CO885-11 — Page 614

603

PUBLIC RECORD OFFICE

Reference :-

PLEC.O. 882/11

PUBLIC RECORD OFFICE, LONDON

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

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27. Both these (lovernments were asked to consider the suggestions made by the Advisory Committee for the more effective application of Article 6 of the Opium Convention. I have not yet received a report from Sarawak, but I have been informed semi-officially that the Sarawak Government has decided to introduce a system of registration and individual rationing of opium smokers. The position in that State can therefore, from this point of view, be considered satisfactory.

28. The British North Borneo Company, on the other hand, after careful inquiry have come to the conclusion that conditions in their Territory are not suitable for the introduction of such a system, and they are not prepared to go further than to watch the results of registration in neighbouring territories with a view to its possible ultimate adoption in North Borneo.

29. I am sure that the Company would resist strenuously any endeavour on our part to induce them to adopt such a measure as total prohibition at a definite date, but I have no doubt that I could induce them to adopt a scheme on the lines of that proposed by the Malayan Committee.

The Revenue Question.

30. The Home Office suggest that, failing a decision in favour of total prohibition, the Colonial Governments should proceed with such improvements in the existing systems as can be devised and at the same time should dissociate the prolits of the opium monopolies from the general revenues of the Colonies and use them for humanitarian and social services outside the ordinary sphere of Government activities-the process to be spread over a number of years.

31. I may say at once that when it was first made to me I was much attracted by this suggestion which, if it could be adopted, would clear the Colonial Governments of any suspicion that their vested interests are preventing them from taking more effec- tive action to carry out the terms of the Convention. The comparatively small, com- pact and prosperous Colony of Hong Kong would present no serious difficulty, as the Governor has often declared that the revenue question was quite irrelevant there. I felt, however, that 1 could not agree to the suggestion on behalf of the complex array of States which comprise British Malaya without consulting the Governor and High Commissioner.

32. British Malaya is by no means a homogeneous whole. It consists of—

(1) The comparatively densely populated Colony of the Straits Settlements dependent mainly on the prosperity of the free port of Singapore, and to a less (though still great) extent, Penang,

(2) The Federated Malay States, whose prosperity is bound up with that of the Both these industries have tin and planting (mainly rubber) industries.

in the course of the last three years suffered from an unprecedented slump, and from its position as probably the most flourishing country in the Empire, the Federation was brought to a critical financial condition, from which it is only just beginning very slowly to recover. Of the States com- prising the Federation, Perak, Selangor, and Negri Sembilan are opened up and reasonably accessible throughout. Pahang is less advanced, and bas many villages, estates and mines buried in the depths of jungle-covered mountains, extremely difficult of access.

(3) The Unfederated States:

(a) Johore, which is in much the same position as the Federated Malay

States, and

(b) Kedah, Perlis, Kelantan, and Trengganu in the Malay Peninsula, and the small State of Brunei in the Island of Borneo. For the most part these States consist of mountainous and jungle country, and they are remote, backward and difficult of access.

33. The Straits Settlements and the Federated Malay States are administered mainly by European officers of the Malayan Civil Service; the Unfederated States mainly by their Malay rulers, with native officers, but acting on the advice of British Advisers responsible to the High Commissioner at Singapore.

34. The political relations of the High Commissioner with the Malay rulers (not only of the Unfederated but also of the Federated States) are very delicately balanced, and the smooth administration of the States and the development of British policy in the Peninsula depends to a great extent on carrying the rulers and their people with us in any matters which vitally affect their well-being.

35.

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I have received the following telegram from the Governor and High Com- missioner in reply to my inquiry whether the Malayan Governments would accept in principle the suggestion for the gradual surrender of opium revenue:—

■1

Confidential Opium (1) America proposals. On behalf of the whole of Malaya enter strongest objections against the acceptance of the principle that no State is to draw any net revenue from the control. In the Colony enforcement of the principle, especially at the suggestion of foreign Governments, could only be carried in opposition to public opinion with dangerous results and strain of loyalty In Malay States its enforcement would mean the loss of British prestige. It would also, especially in view of uncertainty of revenue from rubber and tin, involve financial troubles of incalculable extent. The incidence of any income- tax would be resented and a high income-tax would arouse the fiercest feeling amongst all races against the British Government. The people of country would say that in order to deprive them of use for general purpose of revenue which they consider natural and legitimate, they are to be burdened with new and un- necessary taxation. They would contend that revenue from opium differs little, if at all, from revenue from alcohol, and they would ask whether any nation is justified in objecting to another nation deriving revenue from alcohol. (ii) British delegates suggestion(s). This, in the opinion of my advisers and myself, will not bear investigation. It would mean that the Government of Malaya would be endeavouring with an income-tax steadily increasing towards a danger point to carry on necessary service whilst an increasing portion of their revenue was being diverted to a fund which is unnecessary and even dangerous as building up ser- vices which as opium traffic declines will he eventually left in the air with no money to pay for them.

I am not prepared to adopt the suggestion in principle. I do not believe that it would be practicable in Malaya even if the French Indo-China and Netherlands East Indies adopt it, which I cannot believe will be the case. Hong Kong a self- contained Colony with easier financial conditions affords no parallel.

Earnestly beg that Malaya may be allowed to develop its policy of steady and continuous réduction of opium consumption on our own lines. It can only be carried out at a rate proportionate to the response by the population to Legislative and Executive action by the Government. Attempts to force the pace will result in smuggling and corruption, and will create desire for alcohol and substitutes for opium such as morphia and cocaine. Rapid progress impossible with present attitude of China, as a result of which smuggling into Malaya cannot be effectively controlled and immigrant Chinese arrive addicted to the opium habit."

36. The first part of the telegram refers to a proposal put forward by the United States Government that the Conference should accept the principle that no State should draw any revenue from the control of opium beyond the expenses incident to the exercise of the control. The second part of the telegram refers to the suggested dis- sociation of the opium revenues from the general revenues of the Colonies.

37. In amplification of this telegram I should explain that practically the whole of the development of British Malaya-railways, docks, waterworks, hospital, and sanitary services (including very extensive anti-malarial measures) has been paid for out of current revenues. Without the revenues derived from opium development on anything like the scale which has been carried out, would have been impossible. In the truest sense then these opium revenues have in fact been employed on social and humanitarian services, the maintenance of which now entails very heavy recurrent expenditure. Moreover, from their accumulated balances both the Colony and the Federated Malay States rendered extraordinarily generous financial assistance to this country during the war.

38. I submit that in this present time of financial depression, in Malaya's hour of need, it would have the worst possible effect on our relations with the rulers and people of these States if His Majesty's Government were to insist on a measure which has no direct bearing on the question of the suppression of opiunt smoking, but is merely suggested as a sop to ill-informed American and other prejudices.

39. In saying this I recognize (and I am sure that the Malayan Governments also recognize) that with the gradual suppression of the consumption of opium which it is hoped will ultimately be the result of the scheme elaborated by the Malayan opium Committee, these Governments must look to and make provision for a gradual reduc tion in the revenues which they now derive from the sale of opium.

10. If the Cabinet, as I suggest in the circumstances they ought, rejects the Home Office proposal, I intend to take up seriously with the Malayan Governments this question of the gradual replacement of the opium revenues. The matter will of course