CO129-405 - Public Offices - 1913 — Page 337

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the auctions in Calcutta is the cost price to merchants. We telegraph this figure to you month by month; 4,860 rupees is the average price realised per chest of Bengal opium since July 1911, when certificated opium was first sold separately. Cost price in India to merchants of Malwa opium is found by adding together (a) the actual cost of a chest from Malwa delivered at Bombay, say, 850 rupees; (b) pass duty of 1,200 rupees; (c) payment made at sales in Bombay for right of export-this has averaged 2,040 rupees since January 1912, when system was introduced. Hence 4,090 rupees per chest is total average cost to merchants in 1912. In view of the two considerations which follow, we doubt whether these averages can be correctly applied to existing stocks :—

(a.) Separate sales of certificated Bengal opium were not introduced until July 1911, and the stock of Bengal opium in China in May 1911 (the date of the agreement) was purchased at a price which was common for China and non-China markets alike.

(b.) Sales of the right of export of Malwa opium did not affect Malwa opium exported before January 1912, and so much of existing Malwa stocks in China as were exported before then had to pay only a pass duty of 600 rupees. Malwa opium exported before 1912 cost in India to the merchants 1,500 rupees per chest at the most. We can say this much. that over and above profits on any stock of Malwa opium held in China in May 1911 merchants must have obtained profits of 3 crores from Malwa opium, as we show below. Our latest information is that on the 31st January, 1913, stocks at Hong Kong and Shanghai were 26,815 chests, 14,005 of which were Malwa. Exports of Malwa opium from July 1911 to close of 1912 were 24,854 chests; hence, during that period about 10,000 chests of Malwa must have been sold. The only assumption we can make is that opium was sold in the same sequence in which it was received, and if this be so these 10,000 chests must have been exported during 1911 or earlier. On assumption that 5,000 rupees a-chest was average price realised in China, then 5,000 rupees minus 1,500 rupees represents profit per chest, and the total profits 3 crores. Freight from Bombay to China, as to which we have no information, must be deducted from this. As to Bengal, from July 1911 to close of 1912, 7,870 chests have been exported; present stock in China is 12,210; it is inferred, therefore, that 4,340 chests of the existing stocks of Bengal opium are chests bought in India before the agreement of 1911. Jordan's letter of the 14th November, 1911, refers to 11,459 chests as stock on the 8th May, 1911. As we are unaware what amount of this is Bengal and Malwa respectively we are unable to estimate the total sales of each sort, or when the opium which was sold was bought in India. We regret our inability to furnish more satisfactory estimates in the absence of information on following four points:-

(a.) Number of chests of each kind in these 11,459 chests.

(b.) Stocks (other than the 11,459 chests in hond referred to above) of each kind

of opium in existence in May 1911.

(e.) Total amount of unsold stock of each kind in China at present time.

(d) Prices of each kind in China during the period of the agreement. We hope, however, that the information which we have given above will enable the Foreign Office to make calculations which will be sufficiently accurate.

We desire finally to say that there are certain chests in respect of which the right of export was sold in November and December 1912 at Bombay; these chests have not been exported, as they formed part of the permissible exports for 1913. We hope that they will be reckoned as part of the stocks to be taken over.

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Jasien