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opium. I expressed my belief that the attitude of the Board in thus yielding to the agitation would create the worst possible impression on His Majesty's Government, I said that I should decline to recommend any new proposals from the Board or even to forward them to my Government except as a direct message from the Chinese Govern- ment, and I intimated my intention of at once informing you by telegraph of the Board's change of attitude,
Na Tung deprecated sending any telegram on the subject until the Board of Finance had replied, and he denied that the Wai-wu Pu had definitely decided to abandon the principles of the draft agreement; it was not impossible that the Board of Finance might accept them; on the other hand, they might wish to make some new suggestions; in any case, it was better to await their reply, which he would pre-s for as early as possible,
Mr. Max Müller said that he could not see the necessity of submitting the agree- inent to the Board of Finance, except, perhaps, in regard to the question of additional taxation, and he pointed out that there had been plenty of time to obtain an answer on this latter point from the Board of Finance.
To this Na Tung replied that the opium question could not be regarded as an ordinary case for negotiation with the Wai-wu Pu, for it was one which had a humanitarian side and affected the welfare of the Chinese race as a whole, and the Boards interested had to be consulted.
The Chinese attitude was more clearly stated by Mr. Hu Wei-te, who explained that the Board of Finance would consider the opium question in all its bearings, including the idea of shortening the seven years' period, and that its decision would determine the future policy of the Government. It was, he stated, a serious question for that Board, who were faced with the possibility of losing at the same time the revenue derived from foreign and native opium.
As it was obviously useless to continue the discussion, I concluded with an expression of surprise and disappointment at the attitude of the Board in regard to the proposals which they had themselves put forward.
(Memorandum.)
Enclosure 1 in No. 1.
Draft Agreement.
I have, &c.
J. N. JORDAN.
UNDER the arrangement concluded between His Majesty's Government and the Chinese Government three years ago His Majesty's Government undertook that, if during the period of three years from the 1st January, 1908, the Chinese Government should duly carry out the arrangement on their part. for reducing the production and consumption of opium in China, they would continue in the same proportion of 10 per ceut. the annual diminution of the export of opium from India until the completion of the full period of ten years in 1917.
His Majesty's Government, recognising the sincerity of the Chinese Government and their partial success in diminishing the production of opium in China during the past three years, are prepared, in accordance with the proposal of the Chinese Government, to continue the arrangement of 1907 for the unexpired period of seven years on the following conditions:→→
(a.) From the 1st January, 1911, China shall diminish annually for seven years the production of opium in China in the same proportion as the progressive 10 per cent. diminished annual export, from India until total extinction in 1917.
(b.) During this period of seven years it shall be permissible for the "British Government to obtain continuous evidence of this diminution by local enquiries and investigation conducted by one or more British officers whose decision as to the extent of cultivation shall be accepted by both parties to this agreement.
(e) During this period of seven years one or more British officers shall be given facilities for reporting on the taxation and trade restrictions on opium away from the treaty ports.
(d) On confirmation of this agreement China shall at once cause to be withdrawn all restrictions and taxation other than the consolidated import duty, ie, import and li-kin duties, on the wholesale tradle in Indian opium which have been imposed at the treaty ports by or with the sanction of the provincial authorities.
(e) During the period of this agreement no restrictions or taxation other than the
consolidated import duty shall be imposed by or with the sanction of the provincial authorities on the wholesale trade in Indian opium at the treaty ports.
(f.) The terms of the additional article to the agreement of Chefoo, as interpreted by the British Government in the past, shall be literally observed by the Chinese Government.
(g.) The number of Chinese wholesale dealers in Indian opium at the treaty ports shall not be arbitrarily reduced.
On a breach of any of the above conditions His Majesty's Government shall be at liberty to suspend or terminate this agreement, and to suspend or withdraw the restrictions on the export of opium from India.
2.) By the arrangement of 1907 His Majesty's Government agreed to the dispatch by China of an officer to India to watch the opium sales, on condition that such officer would have no power of interference. His Majesty's Government further agree that the officer so dispatched may be present at the packing of opium on the same condition.
(6.) With a view to assisting China in the suppression of opium, His Majesty's Government undertake that from the year 1911 the Government of India will issue an export-permit with a consecutive number for each chest of Indian opium declared for shipment to or for consumption in China.
(c.) During the year 1911 the number of permits so issued shall not exceed 30,600, and shall be progressively reduced annually by 5,100 during the remaining six years ending 1917.
(d) A copy of each permit so issued shall, before shipment of opium declared for shipment to or for consumption in China, be handed to the Chinese officer concerned for transmission to his Government or to the Customs authorities in China.
(e.) His Majesty's Government undertake that each chest of opium for which such permit has been granted shall be sealed by an officer deputed by the Indian Government in the presence of the Chinese officer concerned, if so requested.
(f) The Chinese Government undertake that chests of opium so sealed and accompanied by such permits may be imported into any treaty port of China without let or hindrance, if such seals remain unbroken; and that such opium, having paid the consolidated opium duty, shall be exempt from any further taxation whatsoever in the port of import.
(g.) Adequate public notice of this change of procedure shall be given, and for a period of
months after its introduction opium in unsealed chests, equally with opium in sealed chests and unaccompanied by permits, shall be freely admitted as hitherto into the treaty ports.
On the expiry of months from the date of introduction of this new procedure, chests of opium, unsealed and unaccompanied by permits, shall be refused entry into any of the treaty ports of China.
This article shall not come into force until all the treaty Powers have signified their acceptance of the engagement set forth therein as binding on their nationals.
(h.) Prior to the introduction of this new procedure, the Chinese Government shall unreservedly accept and put in force the above conditions of the present agreement.
W. G. MAX MÜLLER.
Peking, November 1, 1910.
Enclosure 2 in No. 1.
Proposed Additional Article. (Handed to Mr. Max Müller by Dr. Yen on November 10, 1910.)
1. When the Chinese Government have agreed to the several arrangements mentioned above, the British Government shall give their consent to have the consolidated duty on Indian opium imported into China collected at the rate of per cent. on the present market price of the drug. As a measure of uniform treatment, the Chinese Government engage to collect the tax on native opium at the
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same rate.
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