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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

C. 63017/29 [No. 1].

198

No. 168.

STRAITS SETTLEMENTS.

THE GOVERNOR to THE SECRETARY OF STATE.

(Received 10 a.m., 2nd January, 1929.)

TELEGRAM.

[Answered by No. 176.]

SECRET. Your telegram of 28th December.* Co-operation with Netherlands East Indian Authorities in purchase of opium. I agree to suggested meeting. Singa- pore preferred but not essential.

C. 63017/29 [No. 5].

No. 169.

DEPARTMENT OF OVERSEAS TRADE to FOREIGN OFFICE.

(Copy received in Colonial Office, 15th January, 1929.) [Answered by No. 174.]

(Memorandum.)

THE Department of Overseas Trade transmits to the Foreign Office copies of despatches from His Majesty's Consul at Shiraz and His Majesty's Consul-General at Isfahant on the subject of the export of opium from Persia. Copy of the despatch of the 12th Septembert to the Acting Secretary in charge of Commercial Affairs at Teheran to which reference is made by both officers is also attached.

2. Mr. Chick is doubtful whether any advantage accrues to the United Kingdom as the result of the participation in the Persian opium trade of Manchester merchant firms, and suggests that official support and the granting by the Government of the Straits Settlements of future contracts for the supply of opium should be made con- tingent upon a greater activity in the sale of cotton piece-goods and other United Kingdom manufactures on the part of the Manchester firms concerned.

3. On the other hand, His Majesty's Consul-General at Isfahan transmits a memorandum reporting that definite advantage has accrued to Messrs. Ziegler and Co., one of the best known Manchester piece-goods firms established in Persia who are working there in conjunction with Messrs. Bellairs, Atkinson & Co., and with the financial support of the Imperial Bank of Persia. Messrs. Ziegler and Co., are stated already to have considerably strengthened their financial position, and should they succeed in obtaining a further order next year from the Government of the Straits Settlements they will have been enabled to clear the whole of their outstanding accounts in Persia and be left with some balance to pay. This balance they propose to pay not in cash but in Manchester piece-goods, if necessary even at a loss and so effec- tively compete with those piece-goods dumped on the market by the Soviet Govern- ment. In the opinion of the Department of Overseas Trade this opinion counter- balances that of Mr. Chick.

4. As mentioned in the Department's despatch to the Acting Secretary in charge of Commercial Affairs at Teheran of the 12th September last, the Department's only concern in this matter is to ensure that this lucrative traffic should, as far as possible, pass through the hands of British merchant firms in Persia and thereby strengthen their position there, viz., as regards import trade in cotton piece-goods and other articles into that country. At the present time it is admitted that competition there by British exporters of cotton piece-goods is difficult, if not practically impossible chiefly because of the dumping policy employed by the Soviet authorities. Messrs. Ziegler and Co., have, as was already known to the Department of Overseas Trade. and as is shown in the attached despatch from the Acting Secretary in charge of Commercial Affairs at Teheran of the 5th October last, Overseas Trade (B) No. 105,† been forced by circumstances to devote attention to goods other than textiles. Their association with the opium trade seems to provide the only possibility of selling United Kingdom piece-goods against those of the Soviet; indeed their continued existence in Persia was doubtful.

* No. 166.

† Not printed here.

199

5. The Department of Overseas Trade is through His Majesty's Consular Officers in Persia, in close touch with the activities of British firms. Bearing in mind these grave difficulties, it does not seem desirable to subject them to any inquisition about the origin of the goods which they sell, as suggested by Mr. Chick, and it is therefore proposed to inform that officer:-

that the very existence of these firms was in question; and

(b) that it is too early to say whether the opium projects will benefit British

goods.

6. Copies of this correspondence are being sent to the Colonial Office, India Office, and Home Office.

15th January, 1929.

(Confidential.)

SIR,

Enclosure 1 in No. 169.

British Consulate, Shiraz, 29th November, 1928. I HAVE the honour to refer to letter dated 12th September, 1928, from the Department of Overseas Trade to the address of the Acting Secretary in charge of Commercial Affairs, Teheran, a copy of which was sent to this Consulate, on the subject of the new arrangement made by the Government of the Straits Settlements, in conjunction with the Secretary of State for the Colonies, for purchasing opium from Persia, and of the contracts given to Messrs. Bellairs, Atkinson and Company working in Persia through Messrs. Ziegler and Company (to which might be added, though not mentioned, another contract, understood to have been given to Haji Ali Akbar and Sons Ltd., of Manchester, who work through Kazaroni and Sons of Bushire and Shiraz).

2. The Department of Overseas Trade state in paragraph 2 that they are only concerned that this lucrative traffic passes through the hands of British merchant firms in Persia and thereby strengthens their position, viz., as regards the import trade in cotton piece-goods and other articles into that country, and in paragraph 4,

"

in order to strengthen the position in Persia of Messrs. Ziegler and Company

3. I admit that I myself used this argument when drawing the attention of His Majesty's Minister at Teheran in my demi-official letter of 5th February, 1927 (forwarded to the Foreign Office under despatch No. 133 from Sir Robert Clive) to the request by the Managing Director of Haji Ali Akbar and Sons Ltd., of Manchester, that his company should be allowed to become a supplier of Persian opium to the Colonial Governments.

But I venture now to inquire whether the Department of Overseas Trade would not think it useful to ascertain during or at the end of the term, for which contracts have been given to Messrs. Bellairs, Atkinson and Co. (Ziegler and Co., Manchester) and Haji Ali Akbar and Sons Ltd., figures of sales of cotton goods by the two latter companies during 1928 as compared with previous years; and whether the future encouragement by the Department and the Government of the Straits Settlements to these two companies in the matter of opium contracts might be made contingent on evidence of greater activity in such sales, or sales of other British manufactures.

4. My reason is this. Though personally I have enjoyed friendly relations with Mr. T. P. Ziegler for a number of years in connexion with his business interests during my long stay at Bushire, and though his managers in South Persia are all British-born subjects, they have always been somewhat unsatisfactory in their dealings in non-British goods, we had occasion at Bushire before the war to complain of their patronage of certain Dutch cottons, and I consider the recent trend of their business in South Persia (Bushire and Shiraz) to be far from deserving British official support. Here at Shiraz in the past few months they have barely sold 50 bales, most of those woollens, I understand from the manager, and His Majesty's Consul-General would probably give no better report from Bushire; while they seem to be concentrating, as their main line, on sales of motor vehicles from the United States on behalf of General Motors, of which they are the agents in Isfahan, Shiraz, and Bushire. In all these places they have recently opened large showrooms to push the interests of this non-British organization; a locally established German is in charge of the show- room at Shiraz.

It is of course arguable that motors from the United States would in any case have the largest sales in this, as in other countries, and that it is better that a British firm should profit from the agency rather than other foreigners.

But, as I see it. Messrs. Ziegler and Company have made no attempt to intro- duce or popularize British-made motor vehicles; if they are deriving financial benefit from their connexion with Bellairs, Atkinson and Co., in the sale of opium to the