CO129-373 - Public Offices - 1910 — Page 283

[This Document is the Property of His Britannic Majesty's Government.]

282

OPIUM.

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CONFIDENTIAL.

[37138]

No. 1.

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(October 13.

SECTION 2

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O

33072

Reco Reg928 OCT 10

Sir,

Colonial Office to Foreign Office.--(Received October 13.)

Downing Street, October 12, 1910. -

I AM directed by the Secretary of State for the Colonies to transmit to you, for the consideration of Sir Edward Grey, with reference to letter from the Colonial Office of the 7th October, copies of despatches from the officer administering the Government of Hong Kong on the subject of the taxation of foreign opium at Canton.

I am, &c.

FRANCIS J. S. HOPWOOD.

Enclosure 1 in No. 1.

Sir F. May to the Earl of Crewe.

(Confidential.) My Lord,

Government House, Hong Kong, September 5, 1910. WITH reference to my confidential despatch of the 13th ultimo, forwarding a resolution by nine banks in the colony on the subject of the disorgauisation of the opium trade, the following information, which I have been at some pains to collect, and for the accuracy of which I can vouch, shows the magnitude of the financial crisis which the action of the Viceroy has induced.

2. Since the imposition of the new regulations and tax in the Kwangtung province clearances of Indian opium had been on a very small scale, and at the date of the resolution sales of the drug had practically ceased, with the result that the accumula- tion of Indian opium in Hong Kong and Shanghai amounted to 24,000 chests, representing a value at current quotations of over 40,000,000 dollars, though the actual cost was probably considerably higher. Of this accumulation about 25 per cent, was held in Hong Kong. Apart from the heavy losses in interest and the severe drop in prices due to the stoppage of business, there was a danger of failures among Chinese merchants owing to their inability to meet engagements and to take delivery of stocks already contracted for, as the market for opium was practically closed. Apart from the enormous lock up of money for an indefinite period, merchants dealing in Indian opium were subjected to the hoavy strain of carrying such large stocks. It was quite evident that if the trade were longer restricted by the operation of the new regulations there was very great danger that very serious losses would result.

The prices realised at auction in Calcutta in April before the tax was imposed were 8,700 rupees to 4,000 rupees per chest. After the new regulations and tax were imposed they fell to--

Rupees, Rupees.

In May

In June

In July

13

**

3,100 to 3,065 2,205 2,155 1.970

2,150

The stocks of Indian opium in Hong Kong and Shanghai in August 1909 were about 17,000 chests, with a 10 per cent. larger export from India than in the

current year.

3. The situation has been slightly relieved by a recent improvement in clearances, which is said to be due to the Chinese authorities being less strict in enforcing the regulations and tax. I do not know what truth there is in this latter surmise.

4. I have obtained the facts set out above in order to convey to your Lordship—and, I trust, through your Lordship to His Majesty's consular officers in China-some idea of the magnitude of the interests involved in a trade which merchants and traders and bankers in this colony have a right to regard as legitimate and protected under existing treaties. The sudden and wanton interference of the Viceroy has already caused heavy losses to those concerned in that trade, and has narrowly escaped inducing a financial crisis of great magnitude.

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