CO129-405 - Public Offices - 1913 — Page 119

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

[A]

OPIUM.

CONFIDENTIAL

118

2663

[REC? [Decemb 24 JAN:3

SECTION 3.

[55895]

No. 1.

Sir,

India Office to Foreign Office.—(Received December 31.)

India Office, December 31, 1912.

I AM directed by the Secretary of State for India in Council to forward a copy of three telegrams received from the Government of India on the 30th December regarding the opium traile, and to state that his Lordship would be glad to be informed as early as possible whether Sir Edward Grey considers that the assumption contained in telegram (A) is correct, as in that case Lord Crewe proposes to agree to the Government of India's proposals contained in telegram (C) to give three months' notice of the suspension of the opium sales and to fix a substantial "upset " price on the sales for January, February, and March.

I ani further to ask for Sir Edward Grey's observations on the rest of the telegrams, and to suggest that the views of Sir John Jordan should be ascertained,

I have, &c.

lave.

W. HOLDERNESS.

Enclosure 1 in No. 1.

(A.)

Government of India to the Marquess of Crewe.

(Telegraphic.) P.

December 30, 1912. WE have assumed in our two telegrams of to-day on the subject of opium that you cannot ensure that China will without delay carry out her treaty obligations thus enabling disposal of large accumulations of opium in that country soon enough to prevent a possible financial crisis.

(Repeated to His Majesty's Minister, Peking.)

Enclosure 2 in No. 1.

(B.)

Government of India to the Marquess of Crowe.

(Telegraphic.) P.

December 30, 1912. WE have had under review the whole position in the matter of opium in view of the definite prohibitory action which the Central Chinese Government have now taken. Most of the opium for China would in the ordinary course be exported in 1913 from Bombay, and the situation has been examined from all points of view by our finance member at that port. We are informed that there is a large accumulation of opium at the treaty ports, while it is rapidly becoming increasingly difficult for it to gain admission into the interior; there is thus a large amount of capital locked up for an indefinite period. The banks have heavy commitments in advance and are showing signs of uneasiness which may turn into financial panic at any time; while Chinese merchants are adopting the uncommon and reckless step of disclaiming their bargains. It therefore seems clear to us that there has at last arisen a critical situation which must be met by special measures.

On previous occasions when to have stopped sales would merely have been to protect speculating buyers against break in prices, we have opposed stoppage of sales. Conditions are now entirely different. We have now to face-(1) an overloaded market

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