[This Document is the Property of His Britannic Majesty's Government]
OPIUM.
CONFIDENTIAL.
[26684]
a
No. 1.
[July 23.1
SECTION 27
28323
RECO
REG 26 AUG 10)
Sir,
London Chamber of Commerce to Foreign Office.-(Received July 23.)
Oxford Court, Cannon Street, London, July 22, 1910.
I AM instructed to inform you that this chamber has recently had under consideration the action of the Chinese authorities in imposing taxation on opium in such a manner as to establish a Chinese Government monopoly for the sale of raw opium in disregard of the terms of the Chefoo Convention without effective objection from the British consul-general.
It will be within the knowledge of the Secretary of State that three years ago an agreement was come to with China, at the instance of His Majesty's Government, whereby the Indian Government consented to reduce their output of opium by 10 per cent. per annum-provided the Chinese did the same--and to extinguish the export to China entirely in ten years, although by so doing the Indian Treasury would lose a large amount of revenue.
Under the terms of the Chefoo Convention, raw foreign opium (it is always imported raw) has to pay a fixed amount per chest as duty and li-kin, after which it is not to be subjected to further taxation of any kind, direct or indirect, except at the place of consumption, and then only provided that a similar tax is imposed on native opium, or, in other words, the payment of duty and likin is, according to treaty, to free foreign raw opium from any further taxation while in transit to the interior.
Towards the end of April last the Viceroy of Canton caused a proclamation to be issued that from the 9th May a tax would be imposed on prepared opium, but that the tax would be collected from the Chinese raw opium importers at Canton (a treaty port) at the rate of 7 dollars per ball of raw opium (or, say, 300 dollars per chest) under most harassing conditions, and heavy penalties for evasion. The collection of this tax was to be farmed out to a Chinese firm in Canton, who were to retain 30 per cent, as their remuneration, thus establishing a monopoly in contravention of treaty.
The tax was uot enforced until some three or four weeks after the date originally fixed, presumably because the Chinese authorities, as hitherto, wished to see how the British Government would regard the new impost. Finding, however, that the British consul-general raised no serious objection (although strongly urged to do so by the merchants, the Hong Kong Chamber of Commerce, and the China Association, supported by the Governor of Hong Kong) the Canton authorities put the tax in force early in June.
The British consul-general appeared on this occasion to have been quite sensible of the fact that the Chinese have no right under the treaty to impose additional taxation ou raw foreign opium, but apparently raised no serious protest to this tax, owing to the pretence by the Chinese that only prepared opium was subjected to
taxation.
I am to point out that, ever since the sentiments of His Majesty's Government on the subject of the opium trade were realised in China, the Chinese authorities have endeavoured to turn this to their advantage and to establish a monopoly for themselves, but hitherto the British consul-general has been able to prevent any such disregard of conventions by China, and that up to the present time attempts to impose additional taxation on raw foreign opium have been unsuccessful.
The present tax, which is assumed to be limited to prepared opium, is by method of collection in fact a tax on raw opium, because the raw opium dealer is called upon to pay the tax instead of the holder of the prepared opium, and this infringement is apparently not regarded as sufficient to call for action by the British consul-general at Canton.
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Trade has been brought to an absolute standstill for the past three months, merchants being unable to dispose of their stocks, and the Chinese rendered unable to take up their bargains. The Indian Government auctions still go on, however, though at rapidly diminishing rates, thus adding to the seriousness of the position.
It must not be forgotten that all purchases of opium are made from the Indian
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