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[This Document is the Property of His Britannic Majesty's Government.]
1024
REC? 13 APR 13
338
OPIUM
CONFIDENTIAL.
C [9020]
No. 1.
[February 25.]
SECTION 1,
Sir J. Jordan to Sir Edward Grey.-(Received February 25.)
(No. 60.) Sir,
Peking, February 6, 1913. REFERRING to my telegram No. 30 of the 1st instant, I have the honour to enclose herewith copy of a despatch from His Majesty's consul-general at Shanghai, transmitting copy of a tentative proposal put forward by the foreign opium importers, under which it is estimated that the stocks of Indian opium at Shanghai and Hong Kong could be worked off within two years.
In their letter the foreign importers suggest that the Indian Government might be induced to cease making sales of opium for all those markets outside China for the supply of which that Government holds a monopoly. They explain that under existing arrangements they cannot avail themselves of those markets because, so long as the Indian Government continue to supply them, the prices ruling there must remain somewhere in the neighbourhood of 900 taels per chest. The estimated laying down cost of the China stocks is given by Sir E. Fraser as 3,000 taels a chest. A list of markets is added, showing how it is proposed to work off, at the annual rate of 19,200 chests, the existing stocks of certified opium, 29,760, in addition to 7,300 uncertified, making a total of 37,060 chests.
The list requires more detailed explanation, as the estimate of 1,600 chests monthly supply for the "markets left at "date" appears too high. No account also seems to have been taken of the probable tendency of increased competition of Persian and Turkish opium, to which reference is made by the Government of India in their despatch of the 18th July, forwarded in your despatch No. 236 of the 23rd August,
1912.
His Majesty's consul-general considers that probably the fairer arrangement to obviate the possibility of the scheme resulting in a monopoly would be for India to hold auctions at which the non-China markets could bid for the stocks in Hong Kong and Shanghai at an upset price equivalent to whatever is considered a fair value-say, 2,500 taels a chest.
The proposal of the opium importers as presented by His Majesty's consul-general means in effect the transfer of the practical monopoly of opium sales from the Indian Government to the foreign importing firms in China for about two years, and that the Indian Government should act as auctioneer,
The proposal calls upon the Indian Government to make further sacrifices in addition to the suspension of sales of certified and the reduction of uncertified opium by 4,200 chests during 1913. Moreover, it will be difficult for the Governments of Hong Kong and the Straits Settlements to understand why they should be compelled to pay 3,000 in place of 900 taels a chest. For the same reason, no doubt, protests would be made by Indo-China, the Netherlands-India and Siam; in none of these countries is there cultivation of the poppy except to an inappreciable extent in Indo- China. The last named would endeavour to reduce the import of Indian by buying Yünnan opium, Formosa is also a consumer of Indian opium and Japan would in all probability raise objections to being placed on the auction list and subjected to an artificial enhancement of prices for the benefit of the foreign importers in China. The suggestion that the Indian Government should auction the stocks would not necessarily obviate the possibility of the scheme resulting in a monopoly. No safeguard has been provided against the opium-merchants making a pool and bidding fictitious prices. In order to avoid the danger of a monopoly, therefore, it would appear to be essential that the surplus realised over a fair laying-down cost of the stocks at Hong Kong and Shanghai should be held by the Indian Government,
The returns of Indian opium removed from bond at Shanghai during January this year give 689 and two half-chests (including 210 for re-exports to foreign countries) as compared with 7923 for the same month last year. The corresponding figures for Kiukiang are nil and 84, for Foochow, Amoy, and Swatow, 134, 132, and 147 as against 38, 128, and 106 respectively. The total for the five ports is 1,102 during January 1913, and 1,148 chests for January last year. The latter figure is below the
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