CO885-11 — Page 665

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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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(IV) PAPERS (1925-1931) RELATING TO THE SUPPLY OF PERSIAN OPIUM TO THE FAR EASTERN COLONIES, ETC.

55773/25.

(Confidential.)

SIR,

No. 108.

INDIA OFFICE to COLONIAL OFFICE.

India Office, Whitehall, S. W.1, 11th December, 1925. I AM directed by the Secretary of State for India to refer to the letter from this Office of 11th August, 1925,* and connected correspondence on the subject of the supply of Indian opium to Indo-China.

2. Copy is enclosed of a Confidential despatch dated 12th November, 1925, received from the Government of India in reply to the Earl of Birkenhead's despatch of 6th August, 1925. It will be seen that the Government of India, although unable to frame an estimate of the legitimate requirements of Indo-China, agree that the facts set out in the Home Office memorandum show that there are grave abuses in connexion with the control of opium in that country. Particular attention is invited to para- graphs 9 and 10 of the Government of India's despatch.

3. I am also to forward paraphrase of a telegram, dated 2nd December, in which the Government of India report that the Government of Indo-China desire to conclude an agreement for the direct purchase of Indian opium from the Government of India.

4. Before deciding whether he should sanction the proposal of the Government of India to conclude such an agreement the Earl of Birkenhead would be glad to be favoured with the views of Mr. Secretary Amery on the various questions raised in this correspondence and he suggests that these questions might be discussed at an interdepartmental conference to be held at the India Office.

If this suggestion commends itself to Mr. Secretary Amery the date of meeting might be arranged demi-officially.

I am, &c.,

Enclosure 1 in No. 108.

(Confidential.)

(No. 2 of 1925.)

MY LORD,

E. J. TURNER.

Finance Department (Central Revenues),

Delhi, the 12th November, 1925. Subject: Opium-Indian-French Indo-China-Supply of, to-Your Lordship's despatch No. 9—Overseas, dated the 6th August, 1925.

We have the honour to reply to your Lordship's despatch quoted above, on the subject of the supply of Indian opium to Indo-China. Your Lordship expressed the desire to learn as early as possible whether the Government of India agree that excessive quantities of Indian opium have been exported to Indo-China, and, if so, whether there are materials upon which an estimate can be made of the amount required for legitimate consumption in that Colony. There appear to us to be grave difficulties in the way of framing such an estimate. Such data as we have are in your Lordship's possession. They have mainly been furnished to us by the India Office.

2. In the Home Office memorandum enclosed in your Lordship's despatch, the consumption in Indo-China and Kwang Chow Wan is compared unfavourably with that in Hong Kong having regard to the relative strength of the Chinese population in each area. This line of argument is obviously open to criticism. Opium smoking cannot be assumed to be confined to the Chinese, and the proportion of smokers to the Chinese and the non-Chinese population respectively cannot be assumed to be constant in the different areas.

3. A further difficulty is the widely different results that this method yields according as Hong Kong or British Malaya is selected for comparison with Indo-China.

* 37065/25: not printed.

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If

If Hong Kong be taken as the basis, it is evident that the amount of Indian opium hitherto exported to Indo-China is by itself far in excess of legitimate requirements. On the basis of the actual exports of Indian opium to Hong Kong and of the strength of the Chinese population, Indo-China could not require more than 150 chests. smuggling into and out of Hong Kong were suppressed, the legitimate demands of Hong Kong might perhaps be rather less than double of the amount of Indian opium at present supplied. Even on this basis and assuming that no Indian opium passes into the illicit traffic from Indo-China it could not be claimed that an annual supply of more than 300 chests of Indian opium for Indo-China and about 100 for Kwang Chow Wan was reasonably necessary, whereas Indo-China has been importing on the average about 2,217 chests (a little over seven times the quantity just mentioned) in recent years and 500 chests a year have been offered for sale in Kwang Chow Wan. 4. On the other hand, if we take the Chinese population of Britishi Malaya and the average quantity of Indian opium supplied to that Colony for the purposes of our calculation, instead of the statistics for Hong Kong, we find that Indo-China might reasonably claim about 1,500 chests of Indian opium annually and that 500 chests Indo-China and a year is, if anything, rather moderate for Kwang Chow Wan. Kwang Chow Wan would, therefore, require about 2,000 chests annually and the difference between this and the average quantity of 2,217 chests supplied, though considerable, could probably be justified on plausible, if not convincing, grounds.

5. If, therefore, British Malaya is taken as the standard, the present supply of Indian opium to Indo-China is not strikingly excessive. If, on the other hand, in any representations to the French Government on the subject, Hong Kong were taken as the standard a somewhat embarrassing situation might arise should they point in reply to British Malaya.

6. Any estimate of the legitimate requirements of Indo-China must evidently We venture to suggest, be at once largely hypothetical and highly controversial. however, that the matter may and should be approached from another point of view. Whatever may be the legitimate requirements of Indo-China, there can be no doubt, whatever, that the situation in that country in regard to the control of opium and of the traffic in that drug passing into and out of Indo-China and Kwang Chow Wan is thoroughly unsatisfactory. Here again, we are almost wholly dependent on the India Office for our information. The facts are set forth in the Home Office memo- randum already mentioned and there is no need to repeat them. They bear con- clusive evidence to the existence of the gravest abuses. In such circumstances, we would ask whether questions relating to the supply of Indian opium to Indo-China can fruitfully be considered with reference to any estimate of legitimate requirements. 7. The question what quantity is legitimately required would be more relevant, in our opinion, if we had any assurance that any opium that we might supply would only be used for legitimate purposes, and that opium was not pouring into Indo-China from other sources. We would here refer in passing to the recent sudden and remark- able fall in the demand for opium from Indo-China which has been reported to your Lordship in another connexion. Two hundred and fifty chests of opium were offered for sale by auction at Calcutta in September and the same quantity in October-but in each month only five chests were sold. It seems to us quite probable that in order to avoid the indignity of the supply of Indian opium being rationed the Government of Indo-China are turning to other sources for their opium, for example, to Persia. It may be that the possibility of such a course is hinted at in the Report on the Traffic in Opium in Indo-China in 1922 furnished by the French Government to the League of Nations (O.C. 23 (d) 1, dated 11th May, 1925) of which a copy has been forwarded to us by your Lordship's Under-Secretary with his letter dated 10th September, 1925. The passage to which we refer runs :-"Contrary to the current practice of other Far Eastern countries the Colony has purchased no Turkish or Persian opium notwithstand- ing the tempting offers it has received. In spite of the considerable profits which would have been derived from these operations the Indo-Chinese authorities have carefully refrained from endeavouring to extend their clientele by putting new products on sale at advantageous rates."

position to frame a satis- 8. Our conclusions, then, are that we are not in a factory estimate of the legitimate requirements of Indo-China, and that the quantity of opium that the Government of India can supply to that country with a clear con- science, and consistently with their international obligations, cannot be determined with regard to any such estimate, so long as the Government of Indo-China do not set their house in order.

9. We desire to add for your Lordship's information that we have been much impressed with the difficulties of the present situation in regard to the export of Indian