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[CONFIDENTIAL.]

Copy of a letter received from Messrs. BUTTERFIELD & SWIRE, HONG KONG,

Messrs. ALFRED HOLT & Co.,

Dear Sirs,

LIVERPOOL.

0.8.8. Co., Ltd., and C.M.S.N. Co., Ltd.

1st March, 1916,

"ALOINOUS"-OPIUM-Your request for a strict enquiry came to hand on the 27th ult., before the steamer had left Shanghai for the North, and as she does not return to this port, Shanghai were requested by wire to carry out your wishes. As a result we have to-day telegraphed you the gist of their finding, viz. :—-

CC

That it is assumed the cacho (which was found in the port bunker) must have been "built at Liverpool when (presumably the engine-room) in charge of watchmen." The reason given why the discovery was not made sooner is that it was covered by coal. In our telegram we added that the engineers had been instrumental in discovering quantities of the drug both here and at Port Swettenham.

The construction of these places of concealment is certainly mysterious, and we find it difficult to believe it probable that they are built when the ship is at sea or during the short stay at ports on the voyage. It certainly appears more feasible that the work is done during the longer stay at home and during the time when, if we understand aright, the officers and engineers standing by the ship are not so numerous. It may be that the work is carried out at sea the Chinese are capable of doing much if in their own interests-but the Home ports seem the more likely places. Much must of course depend on the alertness of the engineers in prosecuting enquiries into any suspicions shifting of coal in the bunkers and in generally keeping a watchful eye on the movements of the firemen both at sea and at ports on the journey.

We have no evidence to lead us to suspect that any of the Company's engineers are implicated in the traffic.

Yours faithfully,

(Signed) BUTTERFIELD & ŚWIRE,

Agents.

[CONFIDENTIAL.]

Copy of a letter from Messrs. BUTTERFIELD & SWIRE, HONG KONG.

Messrs. ALFRED HOLT & Co.,

Dear Sire,

LIVERPOOL.

OPIUM SMUGGLING.

2nd March, 1916.

We are in receipt of your wire of 24th ulto., reading —

K

Approve disclose correspondence. Ming gone New York. Have presented memorial Home Government according our letter first."

The matter has been carefully considered in consultation with Mr. Mackay-who is

at present on a visit here—and the correspondence will be disclosed to the Authorities in due course, both here and at Shanghai,

Yours faithfully,

(Signed) BUTTERFIELD & SWIRE,

7

Agents.

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