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10. Notices have now been issued calling for tenders for the farm for a term of three years. I believe, as I have already said, that this new legislation will prove beneficial as regards the safeguarding of our revenue, but I shall not be surprised if we do not receive a tender equal to the very high one made in 1889. The Chinese have lost very large sums in the last two years both in the Straits and Hong Kong, and are likely to approach the new farm with greater caution, and, if they calculated on making indirect profits out of smuggling into China, those expectations will be to a very great extent defeated by

the terms of the new contract.

11. The agreement entered into with the farmer in 1888 bound him to draw not more than 3,600 chests per annum except on payment of the same fees as that charged in China, it being considered that 300 chests a month represented a fair allowance, even if the farmer succeeded in getting into his hands the export trade to Australia and San Francisco. After observing the working of the farm for three

years, it (tho' it is very difficult to speak with certainty on the point), that half that amount is appears probable sufficient to meet the requirements of a farmer, if excluded from the two markets above referred to (they being at present monopolised to a great extent by the Macao farm), both for local requirements and exportation. It is proposed therefore to allow the new farmer only 150 chests a month unless he can satisfy the Governor that he can properly use a larger amount. It is not at present proposed to levy any tax on any extra quantity which may be allowed as it is more to our interest that the tenderer should offer us a larger annual rental in consideration of being allowed such larger amount than that our revenue should fluctuate from month to month and year to year. I need hardly point out that this very large diminution of the amount allowed to the farmer should be regarded by China as a great boon, especially as she offers us nothing in return and does not propose that Macno should follow our example.

December 1, 1891.

Enclosures 4 and 5 in No. 22.

"THE DAILY PRESS," HONG KONG, NOVEMBER 3rd, 1891. HONG KONG LEGISLATIVE COUNCIL.

A meeting of the Legislative Council was held yesterday afternoon. There were present:-

His Excellency the Acting Governor, Major-General G. Digby Barker, C.B. Hon. W. M. Goodman, Acting Colonial Secretary. Hon. A. J. Leach, Acting Attorney-General. Hon. J. H. Stewart-Lockhart, Registrar-General. Ilon. N. G. Mitchell-Innes, Colonial Treasurer. Hon. F. A. Cooper, Acting Surveyor-General. Hon. P. Rvric.

Hon. Ho Kai.

Hon. T. H. Whitehead.

Mr. A. M. Thomson, Acting Clerk of Councils.

The Prepared OPIUM ORDINANCE, 1891.

The Acting Attorney-General said: Inasmuch as at the last meeting when the Bill was in Committee, clause 28 was eliminated, I have to move that the Bill be re-committed in order that certain formal alterations and amendments in the Bill may be made consequent upon the cutting out of provision 28.

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The Colonial Treasurer: I second that.

Hon. T. H. Whitehead: I wish to move an amendment to section 14 of the Bill. I would move that section 14 should read as follows:-"The Governor in Council may grant to any person, for such considerations and upon such conditions, and for a period of two years only, the sole privilege of preparing opium, &c." It is unnecessary and inexpedient for the Legislature to sanction the continuance by Government of the opiam monopoly farm for an indefinite time or for a longer period than one year or two years The principle of this proposed enactment is directly opposed to the established laws of England, inasmuch as it creates a monopoly, and as monopolies of every description are in their essence objectionable and bad policy. Thanks to the continued strenuous efforts of our forefathers for generations against it,

at the outside from March next.

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the farming of any tax is no longer tolerated in Great Britain, and has not been known in the United Kingdom for upwards of 200 years. The time has long since gone by for any Power claiming to be a civilised Government to farm taxes of any description, and any Government of the present day attempting the re-introduction of such a pernicious system in England would promptly ensure its own destruction. It is greatly to be deplored that the Government system which creates this monopoly, and farms this opium tax amounting to about half-a-million dollars per annum, or one-fourth of the Colony's total revenue, cannot be dissociated with the bolstering up of a vast amount of vice and immorality, or rendered inseparable from bribery and corruption, as well as grave abuses and evil effects. A monopoly is not permissible in Hong Kong. It can only be tolerated where the governing authority is weak and hopelessly at fault, and where such a system may be looked upon as the lesser of two evils. This opium monopoly farm proposed by Government may be regarded as approaching a confession of incapacity to grapple with the subject, for it is a lax and unconstitutional method of government. It will again legally set up a monopolist in our midst, the farmer, who has to make profit somehow, for it is scarcely conceivable that he, the opium farmer, will pay the Govern- ment about half a million dollars a year for the opium monopoly out of benevolent or philanthropic motives. All the resources of this Government-created monopolist, who having a large pecuniary interest at stake, will be devoted to increasing the sale of the drug and to deriving gain at the expense of the people by means of this opium tax, which tax if extracted at all from the pockets of the public should pass entirely into public treasury. This proposed law delegates the functions and the duties of the Colonial Government to the opium monopolist. The farmer will consequently be permitted to squeeze the opium consumers to the utmost degree for his own gain and he will be armed by Government with legal power to an extent which in Chinese hands is simply appalling, and which will render Hong Kong no longer a free port. If a duty were collected by the Government on raw opium a perfectly reasonable and legitimate revenue would be raised. There is nothing to hinder the Government from collecting such a revenue if the Imperial Authorities do not deem it expedient to interfere. The Governments of America, China, Japan, India, and other countries have hitherto collected the duty on opium direct, and continue to do so, not through a farmer. The Government here on a previous occasion collected the opium tax direct from the public instead of through a farmer, and thereby increased the revenue. If the opium farm monopoly were abandoned we would have fewer criminals to deal with, one magistrate and a less numerous police force would meet our requirements. There would be absolutely no necessity for the expenditure of several hundred thousands dollars for increased gaol accommodation during the next decade. All opium on its arrival here should be stored in bonded warehouse. A duty could be levied on raw opium as delivered from bond for local consumption sufficient to raise the income required and pay for an efficient preventive service to guard against smuggling. The opium intended for transhipment would pay no duty, and could be removed from bond under proper restrictions ensuring that it did not go into local consumption. The working of the bonded warehouse system would be simple enough, and so long as a revenue is required from opium it could be adjusted annually. The freedom of the port would be sacrificed in name only, and solely as regards opium. Hong Kong under such a system would be a freer port than it is now, or is likely to be under the proposed new law, for the restrictions to protect the Government monopolist are increasing to the point of becoming unbearable. It is earnestly to be hoped the day is not far distant when the Hong Kong Government will set its fece resolutely and emphatically against farming out the opium tax, or any other tax. The present method, which is proposed to be continued with increased vigour, directly associates the Govern ment with the preparation and increased sale of the drug. The fiscal policy of the Government as regards the opium tax stands condemned on moral as well as on economic grounds. The time has come for a reversal of this vicious, iniquitous, uneconomic opium farm monopoly tax. We should do all in our power to wash our hands entirely and abandon at the earliest possible date all Government connexion with pecuniary gain from the preparation and sale of the deleterious drug. It has done more harm than anything I can well recall, and tends to if it does not demoralise a number of our police force. The Government may be enabled to derive a quarter of our revenue from the continuance of the opium farm, but it is an unhealthy and unwholesome source of income, for the Government thereby sacrifices or sells for money every principle of political economy and morality. The opium traffic has long been and still is in itself the source of much human misery and crime, but when carried on under a farmer as a Government monopoly, that misery and that crime is intensified in character and more than doubled in quantity. The Government connexion with this antiquated monopoly system is as

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degrading to the Government as it is debasing to the people, for it blocks the advance of Western ideas in China, and has done more than anything else to undo any civilising influence Europeans may exercise on the Chinese. The Govern- ment creates and clothes the opium farmer with legal power, which, in Chinese hands, becomes superior to the power of the Government-yes, a tyrannical power exercised through the lowest of the low, which makes our boasted liberty of the subject hypocritical mockery. One can witness any and every day in the week the way in which the luggage and persons of respectable Chinese men as well as women, on arrival in Hong Kong, are now pounced upon haphazard, and searched by the minions of the Government farmer, not in any house or place set aside for the purpose, but on the public wharves and on the public streets. The meanest intelligence on seeing it will realise that it is nothing less than an outrage on public decency in a British Colony, and such treatment causes a sense of personal indignity and intense irritation generally. It cannot be denied that it is a most obnoxious, wasteful system, or that it results in considerable State-created crime. The official return I have asked for will prove this. It is an old saying that ancient abuses possess a wonderful vitality." The serious disadvantages attending our Government opium monopoly are a sad illustration of that adage, notwithstanding the reckless and irresponsible statements to the contrary of persons in official positions who ought to know better. One cannot but regret the morally indefensible fiscal policy of this British Colony in connexion with the Government-created and prolonged opium monopoly. It is a blot on the character of the British nation, whose people in all other respects justly aspire to and have become more than any other the civilisers of the world. The unofficial members of this honourable Council are desirous the Colonial revenue should be maintained by every and all legitimate means, in order that we may be enabled to continue to pay the large and ever increasing demands of the mother country for contributions to Imperial military purposes, as well as the generous increase in our officials' salaries recommended at a period of great local inflation (a rise of 35 per cent. was not intended). It should not be forgotten that our contribution to the Imperial Government for the military and local official salaries amounts to more than half of our total revenue. It is impossible to regard the revenue derived from the opium farm as either legitimate or safe. It is not the legitimate profits on opium consumed in this Colony by the inhabitauts of it and opium openly exported. The export trade has become limited, and is chiefly in the hands of the Macao farmer, as he pays but $130,000 a year for the opium monopoly there. No opium farmer would now pay about half a million dollars a year if he had to rely solely on the revenue he derived from prepared opium consumed in the Colony, or openly exported to China, America, Australia, and elsewhere. Anything which stopped or seriously checked smuggling would render it impossible for the farmer to continue to pay to the Government tax out of opium profits. It is not honest revenue, and it is not revenue which can be relied upon for a continuance. On that ground alone it should be abandoned as quickly as possible, and the Government should be content to raise a less amount after a fashion which shall be at least honest and to be depended upon. It is not expedient for the Legislature to sanction the continuance by the Government of its opium farm monopoly policy for an indefinite time or for a longer period than one or two years at the outside from March next, more especially as the Right Honourable the Secretary of State for the Colonies, in his Lord- ship's instructions to the Singapore Government, has at last ventured to express an adverse decision to the farming system, and which news has come to our knowledge within the last few days. This Council has not been informed whether any such instructions have been received here. Under the proposed law the Government could commit the Colony to its present opium policy for an indefinite period, whereas one year or two years should be ample time for the consideration of the opium farm system, with a view to its abandonment at the earliest possible moment. Under all the circumstances

I move that the next farm monopoly be limited to two years at the outside.

Hon. P. Ryrie: J rise to second the proposition of my friend. At the same time, I do not think that the statement that the export business in opium has finished is correct. I think there is still a considerable export in opium. Of course, the Macao farm is our most formidable opponent. They get their licenses for a moderate sum compared to ours, and I know they have got the best brand of opium that exists. But at the same time I agree with my friend that the licenses should not be extended over two years, and that we should say, "Well, let us see what comes of this." The opium farmer says that he is losing money by it. He tells me himself that he really has lost; but it does not do to believe him. Many Chinamen say that they are losing money, when they are simply not making as much as they expected. I maintain that we ought not to let the farmer have his license for more than two years. Let him at the end of that time get it

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again if he can.

There are always three or four applicants. Probably my honourable friend (the Acting Colonial Secretary) knows more about it than I do. The privilege of the opium farmer is a valuable one, and I am quite in favour of my friend, Mr. White- head. The Government, I think, ought to resume its old position of having its own boiling house and boiling its own opium. They did it once, and did it properly. I beg to second my friend's proposition.

The Colonial Treasurer: Sir, the honourable member on my right (Hon. T. H. White- head), in moving his amendment to clause 14, has endeavoured to make out a case against what has been Government policy since the forties or fifties. I do not remember the exact date.

His Excellency: 1844.

The Colonial Treasurer: From the honourable member's speech one would imagine that the Government were about to adopt some new and heinous policy that had never been heard of before, and which had now just been brought to light. My honourable friend commences, as I notice in a Singapore paper that I have here, by dealing a heavy blow at the practice of opium smoking, but neither my honourable friend. nor the paper then

goes on to the logical conclusion that the Government should be urged to suppress opium smoking. If my honourable friend believes that the Government is encouraging opium smoking by disposing of the opium monopoly, then the best thing and only the reasonable thing for him to do would be to urge the Government to put a stop to opium smoking by making it a puni-hable offence. But so far from that, both my honourable friend and the paper I have alluded to go on to say that the Government might derive a revenue from the opium while doing away with the opium farmer. I do not know how much time the honourable member has given to the consideration of this subject. I myself have had to give a good deal since I have taken over the working of it in connexion with my official post as Treasurer, and I must say that my opinion as to the advantages of the policy adopted by Government has led me to entirely different conclusions to what he has come to. Were this Colony impregnable and only accessible by one entrance, the taxing of opium for local consumption might be advantageous, but under present circumstances the taxes would not approach anything like that paid every year by the opium farmer. The Chinese duty on opium is $200 per chest. In this Colony the opium boiled for consumption is estimated as being from one to three chests per day. If we had the maximum boiling per day, we should have to charge $333 per chest to gain what the opium farmer pays us. If only 60 chests were boiled a month, we should have to charge a duty of $666 per chest, and if 30 chests were boiled a duty of $1,332 per chest. I do not know how my honourable friend proposes to stop smuggling when there would be such enormous advantages in running opium across from Kowloon. At the present moment the Government has all the preventive work which is necessary in connexion with this matter done by the opium farmer. It is well known that the Chinese adopt similar if not severer measures, and I think it is impossible for any person who gives calm deliberation to the subject to condemn the steps taken to check smuggling. I must say that I think the remarks made as to the success when the Government took over the work themselves show great ignorance of the figures then and now. did the work ourselves our revenue was some $20,000 per month, or $210,000 per year; but there is surely a great difference between that and something like half a million dollars we receive now. The difference in the figures received then and now must be patent to any man, certainly to the honourable member on my right, who has so much to do with finance. With regard to the remarks made by the honourable member as to seeing respectable persons being searched, I must say that I myself have seen and experienced, and I suppose he has, luggage and persons being searched in crossing from France to England and from England to France, and no one appears to have taken objection to it. If we object to opium being brought into the Colony, it is necessary that persons and luggage should be searched. With regard to the main point raised in the amend- ment, the limiting of the period of disposal of the monopoly for two years, I cannot recommend it for serious consideration. Anyone who knows anything about this farm will tell you that the farmer looks to lose on the first year, the second year he holds his own, and that it is only in the third year, when he has found out the different ways of opium smuggling, and when his opium has become known and has found its way into foreign markets that he begins to recover the losses that have occurred during the first part of his tenure of the farm. I fail to see any merit which would lead me to support this suggestion, nor can see that any strong argument has been brought forward to lead me to do so. I could understand anyone advocating doing away with opium smoking altogether. I suppose if anyone mentioned wines and spirits to Sir Wilfrid Lawson and his following, they would say they were bad, and I can quite believe that

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