PUBLIC RECORD OFFICE
Reference --
TTTTC.O.
882
3 PUBLIC RECORD OFFICE, LONDON
ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC-
COPYRIGHT PHOTOGRAPH—NOT TO
6
Minute Mr. flart's letter; but it seems to me to depend entirely on the extent to which the collection of Chinese revenue is to be carried on, and on the terms and condi- tions under which it is to be allowed.
One important feature in Mr. Hart's scheme is that he holds out the probability of being able, in conjunction with Mr. Wade, to put sufficient pressure upon the Hoppo of Canton, through the authorities at Pekin, to make him give up the "blockade" altogether on condition of the opium duties alone being secured to him by collection in Hong Kong.
Mr. Hart admits that the Colonial Government might itself undertake the collection of these duties, but to his ideas, the collection of revenue for the Chinese by British officers in British territory is as repugnant as the collection of Chinese revenue by Chinese On the whole I am inclined officers in British territory is objectionable to the Colonists.
to think that Mr. Hart's connection with the scheme would probably insure better terms in relation to the complete withdrawal of the blockade and a stricter observance of all stipulations entered into by the Hoppo, and that it would generally strengthen the position of the Hong Kong Government.
The Chinese Government, having placed in the hands of foreigners the collection of their Customs revenues under the name of Foreign Inspectorate, it seems to me that there is nothing derogatory in the Government of Hong Kong availing itself of the services of that establishment to carry out a scheme of which the sole object is to protect the Chinese
revenue.
The proposed arrangement could be placed on such a footing as to obviate any semblance of a surrender by the Colonial Government of its supremacy or of the freedom of trade within its territory, for the establishment of a 'special station" of the Foreign Inspectorate in Hong Kong must of necessity be sanctioned and regulated by a local Ordinance, which would clearly define its status and objects, and in point of fact Mr. Hart would be the Agent as well of the British as of the Chinese Government for the purposes of carrying out an arrangement devised for the mutual benefit of both parties.
The broad features of Mr. Hart's scheme are sketched out in the third page of his letter. He proposes that all opium arriving in Hong Kong (it is all brought in steamers from Calcutta) should be landed in opium hulks, which would serve the purpose of floating bonded warehouses; and that it should be cleared from thence, if for shipment in Chinese junks, upon payment of duty, or if for shipment in foreign ships, upon a bond being given to secure its being landed at the port of destination in China. Special regulations would have to be made for opium in transitu, and in the case also of opium intended to be prepared in Hong Kong for the Californian market. The scheme might be advantageously considered in connection with the troublesome "opium monopoly question" dealt with in
'Hong Kong, 4,304 " annexed.
"
The Report of the Commission appointed to inquire into the operation of Ordinance No. 2 of 1858 " for licensing and regulating the sale of prepared opium" shows what difficulty is experienced by the Hong Kong Government in ascertaining the approximate value of the monopoly.
The license is granted to the highest bidder, and it will be seen by reference to an inclosure to Sir A. Kennedy's despatch, No. 58 of the 10th of March, 1873, that the revenue derived by the Colony from the sale of this license has gradually increased from 28,165 dollars in 1859 to 137,000 dollars in 1875.
The enormous influx of Chinese into California, and their continued emigration to Australia, New Zealand, the Straits, Honolulu, Peru, and to various ports on the west coast of America, has opened a vast market for prepared opium. This preparation is manufactured at the lowest price in Hong Kong, for the obvious reason that the raw material pays no duty there. How much profit is made by the monopolist after paying 137,000 dollars a year to the Hong Kong Government is a mystery which it is impossible to fathom; but there can hardly be any doubt that his calculations for a tender are based on a very large margin of profit, and that the demand and the sale of prepared opium, and the profits derived from it, are yearly increasing with the tide of Chinese emigration, and the increase of the Chinese population abroad.
The Commission of Enquiry recommend as the only expedient they can suggest that the Government should establish boiling houses under its own supervision, "making these the only places at which it shall be legal to boil opium," and charging duty on the drug prepared by quantity or weight. This suggestion, no doubt, contains a correct principle, but its application would be attended with much risk, expense, and trouble, besides exposing the Hong Kong Government to the reproach of connecting itself with the actual manufacture of the noxious drug. But if an opium Customs Department should be estab- lished in the Colony, either with the assistance of the Foreign Inspectorate or indepen- dently of it, a certain mode of securing to the Hong Kong Government a fair payment for the monopoly would be provided, as the monopolist would be charged with a rate of duty
The
on cach ball of opium taken out of bond by him for the purpose of his manufacture. amount of that duty should, of course, be much below the amount of duty on the impor- tation of opium into China, otherwise the monopolist would have no object in establishing himself in Hong Kong.
Under the new régime the system of monopoly might, if preferred, be abandoned, and the Hong Kong Government, instead of receiving duty (which it does in the shape of a license fee) on prepared opium, might receive it on the raw material, and throw open the manufacture of prepared opium to public competition, taking care not to fix the duty so high as to drive the trade away.
It is not at all improbable that if the trade were thus thrown open the revenue of Hong Kong would increase prodigiously, while it is certain that the amount which it might fairly expect to derive from this source would no longer be difficult to estimate.
Reverting to the main question of Mr. Hart's scheme, I venture to express my opinion that the present opportunity should not be lost of securing for Hong Kong the good will and cooperation not only of the Foreign Inspectorate, but of the Foreign Office, which the Colony has long ceased to enjoy.
British Ministers and diplomatic officers in China have not ceased for years to denounce the place as a nest of pirates and smugglers, and as a "thorn in their side." Mr. Hart uses this very expression, yet it is evident that his mind is balancing between the special interests of his inspectorate and the broader interests connected with the advance- ment of the much abused Hong Kong as a British stronghold of foreign civilization at the gate of China.
Mr. Hart is a gentleman of extraordinary ability and influence in China, and if his offer of partnership in the important scheme proposed were accepted, it would probably reconcile by degrees the conflicting interests which have rendered the Colony odious in the eyes of the Foreign Inspectorate and of successive British Ministers at Peking, and strengthen the position of Hong Kong as a fulcrum for the great civilizing engine, commerce, which Mr. Hart is so anxious to develop, and, as he observes, a point from which western light might be thrown into the whole of China."
Cr
The questions involved are of such great practical importance to the future welfare of the Colony, that Lord Carnarvon may be disposed to invite Sir A. Kennedy to favour him with his views before a decision is arrived at.
I believe that no one is more convinced than Sir A. Kennedy of the great advantages which would accrue at this juncture, from some early and decisive action on the part of Her Majesty's Government to "unshackle" the trade of the port, and to remove the disheartening impression, however erroneous it may be, under which the whole community of Hong Kong has laboured for some years past, that they can expect neither sympathy nor support from home in their difficulties with the Chinese Government.
Sir J. Pauncefote's suggestions appear to me very valuable.
July 15.
J. P.
R. G. W. H.
I am much obliged to Sir J. Pauncefote for going so fully into this question.
Sir A. Kennedy's opinion should be at once invited.
If Mr. Hart's proposals should be accepted-
(1.) Care should be taken to show in writing that the disadvantages of the plan are
not overlooked, but that they are outweighed by the advantages.
(2.) We ought to get an abolition of the blockade.
(3.) Care should be taken to prevent the misapprehensions noticed in Sir J. Paunce- fote's Memorandum.
July 15.
Sir,
No. 3.
Sir A. E. Kennedy, K.C.M.G., C.B., to Colonial Office.
C.
Junior United Service Club, Charles Street, S.W., July 28, 1875.
I HAVE the honour to acknowledge the receipt of your letter dated 24th July,* Confidential, transmitting the papers named in the margin,+ on the subject of the so-called
• No. 2.
+ Printed Parliamentary Papers, April 1875; letters from Sir R. G. MacDonnell and Mr. Robert Hart, dated 25th June and 10th April respectively; memorandum of Sir Julian Pauncefote on the foregoing, together with Minutes of the Earl of Carnarvon and Mr. Herbert thereon.