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opium to the Far East, especially in view of the fresh obligation imposed upon us by Article I of the Protocol to the Convention of the Second Opium Conference" to take such measures as may be required to prevent completely within five years from the present date the smuggling of opium from constituting a serious obstacle to the We have, therefore, cffective suppression of the use of prepared opium. been led to consider whether, in order at once to fulfil our international obligations in the largest measure, and to obviate the complications that may arise from the delicate and invidious task of attempting to sit in judgment on the internal Colonial policy whether of a power such as France, as in the case of Indo-China or of a British possession such as Malaya, and to ration their territories, we should not once for all declare our intention to reduce our exports progressively so as to extinguish them within a definite period.

10. The dignity and value of such a decision would undoubtedly be greater if it were evident that it was a voluntary act, and that we were not merely making a virtue of necessity. It would wear the latter aspect should our customers have already very largely reduced their demands for our opium.

The policy suggested would be a momentous departure and we have not yet collected all the facts essential to a proper consideration of it in all its bearings.

We have, &c.,

W. R. BIRDWOOD. C. A. INNES.

B. P. BLACKETT.

157

No. 109.

SIR G GRINDLE (COLONIAL OFFICE) to MR. S. P. WATERLOW (FOREIGN OFFICE).

DEAR WATERLOW,

Downing Street, 4th January, 1926.

I UNDERSTAND that you will be representing the Foreign Office at the Confer- ence which is being held at the India Office on the 6th to discuss the question of the supply of Indian opium to Indo-China, &e. I enclose a copy of a memorandum indicating the Colonial Office view on that part of the discussion which particularly concerns the Far Eastern Colonies.

Yours, &c.,

Enclosure in No. 109.

G. GRINDLE.

The Right Honourable

The Earl of Birkenhead,

His Majesty's Secretary of State for India.

Enclosure 2 in No. 108.

FROM VICEROY, FINANCE DEPARTMENT, TO Secretary of State for India.

(Paraphrase.)

(Dated 2nd December, 1925.) TELEGRAM.

A DESIRE to conclude a direct agreement with us for the supply of Indian opium has now been expressed by the Government of French Indo-China, through their Trade Commissioner at Calcutta. Hitherto, as you are aware the authorities in Indo- China had consistently refused to enter into an agreement of this kind. We propose, if you see no objection, to conclude an agreement as they request. It is preferable that Indian opium should, so long as it is sent to Indo-China, be exported under a direct sales agreement rather than that the supplies should continue to be obtained at the auction sales. It was even suggested by the Foreign Office last year that if Indo-China would not conclude an agreement we should threaten to cut off the supply altogether. The average annual quantity supplied for the past 11 years was 2,217 chests. Next year's estimated requirements, namely, 2,400 chests exceeds this but we are anxious, as pointed out in paragraph 9 of our despatch No. 2 of 12th November, to avoid such a delicate undertaking as an attempt to ration Colonial and foreign Governments. The Government of Indo-China will also be bound by the agreement to obtain from India the whole or substantially the whole of their supplies. It can scarcely be doubted that at present they obtain opium from other sources. It is, therefore, proposed that their estimates should be accepted. They will not be bound to take any minimum quantity. The agreement will, moreover, be worded so that our power to reduce maximum will not be fettered in the event of our adopting policy outlined in our above-quoted despatch, which we are still considering. Apparently the Government of Indo-China are anxious that an early decision should be reached.

MEMORANDUM RESPECTING THE SUPPLY OF INDIAN OPIUM.

I.

THE question of the possibility of the Government of India deciding to adopt the policy of progressively reducing the amount of opium supplied (for smoking) to the Governments of our own and other Far Eastern possessions arose this time last year in connexion with the draft amendment of Articles 1 and 8 of The Hague (1912) Convention, put forward by the American Delegation to the Geneva Opium Conference. 2. It will be recalled that the American redraft of Article 8 sought to secure imports an agreement by the Powers with Far Eastern possessions "to reduce of raw opium for the purpose of making prepared opium by 10 per cent. of its present importation each year for a period of ten years . . . . at the end of such period will prohibit the importation of raw opium.

3. The American redraft of Article 1 sought to restrict the production of raw opium to the amounts required for strictly medical or scientific purposes plus the amount required for smoking" in conformity with the provisions of this Convention " (i.e., as limited by the redraft of Article 8 quoted above).

4. In reply to a personal letter from the Secretary of State pointing out that any such action as is now being considered by the Government of India "would have the disastrous effects as regards the Far East," Lord Birkenhead (in a letter dated the 8th December, 1924), said:-" I cannot think that if India should in future be inclined to embark upon a policy embarrassing to the Crown Colonies, some way of disposing of mutuat difficulties could not be found.'

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5. The Secretary of State had, in the meantime, laid before the Cabinet a memo- randum (dated the 5th December, 1924), repeating the views of the Far Eastern Governments that in existing circumstances any premature attempt at an arbitrary restriction of the amount of opium placed on sale by the Government monopolies would lead to a complete breakdown of the present systems of control.

E

6. Subsequently, in connexion with an India Office memorandum, prepared for the guidance of the Indian Government Delegates at Geneva, Sir G. Grindle wrote to Mr. Walton, expressing the hope that any undertaking made by the Government of India would contain a provision for allowing the supply of opium to our Colonies for as long as they require it." Sir G. Grindle also referred to the unpleasant possi- bility (already indicated in the Secretary of State's letter to Lord Birkenhead referred to above) that if our Far Eastern Colonies are unable to obtain the opium they require from India they might have to buy it from Persia.

II.

1. The reasons why the policy now being considered by the Government of India would be exceedingly embarrassing to the Governments of the Far Eastern Colonies are indicated in the following paragraphs.

2. The local Committees appointed in the Far Eastern Colonies, in preparation for the Geneva Conference were not asked to consider the effects of an immediate progressive annual reduction of the amount of the opium placed on sale by the Govern- ment monopolies, as this was not among the suggestions put forward by the League of Nations Opium Advisory Committee for consideration by the conference. They

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