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and provide that when it arrives at the place of consumption it shall not be subjected to any tax other than, or in excess of, such tax as may be levied on native opium.
This is the extent of the control which we exercise over opium in the interior of China, and to me it does not seem to justify the contention put forward by the
merchants.
My action in the Canton and Nanking cases has been reported in separate despatches, and has been based rather upon the view that the system might lead to a monopoly under the 14th Article of the French Treaty.
I have offered these remarks, therefore, merely to show that the Rules of the 20th September, 1906, to which no objection was offered by His Majesty's Government at the time, can scarcely, in my opinion, be held to constitute, "a violation of British Treaty rights."
şir,
I have, &c.
(Signed)
J. N. JORDAN.
Inclosure 1 in No. 1.
Governor Sir F. Lugard to Sir J. Jordon,
Government House, Hong Kong, December 17, 1908. WITH reference to your Excellency's letter of the 30th October last, I have the honour to transmit, at the request of the signatories, copy of a letter addressed by them to the Colonial Secretary dated the 9th instant and a copy of a letter addressed by them to His Britannic Majesty's Acting Consul-General, Canton, dated the 23rd September last, on the subject of the action of the provincial Government which it is alleged will have the effect of restricting the sale of imported opium.
2. While agreeing with your Excellency that it is doubtful whether the Regulations introduced by the Canton provincial authorities for the control of the trade in raw opium can be regarded as doing more than reproducing the Rules framed for the enforcement of the opium edict of the 20th September, 1905, it appears to me that those Rules were themselves in some respects a violation of British Treaty rights, and cannot therefore, where conflicting with such rights, be pleaded in justification of provincial Proclamations.
I have, &c.
Sir,
(Signed)
Inclosure 2 in No. 1.
F. D. LUGARD,
Hong Kong Opium Merchants to Mr. May, Colonial Secretary,
Hong Kong, December 9, 1908. WE have the honour to acknowledge the receipt of your letter of the 21st ultime, in which you are directed to inform us that his Excellency the Governor has received a despatch from His Majesty's Minister at Peking to the effect that he regards it as doubtful that the Regulations, as they stand at present, can be regarded as establishing a monopoly, that they appear to do little more thau reproduce the Rules passed for the enforcement of the opium edict of the 20th September, 1906; and that he has accordingly instructed His Majesty's Consul-General at Canton that, while the working of the system would doubtless require to be carefully watched, it is inadvisable to take further action pending reference to His Majesty's Government.
We have in our letter to Mr. Harry H. Fox, His Britannic Majesty's Consul- General at Canton, of the 23rd September last (copy of which was forwarded to you in our letter of the 25th September, and copy of which is hereunto attached) so fully dealt with the pernicious effect that these Regulations will have, if brought into force, upon the raw opium trade, that no useful object would be gained by recapitulating them, save to again contend that it must be obvious that if analyzed in detail to a logical conclusion the Regulations sought to be enforced in the Two Kwongs, and in particular the Regulation that after the ascertainment and registration of the number of opium shops in the province of the Two Kwongs now in existence, no new opium shops doing business in the buying and selling of raw and prepared opium will be allowed to be established," all tend to the idea that the primary intention is the creation of a
3
monopoly amongst a certain number of existing opium shops, which shops will, as time goes on, decrease in number by either-
(a) Retirement from business ;
(b.) Seizure and closure by the authorities of the shops for infringement or alleged infringement of the law; and
(c.) The purchase by capitalists of the shops and of the licences.
In the course of time, therefore, the sale of raw opium will be in the hands of a few, thus creating a monopoly.
We cannot agree, therefore, with the dictum of His Majesty's Minister at Peking that he is doubtful that the Regulations, as they stand at present, can be regarded as establishing a monopoly. We contend that the Regulations, if carried into stringent effect, will form the nucleus of a monopoly expressly contrary to the Treaty of Nanking.
We contend that the same must be said of Article 5 of the eleven Articles for carrying out the prohibition of opium if it is brought into force in China.
It reads as follows:-
"To closely inspect opium shops in order to facilitate preventive measures."
And which Article is further explained as follows:-
"All shops in any city, town, or village which sell the raw drug or prepared opium must be severally inspected by the local authorities, who will draw up a list of them in the form of a register and issue to each a licence which will constitute their permit to carry on this trade. Once the inspection has been made no addition to the opium shops will be allowed."
It further adds:-
"Shops which from time to time drop out of the business must surrender their licences for cancellation. The licence must not be kept under penalty of a heavy fine."
Surely this enactment would create a monopoly and be contrary to Treaty. In course of time the trade will obviously be in the hands of a few Chinese merchants.
We would refer you to Article 5 of the British Treaty of Nanking, 1842, to Article 10 of the same Treaty, and to Article 14 of the French Treaty of Tien-tsin of 1858, which for convenience we quote in full:-
Article 5 of the British Treaty of Nanking, 1842 :--
"The Government of China having compelled the British merchants trading at Canton to deal exclusively with certain Chinese merchants, called hong merchants" (or co-hong), who had been licensed by the Chinese Government for this purpose, the Emperor of China agrees to abolish that practice in future at all ports where British merchants may reside, and to permit them to carry on their mercantile transactions with whatever persons they please, and His Imperial Majesty further agrees to pay to the British Government the sum of 3,000,000 dollars, on account of debts due to British subjects by some of the said hong merchants (or co-hong) who have become insolvent and who owe very large sums of money to subjects of Her Britannic Majesty."
*-
Article 10 of the same Treaty:-
"His Majesty the Emperor agrees to establish at all the ports which are by Article 11 of this Treaty to be thrown open for the resort of British merchants, a fair and regular Tariff of export and import customs and other dues, which Tariff shall be publicly notified and promulgated for general information, and the Emperor further engages that, when British merchandize shall have once paid duty at any of the said ports the regulated customs and dues, agrecable of the Tariff to be hereafter fixed, such merchandize may be conveyed by Chinese merchants to any province or city in the interior of the Empire of China on paying a further amount as transit dues, which shall not excced per cent, on the Tariff value of such goods."
Article 14 of the French Treaty of Tien-tsin, 1858-
"Aucune Société de Commerce privilégiée ne pourra désormais s'établir en Chine, et il en sera de même de toute coalition organisée dans le but d'exercer un monopole sur
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