652
PUBLIC RECORD OFFICE
Reference :-
TPELLICO. 882/11
ست
PUBLIC RECORD OFFICE, LONDON
ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC- COPYRIGHT PHOTOGRAPH-NOT TO
}
140
more than half the weekly average three years ago. situation was as follows:-
1923. $ 5,750,000 5,224,000
1924..
$
In round figures the revenue
1925.
$
1926. *
2,900,000
690,000
Year.
Gross Sales
Costs
Net Profit
3,466,000 496,000 777,000 695,000
$5,263,000 $4,447,000 $2,771,000 $2,210,000
The Colony's opium revenue in 1926 was 10.1 per cent. of its total income, and, as I pointed out in my budget speech to the Legislative Council on the 1st September last, a copy of which was forwarded to you in my despatch No. 374 of 1st September, 1927, the ratio between opium revenue and total revenue in Hong Kong is still mucli the same as it was thirty years ago. In this connexion I refer you also to enclosure No. 1 in my Secret despatch of the 6th October, 1927.†
9. I inquired into the price at which the Government Opium Monopoly was selling its opium and I found, to my dismay, that we were attempting to sell a mixture of Indian opium, heavily alloyed with non-Indian opium, at the price fixed from a pure Indian brand in 1918. This price, $14.50 a tael, was fixed by Gazette Notice No. 246 of the 29th June, 1918, and my predecessor reported to you in his Confidential despatch of the 10th August, 1918, that this high price had been fixed" with a view to restricting the consumption." The price which Indian opium will fetch in China is, of course, very much higher than the price commanded by Persian opium, which may be roughly compared to Yunnan opium of the best quality; and I found that the Government Monopoly had accumulated a substantial stock of confiscated material, both Persian and Chinese, and that a stream of fresh seizures of very considerable volume was constantly flowing in. This confiscated opium was used as an alloy for the Indian opium and a mixture roughly equivalent to half-and-half was being sold at $14.50 a tael. It was, of course, obvious that under present-day conditions such a brand could only obtain an increasingly restricted consumption, and that the demand of addicts would be mainly supplied by smugglers. In other words the high price served only to restrict the sale of Government opium and did not in the least restrict opium consumption, rather the contrary.
10 I ascertained that the Macao Government's Opium Monopoly, which was inaugurated on the 1st July, 1927, officially sold a blend consisting of one part of Indian to two parts of Persian opium at about $8 a tael, and the Canton " Opium Suppression Bureau" offered a good quality of non-Indian blend (part Persian and part Chinese) at about $6 a tael. These figures indicated the prices which Macao and Canton respectively considered necessary to protect their monopolies. Moreover, they were figures which our own knowledge of the prices of certain illicit brands confirmed.
11. In these circumstances I decided to make a determined effort to drive smugglers out of the Hong Kong opium market and to re-establish effective Govern- ment control. With this end in view, I proceeded to utilize the stock of confiscated Persian and Chinese opium then in the hands of the Superintendent of Imports and Exports. It would, of course, have been absurd to endeavour to sell this stock at $14.50. I should not have sold a tael. Accordingly, guided by the information obtained from Macao and Hong Kong and hy knowledge which the Superintendent of Imports and Exports had as to the prices fetched by illicit opium, I decided with the concurrence of my Executive Council to put on the Hong Kong market three brands of opium, viz., (a) pure Indian opium at $15 a tael; (b) a blend of Indian with non- Indian opium at $8.33 a tael; and (c) non-Indian opium at $6.66 a tael. This decision was announced in Government Gazette Notice No. 556 of the 29th September, 1927. 12. Unfortunately I made two miscalculations. I did not foresee the extent of the demand for the blend of Indian with non-Indian opium at $8.33 a tael and for non-Indian opium at $6.66 a tael. Nor did I foresee the extent to which the sale of these new brands would stop the flow of confiscations. In other words, I under- estimated the signal and immediate success of my experiment. It is, as I informed you in my telegram of the 12th December, 1927, § no longer an experiment. We have recaptured the Hong Kong opium market for the time being, and it is an accepted fact in the Colony that the opium smugglers have had a serious setback. There has been a considerable reduction in gaol figures of opium offenders, and there is no sign of
32014;18: not printed.
* C. 30222/27 [No. 1]: not printed.
t No. 93.
§ No. 98.
141
any increased consumption to balance the increased official sales. As, however, in October last the consumption of Government opium rose beyond all anticipation from 500 taels to 2,000 taels a day, in itself an indication of the extent to which smugglers had previously dominated the market, it became clear that our stocks of confiscated non-Indian opium would not suffice and must be supplemented, if the new policy so successfully inaugurated was to be maintained. It was in these circumstances that the Hong Kong Government approached His Majesty's Government for permission to purchase Persian opium and that His Majesty's Government categorically refused.
in a
13. One thing more than any other had determined the date upon which the Hong Kong Government commenced its campaign against the opium smugglers, namely, the rejection by His Majesty's Government of the appeal made to it by the Government of Macao for help. I refer you to the correspondence beginning with my telegram of the 13th June, 1927,* and ending with your telegram of the 19th August, 1927.† Macao is, as you know, a near neighbour of this Colony-only 50 miles away-and it is notorious that Macao was one of the principal centres of the illicit traffic in opium in the Far East. Moreover, in signing the Agreement concludedl by the First Opium Conference at Geneva, Portugal made reservations to Articles 1 and G to the effect, firstly, that she could not replace the farming system by one of Government monopoly until circumstances permitted and, secondly, that she was not position to prohibit the export of opium. Accordingly the Government of India decided in April, 1925, that no further export of opium from India to Macao would be permitted at least until it could be shown that a completely satisfactory system of control had been established there "; (see letter from India Office to Foreign Office, of the 18th April, 1925). For this action on the part of India the. Hong Kong Govern- mment was duly grateful, because it provided a very effective lever to induce Macao to assume obligations in respect of official control of opium consumption and of the export of opium such as Hong Kong had already accepted. Eventually the Govern- inent of Macao did assume these obligations and established a Government Opium Monopoly on the 1st July, 1927. It did this in the face of bitter opposition from the Chinese who had till then been the Macao opium farmers, Messrs. Yue Seng and Company; and, on the eve of the inauguration of his Government Monopoly, the Governor of Macao found himself with only 75 chests of Persian opium and with no Indian opium at all. I may say that in spite of the fact that the Government of India had exported no opium to Macao since the 4th February, 1925, it was common know- ledge that the Macao opium farmers by devious and illicit methods had contrived to obtain supplies of Indian opium for their farm.
14. In these circumstances the Governor of Macao turned to me for help; and it then appeared to me that an unlooked for opportunity presented itself to conclude an arrangement with Macao, on terms dictated by His Majesty's Government, which would not only afford relief to this Colony against the operations of Macao opium smugglers, but would also advance those objects which the First Geneva Conference aimed at.
I would remind you in particular of Article 8 of the Agreement made at that Conference, which reads:-"The Contracting Powers undertake to assist one another in their efforts to suppress the illicit traffic by the direct exchange of informa- tion and views between the heads of the services concerned." I was convinced that Senhor Barbosa, the present Governor of Macao, really desired to control the opium trade in Macao; and I, therefore, supported his request for an annual supply of 120 chests of Indian opium to Macao, subject to yearly reduction as in the case of Hong Kong.
15. The rejection of Senhor Barbosa's appeal disappointed my hope of co-opera- tion between Hong Kong and Macao for the suppression of opium smuggling; for it left the Government of Macao free to seek supplies from Persia and China according to its own calculations of its requirements; and I fear that before long we shall witness in Macao a recrudescence of the old methods of uncontrol. Moreover, as you informed me in your Confidential despatch of the 5th October, 1927, § at the recent meeting of the League of Nations Opium Advisory Committee, the Portuguese representatives stated that, if the Macan Government were unable to get any Indian opium, and if (as a result of the decision of the Persian Government to restrict the cultivation of opium in Persia) the supplies of Persian opium should fall off, the Portuguese autho- This Colony rities would be compelled to start the cultivation of opium in Timor." would, of course, be the first to feel the repercussion of such action, and prompt
* C. 30049/27 [No. 34] : not printed.
20915/25: not printed.
+ C. 30049/27 [No. 55]: not printed.
§ C. 30049/27 [No. 83]; not printed.