CO129-382 - Public Offices - 1911 — Page 304

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with the British Government admits that China is unable to enforce in the provinces of the Empire her treaty obligations--an admission which would justify a foreign Power in herself taking steps to enforce them. The disingenuousness of his Excellency Na Tung's remark has, I believe, been exposed by a statement made later by the Wai-wu Pu in support of a proposition of their own to the effect that if the British Government would agree to it, there would be no difficulty in satisfactorily settling the Canton difficulty.

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I submit that the way in which the Kwangtung Government has floated alike the protests of His Majesty's Government and the orders from Peking has had a very add that serious effect on the prestige of Great Britain in South China. Kwangtung is the only province in which this tax has been made effective, and that except on one occasion, when the French consul was away from Canton, no attempt was made to levy it on opium sold in Canton by the French house of Messrs. Sales and Co.

2. The next point to which I would invite your attention is the attitude in this matter taken up by Consul-General Jamieson at Canton. Sir Edward Grey, in his despatch of the 19th September, 1910 (enclosed in yours of the 27th September, 1910), has already taken cognisance of the accusation made against him that he approved the regulations when submitted to him by the provincial Government without reference to His Majesty's Legation or to the Government of Hong Kong. But, apart from this issue, there remains the fact that the consul-general has throughout adopted views which are apparently directly antagonistic to those of his predecessors, Messrs. Scott, Mansfield, and Fox, and in opposition alike to the view taken by His Majesty's Government, the British Minister, and the Government of Hong Kong. In brief, the latter have consistently held the view, and imposed it upon the Chinese Government, that under the additional article of the Chefoo Convention no tax whatever in excess of 11 taels per chest could be levied on foreign opium in a treaty port, and that foreign opium, if covered by a transit certificate, was free from any additional tax while in transit beyond the treaty ports into the interior of China until the packages made up in bond at the treaty port were opened at the place of consumption in the interior. (Sir John Jordan's despatches of the 14th December, 1908, and 2nd January, 1909.) follows that the Canton Government had no right whatever to interfere with raw opium destined for the interior until it reaches its place of consumption, provided it has paid its dues (110 taels). They cannot take delivery and order it to be boiled, or assume that Canton is its place of consumption. In point of fact, the Viceroy, in his telegram to Peking, states that 300 chests of it per annum goes to Kwangsi (Messrs. Sassoon can prove that the figure is 1,000). The quantity is immaterial to the argument. They illegally detain and tax the amount (whatever it is) destined for Kwangsi. and are equally ultra vires in imposing an annual restriction on the quantity. In the case of foreign-prepared opium (e.g., imported as prepared opium), it has on more than one occasion been settled by the British consul-general and the Viceroy at Canton that taxes on it can only be imposed with the sanction of the Wai-wu Pu and the consent of His Majesty's Minister at l'eking (Mr. Fox, 25th August, 1909), and that any restriction by way of monopoly or impediment to free purchase, direct or indirect, in a treaty port is an infraction of the treaty.

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It has been pointed out that merchants, who for half-a-century or more had been engaged in a legitimate trade, safeguarded by special treaty stipulations, were now in the position of seeing their entire trade wiped out within seven years, that they had legally accepted this decision in furtherance of the Imperial policy and in the moral interests of China, and that they were the more entitled to fair play and strict observance of their treaty rights during the few remaining years of their annually diminishing business. The consul-general, on the other band took the view that we have no grounds of protest unless taxation were differential (8th June, 1910), and that the tax being levied on the actual weight of prepared opium collected from the boiler, he could not reasonably interfere (8th June, 1910). He could not see his way to raise objection against the view that the Canton officials were at liberty to decide who may and who may not handle opium, and under what conditions (18th August, 1910). He does not propose to interfere with punishment of Chinese for transgressing the laws of their own country (24th August, 1910), and he has therefore declined to protest against seizures of opium owing to infraction by those who had charge of it of the established regula tions, i.e., the very regulations to which His Majesty's Government has taken exception. When asked by the foreign secretary of the Viceroy to suggest a modus vivendi, be proposed an extension of the time allowed for boiling raw opium (18th August, 1910), à concession which had already been shown to be entirely worthless (despatches, 21st

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July, 1910, et seq.), and which is described by Mr. Max Müller (13th October, 1910). He sympathises with the Chinese complaint that "the British Government, although they have promised their assistance, yet ask us to abstain from exercising supervision and control" (6th October, 1910), and although, under instructions from Mr. Max Müller, he formally protested (25th June, 1910) against the regulations---

(a.) As imposing charges on raw opium in a treaty port additional to those sanctioned by the additional article of the Chefoo Convention.

(b.) As obliging purchasers to boil within three days. (c) Because the levy being in the hands of opium merchants partakes of a monopoly.

(d) Because of the decennial arrangement with India.

I infer that he considers these grounds to be of doubtful validity. He seems to me

to fail to discriminate between the perfect right, and indeed obligation, which China has of increasing the price of native opium, and hampering its sale and consumption in every way in her power, and the equal obligation which lies upon her to observe the treaties regarding foreign opium, the total extinction of which was, as Sir John Jordan pointed out (Enclosure 6 to Sir John Jordan's despatch of the 24th June, 1909, Foreign Office prints), assured in a very limited period by the friendly action of Great Britain. He even went so tar as to suggest that if China abolished native opium in a less time than that covered by the Indian agreement, she would have a strong claim to insist on the cessation of Indian imports at a date prior to the one agreed upon. In these circum- stances I submit that in a matter so vital to the financial interests of a very large and important section of this community, the views held by His Majesty's Government, and formally announced to and eventually concurred in by the Chinese Government at Peking, have found a somewhat equivocal exponent in His Majesty's consul-general at Canton.

3. The third point which I desire to bring to your very special attention is the gravity of the financial aspect of this matter. Sir Henry May, in his despatch of the 5th September, 1910, states that the illegal action of the Viceroy had resulted in the accumulation of stocks in this colony valued at close on 4,000,000%, that already large losses had been incurred not only by the firms dealing in opium but by the banks and all the other industries affected by a commerce involving so large a capital. He added that a financial crisis had been narrowly averted, and still threatened the colony. I may remind you that this colony has for some years past been suffering from a very severe trade depression, aggravated by depreciation of house property due to plague, and by the falling value of silver. From this it was gradually emerging towards the end of last year, when it has again been plunged into severe difficulties by the financial débâclé in connection with rubber at Shanghai--a port with which Hong Kong is very intimately connected in commerce and banking. It is, therefore, a moment at which the commercial houses are least able to bear a severe financial strain. Tension in the commercial prosperity of the colony is of course reflected in the revenue, and there is no necessity for me to remind you of the difficulties I have had to encounter in this regard since I came to the colony. Losses by exchange, by the redundancy of an alien subsidiary coinage, and by the measures taken for the suppression of opium divans have coincided with the very heavy cost of an unremu- nerative railway undertaking, and have involved new and heavy taxation.

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On the other hand, the illegal taxes imposed on importations of opium into the Kwangtung province are admitted by the Viceroy to be for purposes of revenue only. In his telegram in reply to the orders of the Wai-wu Pu to withdraw the regulations, he states this is only a question of raising revenue, it has nothing to do with the anti-opium question" (enclosure to despatch of the 13th September, 1910), and he on to show that he anticipates an increase in the revenue of his province from this source of some 4,400,000 dollars (400,000, annually). He points out that a proposal to increase the import tax on foreign opium by 30 per cent. would not be nearly so lucrative, "even," he

says, "though the sum (now paid) be doubled, the amount collected would still be smaller than the tax imposed on prepared opium," e.g., the present illegal tax. These large increases in the Viceroy's revenue are admittedly to be made at the expense of Hong Kong merchants-the discussion you will observe is based solely on the best means of doing so, and has, as the Viceroy says, nothing to do with opium suppression. I may add, that the Indian Government will by these measures be also involved in heavy loss, in addition to the sacrifices voluntarily made on the assumption that China would act with equal bona fides.

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