CO885-11 — Page 659

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PUBLIC RECORD OFFICE

Reference :-

TPLLC.O.882/11

PUBLIC RECORD OFFICE, LONDON

ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC-

COPYRIGHT PHOTOGRAPH-NOT TO

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steps to recapture the Hong Kong opium market and to hold it against smugglers became, therefore, essential.

16. The decision of His Majesty's Government prevents me from doing this by refusing me authority to purchase Persian raw opium for the purpose of maintain- ing the grades of prepared opium recently put on the local market by the Hong Kong Government's Opium Monopoly. This is embarrassing because, on introducing the new grades, the Superintendent of Imports and Exports, with my approval, announced -what was the bare truth-that this step was taken to combat the menace of smuggling. The Chinese are a logical people and the implication of the withdrawal, now neces- sitated, will not be lost upon them, unless indeed they merely dismiss the whole matter as a manifestation on the part of this Government of that disingenuousness which commonly characterizes announcements on the subject of opium by the Chinese authorities.

17. From a careful perusal of your telegrams conveying to me the decision of His Alajesty's Government it seems to me that there has been a serious misconception as to the local situation and as to the effect of my action. For instance, in your telegram of the 15th October, 1927,* you speak of the inflated demands created by It is, of course, wholly this experiment "'in contrast to the "normal demands. incorrect to apply to the local demand for opium at the prices recently fixed in Hong Kong the description "inflated," and it is equally incorrect to apply to the local demand for opium at the price fixed for Indian opium in 1918 the descrip- tion "normal.'

The true position will perhaps be clearer if for opium is sub- At the present time stituted some common European commodity, say, tobacco.

The competition of Capstan Navy Cut holds the field on the local market. Messrs. Players would, I suggest, clearly not induce anyone to smoke an appreciably larger amount of tobacco, although it might induce some to transfer their custom. And if Messrs. Players were given the legal right in Hong Kong to imprison, fine and " tobacco they found. Capstan and to seize all " Capstan banish all who smoked

Capstan " tobacco from the market the probable effect would be the elimination of " in much the same manner as my recent action eliminated smugglers of opium from the Hong Kong market.

"

>>

18. The term normal," as used in your telegram, is similarly misleading: for, if sales of Government opium continue to diminish at the rate at which they were diminishing before I took action, the demand will soon be limited only to those wealthy addicts who are determined to enjoy the luxury of smoking Indian opium, no matter how expensive.

a radical change

19. In the same telegram you say that I have embarked on from the existing practice." The suggestion underlying your statement is that the problem with which I am confronted is a static one, and that the price fixed for Indian opium in Hong Kong in 1918 is the proper price to charge to-day. Had conditions But no comparison can reasonably not altered since 1918, I should readily agree.

poppy.

be made between the year 1918, when China was reported practically free of the and the present year, when the cultivation of the poppy in China is more abundant than ever and the heyday of pirates, brigands, and smugglers of all kinds has come I could with greater justification claim that it was precisely owing to the radical change of circumstances, which has unhappily occurred, that I sought to save the Hong Kong system of opium control from complete collapse.

20 The Colonial Office itself put this point forcibly and well in its memorandum of November, 1926, prepared for the Interdepartmental Committee held at the Foreign Office to consider the recent increase in consumption of prepared opium in Malaya. It is very correctly stated therein (see paragraphs 37 and 38) that an unduly high price of opium

"would be bound to have the effect of driving still more consumers into the arms of the smugglers, either for the whole of their requirements or to supplement the quantities which they might think they could buy at the Government shops with- out coming under adverse notice. Smuggling would still further increase and eventually get completely out of hand, with the result that unlimited supplies of cheap opium would be available, leading to a great increase in individual consumption. In these circumstances, while the sales of Government chandu (prepared opium) would no doubt decrease, the official figures of consumption would be little more than eye- wash." In the same memorandum it is pointed out that the Government of the Netherlands East Indies, in order to induce smokers to return to the consumption of Government opium, contemplated, if necessary, as a last resort to reduce the price

* No. 90.

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of Government chandu. This is precisely the action which, being in far greater jeopardy than the Netherlands East Indies, Hong Kong has been obliged to take.

21. In the same memorandum the Colonial Office observed that in Hong Kong ** it has been officially estimated that (in spite of all the efforts of a remarkably vigilant and efficient preventive service) at least as much illicit as Government chandu is smoked."

But even that description falls short of the truth to-day. In 1924 the Hong Kong Committee, appointed to consider this Colony's position with regard to the obligations incurred under the International Opium Convention (1912), admitted a total opium consumption of 700,000 taels per annum for a population estimated to be 650,000 souls. To-day the population of Iluong Kong cannot be less than 900,000 souls and the licit opium sales (I take the 1926 figures) fall short of 200,000 taels.

the opium you say that 22. In your telegram of the 15th October, 1927,* problem cannot be treated as a domestic concern of the Government of Hong Kong only." I entirely agree, and in my recent action I was not actuated solely, or even mainly, by domestic considerations. I freely admit that domestic considerations were present to my mind and are sufliciently serious. The Colony's gaols were filled with artificial criminals, who had committed no crime other than what is regarded by Chinese public opinion as a most venial offence. The native police and preventive staff were open to the most serious temptations. Smuggling was rife, and it was impossible for this Government to hope to combat smuggling, when its price for opium was $14.50 a tael, while a respectable brand of Chinese prepared opium could be purchased at $2 a tael and opium from Macao and Kwong-chau-wan could be obtained for $6 a tael. In the absence of any effective opposition, the position of the opium smugglers grew daily stronger. Their profits returned to illicit business, and the local interests concerned to oppose any reduction of opium consumption became progres- sively more formidable. Before my recent action the smugglers' profits on Hong Kong opium consumption were estimated to be at least $1,500,000 annually. In addition there still exists an enormous wholesale opium smuggling business from South China, for which Hong Kong is the natural port of shipment, and which thus brings this colony into disrepute. The revenue aspect of this question is also serious. You will find a statement of the revenue derived by Hong Kong from opium for the last thirty years in Table IV of Sessional Paper No. 4 of 1927, copies of which were forwarded to you in my despatch No. 374 of 1st September, 1927.† As I stated in Legislative Council of the 1st September, 1927, "this Government is very willing to prohibit the consumption of opium in the Colony and to forego its revenue from this source as as the production and consumption of opium in China are suppressed." But, when we know that for each dollar we receive the less a dollar or more has gone to swell the funds of smugglers, to facilitate increased opium con- sumption, and to postpone the date of final suppression, then we regard the subject in a different light. We are ready to make serious sacrifices for a common cause; but we claim that some limit should be set to the concessions which we are asked to make for the sake of what the Colonial Office itself has very correctly called “ wash.""

23. However, as I have said, domestic considerations were not the only motive, nor indeed the chief motive, for my action. I was more concerned with the palpable failure of this Colony to fulfil the international obligations undertaken on its behalf. No one who has perused the voluminous literature that has flowed from the Secretariat of the League of Nations since its assumption of duties in relation to The Hague Opium Convention, can fail to observe that, if there is one note more constantly reiterated than another, it is a note of alarm lest smugglers should defeat the objects of the Convention; and, if there is one remedy more consistently urged than another. it is the assumption of governmental control over opium traffic. That diagnosis and that remedy were, as you know, finally embodied in the most formal way in the preamble and first Article of the Agreement made at the First Opium Conference at Geneva.

24. In the present condition of Southern China, the Governments of European Colonies established on her coast-Hong Kong, Macao, Kwong-chau-wan-can main- tain control over the opium traffic in one way only, namely, by themselves supplying the insistent demand within their own territories and resolutely holding their own market against all smugglers. This can only be done by adjusting the quality and price of official supplies so as to exclude the illicit opium, which seeks admission from without. Any attempt to restrict local consumption by maintaining an unduly high price or by raising prices is comparable to an attempt to restrain the flowing tide by

+ C. 30222/27 [No. 1]: not printed.

soon

* No. 90.

eve-