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C. 83014/31 [No. 55].

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No. 19.

STRAITS SETTLEMENTS.

THE OFFICER ADMINISTERING THE GOVERNMENT to THE SECRETARY OF STATE.

(Confidential (2).)

MY LORD,

(Received 8th June, 1931.)

Government House, Singapore, 15th May, 1931. WITH reference to Your Lordship's telegram of the 13th March, 1931,* on the subject of the International Conference on Opium Smoking, I have the honour to transmit my observations on the conclusions and suggestions of the League of Nations Commission of Inquiry into the Control of Opium Smoking in the Far East as set out in Part IV of Volume I of the Commission's report to the Council of the League, which formed an enclosure of Your Lordship's despatch No. 62 of the 25th February, 1931.†

2. With regard to paragraphs 1-7, 9, 10, 12, 16, 18, 19, and 20, I have no special comments to offer.

3. Paragraph 8. A reduction in the price of Government chandu would un- doubtedly increase consumption in the following directions :-

(a) a certain number of smokers, who now use illicit chandu or dross as a matter of economic necessity, would take the opportunity to revert to the licit product;

(b) smokers of Government chandu whose purchases are now limited by their

pockets would increase their consumption;

(c) some persons who are now non-smokers might be induced to acquire the habit it is impossible to forecast the extent of such increase, which would depend on a number of economic factors other than that of the price of chandu.

As long as the production of opium in countries outside Malaya is uncontrolled, it cannot be said that there is any hope that it will be practicable to reduce the price of chandu in Malaya to such a level as will make smuggling unprofitable. It would no doubt be possible to drive illicit chandu temporarily off the market by reducing the price of Government chandu to a price barely above the cost of production, but as soon as the price was again raised to luxury level, as suggested by the Commission, smuggling would revive. For these reasons I am doubtful of the usefulness or advisa- bility of a reduction of price so far as Malaya is concerned. I agree, however, that the prices of Government chandu in neighbouring territories should be, as nearly as possible, level, and would be prepared, should, for instance, the Government of the Netherlands East Indies desire to reduce the price of its chandu, to consider making a corresponding reduction in the price in Malaya. Parity of price between Siam and Malaya should also be carefully considered.

4. Paragraph 11. I am of opinion that, so long as a flourishing illicit traffic exists, no scheme of registration and rationing of smokers (however sound theoreti- cally) has any real prospect of success. Experience in Malaya during the past two years has shown that any such scheme tends to drive smokers to the use of illicit chandu where such is to be had. Under existing conditions a combined licensing and rationing scheme does not seem to be a practical proposition in Malaya.

5. Paragraph 13. In this paragraph the Commission puts forward a proposal which is admittedly the ideal solution of the opium smoking problem provided that certain conditions are fulfilled. The first of these conditions is the absence of illicit traffic. Under a system by which Government opium is sold in Government opium shops to licensed opium-smokers alone the disappearance of the habit must theoretically be a matter of time only, but the limiting of smoking to Government saloons is feasible only in areas where communications and means of transport are good. In the country districts of Malaya where many smokers live up to 10 or 15 miles from the nearest road. it would obviously be impossible to provide adequate smoking facili- ties by means of Government saloons. I am of opinion, however, that the price of chandu in existing smoking saloons should be lower than the price in retail shops, and If such a reduction led to increased this question is now under consideration.

No. 3.

+ C. 83014/31 [No. 11]: not printed.

1

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patronage of Government saloons, the number of saloons would have to be consider- ably increased, and the number of retail shops could then be reduced.

6. Paragraph 14 I am in agreement with the suggestion of the Commission that opium pipes used in Government smoking establishments be sterilized, but am of opinion that the licensing and registration of opium pipes in the possession of individual smokers is impracticable.

7. Paragraph 15. With regard to the control of dross, I would observe that the suggestion made in connexion with Recommendation No. 13 above, viz., that the price of chandu in smoking shops should be less than that in retail shops, would increase the recovery of dross. In areas where the nominee-purchaser system is in force I am considering whether nominee-purchaser licences should not be issued only on condition that the purchaser returns à certain percentage of dross which would be fixed in accordance with the conditions. It would be difficult to devise a system under which the return of a proportion of dross is made a condition of permitting retail purchase in each individual case, owing to the smallness of the unit of sale of Government chandu in Malaya and the consequent necessity of testing a vast number of very small consignments with a view to the detection of adulterated dross which would be an essential part of the system.

S. Paragraph 17. It is recommended —

(a) that opium revenue should be transferred to a special section of the budget; (b) that all expenses in connexion with opium including preventive services

should be charged against this revenue;

(c) that the net revenue should first be devoted to specific services connected

with the campaign against illicit traffic in opium;

(d) that the available balance, if any, should be applied to the formation or enlargement of an opium revenue replacement fund or be expended on social or sanitary services or on public works connected with the cam- paign against illicit traffic in opium.

(a) and (b) I can see no advantage in creating a special section of the budget for opium revenue and expenditure. In the annual budgets the estimated opium revenue is separately shown, and though it has not been the practice hitherto to show separately the expenditure on opium control it would be a comparatively simple matter to do so.

(c) The services on which it is suggested that the net opium revenue should be primarily expended already receives the close attention of the Malayan Governments. and it would be a matter of considerable difficulty and of questionable value to appor- tion the cost of such services, e.g., education, to an opium section of the budget.

(d) As Your Lordship is aware Opium Revenue Replacement Funds already exist in the Colony, the Federated Malay States, and in the Unfederated Malay States with the exception of Kelantan.

I enclose a memorandum by the Acting Treasurer, Straits Settlements, setting out the financial side of the question in greater detail, so far as the Colony is con- cerned. The statements in this memorandum may be taken to apply generally, mutatis mutandis, to the other Malayan administrations.

9. I am supported in the views which I have outlined above by the Malayan Opium Advisory Committee which represents the Straits Settlements, the Federated Malay States and Johore. The other Unfederated States take upon the whole similar views to those held by the Opium Advisory Committee with minor variations as regards certain recommendations, but it will no doubt be found possible to bring these into line with any general Malayan scheme. Most of them object to the premature extinc- tion or to the specific earmarking of the opium revenue, and point out that although it forms part of the general revenues of the State it is used to a large extent for social

10. At the International Conference on Opium Smoking in Bangkok the Malayan Governments will be represented by Mr. G. E. Cator, M.C.S., Superintendent, Govern- ment Monopolies, Straits Settlements. It is regretted that it will not be practicable to send a special delegate to England for the preliminary discussions, but I may mention that both Mr. A. M. Goodman, the present Chairman of the Opium Advisory Com- mittee, and I myself will be on furlough by July or August this year, and I personally shall be in England.

services.

* The nominee-purchaser system, in force in the Federated Malay States, is a system where- by a person nominated in that behalf is enabled to purchase on behalf of a licensed amoker, as for instance the headman of a gang of workmen, will often be nominated by them to draw their ration for them.

PUBLIC

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PECORD OFFICE

Reference —

C.O.882 882/12

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