[This Document is the Property of His Britannic Majesty's Government."]
OPIUM.
CONFIDENTIAL.
[25951]
No. 1.
C
24839
[July 18.]
RESP
Rre 12 AUG 10 SECTION 1.
(No. 214.) Sir,
Mr. Max Müller to Sir Edward Grey.--(Received July 18.)
Peking, June 29, 1910. I HAVE the honour to transmit herewith a copy of a letter from the British opium merchants at Shanghai on the subject of the alleged violation of their treaty rights by the Chinese officials and their disregard for the direct and implied pledges given by the Chinese Government at the time when the arrangement for the reduction of export of opium from India was concluded.
In view of the statement that any neglect on the part of the British Government to support the protests of the opium importers against the alleged irregular and illegal interference by the Chinese authorities "constitutes a breach of the obligations of the British Government to them, and a disregard of the representations at least indirectly made by that Government to them in extracting from China the assurances which have been given by her in allowing their treaty rights to remain as they are, and in selling them and allowing them to buy opium in India for export to China"--~ in view of this statement have thought it right to refer this letter to you for instructions and for consideration in connection with the proposals for the extension of the three-year agreement, and I have informed Messrs. Sassoon accordingly.
What they ask His Majesty's Government to do, viz., to insist upon the Chinese authorities issuing definite orders to all the provinces not to interfere with the foreign raw opium trade so long as li-kin and duty have been regularly paid by the importer, has been repeatedly done by this legation, but this evidently does not satisfy Messrs. Sassoon, and I do not see what further action I could usefully take in this direction.
Turning to some of the arguments employed by Messrs. Sassoon, I should hesitate to endorse their statement that "the irregular and unfair interference by the Chinese authorities with the trade in foreign raw opium appears to be induced not with any bona fide intention of suppressing the use of opium in China, but merely with that of increasing the revenue derived by the Chinese officials therefrom."
I would draw attention to the statement that " though prepared foreign opium may be taxed in China it may be so taxed only at the place of consumption, and then only provided a similar tax is imposed upon Chinese prepared opium." This appears to me to concede a right against which I have now protested in connection with the issue of the new regulations at Canton, viz., the right to tax prepared foreign opium in a treaty port.
A little later reference is made to any interference with the rights of a free market either directly or indirectly, as constituting a breach of China's pledges. If this refers to interference with the wholesale trade in treaty ports between native dealers and the importing merchants the assertion is doubtless correct, but if it refers to regulations on the retail trade which indirectly affect the wholesale trade, it appears to me that His Majesty's Government could hardly support Messrs. Sassoon's contention, which would be at variance with the view expressed by the Secretary of State for India in a letter to the Foreign Office dated the 26th January, 1910, to the effect that "it would be difficult to maintain that the regulations have been improperly applied, merely because restrictions placed on the retail business of the dealers may indirectly affect the wholesale trade."
In regard to the statement of the opium merchants that they are threatened by the Opium Guild with a total repudiation of their contracts, I would state, that being totally ignorant of the terms and conditions of those contracts, it is impossible to state whether this is a question in which His Majesty's Government could properly and usefully interfere.
In my despatch No. 210 of the 24th instant, I hinted that Messrs. Sassoon's own speculative dealings were largely responsible for the difficulties in which they now find themselves. There appears to be little doubt that they and a few other dealers artificially raised the price of opium at the Government sales in India, and have imported larger quantities of the drug to Hong Kong, Shanghai, and various other
[2812 s-1]
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490
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