CO882-(4-5) — Page 366

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PUBLIC RECORD OFFICE

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Reference:

C.O. 882

ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC- COPYRIGHT PHOTOGRAPH-NOT TO

5 PUBLIC RECORD OFFICE, LONDON

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When the farm came to be let in 1883, the old farmers had got away all opponents, and there was only one offer for the farm at $132,000 a year.

It was under these circumstances that the Governinent determined to issue licenses, and owing to a piece of good luck during the first year $100,000 more than the old farmer's offer was realised, but this was owing to an increased tax coming into force in America on opium imported after a certain date.

For shipping facilities, and to get opium into America in time, the old people had to come in and take licenses, but, as Lord Knutsford hints, the following year showed a great falling off, and Her Majesty's Government of that day instructed the Governor to farm the privilege, even at a loss, rather than continue the direct licensing system, which, after years, might have been the best thing for the Colony.

At that time the traffic in raw opium was perfectly uncontrolled, and there was no agreement with China to help her to control smuggling from Hong Kong.

If licenses were now granted to a number of persons, I fear that there would be thus a multiplication of centres for smuggling, as it would be difficult to control licensees who would be in opposition the one to the other, and all of whom would have to be watched.

Again, it is now clear that revenue to be derived from opium must be obtained on what is consumed in the Colony. The Macao farmers have got a long lease of the farm at Macao. They have the monopoly in the foreign markets, and the consumption there inust decrease because of the exclusion of Chinese from Australia and America, and also from the increased tax which is placed on the drug. Revenue from that source is there-

fore very precarious,

By levying the tax on prepared opium through a farmer who alone can boil and it within close limits, one great object is gained, viz., helping China to collect Prepare i

opium revenue, as his depôt has alone to be guarded.

But another advantage is that as the farmer keeps a large excise staff, he performs a duty which the Government would have to undertake, and which could not be anything like so well done, as its performance must depend on Chinese paid by Government.

The farmer's employés are his own people or connexions, and work loyally with him and for him, and I am quite satisfied that if the Government attempted to raise its revenue now by a number of licenses there would be a great falling off in the amount, and constant complaints from the Chinese Government about increased smuggling would be forthcoming.

By the check and tally system the quantity of opium consumed in Hong Kong and the adjacent districts is greatly diminished, because now all of it has to pay duty, and a heavy duty. In Hong Kong the farmer has increased his prices, and this tends to diminish the consumption, but more especially because there is hardly any chance of getting loose opium to boil surreptitiously. That is why he can pay a bigger price, The levying of an increased tax, therefore, by China on opium formerly smuggled, and the enhanced tax on that which is used here must diminish the total quantity consumed so far as Indian opium is concerned, and the only cheap opium is that which is produced by China herself.

As to the bonded warehouse system, it is obvious that if we had such a system the Government would have to keep up a revenue cruiser service, and blockade ourselves, instead of China keeping up the revenue service. For opium in its raw state would be landed all over the Colony either for boiling bere or smuggling into China or both.

The idea of Mr. Whitehead is that the raw opium, on paying a tax at the bonded store, might be boiled by anybody, and sold in the Colony so as to give cheap opium and give free trade in prepared opium, But would not this increase the consumption, and deprive the Government of a proper tax?

If anything like an adequate tax, such as is paid at present for what is issued to the opium farmer, was demanded, then very little opium would be released from bond, in my opinion. It would be landed at Shankiwan, Stanley, Aberdeen, and prepared openly, and once past the cruisers and Custom House, how could it be said not to be duty paid ? The only practicable way, in my opinion, of getting any proper revenue out of opium in a free port is by levying a tax on the manufactured article, just as on manufactured tobacco, or on spirits. Opium in the raw state is not usable. It has to be made fit for smoking, and the raising of a tax on it is just like raising a tax by distilling licenses, or the duty on spirits or duty on tobacco,

To diminish consumption of opium, to get an adequate revenue, and to help China to put down smuggling, I am satisfied that the farming system, properly controlled, will, under

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local circumstances, best carry out Lord Knutsford's wish to diminish the evils of the opium traffic.

I have, &c.

His Excellency Sir W. Robinson, K.C.M.G.,

&c.

569.

SIR,

&c.

(No. 84.)

&c.

No. 24.

LORD KNUTSFORD to SIR WILLIAM ROBINSON. [Answered by No. 28.]

J. RUSSELL.

Downing Street, April 8, 1892. I HAVE the honour to inform you that Her Majesty will not be advised to exercise her power of disallowance with respect to the following Ordinances of the Legislature of Hong Kong, transcripts of which accompanied Major-General Barker's Despatch of 7th December last, viz., Ordinance No. 21 of 1891, entitled "An Ordinance to repeal "Ordinances No. 1 of 1884, and No. 17 of 1886, and to amend the laws relating to the preparation of opium," and Ordinance No. 22 of 1891, entitled "An Ordinance to "amend Ordinance No. 22 of 1887."

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2. I am disposed to think that the Government might well have accepted Mr. White- head's amendment to limit the term of the farm to three years. At any rate the farm should in fature, under no circumstances, be let for longer than three years without the previous sanction of the Secretary of State.

3. As regards the discussion also raised by Mr. Whitehead on the question of pro- viding a suitable place for searching passengers and luggage, I trust that steps will as soon as possible be taken to provide such a place, either at the cost of the Government or otherwise, so as to do away with the unseemly searching in the public streets and on the wharves.

4. I am addressing you in a separate Despatch on the question whether the farming system should in future be modified or abolished; but if it should be decided to maintain the present system, I consider that Ordinance No. 21 of 1891 should be amended in respect of the two points mentioned below, before the time arrives for reletting the farm,

viz.:-

(1.) As regards the power to search under section 29, which is limited to cases where the police or excise officer "reasonably suspects" any person of unlawful possession of opium, section 48 should, in my opinion, be amended so as to make the farmer liable to pay $5 to the person searched, where the search has been unsuccessful, as defined in that section; and this sum should be recoverable in the police court, thus enabling the magistrate to determine whether the officer had reasonable grounds of suspicion. But it is probably desirable that this amendment should not take effect during the term of the present farm.

(2.) In view of a case which recently occurred at Singapore, it is desirable to exempt from the operation of section 9 of this Ordinance prepared opium, which may be proved to have been brought into the waters of the Colony only in transits and not for the purpose of being landed in the Colony, and which is entered in the ship's manifest as cargo for another port. In order to guard against smuggling, the burden of proving the purpose of transit might be laid upon the master of the ship.

5. With reference to your Despatch of 25th July last, I enclose copy of a letter which I have caused to be addressed to Mr. Webb, M.P., in regard to these new opium Ordinances.

• No. 22.

† Not printed.

I have, &c.

KNUTSFORD.

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