arisen between him and the gentry, as reported in my despatch No. 4, has intensified the situation, and the Viceroy hesitates to aggravate public feeling any further. But for this latter fortuitous circumstance I am satisfied
(Translation.)
Inclosure 2 in No. 1.
Opium Licence Regulations.
THE convenience both of officials and merchants being an important consideration in the introduction of the present licensing system, substantial merchants will be required to guarantee the revenue to be derived from the licence fees, and will pay three months' revenue in advance as security, this sum to be deducted in the last quarter.
Licensed shops will pay 4 candareens per tael's worth of goods sold, and to prevent trouble this should be paid by the purchaser, and not be an additional burden upon the raw-opium merchants. The head office will issue licence certificates in duplicate, sealed and serially registered. The aforesaid merchants will give in detail the number of licences required, the names of the shops, their situation, and the amount to be paid by each. They should make application in person at the office, and themselves fill in and issue the licences.
Licences shall be renewed every year, and a fee of 1 dollar for the licence certificate itself will be charged.
Certificates will state whether any godowns are covered by the licence, and in such case, where these are situated, in order to facilitate inspection. The counterfoil should be returned to the office to be filed for reference. The licence fee, due monthly from every shop, shall be fully discharged during the first five days of the month. Shops ceasing to do business should be reported to the Syndicate, and fees due from such shops shall be paid by the members of the Syndicate. The amount guaranteed by the Syndicate must be paid in full; no plea for reduction will be entertained.
2. Every shop for the sale of prepared opium, as every shop for the sale and consumption of refuse opium, and every divan for the consumption of opium, in every town, market-town, and village shall apply for and receive a Government licence before it may be opened. The fee for such licence shall be assessed according to the size of the business.
Licensed shops will be public establishments and under Government protection; shops unlicensed in defiance of these Regulations will be immediately closed by the Government as illicit.
All persons who, relying on the local strength of their clan, presume secretly to disobey these Regulations, and all persons furnishing short returns, will, on detection, be arrested, tried, and severely punished.
The sale of opium being a legitimate business, the farming of opium licences has nothing in common with the farming of the coast defence tax (levied on gaming-houses, brothels, &c.). The option of farming is given to the merchants concerned in order to prevent vexatious extortion by middlemen, and when the said merchants shall have received their certificates no outside competition will be allowed to deprive them of the privilege. Should the merchants fail to recognize the exceptional consideration thus shown to them, and make an inadequate offer for the farming of the licences, or be dilatory in availing themselves of the option, the licences will either be under Government control, or the right of farming will be granted to other merchants in each district. Such merchants must, however, in the interests of the revenue, procure substantial guarantees for the amount.
3. Preparation of the drug in private houses must, after the adoption of this system of licences for opium shops, be rigorously prohibited, as injurious to the revenue; and opium boilers are strictly forbidden to assist in screening any such abuse. Any person objecting to the flavour of the opium in the shops may, on payment of a fee in proportion to the amount to be consumed, obtain a separate licence to prepare opium.
4. The immediate abolition of shops for the sale and consumption of refuse opium and divans for the consumption of opium being unadvisable, inasmuch as the
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