This Document is the Property of His Britannic Majesty's Government.
OPIUM.
CONFIDENTIAL.
[20708]
No. 1.
303
23142
[June 10.]
JUL TO]
SECTION 2.
India Office to Foreign Office.-(Received June 10.)
India Office, June 9, 1910.
Sir,
I AM directed by the Secretary of State for India in Council to reply to your letter, dated the 25th May, on the subject of extending the existing agreement for the progressive reduction of the Indian opium traffic with China.
2. In reply, I am to say that Lord Morley has no objection to the course proposed by Mr. Max Müller, and to refer you to my letter, dated the 9th June, expressing the opinion of the Secretary of State in Council as to the way in which the question raised in Mr. Max Müller's despatch No. 110, dated the 20th April, should be disposed of.
3. With reference to the interpretation placed by Mr. Max Müller on the second stipulation proposed by the Government of India in paragraph 13 of the extract from their despatch of the 28th October, 1909, I am to say that the stipulation should be read in connection with the proposal made by the Chinese Government in 1907, when an arrangement with the Government of India was first mooted, that the import and li-kin duty should be doubled. This proposal was examined in paragraph 8 of the India Office letter of the 29th May, 1907, to the Foreign Office, and in paragraphs 17-21 of the Government of India's despatch No. 64, dated the 21st February, 1907, copies of which were transmitted to Sir John Jordan by Sir Edward Grey's despatch of the 14th June, 1907,* and Sir John Jordan was authorised to discuss it with the Chinese Government. Eventually, the Chinese Government decided not to pursue the matter further for the time being. If the Chinese Government were to reopen the question, and if there is evidence that the taxation of the local article has been substantially increased, Lord Morley would be willing to consider any recommendation which His Majesty's Minister may see fit to make regarding an increase in the present consolidated import duty. A concession in this direction would appear more prudent than abandoning the principle of the additional article to the Chefoo Convention, which protects foreign opium from provincial taxation so long as the package is unbroken.
4. Though the question of extending the existing three years' agreement with China may not be of great urgency, an early settlement is desirable in the interests both of China and India and of the trade of Hong Kong. For this reason, Lord Morley will be glad to know that negotiations with the Chinese Government have been opened.
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* See "China No 1 (1998)," p. 17, Cd. 3881.
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am, &c.
ED. MONTAGU.
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