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reaping large illicit profits from the traffic, no revenue from opium passes to the Government. The position of the customs in these conditions would be absurdd if it were not painful, humiliating and demoralising to our staff. Unorganised for what is really police work on a large scale we are called upon with our small staff, urgently required for other purposes, to control and suppress a traffic which is deliberately fostered by the de facto Governments in the provinces. Our officers are subjected to the demoralising effects in several places of getting seizure rewards far in excess of their pay. The Shanghai commissioner reports that tide waiters take no interest in anything but opium seizures, and that the infection is likely to spread to the examiners. Ihave just had to dismiss the acting tide-surveyor in Chefoc for gross corruption in au opium case. Two sources of extra profit are open to our staff. They can either take Either source is destructive to rewards for seizing opium or bribes for letting it go. moral. If we now withdraw seizure rewards, our men will no doubt think that they are defrauded of lawful emoluments and consider themselves justified in engaging in a profitable traffic.
The position seems to have come to this: Either China must organise a large police force to deal with the opium traffic or it must acknowledge that it has failed to suppress it, and legalise it and tax it heavily as before. The former course is clearly impracticable. What police force can possibly deal with whole provinces or coerce recalcitrant Tuchuns? In Chinese conditions how can it be adequately paid or kept from becoming interested in the traffic it would be supposed to suppress? The latter, seems to be the most honest, the most practicable and sensible course. Acknowledge that we have attempted the impossible and failed; go back and begin again on lines that promise some measure of success. As a legal traffic, opium can be heavily taxed and the trade kept under control. A large class of legitimate traders will arise whose interests will be identical with those of the Government and against the smugglers. Smuggling will be, as it was before, relatively unimportant. If the present fiction of suppression is continued, we shall have an uncontrolled and enormously profitable illicit traffic. The people will get all the opium they want and the Government will derive nothing from its taxation. As opium now seized is burned, the Customs get nothing from it, while large funds have to be found to furnish the informer and seizure rewards. The loss of face to China, if the trade is again legalised, is undeniable. But could anything be more undignified and absurd than the position she now stands in in this matter.
Incidentally, the efforts of the Anti-Opium Society here, directed as they have been mainly against the smuggling of opin and morphia from abroad, have tended to create a false impression in the public mind. The real enemy is not the smuggler of foreign opium or morphia. Deleterious as his proceedings are, the results are trifling compared with those of the real malefactors-the native cultivator and his Tuchuů patron. As China has entered into a treaty with Great Britain under which she undertakes to suppress opium in China, the legalisation of the growth of opium and measures for its control and taxation can only be carried out with the abrogation of the treaty and the consent of the British Government.
If the Chinese Government makes such a proposal it will come as a great blow to the British people, who, having carried out their part of the bargain, will be shocked to The anti-opium societies and learn that China is quite unable to carry out hers.
religious bodies will be horrified at the suggestion to legalise the traffic in the drug, and the outery which will inevitably be made may put the British Government in a difficult position.
China should therefore make clear-
to
(i) That she does not wish to legalise opium, but only proposes to do so because
she is unable to suppress the traffic, and this seems the only way establish any control over it;
(i.) That she proposes to control it by taxing it heavily, both directly at the place of production and in transit, and indirectly by the issue of licences to those using it. By the strict use of the licence system she hopes ultimately to stamp out the use of the drug;
(iii) That the best way to control the trade and collect the revenue from it will be to establish an Opium Department under the management of a Chinese controller with a foreign co-controller, who will be jointly responsible for the collection of the revenue on behalf of the Chinese Government and deal with the whole question of the management of opium. Possibly this Department could be combined with the Wine and Tobacco Department;
(iv.) That the revenue thus collected will be devoted to specific objects of public benefit, e.g., the prevention of famine, the improvement of waterways and the construction of roads, with an allocation to each of the provinces in proportion to provincial needs.
Under some such arrangement as the above, it is possible that the provincial military authorities might be induced to concur and the British public persuaded to consent to the making of the best of a bad business. The other alternative is to leave things as they are, in which case China loses a valuable revenue, while the rapid increase of the traffic in opium and the accelerated demoralisation of the Chinese people are inevitable.
Enclosure 4 in No. 1.
Memorandum by Mr. H. E. Shadgett of Messrs. Butterfield and Swire, Shanghai,
OPIUM produced to such an extent with the connivance of officials-military especially that a traffic in the article has resulted beyond present system of prevention.
Present system of prevention depends upon customs action, and where the customs themselves fail, they depend upon pressure brought to bear upon the steamer companies (one avenue-though the quickest for the traffic); and immediate recognition of the fact that the task is utterly beyond the power of the steamer companies is urgently necessary, because the customs action, as directed against the steamer com- panies, amounts to a serious interference with legitimate trade and forms a cause of crime and conflict between Chinese and Europeans at a time when it is to be assumed that British interests require a minimum of friction.
Probably the only force which can put an end to opium smoking in China is Chinese public opinion applied everywhere, Unless, or until, therefore, public opinion prevents the cultivation of the poppy or the smoking of opium, thus destroying the inducement for its cultivation, would it not be better for the authorities to look the facts in the face and legalise the trade until they can prevent it by means which will not interfere with legitimate trade?
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