CO129-383 - Public Offices - 1911 — Page 200

ན་ས་ཤག་ སབས་

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To my surprise, instead of the definite reply on this point which I had been promised, I was informed that, according to the Chinese Minister, instructions were being sent to me to submit article 4 to the Government of India.

I could only tell Dr. Yen that I felt convinced that Mr. Liu had misunderstood the purport of whatever had passed between him and the Foreign Office, but not content with continuing to press for the inclusion of this article, Dr. Yen further announced that he wished to make clear the meaning which the board attached to the prohibition of import province by province; the Chinese Government considered that the pro- hibition of the import of Indian opium into any particular province should take effect as soon as that province had stopped the import of native opium, regardless of whether the province was an opium-producing one or not.

Here was another and serious departure from the original basis of negotiation introduced after nearly a month's discussion, and I could not conceal my grave disappointment at the turn events were taking,

I pointed out that the object of the original Chinese proposal, which alone I had authority to entertain, was to prevent Indian opium from taking the place of native opium in an opium-producing province where production had ceased, and that it was never intended to apply to the coast provinces which had produced little opium of their own and had been largely dependent on the foreign drug for the last fifty or sixty years. It was extremely difficult to devise any practical means of attaining even this original object, but His Majesty's Government in their desire to meet the wishes of China as far as possible had expressed their willingness to stop the issue of transit-passes for Indian opium to provinces which had ceased to produce and import the native drug to attempt now to extend the prohibition to any province would be tantamount to stopping the Indian trade outright, for provinces like Kuangtung and Kiangsu could few months, extinguish their own small production and import of native opium within and then claim to close the great distributing centres of Canton and Shanghai to the foreign article.

I warned Dr. Yen that this continued introduction of new matter outside the original basis of discussion, as it had prevented any progress being made up to the present, now threatened to preclude the possibility of any agreement being reached, and I strongly urged him to secure the immediate consent of the board to (1) the complete acceptance of our amended anti-restriction clause (Enclosure 4 in my despatch No. 90), in exchange for which I would recommend a specific duty of 300 taels per chest, and (2) the acceptance of our revision clause in lieu of both articles 4 and 7 (Enclosure 3 in my despatch No. 90). At the same time, I handed him a redraft of the Chinese article regarding provincial prohibition, copy of which is enclosed.

Dr. Yen sought to maintain that the only object of the Chinese Government was to obtain the fullest possible advantage from measures which had already been accepted in principle, and in response to his earnest request I agreed to repeat my arguments to the Ministers of the Wai-wu Pu the same afternoon,

I accordingly called at the board, and had an interview with the President Tsou and Vice-President Hu, at which Dr. Yen was also present. I pointed out to the Ministers that nearly a month had elapsed since the resumption of these negotiations, and so little progress had been made that it seemed as if the Chinese Government had no real intention of coming to any agreement. The Ministers said they had been waiting for a reply from the Chinese Minister in London, and asked whether I had received any instructions from you on the subject of articles 4 and 7. I replied that I had received none and did not expect any, and I reminded them that as seventeen days had now elapsed since I had informed the Grand Secretary Na Tung that these articles must be eliminated, it was essential that I should receive a definite answer without further delay. The only response was that the question must be again referred to his Excellency Na Tung.

In view of the express undertaking given to me by the Grand Secretary himself on the 10th ultimo that, in the event of his absence, one or other of the Ministers would give a decision on any point which might arise, I protested strongly against this deliberate evasion. I pointed out that I had exercised the greatest patience in my anxiety to prevent a failure of the negotiations, for which, if it now occurred, they must accept the entire responsibility.

This reinoustrance apparently produced some effect, for two days later Dr. Yen brought me a fresh draft of article 4, which expressly confined the operation of the anti-opium laws to the retail trade.

In view of the fact that we had already recognised in practice the right of the

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Chinese Government to adopt its own measures for the restriction of smoking and of the retail trade generally I saw no objection to the inclusion of such a clause in the agreement, and I accordingly undertook to recommend that it should be incorporated in the anti-restriction clause which, after considerable further discussion, Dr. Yen also (agreed to accept, in response to a final offer on my part of 330 taels per chest import

duty.

This acceptance, however, was coupled by Dr. Yen with the proviso that the removal of existing illegal restrictions should take effect simultaneously with the imposition of the increased rate of duty on Indian opium. The enforcement of this increased duty was made conditional upon the issue of an Imperial rescript imposing an equivalent tax on native opium, due allowance being made for the difference in the market values of the foreign and native drug.

In agreeing to recommend the acceptance of this proviso, I did so subject to a formal declaration that such acceptance should not be held to imply any admission of the legality of the Canton restrictions.

Thus at the cost of continual concessions on my part in the course of more than a month's protracted discussion, a basis of agreement has been arrived at on the following points :---

(1.) Elimination of the objectionable features in articles 4 and 7 of the Chinese proposals.

(2.) Inclusion of safeguards against illegal restriction and taxation of the wholesale trade.

(3.) Increase of the consolidated import duty. The enclosed copy of a memorandum handed to Dr. Yeu on the 14th instant contains a rough draft of the clauses agreed upon

under (1) and (2), but the definite acceptance by the Chinese delegate of (3) is still dependent on an agreement being reached on the two main points of difference now outstanding, namely, provincial prohibition and stocks.

of

In view of the extreme difficulty which had accompanied even this small measure progress, I felt that it would be useless to put forward any of the alternative proposals contained in the Government of India's telegram of the 17th instant.

The last three meetings have in fact been principally occupied with the discussion

of the two remaining questions, both of which present serious difficulties.

As regards provincial prohibition, I have maintained that it is impossible to depart from the original intention of the Chinese proposal as clearly laid down in article 2 (c) of their own memorandum (Enclosure 2 in my despatch No. 90), that this prohibition should apply only to opium-producing provinces, and that our transit-pass suggestion is the furthest limit to which we can go in a desire to meet the wishes of China. I have urged that the Chinese Government should accept this suggestion, and trust to the good faith of His Majesty's Government to give as wide effect thereto as they reasonably can. In order to meet my objection that an interpretation of the prohibition as applicable to all provinces would entail the speedy closing of Canton and Shanghai to trade in the Indian drug, Dr. Yen put forward the proposal to exempt these two distributing centres only from the prohibition, and all efforts to move him from this position have so far proved fruitless. In my anxiety to find a way out of the difficulty, I eventually suggested that our transit-pass proposal might be made to apply to all the provinces of China except those seven which are the principal consumers of the Indian drug, and which 1 named, viz., Kuangtung, Fukien, Chekiang, Kiangsu, Shantung, Anhui, and Kiangsi, I contended that these seven provinces, having always imported foreign opium of their own accord, could not expect to stop that import at once, whereas the remaining fourteen provinces never having used foreign opium to any great extent might with some justice claim to exclude it concurrently with native opium.

If the board would accept this interpretation of the provincial prohibition I offered in the last resort to recommend that it should be embodied in an exchange of notes, as any mention of specific provinces in the agreement itsell would, I felt sure, give rise to increased provincial agitation.

Even this extreme offer, however, failed to satisfy the board, and when I heard from the Grand Secretary Na Tung, at an interview which I had with the board on the 23rd instant, that the suggestion to differentiate between the provinces had already become known and had produced a violent denunciation of himself by a censor I formally withdrew the offer, and again appealed to the board either to drop the promised prohibition altogether or to accept our transit-pass proposal, coupled with an assurance of our good faith to make it as effective as possible.

The question of stocks has proved equally difficult of solution, the board persisting

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