2
list, regarding a scheme submitted by Mr. J. J. J. Keswick with a view to facilitate the collection of the Chinese duty on opium under the new Opium Article; in that correspondence a suggestion was made that opium should be exported from India under the Chinese flag only; that suggestion has not our approval; and we beg to state, with reference to the letter from Her Majesty's Chargé d'Affaires, Peking, dated the 28th October, 1885, which forms an inclosure of your Lordship's despatch dated the 11th February, 1886, that we have been awaiting the scheme which it was understood would be submitted in London.
4. We understand that the proposals in Sir R. Hart's Memorandum of the 31st October, 1885, and the Foreign Office instructions inclosed in your Lordship's despatches dated the 11th February and 25th March, 1886, respectively, supersede the schemes submitted by Messrs. Keswick and Lister, and that the opinion called for in your Lordship's despatch of the 4th March is not required, as Germany has withdrawn her objections to the Additional Article.
5. We desire, however, to indicate briefly our objections to Mr. Lister's proposal to put a special tax on all Indian opium at the time of export. In the first place, India does not possess a complete monopoly of the production of opium outside China; Indian opium has to compete with opium produced in Persia, Turkey, and other countries, and a special duty could not with safety be levied on Indian opium in India, unless a special duty of equal amount were levied on opium exported to China by countries other than India, or unless the import of such opium into China were altogether prohibited. In the next place, Mr. Lister proposes that the whole of the special rate should be divided between China, Hong Kong, and the Straits. This proposal overlooks the fact that there is a considerable export of Indian opium to the Dutch Netherlands, the Philippines, Siam, the Malay Peninsula, French India, Sumatra, &c. The amount of Indian opium exported to these countries in 1884 exceeded 8,000 chests; and to the special rate on this opium neither China, Hong Kong, nor the Straits can have any claim. Finally, the claim of Hong Kong and the Straits to be treated in the same way as China is not strong. China grows opium, and can compete with India for the supply of opium to her own population, while neither Hong Kong nor the Straits can do so; and if the Indian Government had a monopoly of opium grown outside China, there would be no reason why Hong Kong or the Straits should get any portion of any revenue which it might be found possible to levy from opium in India. Mr. Lister's scheme is apparently further open to the objection contained in Mr. Godley's letter, dated the 20th January, 1886, which is an inclosure to your Lordship's despatch, dated the 11th February, 1886.
6. The conditions on which a scheme such as Mr. Lister's might be taken into consideration are, in our opinion, the following:-
(a.) China, Hong Kong, and the Straits to relieve Indian opium from all taxation, whether on import, during transit, or at place of consumption.
(b.) The same countries to guarantee that Persian and other foreign-grown opium, other than Indian opium, shall either not be imported or shall be subjected to a duty of not less magnitude than the special duty to which Indian opium shall be subject in India. This duty to be, if possible, levied in the country which produces the opium.
(c.) The Indian Government to undertake to levy the maximum possible revenue on all opium exported from India.
(d) On the revenue so collected the Indian Government to have the first claim up to the amount of the average net Indian opium revenue in past years.
(e.) The balance to be divided equitably between China, Hong Kong, and the Straits.
(f.) If the share divisible between China, Hong Kong, and the Straits should exceed a certain amount, half the excess to be given to those countries and half to India.
We have been induced to mention these conditions by the fact that your Lordship has asked our opinion on a scheme which provides for the taxation of opium in India only. We entertain grave doubts whether any scheme of the kind preferred by Mr. Lister would be found practicable, and our conditions are put forward tentatively as a basis for discussion; our final opinion regarding their expediency must be held to be reserved.
We have, &c. (Signed) DUFFERIN.
F. S. ROBERTS,
3
Inclosure 2 in No.
Mr. J. Keswick to Mr. Finlay.
August 6, 1885.
329
(Private and Confidential.)
I HAVE received by the mail from China a letter from my brother, of the firm of Jardine, Matheson, and Co., stating that, when he was recently at Tien-tsin, he had several conversations with Chinese high officials on the subject of the collection of duty and the li-kin, or war tax, on opium.
The Chinese have never succeeded in collecting duty and the tax on the whole of the opium that has entered China; and now that the Convention lately signed in London recognizes a large and fixed li-kin tax, the inducement to smuggle is greatly increased, and beyond all doubt China will be unable, by a preventive service and by Regulations, to cope successfully with the daring and enterprise of smugglers. From time to time China has made efforts to come to an understanding with the Colony of Hong Kong, whereby she might obtain some sort of control over drug until Imperial revenue was collected, but from the very nature of the case, nothing ever came of the proposals, and eventually what has been termed the "blockade of Hong Kong" was established by stationing revenue cruizers all round the island. These cruizers have always been a source of trouble and serious annoyance to the Colony, and no representations have obtained their removal.
My brother was asked if he could suggest any method by which the Chinese Government could overcome its present difficulties and make the collection of the opium revenue fairly certain, and replied that the duty afforded so great an inducement to smuggle that he could only regard it as almost hopeless to suppress smuggling unless control were obtained over the drug until the li-kin and import duty were collected, and that such control could only be obtained by agreement with the Indian Government. When asked if he believed an agreement with the Indian Government was possible, he replied that he did not see why an understanding should not be arrived at whereby China's object should be attained, and likewise from India all objections removed, such as are frequently raised in consequence of the Government's connection with opium; but that he thought an agreement mainly depended upon whether China was in earnest or not, and whether she was prepared to suggest a reasonable agreement, unhampered by objectionable restrictions.
He suggested that the Chinese Government should propose to the Indian Government that no opium should be allowed to leave India except by steamers under the Chinese flag; that from Bombay and Calcutta a sufficient number of steamers should be dispatched to fully meet the convenience and requirements of shippers at a fair and moderate rate of freight; that the bills of lading issued should be on a special form, protecting shippers from all risks and providing for the payment, in addition to freight, of the import duty and li-kin tax agreed upon by the Treaty; that in Hong Kong and at the Treaty ports in China the drug should be stored in bonded godowns or hulks, so that only on delivery for consumption should the duties be collected. Transhipment could be effected in bond. The Chinese would undertake that all drug should, from the coming into force of the agreement, be absolutely free from all further duty and li-kin, and agree that in the event of a departure from this condition, the Indian Government would be released from their part of the agreement.
How to deal with opium destined for Penang and Singapore would, of course, require consideration, and also the conditions upon which the delivery of opium for the requirements of Hong Kong should be regulated; but the difficulties in connection with supplies for these ports are probably not insuperable. The question is, would the Government of India be inclined to come to some arrangement with China on some such basis as sketched? If so, China would send a special Commissioner with power to come to an understanding with the Indian Government in the matter.
In the meantime, my brother was asked to ascertain privately and confidentially whether there was any likelihood of some such agreement as indicated being favourably viewed, and he promised to put the matter before me to privately sound the right Department upon it. I do not know whether in addressing you I am addressing the right Department, but I think I am. If not, will you kindly make the letter over to the proper Department and excuse me? I will be glad to receive a reply as early as convenient.
C. P. ILBERT.
S. C. BAYLEY.
T. C. HOPE.
A. COLVIN.
O. R. NEWMARCH.
Page 330
Page 331
2
list, regarding a scheme submitted by Mr. J. J. J. Keswick with a view to facilitate the collection of the Chinese duty on opium under the new Opium Article; in that correspon- dence a suggestion was made that opium should be exported from India under the Chinese flag only; that suggestion has not our approval; and we beg to state, with reference to the letter from Her Majesty's Chargé d'Affaires, Peking, dated the 28th October, 1885, which forms an inclosure of your Lordship's despatch dated the 11th February, 1886, that we have been awaiting the scheme which it was understood would be submitted in London.
4. We understand that the proposals in Sir R. Hart's Memorandum of the 31st October, 1985, and the Foreign Office instructions inclosed in your Lordship's despatches dated the 11th February and 25th March, 1886, respectively, supersede the schemes submitted by Messrs. Keswick and Lister, and that the opinion called for in your Lordship's despatch of the 4th March is not required, as Germany has withdrawn her objections to the Additional Article.
5. We desire, however, to indicate briefly our objections to Mr. Lister's proposal to put a special tax on all Indian opium at the time of export. In the first place, India does not possess a complete monopoly of the production of opium outside China; Indian opium has to compete with opium produced in Persia, Turkey, and other countries, and a special duty could not with safety be levied on Indian opium in India, unless a special duty of equal amount were levied on opium exported to China by countries other than India, or unless the import of such opium into China were altogether prohibited. In the next place, Mr. Lister proposes that the whole of the special rate should be divided between China, Hong Kong, and the Straits. This proposal overlooks the fact that there is a considerable export of Indian opium to the Dutch Netherlands, the Philippines, Siam, the Malay Peninsula, French India, Sumatra, &c. The amount of Indian opium exported to these countries in 1884 exceeded 8,000 chests; and to the special rate on this opium neither China, Hong Koug, nor the Straits can have any claim. Finally, the claim of Hong Kong and the Straits to be treated in the same way as China is not strong. China grows opium, and can compete with India for the supply of opium to her own population, while neither Hong Kong nor the Straits can do so; and if the Indian Government had a monopoly of opium grown outside China, there would be no reason why Hong Kong or the, Straits should get any portion of any revenue which it might be found possible to levy from opium in India. Mr. Lister's scheme is apparently further open to the objection contained in Mr. Godley's letter, dated the 20th January, 1886, which is an inclosure to your Lordship's despatch, dated the 11th February, 1886.
6. The conditions on which a scheme such as Mr. Lister's might be taken into consideration are, in our opinion, the following:-
(a.) China, Hong Kong, and the Straits to relieve Indian opium from all taxation, whether on import, during transit, or at place of consumption.
(b.) The same countries to guarantee that Persian and other foreign-grown opium, other than Indian opium, shall either not be imported or shall be subjected to a duty of not less magnitude than the special duty to which Indian opium shall be subject in India. This duty to be, if possible, levied in the country which produces the opium.
(c.) The Indian Government to undertake to levy the maximum possible revenue on all opium exported from India.
(d) On the revenue so collected the Indian Government to have the first claim up to the amount of the average net Indian opium revenue in past years.
(e.) The balance to be divided equitably between China, Hong Kong, and the Straits.
(f.) If the share divisible between China, Hong Kong, and the Straits should exceed a certain amount, half the excess to be given to those countries and half to India.
We have been induced to mention these conditions by the fact that your Lordship has asked our opinion on a scheme which provides for the taxation of opium in India only. We entertain grave doubts whether any scheme of the kind preferred by Mr. Lister would be found practicable, and our conditions are put forward tentatively as a basis for discussion; our final opinion regarding their expediency must be held to be reserved.
We have, &c. (Signed) DUFFERIN.
F. S. ROBERTS,
3
Inclosure 2 in No.
Mr. J. Keswick to Mr. Finlay.
August 6, 1885.
329
(Private and Confidential.)
I HAVE received by the mail from China a letter from my brother, of the firm of Jardine, Matheson, and Co., stating that, when he was recently at Tien-tsin, he had several conversations with Chinese high officials on the subject of the collection of duty and the li-kin, or war tax, on opium.
The Chinese have never succeeded in collecting duty and the tax on the whole of the opium that has entered China; and now that the Convention lately signed in London recognizes a large and fixed li-kin tax, the inducement to smuggle is greatly increased, and beyond all doubt China will be unable, by a preventive service and by Regulations, to cope successfully with the daring and enterprise of smugglers. From time to time China has made efforts to come to an understanding with the Colony of Hong Kong, whereby she might obtain some sort of control over drug until Imperial revenue was collected, but from the very nature of the case, nothing ever came of the proposals, and eventually what has been termed the "blockade of Hong Kong" was established by stationing revenue cruizers all round the island. These cruizers have always been a source of trouble and serious annoyance to the Colony, and no representations have obtained their removal.
My brother was asked if he could suggest any method by which the Chinese Govern- ment could overcome its present difficulties and make the collection of the opium revenue fairly certain, and replied that the duty afforded so great an inducement to smuggle that he could only regard it as almost hopeless to suppress smuggling unless control were obtained over the drug until the li-kin and import duty were collected, and that such control could only be obtained by agreement with the Indian Government. When asked if he believed an agreement with the Indian Government was possible, he replied that he did not see why an understanding should not be arrived at whereby China's object should be attained, and likewise from India all objections removed, such as are frequently raised in consequence of the Government's connection with opium; but that he thought an agree- ment mainly depended upon whether China was in earnest or not, and whether she was prepared to suggest a reasonable agreement, unhampered by objectionable restrictions.
He suggested that the Chinese Government should propose to the Indian Government that no opium should be allowed to leave India except by steamers under the Chinese flag; that from Bombay and Calcutta a sufficient number of steamers should be dispatched to fully meet the convenience and requirements of shippers at a fair and moderate rate of freight; that the bills of lading issued should be on a special form, protecting shippers from all risks and providing for the payment, in addition to freight, of the import duty and li-kin tax agreed upon by the Treaty; that in Hong Kong and at the Treaty ports in China the drug should be stored in bouded godowns or hulks, so that only on delivery for consumption should the duties be collected. Transhipment could be effected in bond. The Chinese would undertake that all drug should, from the coming into force of the agreement, be absolutely free from all further duty and li-kin, and agree that in the event of a departure from this condition, the Indian Government would be released from their part of the agreement.
How to deal with opium destined for Penang and Singapore would, of course, require consideration, and also the conditions upon which the delivery of opium for the require- ments of Hong Kong should be regulated; but the difficulties in connection with supplies for these ports are probably not insuperable. The question is, would the Government of India be inclined to come to some arrangement with China on some such basis as sketched ? If so, China would send a special Commissioner with power to come to an understanding with the Indian Government in the matter.
In the meantime, my brother was asked to ascertain privately and confidentially whether there was any likelihood of some such agreement as indicated being favourably viewed, and he promised to put the matter before me to privately sound the right Depart ment upon it. I do not know whether in addressing you I am addressing the right Department, but I think I am. If not, will you kindly make the letter over to the I will be glad to receive a reply as early as proper Department and excuse me? convenient.
C. P. ILBERT.
S. C. BAYLEY.
T. C. HOPE.
A. COLVIN.
O. R. NEWMARCH.
Page 330Page 331
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