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Highness's board on the 5th instant, and also of the confirmatory memorandum which your Highness was kind enough to send me the following day, to the effect that the Chinese Government were not prepared to continue the negotiations for an agreement for the progressive reduction of the importation of Indian opium into China on the basis of the proposals put forward by your Highness's board in writing on the 25th September, and subsequently accepted by the British and Indian Governments as the essential principles of the subsequent negotiations for a detailed agreement between His Majesty's chargé d'affaires and representatives of the Wai-wu Pu.
His Majesty's Government have learned with regret of this sudden change of attitude on the part of the Chinese Government, a change which was all the more unexpected, as the proposal for the extension of the existing three years' arrangement for a further period of seven years had been accepted by the Chinese Government in The memorandum handed by principle, and was indeed their own suggestion. Mr. Max Müller to Dr. Yen on the 1st November was expressly intended to give effect to the wishes of China, and was merely the final stage of what was understood to be a complete understanding between the two Governments on essential points. Its rejection and the proposed substitution of an entirely new basis of negotiation, after the Chinese Government had in their note of the 21st September last expressed their gratitude for the generous attitude of His Majesty's Government, appears to Sir Edward Grey to indicate that the proposals contained in Mr. Max Müller's memorandum bave not received proper consideration.
His Majesty's Government offered to China a very favourable agreement, and fixed its duration at seven years at China's own request; they voluntarily waived their right under the 1907 agreement to evidence of the diminution during the past three years in the production of opium in China; they have shown great patience for several months in the face of the continued illegal action of the provincial authorities in Canton; they have expressed their willingness to agree to an enhancement of the consolidated import duty on Indian opium on the condition that the duty on native opium shall be correspondingly and effectively raised; and, finally, they have accepted the proposals submitted by Mr. Max Müller to ensure that the reduction in the import of Indian opium in China should correspond to the stipulated decrease in the number of cases exported from India. In short, His Majesty's Government have shown every desire to meet China wherever possible, and it is disappointing to see no signs of a corresponding readiness on her part to meet them. The Chinese Government appear to forget that the existing restrictions on the export of opium from India are not imposed by treaty, but were accepted by the Indian Government as part of a tenta ive arrangement between China and Great Britain. This arrangement, as Mr. Max Müller has frequently pointed out, will terminate on the 31st December in default of an understanding between the two Governments as to its renewal. One of the conditions of the expiring agreement is that the Chinese Government should furnish proof that the production of opium in China had been reduced in proportion to the reduction in the export from India, and this the delegates of the Chinese Government have admitted their inability to do. The Government of India are therefore under no obligation to continue their restrictions on exportation beyond the end of the present month, and they can hardly be expected to do so unless they are convinced that a new agreement which could be considered satisfactory is on the point of conclusion. Any arrangement to be satisfactory to the interests of India must have regard to the fact that the two Governments originally agreed upon a period of ten years as not more than sufficient Snch for the effectual accomplishment in China of so great a scheme of reform. evidence as exists shows that opium is still extensively cultivated in China, and that the quantity of Indian opium imported is still relatively small iu comparison with the total amount of opium grown and consumed in China. The Chinese Government no doubt realised this when they insisted to Mr. Max Müller on the existing agreement being extended for the full period of seven years.
In regard to the arrangements contained in Mr. Max Müller's memorandum for preventing the 16,000 chests not affected by the annual reductions from reaching Chinese ports, I regret to have to state that it is now, owing to the procrastination of the Chinese Government, probably too late to put them into force during the coming year. Unless the system of numbering and sealing the chests commences on the 1st January it must be postponed for another year. The Indian Government, who had made arrangements for putting the system into force from next month, point out that there is nothing to prevent the whole of the Malwa opium export for the calendar year from leaving India early in January, and the numbering and sealing of the chests of Patna and Benares opium alone would not afford China the assistance which she asked
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for and which India was prepared to give her. It seems, therefore, as if the Chinese Government, by their unexpected and unjustifiable change of attitude, have deprived their country for at least one year of the benefits of the proposed arrangement.
I am directed by His Majesty's Government to express the hope that, on further examination of Mr. Max Müller's memorandum and of the position which will arise if it is definitely set aside, the Chinese Government will realise that it offers a liberal and reasonable solution, and that its acceptance will be in the best interests of China herself. I would add that I am myself convinced that the arrangement for corresponding reduction with the Indian Government has been, and will be, one of the principal incentives towards an energetic prosecution on the part of the Chinese authorities of the anti-opium campaign in China, and that, though fully conscious of the considerable measure of success already achieved, I feel that a grave mistake is now being made by the Chinese Government in yielding to the pressure of ill-informed agitators, and thus compromising by undue haste the ultimate consummation of the great task which China has set herself.
Finally, in bringing to your Highness's notice the objections entertained by His Majesty's Government to your present action, I have the honour to state that, pending resumption of negotiations on the basis of Mr. Max Müller's memorandum, they will insist on the strict observance of our treaty rights in regard to the trade in opium.
I avail, &c.
J. N. JORDAN,