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Difficulties caused by
position.
At the end of January, 1928, the experiment was discontinued and thence- forward the sales of Government opium declined while the number of seizures in- creased showing the resumption of more extensive operations by the smugglers.
The Government believes that the results of the above experiment merit careful consideration and that therein might possibly be found a solution to the problem of the reduction of consumption.
The Government for the purposes of this experiment placed on sale three grades of opium at $15.00, $8.33 and $6.66 per tael.
The price at that time ruling for smuggled prepared Chinese opium was $2.80 to $3.50 per tael.
geographical
It will be seen therefore that the lowest Government price was still consider- ably above and was not actually competitive with that of the smugglers.
Notwithstanding this continued disparity in prices it is an undoubted fact that there was a great falling off in the amount of opium smuggled into the Colony.
If the smuggler could have maintained his market and still have obtained even his former low price he could still have gained the same profit on his transac- tions and his risks would be unchanged.
It is clear therefore that a factor other than price competition influenced the position and destroyed the smugglers' market.
This factor was, in the opinion of the Government, the reluctance of the ac- tual consumer to run the same risks of punishment as theretofore for the purpose of obtaining smuggled opium even though this might be procurable at a price some $3.00 per tael below that of the cheapest grade of Government opium.
It seems highly probable that the consumer was influenced to purchase and use a smaller quantity of the higher priced Government opium which he could use with the knowledge that he was not infringing the law rather than obtain a larger amount of smuggled opium which he could use only with the fear of incurring heavy penalties.
The argument for reduction of price may be summed up thus :-~
The present price of Government opium is prohibitive except to the wealthier members of the community.
A prohibitive price necessarily encourages smuggling.
A high, but not prohibitive, price cuts away the smugglers' market, increases consumption of the legitimate supplies but reduces gross consumption, because con- sumers prefer smaller supplies of the legitimate and unadulterated article to larger supplies of adulterated contraband which may involve them in fines and imprison-
ment
The cessation of the use of smuggled opium would have a fourfold reaction in that it would reduce the gross amount of opium consumed, would reduce the demand for production in the interior of China, would reduce the profits of smug- glers which now go to increase the contraband opium trade, and at the same time would eliminate that criminality in matters relating to opium which now undermines the general respect for the law and submits the guardians of the law to the temptations of bribery.
5. The Colony of Hong Kong is geographically an integral part of China and there is constant intercommunication between the Colony and the neighbouring pro- vinces of the Republic.
On the northern side of the New Territories there is a land and river frontier extending for over 14 miles.
The Colony and New Territories on the mainland have a coast line of proximately 190 miles which provides innumerable secluded spots at which traband goods can he landed.
ap-
con-
The Island of Hong Kong itself has a coastline of approximately 42 miles offering similar facilities for smuggling, and in the neighbouring waters are some sixty sparsely populated islands which can be, and at times have been, used as dumping places for opium which is intended ultimately to be brought to the island or mainland by small craft.
The task of adequately guarding so extensive a frontier and coast line against the snuggling of opium would involve expenditure beyond the Government.
means of this
6. A brief survey of the traffic entering the Colony shows the difficulties by Means of which this Government and its officers are faced in their efforts to prevent the entry into introduction of contraband opium.
the Colony.
The returns of the Kowloon-Canton railway for the three months, July. August and September, 1929, show that an average of over 40,000 persons per month entered the Colony by rail from stations in Chinese territory.
During the first half of the year 1929 a total of 803,334 passengers entered the Colony by sea.
During the same period 624 ships arrived from Macao, 1654 from Canton, Wuchow and other West River ports, 104 from Kwong Chow Wan territory and 505 from ports on the China Coast other than the above mentioned. The total tonnage of these ships was 2,977,778.
There are in addition many launches registered in the Colony which ply between the port of Victoria and outlying islands and points on contiguous to Chinese territory.
the mainland
Junks to an average of approximately one thousand per month arrive in the waters of the Colony from places on the China coast.
23,056 junks, sampans and other small craft belonging to the Colony were registered in 1928 and these in their constant passing to and between different parts of the Colony are undoubtedly of the greatest utility to smugglers, while a fishing fleet of several thousand large junks affords further facilities for smuggling.
The difficulty of controlling the import of contraband by traffic such as the above is well-nigh insuperable.
What can be done in the way of search of disembarking passengers and of vessels is done and the Government has incurred great expense in the provision of sea-going launches to enable an effectivé patrol to be carried out as far as may be both within the Harbour limits and in the surrounding territorial waters,
7. So far as is ascertainable the profit obtained by the actual smuggler of Profit on opium is not high. The price usually ruling is about $2.00 while the retailer obtains contraband. from $2.80 to $3.50 per tael.
Rapidity of turn-over of capital is the factor which makes the business profitable.
8. The Chinese have always shown the greatest ingenuity in devising hiding Hiding places for contraband opium.
It has been found in receptacles bolted outside the bottom of a junk, in a hollowed out spar, in a compartment inside a tin of petrol or a jar of wine, in the leg of a bedstead, in a bag of flour, in a woman's hair, in tins of preserved fruit and vegetables and in every conceivable place in which the Chinese can devise means to hide an article the bulk of which is as small as its value is large.
Places.
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