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7.
369 Various regulations have been published that only persons who have licences may purchase opium, and that licences will only be issued to old people who have the opium habit. Licences are issued by the Government and a fee is charged; anyone paying the fee can get a
licence.
8. The syndicate have purchased at an average rate of over 89,000 per chest and in addition they have to pay 83,500 tax. Their opium therefore costs them $12,500 per chest. A chest will produce 1,100 taels of fairly good opium. Making some allowance for cost of preparation we may say that it can be produced at $12.50 a tael. The profit cannot therefore be very great when it is remembered that $15
rati the rate at which they sell, is paid in Chinese sub coin at a discount of nearly 20%. A profit of 2% to the sub-compmies is also small. The opium as at present sold is of very poor quality and is not selling well Steps are I am told being taken to improve it.
9. The syndicate and the sub-companies are really aiming at something much bigger, and there are signs of the whole thing becoming a big smuggling co-operation. Though their supply is supposed to be limited to the 1,200 chests purchased, they intend to sell as much opium as they can get from other sources, and there are a number of ways in which this can be got.
10. The first point in this general move is the abolition of opium suppression police throughout the province. This started as far back as September and its result cabe seen in the increase in the sales in Hongkong. Macao sales also appear to have increased and I think it possible that the Macao Farmer will make an application for increased imports. He has already imported since his term, 1st. August, 1915, 500 chests his full allowance for the year, Opium is also moving freely from Kwangchauwan but I do not know if it is doing so now more
than formerly.
11.
The second point is the attempt being made to get raw opium to Canton from Harm various sources. A considerable quantity of Yunnan opium has I believe been ready to go in for some time and it is note- -worthy that the chief manager of the combine, Tung Pok-ng is a native of Tunnan. I have been approached by 2 sets of people asking whether
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