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On the 29th ultimo I received a letter from Messrs. Sassoon and Co. complaining that a newly opened hong (Ho Chung) for the sale of foreign opium had been summarily closed, and requesting me to take some action in the matter. The same morning I called on Mr. Cheng at the Foreign Office, who, however, knew nothing about the case; but he undertook to make enquiries and let me know why the hong had been closed. The following afternoon I received a letter from him saying that the hong had been closed by the magistrate under orders from the Acting Viceroy. I thereupon telephoned to the Acting Viceroy asking him to grant me an early interview, but he replied that he was too busy to see me during the next few days. I again requested him to see me as the business I wanted to discuss was of an urgent nature, but he merely repeated the same answer. In the evening I received a note from Mr. Cheng saying that the Viceroy had directed him and Wang Taotai to see me on his behalf, and appointing an interview at the Foreign Office for 10 o'clock on the morning of the 31st ultimo. I went to the Foreign Office at the appointed time and asked Mr. Wang to inform the Viceroy that unless I was granted an interview within a reasonable time I should have no alternative but to telegraph to you that his Excellency refused to see me. This had the desired effect, as shortly after I had returned, I received a message that the Viceroy would see me the following morning at 9.30. I may mention in this connection that the Acting Viceroy avoids seeing any body as far as possible, many high officials having been refused interviews.
On the morning of the 31st ultimo I received H further letter from Messrs. Sassoon and Co. stating that the manager of the hong had been arrested, and that the receipt of this news had caused a great scare resulting in a demoralisa- tion of the market.
An important point in this matter is that the three kung hongs practically comprise all the opium hongs which were in existence previous to the issue of the regulations, and it is, therefore, to their interest to prevent the opening of any further hongs to compete with them. In their second letter to me protesting against the closing of the Ho Chung hong Messrs. Sassoon and Co. say, "The kung hong had practically a monopoly of the opium trade as in the absence of competition the members were dictating terms both as regards purchases and sales of opium to the detriment of our trade.”
At my interview with the Acting Viceroy yesterday morning I protested against the arbitrary closing of the hong in question as an interference with the right of free trade accorded to British merchants by treaty and as contrary to the assurances given me by the late Viceroy. I also showed him Mr. Hsu's letter, and pointed out that his interpretation of the regulations gave a monopoly of the opium trade to the three kung hongs. His Excellency replied that the Board's regulations laid down that no more opium hongs were to be opened, and as the regulations did not specifically exclude foreign opium from the sphere of their operations, he was merely fulfilling his duty in closing the hong. He said that the British Government had agreed to the reduction of the import of Indian opium, and that, naturally, the number of dealers must be reduced proportionately each year. I objected that, so far as I knew, the British Government had not agreed to any restrictions on the right of British merchants to trade freely, and that so long as the treaties remained in force I must look to him to fulfil their conditions; and I also urged that the quantity of foreign opium imported each year being fixed, it was immaterial to the Chinese authorities how many dealers were engaged in the distribution of it.
After a long discussion, in which the Viceroy affected to treat the whole matter as one of slight importance, his Excellency emphatically refused to allow the hong to be reopened or the manager to be released, and I accordingly informed him that I should report the facts of the case to you.
I have, &c.
Inclosure 2 in No. 1.
Mr. Hsu to Consul Goffe.
HERBERT GOFFE.
(Translation.) Sir,
June 28, 1909.
I HAVE the honour to refer you to the conversation which I had with you at the Foreign Office a few days ago.
You then alleged that the number of opium dealers comprised in the (three) kung
hongs was limited, and that no dealers outside the kung hongs could purchase foreign opium from foreign merchants, and you pointed to this as a breach of treaty regula- tions. I have the honour to point out to you that the kung hongs were formed in accordance with the regulations framed by the Ministry of the Interior, which specifically speak of native opium and make no mention of foreign opium being exclusively within the province of the kung hongs. Neither in the Board's regulations nor in those issued by this office is there anything contrary to treaty.
You also produced for my inspection two forms of permits to import and sell opium, issued by this office to the kung hongs, made out for a certain quantity of I have foreign opium, and you objected to any such authorisation being necessary. the honour to inform you that the regulations specifically provide for the issue of these two kinds of permits in the case of native opium, but there is no mention of their being required where foreign opium is concerned. It appears, however, that in the case of these permits blank forms are issued by this office to the kung hongs, who fill them in as they are wanted, sending the counterfoils to us once a month for purposes of comparison. The permits for foreign opium which you showed me were issued in error by the kung hongs; and they have been severely reprimanded further and directed to cancel any such permits already issued and not to commit any mistakes of the kind in future,
I avail, &c. (Card of the Nanking Treasury Office).
(No. 16.)
Sir,
Inclosure 3 in No. 1.
Sir J. Jordan to Consul Goffe.
Peking, August 13, 1909. I HAVE received your despatch No. 24 of the 2nd instant complaining of the attitude of the Acting Viceroy of Nanking in regard to certain alleged interferences with the freedom of trade in foreign opium.
The whole of this question is one which requires very delicate handling, and I can only hope that you will find that the new Viceroy, Chang, who has had to deal with it in Canton and should know the question thoroughly, will prove more con- ciliatory than the Acting Viceroy. It appears to me very doubtful how far we should. object to the closing of the new hong against which you protested. I understand that under the regulations in force in Kiangsu no further shops for dealing in either raw raw or prepared opium beyond those already licensed will be allowed to be opened. This is merely carrying into effect No. 5 of the original Imperial Regulations of 1906, and as such we cannot oppose such a measure.
His Majesty's Government are of opinion that these regulations should not be regarded as constituting an infringement of our treaty rights, and Sir Edward Grey has gone further and said that even should a case be made out in favour of the rules being considered to constitute a technical violation of treaty rights, he would be disposed all the same not to raise objection to the rules being carried out.
Under these circumstances I do not feel that you are called upon to make any general protest against the enforcement of the licensing rules, but you should remind the Viceroy of the representations made to him by His Majesty's consul-general at Canton, and say that acting under instructions from me, you must request his Excellency to issue directions that foreign opium must be excluded from the operation of any clauses in the regulations which are intended to apply to the whole- sale trade. You should add that you will make no formal protest as long as the licensing regulations are carried out in a proper spirit and in such a manner as not to interfere with the wholesale trade between the British importer and the native purchaser.
You should be very careful as to how you commit yourself to the representations of Messrs. Sassoon and Co. in regard to our general line of policy in this matter, only telling them generally that you have received instructions to protest against. interference with the wholesale trade in foreign opium.
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I am, &c. (In the absence of His Majesty's Ambassador),
W. G. MAX MÜLLER.
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