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Government to devise a method for dealing with them either by means of a time-limit or otherwise, but as regards a time-limit the board were anxious that any agreement arrived should be made effective at the earliest possible date.
I asked Dr. Yen whether he had ascertained what the present stocks amounted to, but he replied that he had not done so, and I gathered from this that the board were determined to do nothing which might have the appearance of any acceptance on their part of responsibility to deal with this aspect of the question, though I feel sure that they are in reality well aware of the fact that the stocks do amount to a very large quantity.
In my telegram No. 58 of the 21st instant had the honour to report on the principal points raised at the meeting held on that date. Our next meeting was originally fixed for the 24th instant, but at the request of the Chinese delegate it was postponed to the 28th instant.
In the meantime I have had the opportunity to examine more closely the arguments contained in the Chinese memorandum in faveur of an ad valorem taxation. Mr. Fox, the acting commercial attaché, informs me that the figures given in sections 1, 2, 3. and 4 of paragraph 1 are substantially correct, but it would appear that the value for 1910, given in section 5 as 2,000 taels per chest, is far too high a figure to take as an average annual value, and it will probably be found that the average value in Shanghai for 1910 will not greatly exceed 1,000 taels. The present taxation upon Indian opium Mr. Fox estimates at about 7 per cent, ad valorem. In assuming a considerable loss to the Chinese revenue in section 6, the memorandum takes no account of the sums derived from the additional taxation imposed on Indian opium by the provincial authorities during the period under review.
Further, Mr. Fox informs me that the assumption that all sales of the drug in India are under Government control is incorrect as regards Malwa opium, which is the product of native States and is sold by the merchants themselves. While, therefore the average auction values of Bengal opium, which is understood to be a Government monopoly, might possibly be obtainable, the valuation of Malwa opium would have to be based on its c.if value at each port of entry in China-a process likely to lead to endless disputes between customs and merchants, where such a highly speculative commodity as opium is concerned,
The memorandum, it will be noticed, is silent as to the feasibility of an ad valorem duty on native opium. The Chinese attitude with regard to this point is that they are taking effective step to put an entire stop to the transport and cultivation of native opium, and that the question of its taxation will soon be one of secondary importance They are, however, prepared to issue an Imperial rescript imposing an excise duty upon the native drug equal to the increased consolidated duty levied upon foreign opium.
The above account of the negotiations to date will, I am afraid, only serve to bear out the opening statement in my telegram No. 58 above referred to that little or no progress is being made.
I have, &c.
(Translation.) Sir,
Enclosure 1 in No. 1.
Prince Ch'ing to Sir J. Jordan.
J. N. JORDAN.
Peking, February 8, 1911.
I HAVE the honour to reply to your Excellency's note on the subject of the prohibi- tion, of opium in which you state that the contents of my note of the 29th December last were duly communicated to His Majesty's Government, and that you are now instructed by His Majesty's Principal Secretary of State for Foreign Affairs to inform me that His Majesty's Government are prepared to entertain the additional proposals put forward in my note under reply, provided that an agreement on the proposals already put forward in Mr. Max Müller's memorandum of the 1st November, 1910, be first arrived at.
Your Excellency added that you would be glad to be informed of the name of the official whom my board proposes to depute for the purpose of discussing this matter so that an early date may be fixed for the resumption of negotiations.
In reply thereto I have the honour to inform your Excellency that my board
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proposes to appoint Yen Hui-ch'ing (Dr. W. W. Yen), a councillor attached to the board, to negotiate personally with your Excellency.
Enclosure 2 in No. 1.
I avail, &c.
Prince CHING.
Memorandum containing the Chinese Government's Draft Proposals respecting the Opium Agreement. (Translation.)
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 cent. 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 having now ascertained the pronounced success achieved by the Chinese Government in restricting the production and the smoking of opium, the two Governments have, therefore, agreed on a further arrangement for restricting the import of Indian opium, the conditions of which arrangement are as follows:---
ARTICLE 1.-General Principles.
The principle upon which the Chinese and British Governments will deal with the question of the prohibition of the production of native opium, and of the restrictions to be placed on the import of Indian opium respectively, is declared to be as follows:---- (a.) Both Indian and native opium must be treated alike. There must be no differential treatment.
(b.) Opium is really very harmful to mankind and total extinction at an early date is earnestly hoped for. The sooner this is done the better it will be for all.
ARTICLE 2.-Time Limit.
(a.) From henceforth the British Government shall diminish progressively by 10 per cent. annually, that is to say 5,100 chests, the import of Indian opium into China until total extinction on the 1st January, 1917. After this period the Chinese Government may totally prohibit the import of opium.
(b) The Chinese Government on its side shall diminish annually by not less than one-tenth the production of native opium until total and permanent extinction on the 1st January, 1917.
(c.) The Chinese Government has, as regards native opium, adopted a most rigorous policy for prohibiting the production, the transport, and the smoking of opium, and the British Government has expressed its agreement therewith and willingness to give every assistance. If, therefore, the production of native opium shall have been uniformly cut off in less than seven years, or if it shall have been cut off in a particular province, then the British Government shall consent at the same time to stop the import of Indian opium altogether, or to stop the import into such a province.
ARTICLE 3.-Investigation.
During this period in which Indian opium is imported, it shall be permissible for the British Government to appoint one or more British officers to proceed in company with officers appointed by the Chinese Government to obtain continuous evidence of this diminution by local enquiries and investigation. At the same time, they may investigate the taxation and trade restrictions on foreign and native opium away from the treaty ports. The reports of these officers shall be accepted by both parties to this agreement.
ARTICLE 4.--Orders for the Prohibition of Opium.
During this period whenever any orders drawn up by the Chinese Government or by the executive officers of the Chinese Government for dealing with the prohibition
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