CO885-(11-12) — Page 284

209

PUBLIC RECORD OFFICE

Reference

ཤ | ༄། ། budi C.O.882/1

PUBLIC RECORD OFFICE, LONDON

ALLY WITHOUT PERMISSION OF THE BF REPRODUCED PHOTOGRAPHIC-

COPYRIGHT PHOTOGRAPH-NOT TO

18

It is estimated that, allowing for the cost of preparation and marketing under the present retail system, the prepared opium could not be sold by the Government other- wise than at a loss for under $7.50 per tael; and it would therefore be impossible, without incurring a serious loss, for the Government to market in Hong Kong an Indian opium which could closely compete in price with smuggled Chinese opium, unless the Indian Government is prepared to make a very large reduction in the price charged to this Government.

Assuming that authority were given for purchase from Persia and that prices remained at their present level the position on utilization of Persian opium would be as follows:-

The cost of Persian opium (including insurance and freight) would, at the present rate of $1=approximately 1s.. be approximately $4,000 per chest.

A chest yields approximately 1,280 taels of prepared opium.

Thus the prepared opium would cost approximately $3.10 per tael, plus cost of preparation, and when allowance is made for the cost of preparation and marketing even on the present system (estimated at $1.40 per tael) it could not be placed on the market at a price which could hope to compete closely with that of the smuggled article. To some extent the cost of Government-prepared Indian or Persian opium would be reduced by the admixture of seized illicit opium, but the amount to be seized cannot be foretold, and it is impossible to make any calculations on this basis.

If price reductions were effected despite loss and resulted in the anticipated partial cessation of smuggling, this would necessarily involve a corresponding reduction in the amounts of illicit opium seized and accordingly reduce the amount of seized illicit opium available for admixture, and thus the cost of Government-prepared cpium would be increased and the loss on sales increased.

It is clear that the finances of the Colony are not in a condition to stand any loss on opium sales.

Any effective scheme of price reduction must necessarily depend on the Govern- ment's ability to procure supplies of opium at prices which would enable the Monopoly to market the prepared article at a price which could compete successfully with the smuggled article, and such supplies would be procurable only from China, unless as remarked above, the Indian Government is prepared greatly to reduce its price. and at the same time to increase the amount available for purchase.

Assuming the economic ability to make competitive price reductions. then undoubtedly it would be a great advantage to the Colonial Government if it had com. plete freedom to take sudden action in the changing of prices without reference to the Home Government. The Government agrees with the Commission's views hereon as expressed at the top of page 44 of their Report.

9.-(a) Complete monopoly for retail distribution.--The total number of licensed retail shops is now 69. These are distributed as under :-

'24

Victoria

Kowloon Urban area ...

17

Suburban and country districts and islands (including Aber-

deen and Aplichauj

28

69

The salaries of the retailers run from a minimum of $20.00 to a maximum of $105.00 per month. The total cost of retailers salaries in 1930 was $51,240.00.

The number of shops in the suburban districts might be slightly reduced, but the configuration of the urban districts does not lend itself to the economic placing of shops.

The Government proposes to explore the possibility of effecting sales at Govern- ment institutions (e.g., Police Stations) in those rural districts in which sales are too small to justify the establishment of Government shops devoted solely to the sale of opium.

It is also prepared to consider the establishment of Government conducted retail shops in urban and suburban districts, but, on account of the heavy expenditure which will have to be incurred for the renting and equipment of premises and the provision of shop staffs, the adoption of this system must be gradual.

Time is not available for making detailed inquiry as to the availability of or the cost of procuring and equipping suitable premises for use as Government shops (with or without smoking establishments in conjunction therewith) but it is clear that the cost would be incomparably greater than the cost of the present retail system.

17

(b) On the question of whether the practice of permitting salaried retailers to engage in the sale of other commodities besides opium in the shops wherein opium is sold is in contradiction to Article 1 (3) of the Geneva Opium Agreement, this Govern- ment holds the view that the wording of the Article is not susceptible of being construed in a manner which would indicate an intention to prohibit such a practice nor does this particular matter appear to have been discussed by the Convention.

1

An examination of the draft Agreements submitted to the Convention by Great Britain and France and the discussion upon Article I (3) shows that it was the intention of the British Delegation that retail sales should be effected only by officials, but that the French Delegation were strongly opposed to this and Article I (3) of the Agreement in its final form was a compromise which was clearly intended to permit of the con- tinuance of sales in retail shops not staffed by officials.

The intention of the Convention would appear to have been to secure the guarantee of continuous official supervision, coupled perhaps with a limitation of sales, and both these objects are, in this Colony, secured, so far as may be done without thrusting the consumer into the hands of the smuggler, by the regulations governing the manage- ment of retail shops, by official supervision, and by limiting the stock which the licensee may hold.

It is desired particularly to emphasize that if a retailer increased his sales of opium this would not be followed by any increase in his salary and that he therefore has no incentive for pushing sales.

10. Retailing of opium for cash only.—This is in accordance with the present practice throughout the territory.

11. Measures to control individual consumption.—The ultimate conclusion of the Commission is that there must be registration of smokers coupled with licensing and rationing, and that licensing and rationing must be based on medical certificates wherever there are a sufficient number of qualified physicians.

The Government is prepared to introduce registration of smokers at the earliest possible date with a view to considering the possibility of the subsequent introduction of licensing and rationing, and is taking immediate steps to inquire of the Government of the Straits Settlements as to the measures which it was there found desirable to adopt. It is desired to point out that the problem of registration, licensing, and rationing smokers in this Colony presents exceptional difficulties, firstly by reason of the great number of smokers, and secondly, by reason of the large number of persons entering the Colony from the neighbouring provinces of China and remaining for varying periods. The requirements of those who stay in the Colony for short periods must be met,

as otherwise they will have recourse to illicit supplies.

12. Prohibition for minors to smoke opium.-Reference has been made to the laws already in force prohibiting sales to minors and to proposed legislation for pro- lubiting attempts to induce minors to smoke.

The prohibition of actual smoking by minors will, it is thought, be best effected, firstly, by making it an offence for them to smoke, and secondly, by making it an offence for them to be in possession of opium (whether Government or otherwise) or of the paraphernalia for smoking. Legislation can be prepared accordingly.

13. Smoking establishments. It is anticipated that there would be very strong opposition to the restriction of personal liberty involved by the limitation of smoking te smoking establishments.

Moreover, the inconvenience of being compelled to go to smoking establishments would almost inevitably lead to the use of illicit opium in the home of the individual, and thereby add a stimulus to the smuggling which cannot be effectively prevented until poppy cultivation in China is brought under control.

The decision as to what should be deemed to constitute adequate reason for per- mitting smoking in the home or elsewhere would be difficult. It would seem that physical inability to go to smoking establishments would be the only logical reason for the making of any exceptions, but the wealthier classes would strongly resent having to go to public establishments. If permits were given to the wealthy in order to prevent their resentment, the Government would at once lay itself open to an acen- sation of introducing class legislation.

The provision of smoking establishments adequate for the accommodation of the smokers, whose numbers are estimated at between 100,000 and 200,000, would involve a large initial capital outlay and a very heavy recurrent annual expenditure. Until the number of smokers to be provided for has been ascertained by registration it would be useless to hazard an attempt to estimate the cost involved,