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[This Document is the Property of His Sritannic Majesty's Government.]
OPIUM.
CONFIDENTIAL.
0 4232
October 17.]
SECTION 1.
2 NOV 10
No. 1.
[37693]
(No. 336.) Sir,
Mr. Max Müller to Sir Edward Grey.—(Received October 17.)
Peking, September 29, 1910. IN my despatch No. 303 of the 8th instant I reported that I had cause to complain to the Wai-wu Fu, both verbally and in writing, of the dilatory manner in which they were treating the proposals which I had submitted through Mr. Liu, in regard to a prolongation of the agreement for the progressive reduction of the export of opium from India to China.
On the 19th instant Mr. Lin banded to me the enclosed memorandum containing a proposal that the consolidated import duty and li-kin on Indian opium should be fixed at 30 per cent. ad valorem on the present price of the drug, while native opium should at the same time be subjected to a total taxation at the same rate of 30 per cent, ad valorem. The memorandum goes on to state that in the event of His Majesty's Government consenting to the above proposal, there would be no difficulty in coming to a satisfactory arrangement in regard to the clauses in the new Kuangtung regulations to which we take exception,
On this occasion I told Mr. Liu that I must take time to consider this proposal before giving an opinion on it, but that at first sight it appeared to me vague and difficult of application, and I reminded him that I had already refused to discuss this question except in connection with the other proposals subinitted to him.
On the 14th instant 1 had another interview with Mr. Liu, at which I had the advantage of Sir A. Hosie's presence and advice. I remarked to Mr. Liu that the memorandum coutained a frank admission that the Kuangtung regulations were framed for revenue purposes rather than from any desire to check opium smoking. The proposal, I said, appeared to Sir A. Hosie and myself to be vague and unpractical, and it required more careful elaboration on the part of the Chinese Government before we could discuss it with advantage. Sir A. Hosie pointed out that they would have to furnish us with satisfactory proof that the native opium was really paying 30 per cent. ad valorem taxation, .e., that the taxation applied not only to opium in transit but to opium produced and consumed in the same province or district. I said that when the Chinese Government were in a position to furnish us with more details as to the method by which they would estimate the total taxation paid by the native drug we would be prepared to further consider the question of a corresponding increase of the import duty and li-kin on the foreign article. Meanwhile, our best course was to drop this point till after we had come to some satisfactory arrangement in regard to a prolongation of the 1907 agreement.
Mr. Jan appeared to agree with Sir A. Hosie and myself that the substitution of direct progressive restriction of importation at the treaty ports for the indirect restriction at present enforced by the Government of India could not be accomplished without great loss of time, the practical difficulties in the way being too great. therefore put it to Mr. Liu that what I now offered to the Chinese Government was a prolongation for three years from January 1911 of the 1907 agreement, with a prospect of its further continuance till the end of the full ten years' period, provided that China on her side effected the corresponding annual diminution in her production of opium, and that meanwhile British merchants engaged in the wholesale trade in foreign opium were allowed free trade within the treaty ports, and that the number of wholesale dealers was not arbitrarily reduced.
Further, I said His Majesty's Government were prepared to give an undertaking that, if at the end of the ten years' period the production of opium shall have ceased in the Chinese Empire, they would co-operate in any equitable measure for prohibiting the importation of opium into China. I urged Mr. Liu to confine his attention for the present to these two points, and to give: me a definite answer in regard to them with as little delay as possible, though I added that I was prepared to consider and submit to iny Government any practical proposal that the Chinese Government might put forward for supplementing such an agreement.
On the 22nd instant I received the note, copy of which I have the honour to enclose, from the Wai-wu Pu in reply to my note of the 7th instant forwarded in my despatch
[2957 r-1]
B
309
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