CO129-330 - Public Offices - 1905 — Page 417

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Inclosure 11 in No. 1.

Government of India to Government of Burmah.

May 5, 1904. I AM directed to acknowledge the receipt of your letter, dated the 25th March, 1904, in which you communicate the views of the Government of Burmah regarding Mr. Litton's proposal to permit the transit of Yunnan opium through Burmah in bond. Sir Hugh Barnes is of opinion that, if proper precautions be taken, the stimulus to trade by the Bhamo-Tengyueh route which will result from the adoption of the suggestion will considerably outweigh any objections which can be urged against the proposal.

2. The Government of India are not satisfied that the importance of the various objections to this scheme has been fully appreciated. Before forwarding copies of the correspondence to the Secretary of State, and before arriving at any definite decision on the question at issue, they desire to explain, in some detail, the reasons which appear to them to militate against the adoption of Mr. Litton's suggestion.

3. In the first place, it inay be observed that no direct and calculable advantages will accrue to India as a result of this concession. India will only benefit in the event of trade by the Rahmo-Tengyueh route expanding in consequence of the permission to export opium through Burmah; and this expansion, and its extent, are entirely problematical. If, as appears probable, the natural trade outlet of Yunnan is the Red River Valley, it is doubtful whether the adoption of Mr. Litton's suggestion would give a permanent stimulus to the Bhamo-Tengyueh trade; and it is questionable whether the maximum ultimate expansion of that trade would be sufficient to compensate for the disadvantages attendant on the acceptance of the scheme.

4. The Government of India are not di-posed to accept the arguments which have been adduced in favour of the contention that the export of opium from Yunnan viá Burmah will not affect the Chinese demand for the Indian drug. It is urged that all opium produced in Yünnan, and destined for the markets of Eastern China, already finds its way there; and it is stated that the total production cannot be increased, as all land which is suitable for opium cultivation is at present under the poppy. If, however, Yünnan opium can, in the future, be laid down at Canton or Shanghae at a considerably lower price than at present, and by a safer, cheaper, and more expeditious route, a result which is the object of Mr. Litton's scheme to effect, it is clear that the Chinese demand would receive a substantial stimulus, and this, it is thought, must in the end bring about an increase in the supply.

5. Besides this primary objection, there are other difficulties in the way of adopting the proposal. It is necessary for the success of the scheme that the Chinese Govern ment should agree to admit opium imported from Yunnan via Burmah at a more favourable rate than Indian opium; and it appears certain that the Chinese authorities will raise objection to the course. The existing prohibition against the import of opium into Burn:ah rests upon a Treaty basis; and it would be necessary for His Majesty's Government to approach the Chinese authorities with the object of removing this prohibition, and of obtaining more favourable terms for Yünnan opium than are accorded to opium produced in India. Not only would this place the Government of India in a false position, but such action would also lend itself to misconstruction by those who are opposed to the trade in opium altogether.

6. The Government of India are also disposed to think that the danger of smuggling across the frontier, and while the drug is in transit through Burnab, has not been fully realized. In this connection I am to point out that an examination of the contents of the packages in which the opium is imported from Tengyueh would in any case be necessary both at Bhamo and at Rangoon. If the Government of Burmah are still of opinion that Mr. Litton's suggestion should be accepted, the draft rules framed by the Collector of Customs should be revised so as to provide for this.

7. I am to request that, with the permission of his Honour the Lieutenant-Governor, the proposal may be again considered by the Government of Burmah in the light of these remarks, and that a reply to this letter may be forwarded at an early date. The Government of India will then be in a position to pronounce definitely as to the advisability of accepting Mr. Litton's suggestion,

Inclosure 12 in No. 1.

Government of Burmah to Government of India.

July 6, 1904.

I AM directed to acknowledge the receipt of your letter, dated the 5th May, regarding the proposal to permit the transit of opium through Burmah in bond.

2. I am, in the first place, to forward a copy of a note written by Mr. Litton, His Majesty's Consul at Tengyueh, upon the draft Rules prepared by the Chief Collector of Customs, which were forwarded with my letter dated the 25th March last. Mr. Litton, it will be seen, agrees with the Lieutenant-Governor that it is unnecessary and impracticable to provide the opium with a military police escort between Tengyueh and Bhamo. Otherwise he approves generally of the Rules, but makes the following suggestions:-

(i) That the weight of the opium should be shown on the box and on the forms in catties and taels instead of in pounds and ounces. It appears to the Lieutenant-Governor that it will be useful if both the Chinese weights and the English equivalents are painted on each box.

(i.) That in Rule 9 the bond shall be for treble instead of double the value of the There is no opium, and that the security shall be some firm known in Burmah. objection to this proposal.

It is also necessary, as suggested in the sixth paragraph of your letter under reply, that a rule should be added giving the Customs officers at Bhamo and Rangoon power to open

and examine any box if this is considered necessary. If the weights are correct and the seals intact, it does not appear to the Lieutenant-Governor to be necessary that every package should be examined on its way through Burmah. Only Yunnan opinm can be packed in the box at Tongyueh, for there is no other opium available. Therefore there can be no substitution of Indian opium on the other side of the frontier. On this side of the border, from Bbamo until the opinm leaves Rangoon, the boxes will be in the custody of the Customs Department, and it is difficult to see how they can be tampered with inside British limits. Moreover, if a case has once been opened hy the Customs Department, obviously it will be easier to open it again for illegitimate purposes. A revised copy of the Rules is inclosed embodying the changes suggested.

3. I am now to reply to the various objections to the scheme which are stated in your letter under reply. As to the first of these, I am to say that it is not admitted by the British Consular officers in Yunnan that the natural trade outlet of West Yünnan is the Red River Valley. In a recent letter addressed to the Government of India in the Public Works Department on the subject of the construction of a railway from Bhamo to Tengyueh, it has been pointed out that the commercial capital of Yüunan is not Yunnan-fu, but Hsia Kuan on the Tali Lake. This point is the meeting place of the great trade routes to Thibet, Szechuan, the Yang-tsze, Yunnan-fu, and Burmah. It is situated approximately half-way between Bhamo and Yunnan-fu, and at present the bulk of its foreign trade is vià Burmah. The distance to the Irrawaddy is less than the distance to the navigable part of the Red River, and the Irrawaddy is the easier and the better-equipped waterway of the two. Mr. Litton holds that the larger figures of the French trade through Mengtse afford no proof to the contrary. He considers that the wealth and population of the districts that ought to be supplied from Tengyueh are superior to those which would naturally draw their supplies from Mengise, and that the greater volume at present of the French trade is owing to the facts---

(i) That the French have had a long start of us, the Imperial Customs Office having been opened at Mengtse many years before the corresponding office at Tengyuch. Consequently trade with French territory was subject to a regular Tariff, while trade with Burmah was still harassed by li-kin and the exactions of the Mandarins. The serious effect of these exactions can be measured by the rapidity with which the Bhamo trade with Tengyueh has increased since the Customs Office at the latter place was opened.

(ii) That by the French route there are no restrictions on the export of opium, the one important export product that Yunnan has to offer. Some 3,000 to 6,000 mule- loads of

opium are said to go to Tonquin every year.

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