[This Document is the Property of His Britannic Majesty's Government.!
OPIUM.
CONFIDENTIAL.
[7347]
No. 1.
[February 18.]
SECTION 1.
India Office to Foreign Office.-(Received February 18.)
India Office, February 17, 1914.
Sir,
I AM directed by the Secretary of State for India in Council to acknowledge the receipt of your letter of the 6th February, on the subject of the opiuni stocks, and in reply to inform you that a copy of it is being forwarded to the Government of India for a very early expression of their views by telegraph, and that on receipt of their reply a further communication will be addressed to you.
In the meantime I am to refer to my letter of the 6th February, and enclosed telegrams of the 30th January and the 5th February from the Government of India, in which they express the strongest objections to the proposal that Indian revenues should bear the cost of purchasing the opium stocks and make suggestions (see telegram of the 5th February) as to the line of action that should be followed in replying to the offer of the Chinese Government to buy the merchants' stocks, and in dealing with the situation when in the coming spring a number of provinces now open to the opium traffic will probably be closed.
Lord Crewe is deeply impressed with the gravity of the problem. One aspect of it has been forcibly dwelt on by Sir John Jordan. But justice to India requires that all its aspects should be dispassionately and carefully considered. And to this end the following observations are offered.
The view taken by the Government of India is that they have already made considerable sacrifices in order to further the policy of His Majesty's Government, and that adherence, at any rate, in form, to the existing agreement will provide the best solution of the apprehended difficulties, and is open to fewer objections than the course proposed by Sir John Jordan. Under the agreement the Chinese Government, on furnishing the requisite evidence, can close the provinces successively to the traffic, and thereby destroy the opium market in China. The merchants and their bankera have all along been aware of this risk, and have to accept it. They have been responsible for holding up the price of certificated opium in China, and they did not utilise the opening for the disposul of their stocks outside China which the Government of India afforded them last year by cutting down the supply of non-certificated opium. Provided the agreement is observed by the two Governments, they have no valid cause of complaint. They cannot demand that His Majesty's Minister should strain its provisions in their favour, or that the Indian Government should relieve them of their stocks. They must come to terms with the Chinese Government, and they will have to accept a price much lower than the compensation they will certainly claim if the agreement is now openly set aside by the British Government, and an offer is made in consequence to take back what was sold to them under it. As regards the contingency that the Chinese Governments might burn the stocks, and repudiate its indebtedness to the merchants, it may be observed that the Chinese Government have not expressed this intention. Moreover, it should be possible to come to an understanding with that Government as to the disposal of the stocks, if and when a price has been settled. Among a population of 400,000,000 there must be a considerable demand for the drug for legitimate uses, which might very well be brought under State regulation and supply. As to repudiation of indebtedness, it would seem possible to hand over the stocks by instalments as payment is made by short-term negotiable bills, which could be discounted and converted into cash, or His Majesty's Government might think fit to assist the Chinese Government in completing the purchase, and to hold the stocks in pledge until the advances were repaid.
The proposal made by Sir John Jordan would, it must be admitted, make the situation easy for the merchants and bankers, the Chinese Government, and the political and commercial interests of this country. But this would be at the expense of India. The Government of India naturally hold that Indian revenues are not called upon to make the further sacrifices which the proposal entails.
Sir John Jordan would seem to minimise unduly the burden that would be thrown upon the Indian Government, and to fix on them an unwarranted responsibility for the
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