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such assurances, verbally adding that, if after trial of our proposal it were found unsatis- factory, the revision clause could always be utilised for its improvement.
In order to make this clearer I strengthened the draft revision clause itself (see enclosure 2 in my despatch No. 138) to read as follows :-----
Should it appear on subsequent experience desirable at any time during the unexpired period of seven years to modify this agreement or any part thereof it may be revised by mutual consent of the two high contracting parties."
The board, however, refused to agree to my suggestion and insisted that nothing less than the omission of the words " under transit-pass" from our proposal could tender it acceptable, and they instructed Dr. Yen to request me to telegraph to you
in this sense.
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I again pointed out to Dr. Yen that the omission of the words "under transit-pass would render the clause destructive of the rest of the agreement for it was tantamount He admitted that on paper this to putting an immediate stop to the Indian trade. danger would exist though he denied that it was a real one, and he undertook to submit to the board the addition of a qualifying sentence which I proposed should be added to the clause if the words "under transit-pass" were omitted, and which would confine its operation to "any province in China which having been previously dependent on native opium for its local "consumption can establish, &c." (See enclosure 1 in my despatch No. 138).
As it was evident that this was now the crucial point in the negotiations I took an early opportunity of seeing the Grand Secretary Na T'ung, and at an interview on the 3rd instant I urged him to add some form of words in place of “under transit-pass which would render the clause compatible with the rest of the agreement.
""
His Excellency, while professing to appreciate the liberality already shown by His Majesty's Government in dealing with this matter, insisted that nothing short of our clause as originally worded and omitting the mention of transit-passes could satisfy the provincial agitation. I asked him to state definitely whether he considered that the clause in this form would give a province like Canton the right to claim the exclusion of Indian opium---say, within six months of the signature of the agreement-merely by extinguishing the very small growth and import of native opium within its own borders.
His Excellency admitted that this would be the result of the clause, and also that the suppression of the demand for opium in Canton province within such a period was impracticable; but while recognising that the clause did not correspond to the actual facts of the situation, he was unable to suggest any form of wording which would do so.
I finally proposed that if there were insuperable objections to distinguishing between provinces in the clause itself, an explanatory note might be appended to it which would define its proper meaning on which it was evident that both parties were now agreed, and I handed his Excellency a draft in the following terms :---
"It is understood that this clause, with a view to securing its smooth working, shall apply in the first instance to those provinces which have been chiefly dependeut upon native opium for their consumption, and shall be gradually extended, as circumstances admit, to other provinces which have drawn their principal sources of supply from abroad."
The Grand Secretary promised to consider my proposal, but urged me at the same time to endeavour to secure your consent to the clause as advocated by him, and so remove the one serious obstacle in the way of an agreement.
When at our next meeting Dr. Yen informed me that the board were unable to agree to the addition of any such qualifying words or note as suggested by me, I felt that it would be necessary to fall back upon the original Chinese offer to exclude merely the distributing centres of Canton and Shanghai. I had hitherto been loth to have recourse to this proposal which only safeguards the entry into two out of the seven provinces which form the principal market for Indian opium, and I had accordingly avoided giving the Chinese delegate any ground for supposing that we should be satisfied with such a meagre concession.
When I now again referred to the exclusion of these two ports from the prohibition, Dr. Yen asserted that the offer made originally by himself and confirmed by the Grand Secretary Na T'ung to exclude Canton and Shanghai had been withdrawn, and although
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such
I was able to convince him by a reference to the minutes that no intimation of
any unusual proceeding had ever been given to me, he gave me to understand that it was now too late-in view of the ever-growing provincial agitation--to incorporate anything which savoured of differential treatment.
I pointed out that it was not open to the Chinese Government to withdraw a proposal of their own making, and made it clear that I considered them bound by their
offer.
Dr. Yen finally undertook to recommend this proposal again to the board, and it was at this stage that I had the honour to report this fresh difficulty in my telegram No. 94 of the 7th instant, supplementing my telegram No. 89 of the 31st ultimo on the same subject.
At our next meeting Dr. Yen said he was still without instructions on this point, but on the 18th instant he enquired whether an offer on the part of the Chinese Government to accept a less duty than the 330 taels provisionally agreed upon would be likely to induce His Majesty's Government to forgo the exclusion of Canton and Shanghai.
stated that I did not think such an offer would have the desired effect, and took the opportunity to explain to Dr. Yen that His Majesty's Government were really unable to understand the attitude of the Chinese Government in seeking to duplicate by means of this provincial prohibition the concession already made to them in the undertaking to extinguish the Indian trade as soon as the cultivation of opium in China ceased. added that if the Chinese Government meant to stop the Indian trade at ouce, they should say so openly; but if, on the other hand, they wished these negotiations to succeed, it was essential that the scheme for provincial prohibition should be rendered compatible with the rest of the agreement, and the very least they could do to this end was to exclude Canton and Shanghai from its operation.
The next offer made by the Chinese delegate was to exclude Canton and Shanghai provided that certain concessions were made in the treatment to be accorded to existing stocks, and finally, by means of a compromise which is explained in greater detail below, the exclusion of these ports was agreed to in exchange for an addition of 20 taels to the proposed increased consolidated import duty, and for the omission of the proposed deduction of 5,000 chests from the total amount of existing stocks for which the Indian Government is to grant a rebate in the exports of subsequent years.
The solution of the question regarding the treatment to be accorded to the existing stocks has occupied an even greater proportion of the time devoted to these negotiations, by reason of the necessity for elaborating a workable method of giving effect to any principle agreed upon.
As reported in my despatch No. 138 above referred to, it was impossible to obtain equality of treatment for stocks and certificated opium except in exchange for a reduction in the authorised imports of subsequent years; and, accepting this as a basis, I offered to recommend the marking by British and Chinese officials conjointly of all uncertificated opium in bond in Hong Kong and the treaty ports, and also to deduct from the total 10,000 chests-being 5,000 for the shortage in the 1910 import, and 5,000 for the assumed amount which would have been in stock under normal conditions at any time-and to reduce the imports of the next four years by an amount equal to one-fourth of the remainder.
I argued that such a proposal was more favourable than the Chinese Government had a right to expect when the plain treaty rights of these stocks were considered.
The Chinese delegate, after consulting the Ministers, agreed that the reduction should be spread over tour years, but refused to accept a greater reduction than 5,000 chests from the total for the purpose of arriving at the amount to be reduced.
This I accepted as a working arrangement, and proceeded to draw up a scheme by which effect could be given to it. As reported in my telegram No. 86 of the 30th March, I proposed that the listing of all uncertificated opium in stock should take place on the date of signature of the agreement, and that all such opium should be marked with labels which should ensure it the same treatment as certificated opium. In this telegram I also suggested that the closing of the ports to uncertificated opium might be made effective as soon after the signature as possible, provided the consent of the other treaty Powers were obtained.
The Government of India's telegram of the 28th March, suggesting the closing of the ports to uncertificated opium on the 1st July, crossed my telegram No. 86 above referred to, and in my telegram No. 87 of the 30th March, I expressed the opinion that this suggestion might not commend itself to the Chinese Government in view of the increase in stocks to which it would probably lead; I also had the honour to
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