[This Document is the Property of His Britannic Majesty's Government.]
OPIUM.
CONFIDENTIAL.
371
[February 26.]
SECTION 1.
[22849]
(No. 28.) Sir,
No. 1.
Sir J. Jordan to Sir Edward Grey.-(Received February 26.)
Peking, January 22, 1915. WITH reference to my despatch No. 381 of the 13th November last, I have the honour to report that, during my recent visit to Shanghai in December last, Messis. Ezra and Levy, representing the foreign opium importers, called upon me.
Mr. Ezra, who was the principal spokesman, complained that, although Kiangsu, Kiangsi, and Kuangtung were nominally open to the import of Indian opium, the Chinese Government had practically closed these three provinces in the same way as thether provinces placed on the prohibition list under article 3 of the Opium Agrec- ment of 1911. After the destruction of the seven chosts of opium at Anking in September 1912, all the retail shops in Kiangsu had been closed by the Chinese Government, and every chest of Indian opium discovered outside the international settlement at Shanghai had been seized and confiscated. He maintained that the stocks would have been sold out if these three provinces had not been illegally closed to the transit of Indian opium. The Chinese Government, he said, had openly violateel the Opium Agreement, and the importers were now entirely dependent upon the retail sales of their stocks. He had heard with alarm my statement that the closing of Kiangsu would necessarily include the international settlement at Shanghai, which was an integral part of that province. He argued that the opium combine were ready to pay duty on their bonded stocks and, once that duty had been paid, it could not be said that the opium was being imported into Shanghai. The subsequent sale of this opium was a matter for the municipal council and the ratepayers of the settle- ment to regulate.
I replied to Mr. Ezra that I would not countenance any subterfuge whereby the sale of opium could be carried on at Shanghai, in the event of the province in which it was situated being declared by His Majesty's Government as closed to the convey- ance of Indian opium. The Opium Agreement did not treat Shanghai as a separate entity, but regarded Shanghai and Canton as large distributing centres, which could not be closed as long as the provinces which they supplied were kept open. In the case of Shanghai, these were the Yang-Isze provinces except southern Kiangsi, supplied from Canton through Kuangtung; and in the case of Canton, the West River districts. Mr. Ezra pointed out that the closing of the international settlement would mean ruin to three-quarters of the importers, and would also bring down a very large number of native banks and dealers. Foreign banks, too, had advanced large sums of money which it would be impossible to recover. The certificated opium had been bought by the merchants from the Indian Government on the understanding that it was for Chinese markets, and the most they could hope to realise in non-China markets would be 500 taels, which would entail a loss of 4,500 taels a chest.
In reply to my expression of opinion that the present accumulation of stocks was largely due to the manipulation of prices during the last year, Mr. Ezra declared that the recent increase in prices had been necessary in order to compensate the importers for their heavy losses previously. Since the import from India had ceased in February 1913 about 23,000 chests had been sold, he said, at an average rate of 4,000 taels a chest, a price barely equivalent to the cost of laying down the drug at Shanghai. The opium had deteriorated through lying for years in godowns, and heavy interest charges had had to be met. The opium importers were now selling two or three hundred chests a month, and he denied that it would be possible to sell an additional chest if prices were lowered. Any signs of a display of weakness of this nature would throw the Chinese dealers into a panic, and they would refuse to buy another chest. These dealers owned about 2,000 undelivered chests for which they had paid, and this supply would meet the demand of consumers for six months without further purchases from the opium combine.
On the 4th January Messrs. Ezra and Levy had a further interview at Shanghai with Mr. Wilton, the Opium Commissioner, and repeated the same arguments. At the request of Mr. Pearce, the chairman of the municipal council, a private and informal interview took place the same day between him and Mr. Wilton, at which the acting
[2363 cc-1]