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PUBLIC RECORD OFFICE

Reference :-

C.O.882/11

PUBLIC RECORD OFFICE, LONDON

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

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divert the opium revenue by annually increasing amounts, from the General Revenues, and devote it to humanitarian and social services outside the normal scope of Govern- nient activities.

3. This proposal was strongly resisted by the Governor of the Straits Settlements on the grounds (inter alia) that if the opium revenues were to be assigned to new and additional schemes, the Colonial Governments would find themselves committed to programmes, the funds for which would gradually decrease from year to year with the gradual suppression of opium. He submitted moreover that the replacement of opium revenue would involve very heavy additional taxation which, if imposed prematurely and without any corresponding gain in the shape of a diminution of the consumption of opium, would be so bitterly resented by the taxpaying community that the necessary financial measures could only be carried in the Colony by over-ruling the Unofficial Members of the Legislative Council by making use of the Official Vote, and in the Protected Malay States by invoking our Treaty rights, which would be damaging to our relations with the Malay Rulers.

4. After much interdepartmental discussion this proposal was dropped.

5. As was inticipated, the subject of opium revenues was raised at the First Opium Conference at Geneva in November, 1924, by the Chinese Delegate, who made a long speech and moved a resolution. In reply, the British Delegate asserted that so far as British Colonies are concerned His Majesty's Government would not be deterred by financial considerations from taking such measures of repression as were practicable.

6. The Second Opium Conference, which met immediately after the First Con- ference, was not intended to deal with opium smoking, but with the control of the production, distribution, and consumption of the raw material and manufactured drugs. Nevertheless the American Delegation, at the opening of the Conference, asserted the right of that Conference to review the question of opium smoking (and the production of opium for that purpose). This contention was resisted by the countries with Far Eastern Territories who had taken part in the First Conference

7. After a series of prolonged and heated discussions the Conference was adjourned on the 16th of December. In an Appeal to my Colleagues" which was communicated to the Conference by Bishop Brent (a member of the American Dele- gation) on his departure from Geneva, the following passage occurred :—

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It has been frequently contended that the matter of revenue is unim- portant and in one instance during this Conference I was charged with being ungenerous in referring to vested interests. Such protestations are empty as long as the fact abides that revenues, whether large or small, are received and not immediately expended on the prevention and treatment of addicts or such other measures as will put into effect the provisions of Chapter II."

8. The interval before the reassembly of the Conference on the 19th of January was occupied by His Majesty's Government in reviewing the position, and for this purpose a Cabinet Committee and an Interdepartmental Committee were set up. One of the most controversial matters which engaged the attention of these Committees was the question as to what steps could be taken to disarm the attacks to which the British Government was being subjected on the question of the Colonial opium revenues.

9. Although strongly urged to the contrary, the Colonial Office representatives, on the instructions of the Secretary of State, were however unable to agree to any declaration being made which would commit the Colonial Governments to any definite line of action in this matter. The British Delegate was, however, authorized, if the necessity should arise on the reassembly of the Conference, to declare that in the period which (in present circunstances) must necessarily elapse before really effective measures could be taken to ensure the progressive diminution of opium smoking, we would study the alternative fiscal measures which will be necessary when the time

comes.

10. It was also decided as a matter of high Imperial policy, and without con- sulting the Colonial Governments concerned, that in order that the attitude of His Majesty's Government in regard to the suppression of opium smoking might be defined more positively, the British Delegate should give an undertaking that (apart from the further measures which the Colonial Governments were prepared to inaugurate forth- with) opium smoking should be abolished in the Far Eastern Territories within a fixed period (15 years) from the restoration of control in China over opium production and the stoppage of smuggling of opium from China; the question when this state of affairs has been reached to be determined by a commission to be appointed by the Council of the League of Nations.

11.

This undertaking, replacing the more vague obligation in Article 6 of The Hague Convention was ultimately embodied in the Protocol to the Agreement con- cluded by the "First "' Opium Conference.

12. The importance attached by His Majesty's Government to the international aspect of the matters-then under discussion at Geneva is to be gauged from the decision to appoint a Cabinet Minister to be the principal British Delegate at the reassembly of the Conference.

13.

In his report on the Geneva Conferences (Cmd. 2461) Sir Malcolm Delevingne wrote as follows:-

Behind the discussions which took place on this subject was undoubtedly the feeling to which expression was frequently given, that the Governments con- cerned and not least His Majesty's Government-were actuated in their policy on the question of the suppression of opium smoking, by considerations of It is doubtful whether, even among the neutral delegations who were not prepared to support the United States proposal, that feeling has been dissipated. It is certain that the United States Delegation held it strongly. It is a point of which more will undoubtedly be heard."

revenue.

14.

After the conclusion of these Conferences careful consideration was given by the Colonial Office to the question of the means to be adopted to give effect to the desire of Ilis Majesty's Government that steps should be taken to disarm the critics whose attacks have been based on the allegation that the vested interests of the Colonial (iovernments concerned constitute the main obstacle to the effective carrying out of The Hague Convention.

15. The attention of the Governor of the Straits Settlements was accordingly drawn to the serious embarrassment which had been caused to His Majesty's Govern- ment by these attacks. He was informed that it was recognized that, at present, circumstances outside the control of the Governments of the Far Eastern Colonies render it impossible to give full effect to the obligations of The Hague Convention; but that on the other hand if these circumstances did not exist and if (as would appear probable) it would accordingly be necessary for the Straits Settlements Government to urge the difficulties of replacing the opium revenues as the sole reason for delaying the final effective application of Article 6 of The Hague Convention, it would be impossible to defend such a claim unless it could be shown that the Colonial Govern- ment had taken definite steps to place itself in such a position financially, that it would be able to meet the situation which would inevitably arise when it becomes possible to give full effect to the Convention. It was therefore a matter for serious considera- tion (both from the point of view of meeting the allegations which had been directed against the Colonial Government, and from the point of view of sound finance) whether it would not be desirable to build up a fund, the income from which would go far towards mitigating the severity of the situation which will arise when the revenue from opium begins to decline.

16. In the summer of 1925, the Governor accordingly asked the Unofficial Members of the Legislative Council to nominate a small committee under the chair- manship of the Financial Adviser, to consider and make recommendations for the building up of such a fund.

17. As the result of the recommendations of this committee a resolution in the following terms was passed by the Legislative Council at the meeting held on the 24th of August :-

"That a sum of $30 millions be appropriated from the revenue and other assets of the Colony to form the nucleus of a special reserve fund to be used for the replacement of opium revenue, the reserve fund and the interest derived therefrom to be invested by the Crown Agents for the Colonies on behalf of the Colony in such securities of the Government of the United Kingdom, or of India, or of any of the Dominions, or of any British Colony as may from time to time be approved by a Secretary of State.'

At the meeting of the Legislative Council held on the 5th of October, 1925, the following further resolution was passed :-

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"That this Council approves of the principle of an annual contribution of 10 per centum of the revenue of the Colony to the Opium Revenue Replacement Reserve Fund and authorizes the appropriation of the aforesaid proportion of the revenue of the year 1926 for payment into that Fund.”

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