CO129-405 - Public Offices - 1913 — Page 111

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It must be admitted, however, that public opinion in China generally takes very little account of distinctions of this kind in regard to the general question of the opium trade. Setting aside the merchants whose interests are specially affected, and the British officials whose duty it is to maintain the rights of British traders, it may safely be said that the provincial authorities in their campaign against opium have the support of the whole body of the Chinese people, so far as its opinion is articulate, and of a considerable majority of the foreign residents. Rightly or wrongly it is considered that the anti-opium movement is sincere, and that no discrimination in favour of native opium is being attempted. Rightly or wrongly, too, the view is generally held that a gradual diminution of the production and consumption of opium in China, such as is contemplated in the opium agreement is impracticable, and that measures of suppression, to be effective, must be total and indiscriminating.

These views are, of course, to a large extent uuinstructed, and I mention them only in order to show the necessity of caution in regard to the grounds on which specific protests are male. The Chinese Government, as the result of my repeated representations, have now reissued to some of the provinces the explanatory instructions of June 1911, and I am pressing for their reissue to all the provinces. A few days ago I discussed the whole question of the opium trade with the Minister of Foreign Affairs, and impressed upon him the necessity of using every possible endeavour to induce the provinces to act according to the policy of the Opium Agreement. This was, I pointed out, the only sure way of attaining the object of suppressing the use of opium altogether. If the agreement were adhered to, the provinces would, one by one, be closed to Indian and native opium alike, and the reform would be accomplished. If, on the other hand, the provinces persisted in their present course of arbitrarily excluding opium, it was impossible to expect His Majesty's Government to agree to any more of the provinces being placed on the list of those into which the conveyance of Indian opium was prohibited in accordance with article 3, and the difficulties and friction would continue indefinitely. They might kill the trade in Indian opium, but this was doomed already, and the result of killing it in this irregular way would be to enhance immeasurably the difficulty of suppressing the cultivation of the native poppy. Mr. Lu Tseng-hsiang seemed to be impressed by my arguments, and promised to bring the matter before the President and see what could be done.

In the present temper of the country I cannot hold out any hope that a solution will be effected on the lines indicated. Within the last few days the situation has become more acute than ever. Encouraged by the impunity which has attended their escapade in Auking in September last, the authorities of the Anhui province have now forcibly closed all retail shops at Wuhu, and the Shanghai in porters state that the native wholesale dealers at Wuhu have in consequence repudiated their purchases. At Wuchang, according to the Hankow native papers, a Government monopoly is being enforced, and certain retail dealers who failed to surrender their stocks were paraded in ignominy through the streets of the city. At Shanghai, Soochow, and other places in Kiangsu province proclamations have been issued that all such shops must be closed by the 31st instant, and that all licences for the sale of opium will be withdrawn on that date.

I am protesting to the Central Government, and where possible to the local Governments, against these infringements of the agreement, but I expect to hear of the movement spreading still further.

Meanwhile, the unfortunate opium importers at Shanghai are faced with bankruptcy, The trade there has now, Sir E. Fraser informs me, entirely ceased, and there are some 20,000 cheats in stocks, representing a value 8,000,000l. to 10,000,000 sterling. The advances against opium made by the Hong Kong and Shanghai Bank alone amount to 6,150,000 taels (say 900,0001). The problem of how to force into circulation the large stocks of Indian opium already imported into China is still further complicated by the fact that more opium is continually coming in. The Indian Government refuse to suspend the sales, and the opium merchants continue to buy at high prices for import into China, alleging that they are forced to do so in order to keep up the price of their existing stocks. In all the circumstances I cannot see how serious disaster to the trade is to be averted.

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

OPIUM.

CONFIDENTIAL.

[54968]

No. 1.

[December 24.]

SECTION 1.

India Office to Foreign Ofice.-(Received December 24.)

Sir,

India Ofice, December 23, 1912. 1 AM directed by the Secretary of State for India in Council to acknowledge the receipt of your letter of the 18th December, on the subject of the prohibition of the entry of Indian opium into Chinese provinces. In reply I am to refer you to my letter of the 18th December, and to state that, having regard to the various Indian interests therein mentioned, the Marquess of Crewe is of opinion that most strenuous efforts should be made to induce the Chinese Government to respect the terms of the opium agreement.

2. His lordship notes that a reference has been made to His Majesty's Minister at Peking on the question whether the sale of native as well as Indian opium is being effectively prohibited, and he concurs in Sir Edward Grey's opinion that if this is found to be the case the fact would have a material bearing on the situation. It appears, however, from recent reports that the cultivation of opium in many provinces has been on a very large scale during the past year, and that no effective attempt- indeed, hardly any attempt has been made by the Chinese provincial authorities to extirpate that cultivation. Action in the direction of prohibiting the open sale of native and Indian opium, accompanied by cultivation of the drug on a large scale and occasionally by the declaration of a monopoly on the part of the local government, has au air of insincerity, and belies the assertion that the object of the agreement, viz., the suppression of the opium habit in China, is aimed at, or is actually being attained. Even, therefore, if it be reported that the measures taken by the Chinese Governments apply equally to native and to Indian opium, the Marquess of Crewe cannot regard the situation as being in any way equivalent to that contemplated in article of the agreement of 1911, namely, "the complete absence of production of native opium in China."

3. Until every possible means of bringing home to the Chinese Government the serious consequences of ignoring the engagements entered into with this country by China in respect of the opium trade has been exhausted, the Marquess of Crewe will hesitate to believe that that Government has definitely resolved to repudiate national obligations which quite recently the President undertook to respect.

4. Pending further information as to the result of such representations as Sir E. Grey may think fit to cause to be made to the Chinese Government, his lordship is not disposed to ask the Government of India to reconsider their programme in respect of sales of opium certificated for the Chinese market during the coming year. But unless some alleviation of the situation created by the prohibitory policy of the Chinese provincial authorities is speedily found, the effect on the credit of the importing houses and of the European banks which finance them, of the heavy stocks of opium accumulated in Hong Kong, Shanghai, and elsewhere, may be very serious. This aspect of the question will not, it is presumed, be overlooked by the English representatives in the six-Power group of banks which is engaged in projects for rehabilitating the finances of the provisional republic.

I am, &c.

T. W. HOLDERNESS.

I have, &c.

J. N. JORDAN.

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