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If the attitude of Governments affected was not to be misunderstood and mis- interpreted, it seemed necessary, in view of the attitude still maintained by the Chinese overnment and its representatives at Geneva, that the facts in regard to the produc- tion of opium in China and the illicit traffic in opium from China should be publicly stated. Unless the general public were informed as to the situation, they would fail to understand why the Conference was unable to accomplish more than it did. The declaration* which is annexed to this Report was accordingly drawn up and adopted by the Conference for this purpose. It embodies the facts which were laid before the Conference by the French representative and myself. After adoption, it was issued to the Press and immediately published in full in the Bangkok newspapers. It will be included in the Minutes of the Conference and submitted to the Council of the League.

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The discussion on the illicit traffic also led to an understanding being reached for closer and more regular co-operation between the preventive services of the Powers affected. Exchange of information and views in regard to the traffic is already pro- vided for by Article VIII of the Geneva Agreement, and there has been some inter- change, with useful results, between the British Possessions, the Netherlands East Indies, and the Philippines. The League Commission recommended that this co- organize on a operation should be carried further, that the Governments should

preventive common plan the existing national preventive services," and that the services should keep in constant touch" (Volume I, page 139). It was not clear what exactly was intended by the suggestion for a " common plan," and the explanations given by the Chairman of the Commission did not disclose that the Commission had in mind any definite line of action. It was pointed out that the circumstances, as well as the administrative arrangements, of the different Possessions differed widely. In the case of some, opium is smuggled over an extensive land frontier, in the case of others it is brought in by sea from a distance. The measures taken necessarily A Committee, consisting of the representatives vary according to the circumstances.

of the local administrations present at the Conference, was appointed to consider what could be done to improve and extend the existing co-operation, and they prepared the lines of an arrangement* which was accepted by the Conference and which is annexed to this Report. 1 urged that periodical meetings of representatives of the local administrations should be held in order to ensure a closer contact and fuller exchange of views, at any rate between those territories in which the circumstances are similar, and an informal understanding that this should be done was come to as regards the As will be noticed later, British Possessions, the Netherlands East Indies, and Siam.

the Conference has proposed that the arrangement should be extended to cover other questions besides that of the illicit traffic.

An important proposal made by the League Commission for checking the illicit traffic, was that the prices of Government opium in the several territories should be (Volume I, reduced to a level sufficiently low to make smuggling unprofitable page 140). This would have involved a reversal of the long-established policy in the British Possessions of limiting consumption by raising the price of Government opium to the highest possible figure; and further, there did not seem sufficient grounds for believing that the proposal would, in the end, achieve the object in view. At a Conferencet which I had at Penang on my way to Bangkok with the Governor, Sir Cecil Clementi, and officials of the Colony and Federated Malay States, the Governor expressed himself in favour of giving the proposal a trial, but the information avail- able both from Malaya and from Hong Kong as to the prices at which the smugglers are able to obtain illicit opium appeared to show that they would always be able to sell at prices considerably below any that the Governments could fix and would reply to any reduction of Government prices by a corresponding reduction of their own. if the smugglers could, by the adoption of this policy, be driven out of the market they would return as soon as any attempt was made to restrict consumption. No fresh light was thrown on the question by the discussions in the Conference and, in accord- ance with my Instructions, therefore, and for the reasons above-mentioned, I stated that His Majesty's Government, while considering the question of prices as purely one of expediency, were not able to accept the proposal in present circumstances. France, the Netherlands, and Siam also stated that they were unable to accept it, though France and Siam had, in districts bordering on their northern frontiers across which opium is smuggled, fixed lower prices for Government opium than the normal prices for the rest of their territories. The proposal, therefore, dropped.

*Not printed here.

† No. 29.

Even

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After the discussion of the illicit traffic, the Conference proceeded to consider whether further measures could be taken with a view to the ultimate suppression of opium smoking, and discussed seriatim the recommendations which had been made by the League Commission. The measures discussed may be classified as (1) further ineasures of control and restriction, (2) counter-measures to eliminate as far as possible the causes which lead to addiction.

Restrictive Measures.

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(1) Institution of Complete Government Monopoly.—Article 1 Agreement provides for the establishment of a Government Monopoly but allows certain exceptions in respect of the manufacture of prepared opium and its retail sale. So far as regards manufacture of prepared opium, the only case in which the manufacture is not at present being carried on by the Government is that of Kwong Chow Wan. Here the practice has been to allow opium to be prepared by licensed boilers " the ground that they can cater for differences of individual taste; an attempt to make consumers buy only tiovernment opium from the Saigon Factory did not, it was said, meet with success. The boilers retail direct to the consumers The number of these boilers has now been reduced to three from a much larger number, and it is the inten tion of the French authorities to abolish the system altogether. They were not able, however, to accept immediately the principle of Government manufacture in respect of Kwong Chow Wan. As regards retail sale, the Conference agreed (subject to reser- vations by Siam* and, as regards the Chan States by India) on the abolition, as recom- mended by the League Commission (Volume I, pages 140-1), of the exceptions in the Geneva Agreement, and a new Article was drawn up which is included in the Supple mentary Agreement concluded by the Conference

At the request of the French Delegate a proviso in general terms was added at the end of the new Article to allow the temporary continuance of retail sales by the Kwong Chow Wan boilers, but the statement made by the French Delugate in full L'onference, which will appear in the published Minutes, should leave no doubt as to the scope and meaning of the proviso.

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The position at Macao also came under consideration. It appeared that the Macao Government, when replacing (in 1927) the old farming system by a Government Monopoly, had taken on as an expert "the manager of the old farmy and that both the management of the Government Factory and the selection of the licensed retail vendors are left in his hands. Macao is the centre of a large illicit traffic in prepared opium, in particular the Red Lion brand which is found in most parts of the Far East, in the United States and elsewhere The authorities at Hong Kong suspect that some at any rate of this illicit opium is actually made in the factory itself.

It was not possible to carry the matter very far in public discussion, but I have put a number of questions, suggested by the particulars and figures given in the League Commis- sion's Report, to Dr. Lobo, one of the Portuguese Delegates and Superintendent of the Opium Monopoly at Macao, and he has promised to send me a full reply. I may add that Dr. Lobo is regarded by the Hong Kong authorities as not above suspicion himself.

It came out in the report of the League Commission (Volume II, page 348) that the retail sale of Government opium in the Colony of Hong Kong is not carried on in Government shops, that is, shops owned and run by the Government, but by persons licensed or appointed by the Government who are paid a fixed salary by the Govern- ment, but who provide their own premises and are not in the strict sense employees of the Government. While this system is in accordance with the letter of the Geneva Agreement, it was, I believe, the intention of His Majesty's Government when deciding to make the retail sale a Government Monopoly, that the retail sale should be carried on in Government shops. This is what has been done in Malaya. I discussed the matter with the officials from Hong Kong who attended the Conference, and arranged with them that the whole position should he reconsidered. It will be seen that the new Article provides that the retail sale shall take place only from shops owned and managed by the Government except where local circumstances make the establishment of Government shops difficult.

(2) Registration, Licensing and Rationing of Opium Smokers.-The League Coni- mission's recommendations on this point (Volume I, pages 141-2) were not accepted

The

* In Siam smoking is restricted in general to the public smoking establishments or divans- some of these are owned by the Government, but the large majority by licensed persons, Siamese Government say it would be very difficult to find the staff to convert the latter into Government shops.

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by the Conference. There appeared to be some inconsistency between the Commis- sion's proposals and the general conclusion at which they had arrived (Volume 1, page 135) that as long as illicit opium is freely offered to the consumer.

in quantities which exceed those available to the legal consumer owing to restrictions on individual consumption, Government measures to limit consumption will never lead to total suppression of opium smoking," and that "registration, licensing, and rationing of smokers

will not be effective when anybody can without great difficulty satisfy his demand for opium from illicit sources. This inconsistency was not satis- factorily explained.

A system of registration has, since the Agreement of 1925, been applied in the British Possessions (with the exception of Hong Kong which is in a special position) as the first stage towards the introduction of licensing and rationing when the illicit traffic has been reduced to manageable proportions; but that point has not yet been reached, and my "Instructions were that His Majesty's Government could not, at present, support a proposal for the complete application of a licensing and rationing system.

While the fact that a territory or district is exposed to the smuggling of opium on a large scale is sufficient reason for delaying the introduction of such a system, the information collected by the League Commission or supplied to the Conference by the Delegates shows that different territories and different parts of the same territory may and do vary much in respect of the degree to which they are exposed to the illicit traffic. For instance, in Malaya, almost all the smuggling takes place through the ports of the Straits Settlements; in the Malay States there is little or none.

Christmas Island, also, which forms part of the Colony, owing to its remoteness is in little danger from smuggling. Similarly, in the case of Indo-China, it is the northern parts of the territories which border upon China which are exposed; it was admitted by the French Delegation that the southern parts are free.

It seemed to me, therefore, that while the Commission's proposal for the general application of a licensing and rationing system was unacceptable in present circum- stances, a strong case could be made out for the regional application of the system in areas where smuggling does not exist or is not a serious danger. In fact, as the prevalence of smuggling is the ground on which the Governments declare their in- ability now, as in 1924-25, to apply the system, it seems difficult to justify its non- application where the smuggling difficulties do not exist. The resolution adopted by the Geneva Conference on this subject, which is embodied-in the Final Act of the Conference, declared "that the possibility of adopting these measures depends principally upon the extent of the contraband trade.” A system of regional applica- tion has been worked successfully in the Netherlands East Indies for many years. When passing through Penang I discussed with the Governor and other officials the possibility of introducing such a system in Malaya, and found that they were quite prepared to consider it.

I accordingly submitted a resolution to the Conference recommending that the Governments should examine in the most favourable spirit the possibility of applying such a system in regions where the illicit traffic does not constitute a serious obstacle. The resolution was adopted by the Conference and is embodied in the Final Act (No. II). The Conference also adopted a resolution recommending the adoption by all the Governments of one or other of the systems of registration of smokers already in operation (in Malaya, Netherlands East Indies, &c.) (No. III).

(3) Suppression of Smoking in Private.--The recommendation of the League Commission that opium smoking should be permitted only in public establishments or divans (Volume I, pages 142-43) was not accepted by the Conference. Only the Delegates of Siam, where that system is already in force, supported it. The Com- mission's view that smoking in private is more likely to lead to the spread of the practice than smoking in public is not shared by the authorities in the British Posses- sions where the policy for a long time has been to discourage the use of divans. The one undeniable advantage of the Siamese system is that it facilitates the collection of dross by the Monopoly. On the other hand the system as applied in Siam. involves the maintenance of a large number of establishments to provide accommodation for those desiring to smoke (the number in Siam is over 900), and, owing to the difficulty of finding a sufficient number of trustworthy persons to undertake the work (seven or eight officials would be required in each shop), and also considerations of expense; only a small number (71) of these are owned and managed by the Monopoly. Insper- tion of a number of divans in Bangkok and other places, well controlled though they appeared to be, did not impress one in favour of the system.

(4) Recommendations by the League Commission that smoking by persons under 21 years of age should be prohibited and that any one inducing a person under that

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age to smoke should be liable to a heavy penalty were adopted; the latter recommenda- tion being strengthened to include persons facilitating the smoking or procuring of opium by anyone under the age of 21. A recommendation that sales of opium should be for cash only was also accepted. This is already the general practice, but it was agreed that it should be given a legal basis, Provisions on these points have been inserted in the new Agreement. See League Commission's Report, Volume 1, pages

139, 141, 142.

(5) Article 6 of the Geneva Agreement prohibits the export of prepared opium from any Possession or Territory into which opium is imported for the purpose of sinoking. This prohibition has already been modified, as a result of an exchange of notes between the British Government and the other Parties to the Agreement, to allow the territories of Sarawak and North Borneo to be supplied, like the Malay States, from the Government Factory at Singapore. On the ground that it would facilitate control of manufacture, I proposed that a provision should be inserted in the new Agreement, allowing a Government Monopoly to be supplied with prepared opium from the Factory of a Government Monopoly in another territory of the same Power. This was agreed by the Conference. It will enable Hong Kong, for example, like the other British Possessions to be supplied from the Singapore Factory, if desired.

(6) Collection and Use of Dross.-The difficulties experienced by the Govern ments in securing the return of dross, i.e., the residue remaining in the pipe after prepared opium has been smoked, were considered by the Conference, but no satis- factory solution was found. The method of offering a high price for dross returned, which is that adopted, for instance, in Malaya, has not proved successful. The possi bility of making it a condition of the sale of prepared opium to a consumer that he should' return an amount of dross corresponding to his last purchase was discussed, but the practical difficulties are great. One difficulty is that the amounts involved would in many cases be extremely small but the chief difficulty is that there is no simple test which the manager of the shop can apply in order to discover whether the dross brought in is genuinely the residue of a previous purchase of Government opiumi; it may be, and often is, adulterated, it may be the dross from illicit opium; or it may have been resmoked before it is brought in. The Conference felt itself unable to do more than recommend that research should be undertaken for the purpose of devising a test. (Nos. VII and X.) See League Commission's Report, Volume I, page 143. In connexion with the question of dross, two points were raised by the Siamese Delegation, which should be recorded. Under the Siamese system, very large quan tities of dross are collected in the divans, and a large sum (about three million ticals a year) is paid annually by the Government to the licensees of the divans for the dross (this payment is the only remuneration the licensees receive, as they are not allowed to make a profit on the sale of the opium) No use up to the present has been made of the dross, but the financial difficulties in which Siam finds itself at the present time have compelled the Government to consider whether any return can be obtained for this large expenditure. Two possibilities have suggested themselves, one that some of the dross should be used in the manufacture of prepared opium, the other that the dross which contains a substantial percentage of morphine should be used, in place of raw opium, for the manufacture of morphine. The First Siamese Delegate who is the Under-Secretary at the Foreign Office, and Mr. Raymond Stevens, the "Adviser to the Foreign Office, had previously asked my opinion on the two points and as to the desirability of bringing them up at the Conference. As regards the first sugges- tion, it appeared that dross is already used in this way, and has been for a long time, in some of the Far Eastern territories (e.g., the Netherlands East Indies), though not in the British Possessions; and it is argued that this does not involve any breach of Article V of the Geneva Agreement, as the dross is treated and reconverted into chandu." In the absence of any evidence that the admixture of a small proportion of dross so treated with the chandu prepared from raw opium had any harmful effects, I thought no objection could be taken to the proposal, but I suggested that the pro- portion should be small and definitely limited. As regards the second suggestion, it was pointed out that by Article XI of the Geneva Agreement, the provisions of the Agreement are not to apply to opium destined solely for medical purposes. There was no intention of establishing a morphine factory in Siam; the idea was to approach the European morphine manufacturers. I said that I could see no objection to the utilization of dross in this way provided the conditions of the Geneva Conventions of 1925 and the new Convention of this year were observed, though it did not seem to me probable that the manufacturers would entertain the idea. While there was no need for the Siamese to obtain the approval of the Conference for either course, it seemed to me best that the points should be mentioned.

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