CO129-405 - Public Offices - 1913 — Page 341

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auction high prices in order to prevent a slump in the value of these stocks be disbelieved, and even if they made large profits during the sudden appreciation of rates in China a years ago, they will be sufficiently mulcted in the losses of the past twelve months, and, if my suggestion be adopted, the probable lower prices obtainable in the other markets, in a trade which is still legitimate under treaty, although under a moral ban that apparently outweighs the peril of setting a precedent of successful agitation to annul international obligations at the will of one party to them.

The present scheme does not attempt any such adjustment, but in effect transfers the burden to India and the non-China markets; and there is always the danger that the latter may defeat it by resorting to the cheap if inferior Persian opium (of which some 1,500 chests remained in Hong Kong after the last agreement, and are, it is said, slowly being smuggled away), although this kind is specially suited for making morphia and cocaine. The situation here is so critical that delay due to the natural opposition of the other opium markets might lead to a serious financial crisis; and so I have ventured to suggest that the burden ought to be lightened even if only by the applica- tion of China's extra-duty receipts towards reducing the price at which the stock could be transferred to the other eastern markets.

The report in the "Shanghai Mercury" of the 19th instant of Mr. Acland's state- ment on the 20th December in the House of Commons deferring the question of the stock in China until the amount of the present native cultivation had been ascertained, has called forth a protest of the importers that only immediate relief can save them from ruin; and the certain provision of such an alternative outlet as is now suggested would at once satisfy the lending banks and probably encourage local demand in order to lay up stores against the impending dearth of Indian opium.

I have, &c.

Sir,

Enclosure 2 in No. 1.

E. H. FRASER.

Opium Importers at Shanghai to Consul-General Fraser.

THE magnitude of the difficulties in which the opium question in China has now

Shanghai, January 20, 1913. become involved, will, we trust, be accepted as sufficient ground to justify us in addressing you at some length, and, as we sincerely hope, to some useful purpose upon those aspects of the situation which most materially affect our interests.

In the first place we have regretfully to represent that not only are all the usual markets for Indian opium outside the foreign settlements of Shanghai illegally closed to our trade, but also that the Chinese authorities who have done this in contemptuous disregard of the Anglo-Chinese Opium Agreement of May 1911, have now surrounded Shanghai with an impenetrable cordon of police, spies and inforiners whose business it is to seize and confiscate every ounce of opium which our customers endeavour to send or convey into the country. The merchandise in question is, as we need scarcely inform you, always covered by proper transit passes, and the packages bear the usual Customs labels, professing to frank the opium through every part of China excepting provinces closed by treaty. Here, then, we have the anomalous and highly undesirable position that the same Government which collects duty on our goods in the morning seizes and confiscates these sarne goods in the afternoon, within a mile of the custom- house in which the impost has been paid. It is almost incredible that any Govern- ment should exhibit such a predatory disregard of the plain rights of merchants to whom, by the ready acceptance of revenue from them it is reasonable to infer that it has guaranteed protection in their lawful trade; but, nevertheless, as you are no doubt aware, many glaring instances of the reprehensible procedure complained of have recently been put on record by us in the consulate-general, and many others of the same nature can be described, if necessary.

It must thus be apparent to the British Government that the markets for Indian opiam in China have now been arbitrarily, illegally and defiantly closed by the Chinese republican authorities, and up to the present moment all our protests, however earnest and respectful, in the matter, have entirely failed to induce the Chinese Government to fulfil its obligations, or, indeed, to treat them with aught but contemptuous and injurious repudiation. Under these circumstances it is not surprising that the recent stoppage of import of Indian opium into China, has not yet relieved us or helped our business in any way, or that we still find ourselves in the unenviable position of having

huge stocks on our hands without a market or the prospect of a market in which to dispose of them. The situation has become absolutely impossible, and can no longer be borne by us. For more than a year we have endured the obstructions so out- rageously presented by the Chinese Government to the legitimate course of our business, and have seen our interests perish by degrees until now, to put the case plainly, some of the merchants are faced with bankruptcy unless something really effectual be done without delay to relieve the situation.

We

The earnest hope of the merchants is that the British Government may find it possible or expedient to enforce observance of the treaties upon the Chinese authorities; but should the British Government, owing to causes with which we are not acquainted, find this course impracticable or undesirable for the moment, there is, we think, one other way in which perhaps the situation might be provided for, at least temporarily, and this plan we would now respectfully bring to your attention. submit it merely as a possible way out of the difficulty, and we would ask that you be good enough to consider it without drawing any inference prejudicial to the rights which we now claim, and which the British Government has admitted that we hold in the general situation. We make the suggestion merely in the utter absence of any other, and we shall be most happy to withdraw it in favour of anything better in the way of a workable scheme that may be forthcoming.

Our idea is that the Indian Government, in view of all that has transpired, and in common justice to us, might be induced to cease making sales of opium for all those markets outside of China, for the supply of which at present that Government holds a monopoly. During the year 1913 it was originally the intention of the Indian Govern- ment to sell 13,200 chests of opium for the markets in question, but since that decision was first announced there has been a reduction in the amount of the proposed sales from the figure mentioned to 9,000 chests. We now suggest, quite tentatively as we have explained, that even this amount, 9,000 chests, be temporarily withheld from the markets outside of China, and that no further sales for those markets be made by the Indian Government until

(a.) The British Government has been successful in inducing China to fulfil her treaty obligations and restore to us those outlets for our trade which she has improperly closed; or

(b.) Until our stocks are exhausted either in our customary markets or those which we now suggest should be opened to us outside of China.

We cannot, under existing arrangements, avail ourselves of these latter marketa, because so long as the Indian Government continues to supply them the prices ruling there must remain somewhere in the neighbourhood of 900 taels per chest, which, of course, is so low a rate that we cannot possibly compete with it. But if the Indian Government were to cease supplying those markets and allow us to supply them temporarily, not only would our position here be ameliorated, but the British Govern- ment would find itself relieved of the necessity of deciding what should be done with the opium now accumulated on our hands in the event of all efforts in the direction of treaty enforcement in China proving fruitless.

We quite realise that our suggestion would be likely to excite strong opposition! in the markets affected, and that the Indian Government would also receive it most unfavourably owing to the loss of revenue that its acceptance would produce in India; but, on the other hand, it ought to be remembered that the Indian Government sold us this opium specifically for the China markets in accordance with the treaty of 1911, and cannot evade the moral and, we believe, legal obligation to protect us in lawfully disposing of the commodity, or, in the alternative, taking the opium off our hands. The British Government having so far refrained, in deference to considerations of a senti- mental nature, from bringing effective pressure to bear upon China to compel her to fulfil her bargain, it is surely reasonable to ask that, acting upon considerations of simple justice, the British Government should now come to the assistance of those unfortunate British subjects who are being sacrificed to the first-named motive, and give them a chance of disposing of their goods in the only markets which it would now seem are likely to be available for some time to come. As to the objection which is sure

to be advanced in the event of the acceptance of our suggestion that the price of opium in the markets affected will thereby be enormously enhanced, it is pertinent to state that prior to the conclusion of the agreement of 1911 the price of opium in those markets was more than double the figures at present ruling there; and that ultimately the burden of the increased cost of the drug must fall upon the consumer and the consumer only.

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