CO129-405 - Public Offices - 1913 — Page 120

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(2) the powerlessness of His Majesty's Government to secure observance of the treaty, (3) the likelihood of a financial crisis by which Imperial trade interests in the Far East as well as our own trade may be injuriously affected. This being so we are proposing to you in a separate telegram that our sales for China in 1913 should be largely reduced. and perhaps completely stopped for the time being. If these proposals meet with your acceptance it will be necessary for us to consider our budget and our liabilities to the Durbars, who have every expectation that the market will remain open till the close of next year.

Without imposing additional taxes we can budget on the basis of the absence of revenue from opium for China in the year 1913-14, but could say little in rebuttal of the assumption that this course indicates inability of His Majesty's Government to enforce observance by China of Opium Agreement of 8th May, 1911, Such a position would not, you will agree, be desirable or dignified.

So far therefore as the necessities of Imperial policy permit, we earnestly press that our relations with China may be regulated in nominal compliance with the agreement of 1911. Claims that cultivation and the importation of native opium have ceased in most of the chief provinces in China will probably be justified as a consequence of the action of the Central Government. Our export trade to those provinces could be brought to a close under the agreement if these claims are broadly reasonable, and rigid evidence can be dispensed with. This course would seem to be more in accord with the dignity of the British Government, and it would not embarrass our presen financial position.

To prevent loss of time this is being repeated to the British Minister, Peking.

(Telegraphic.) P.

Enclosure 3 in No. 1.

(C.)

Government of India to the Marquess of Crewe.

December 30, 1912. KINDLY refer to our other telegram dated to-day dealing with the general position in regard to opium.

We seek your sanction to arrangements proposed with the object of suspending sales of opium for China until it appears that the demand is restored, as we believe that consequences may be serious should further addition be made to the stocks in China. It is proposed to announce at once that from April next, and until further] notice, there will be no sales of certificated opium. This will comply with requirement of three months' notice. In the meantime, with a view to proving whether a genuine demand exists, we propose for the sales in January, February, and March, to impose a a substantial upset price. It has already been notified that passes for the export of 13,820 chests of Malwa opium would be allowed in 1913, and this being so, we are willing to purchase as excise opium, on the usual terms, the difference between this number of chests and the number actually exported in 1913. We do not consider that this concession is in any way binding on us.if the market in China is closed, but as an act of grace it should go a long way towards preventing any just grievance among the rulers and people of the opium-producing States. The concession might necessitate a a substantial restriction of the area under poppy in the united provinces, but it is understood that under the present agricultural conditions no great difficulty would be

occasioned.

2. So far as uncertificated opium is concerned we are prepared considerably to reduce sales for 1913, and we suggest 9,000 chests as a maximum. But we urge that you should definitely recognise this as being only a temporary measure proposed with a view to facilitate the diminution of stocks lying in treaty ports and not founded on any proved reduction in the quantity consumed in countries outside China. The figure can be revised when it is seen whether China's prohibitory measures are sufficiently effective to induce merchants to send their supplies of unsold certificated opium to other

countries.

The matter is of the utmost urgency, and we should be glad to receive your orders

very soon.

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

OPIUM.

CONFIDENTIAL,

[55685]

(No. 366.) Bir,

No. 1.

Sir Edward Grey to Sir J. Jordan,

[December 31.]

SECTION 4.

Foreign Office, December 31, 1912. I HAVE received your despatch No. 470 of the 29th November last, respecting the opening of retail shops by foreign merchants at Hangchow,

our action in the matter has my approval.

I transmit to you herewith for your information, copy of a letter from the India Office respecting the reissue by the Central Government of the circular instructions of the 10th June, 1911, to certain provinces.*

I shall be glad to receive any observations on the letter which you may wish to offer.

• India Office, December 28, 1912.

[2736 hh-4]

1 am, &c.

E. GREY.

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