10
interests, and it will be obviously impossible for them to accept as satisfactory assurances on this point as long as the Chinese Government has to admit its inability to enforce treaty provisions in the provinces.
The continued failure of the Central Government to impose its will throughout the country, of which these flagrant breaches of an agreement signed at the request of China little more than a year ago form only one of many instances, must materially retard the recognition of the Chinese Republic by His Majesty's Government, unless a considerable improvement in that respect is shown before the time comes for recognition.
(Repeated to India.)
(No. 94.) P.
(9.)
Sir Edward Grey to Sir J. Jordan.
Foreign Office, June 17, 1912. Your telegrams Nos. 128 and 129 of the 8th and 11th June. Conference at which Secretary of State for India and I were present has considered reasons for and against suspension of opium sales in India. We came to the conclusion that it would be impolitic, in view of the arguments contained in the telegram of the Government of India of the 6th June, if not impossible, to postpone or discontinue sales, or in any way alter conditions of sales publicly announced. It would be unfair to expect Indian Government to make such a sacrifice for the Shanghai market, to bring financial loss on itself, on the native States and the native cultivators, and to lay itself open to a ebarge of inconsistency and breach of faith in order to enable a few firme interested in the opium trade in China to realise a profit.
Our information is that opium trade has been concerned by two or three firms who have already realised considerable profits, and do not wish to see them diminished through depreciation of stocks held by them in Shanghai and elsewhere. Strength of your argument as to disorganisation produced by revolution is fully recognised, but we consider that this was reasou for merchants to exercise prudence instead of artificially raising prices at auctions to unprecedented figure. On the information before us, therefore, we are unable to urge the Government of India to interfere as suggested.
Are you in possession of reliable and independent information that advances cannot be repaid, and that financial crisis is likely to result from commitments of banks?
We are considering question of further control of export of uncertificated opium.
(Repeated to India.)
II. Selected Telegrams referring to the Suspension of Sules in January 1913.
(No. 257.) R.
(1.)
Sir J. Jordan to Sir Edward Grey.
Peking, December 13, 1912. Your telegram No. 199 of the 12th December: Opium. Facts are as stated in your telegram. All the Yang-teze provinces are being closed to Indian opium, and trade is at a complete standstill at Shanghai, where there are now 20,000 chests, valued at from 8,000,000 to 10,000,000l., stored up without any prospect of a market.
I have made endless representations, both written and verbal, but without any effect. This week, accompanied by His Majesty's consul at Shanghai, whom I summoned here for the purpose, I had long interviews with the President of the Republic and Minister for Foreign Affairs, and we exhausted every effort to induce them to have the Agreement of May 1911 enforced in the provinces. They gave a half-hearted assurance that instructions of the 15th June, 1911, would be reissued under the authority of the President, but so far nothing has been done, and the Central Government shows no disposition to check the widespread movement in favour of total prohibition.
11
I have informed the Chinese Government that unless my last representations produced effective action I should be obliged to place the whole case in the hands of His Majesty's Government.
(Sent to India.)
P.
(2.)
From Viceroy, December 16, 1912.
British Minister at Peking has repeated to us his telegram to Foreign Office, dated the 13th December, No. 257, in which complete cessation of trade in Indian opium at Shanghai is reported. Our letter to you of the 6th December expresses our views as to the seriousness of the position. Our worst fears are confirmed by the telegram from Jordan. In the interests of native States in Malwa, of Indian merchants, and of taxpayers, we beg to urge how extremely necessary it is that China should be induced to observe the Opium Agreement of May 1911.
(Repeated to Jordan.)
(No. 263.) R.
(3.)
Sir J. Jordan to Sir Edward Grey.
Peking, December 20, 1912. Your telegram No. 203 of the 18th December. Drastic measures are being adopted nearly everywhere to suppress the cultivation, trade, and consumption of opium, and there is no evidence of any discrimination in favour of the native drug. (Sent to India.)
P.
(4.)
From Viceroy, December 30, 1912.
We have had under review the whole position in the matter of opium in view of the definite prohibitory action which the Central Chinese Government have now taken. Most of the opium for China would in the ordinary course be exported in 1913 from Bombay, and the situation has been examined from all points of view by our finance member at that port. We are informed that there is a large accumulation of opium at the treaty ports, while it is rapidly becoming increasingly difficult for it to gain admission into the interior; there is thus a large amount of capital locked up for an indefinite period. The banks have heavy commitments in advance, and are showing signs of uneasiness which may turn into financial panic at any time, while Chinese merchants are adopting the uncommon and reckless step of disclaiming their bargains. It therefore seems clear to us that there has at last arisen a critical situation which must be met by special measures.
On previous occasions, when to have stopped sales would merely have been to protect speculating buyers against break in prices, we have opposed stoppage of sales. Conditions are now entirely different. We have now to face (1) an overloaded market, (2) the powerlessness of His Majesty's Government to secure observance of the treaty, (3) the likelihood of a financial crisis by which Imperial trade interests in the Far East as well as our own trade may be injuriously affected. This being so we are proposing to you in a separate telegram that our sales for China in 1913 should be largely reduced and perhaps completely stopped for the time being. If these proposals meet with acceptance it will be necessary for us to consider our budget and our liabilities to the Durbars, who have every expectation that the market will remain open till the close of next year.
Without imposing additional taxes we can budget on the basis of the absence of revenue from opium for China in the year 1918-14, but could say little in rebuttal of the assumption that this course indicates inability of His Majesty's Govern- ment to enforce observance by China of Opium Agreement of the 8th May, 1911. Such a position would not, you will agree, be desirable or dignified.
your
So far, therefore, as the necessities of Imperial policy permit, we earnestly press that our relations with China may be regulated in nominal compliance with the
2053 8-1]
E
174