CO129-395 - Public Offices - 1912 — Page 418

[This Document is the Property. of His Britannic Majesty's Government.]

414

OPIUM.

CONFIDENTIAL.

[24992]

No. 1.

[June 11.] WL 12,

SECTION 2.

Sir J. Jordan to Sir Edward Grey,—(Received June 11.)

(No. 129.)

Peking, June 11, 1912. (Telegraphic.) R.

GOVERNMENT of India telegram of 6th June which crossed my telegram No. 128 of 8th June: Opium.

The arguments of the Government of India do not appear to me to take sufficient account of disorganisation produced by revolution in China which was not a con- tingency in the nature of an ordinary trade risk that merchants could possibly have anticipated. Although upheaval has affected all trade, it has especially hit the opium business, the continued existence of which, under agreement of May 1911, largely depended upon a Central Government able to enforce its authority in provinces.

The depreciation in existing stocks of opium is estimated by merchants at 2,000,0001, and their request is made with a view to prevent further depreciation rather than enhance value of their stocks. The unprecedented fall of 1,700 rupees per chest in June sales in India has caused a panic in Shanghai, and banks in some cases are demanding repayment of advances or auction of stocks. The corumitments of the banks amount to 40,000,000 taels (say, 6,000,000L), of which share of Hong Kong and Shanghai Bank is over 800,0001.

Substitution of uncertified for certified opium would encourage smuggling and afford no remedy, while suspension of sales even temporarily would undoubtedly prejudice future enforcement of agreement with China, but situation seems to demand some alleviation. If sales were suspended it might be perhaps possible to arrange with Chinese Government that balance unsold this year should be added to next year's fixed import.

Every possible pressure has been exercised on Yuan Shih-kai and the Government generally. They are, I believe, quite sincere in their desire to uphold opium agree- ments, but they have not power to enforce them in Chekiang and parts of Fukien, where there are strong anti-opium societies which practically ignore instructions from Peking.

(Sent to India.)

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