[This Document is the Property of His Britannic Majesty's Government.j 238
OPIUM.
CONFIDENTIAL.
i
[April 2.]
SECTION 1.
[75627]
No. 1.
(No. 79.) Sir,
Mr. Alston to Mr. Balfour.-(Received April 2.)
Peking, March 3, 1917. WITH reference to my despatch No. 74 of the 26th ultimo, on the subject of the agreement between the Opium Combine and the Chinese Government, I have the honour to transmit herewith copy of a despatch which I have received from His Majesty's consul-general at Shanghai reporting a conversation with Mr. Ezra, the leading spirit in the combine.
It would appear that a similar agreement is in contemplation for the disposal of the opium stocks at Hong Kong, amounting to 600 chests.
(Copy to India.)
Enclosure in No. 1.
I have, &c.
B. ALSTON,
(No. 71.) Šir,
Consul-General Fraser to Mr. Alston.
Shanghai, February 20, 1917. IN confirmation of my telegram No. 55 of the 19th February, I have the honour to report that on receipt of your telegram No. 44 of the 17th February, I arranged that Mr. Ezra should call on me yesterday when he was asked to explain his statement on the 1st February that the Opium Combine's agreement to dispose of its stock on the 31st March, 1917, to the Chinese Government was subject to the consent of His Majesty's Government, whereas the actual agreement was silent on the point.
Mr. Ezra entered upon an account of the negotiations from which it appeared that the Chinese authorities were anxious to take over the opium because a considerable quantity is pledged at high figures to native banks as well as foreign, and the stoppage of the business in the Settlement would probably lead to a serious crisis, and also because they knew that Kuangtung and indeed Northern Kiangsu, where Chang Haud rules, are not free of poppy cultivation.
Mr. Ezra himself visited the vice-president after negotiating with his agents through a local Chinese merchant taking duplicate sets of agreements, one with and the other without the words "subject to the approval of the Parliament and the British Government," when Feng Kuo-chang tore up the former set as he had in consultation with the Cabinet arranged to use the internal bonds.
The price of 8,200 taela was a compromise arrived at by adding five years' interest and charges to the average original cost of stock, and allowing for the postponed payment by means of depreciated bonds.
Mr. Ezra emphasised that every point in the arrangement obtained approval by the Cabinet who held several meetings especially to discuss it.
The Hong Kong stock is to be dealt with on the same lines as regards 400 chests, the other 200 being taken over by the Canton monopolists whose original deposit of 500,000 taels is to be forfeited to the Combine.
Pressed for the reason why he mentioned the consent of our Government, Mr. Ezra said that, after the tergiversation over the Canton agreement, the Combine felt it essential to have the sanction and approval of the Chinese Government on record at His Majesty's Legation, as also the fact that the British authorities had no objection to the transaction. This would ensure that payment of the bonds in British hands would be supported in case of need which, however, he did not anticipate, as the sale of the opium would doubtless suffice to meet them in due course.
Mr. E. S. Little recently addressed to Mr. Pearce a series of questions on the position of opium in the Settleinent after the 31st March. It appears from the wording
[2684 b-1]