CO129-416 - Public Offices - 1914 — Page 541

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

OPIUM.

CONFIDENTIAL.

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No. 1.

[April 24.]

SECTION 1.

Memorandum on the Macao Opium Farm 1913.-(Communicated by the Colonial Office April 24, 1914)

SOME explanation is wanted for the extraordinary rise in the rental of the Macao Opium Farm. The last farm was let from the 1st August, 1910, for 148,500 dollars for three years, the conditions being:-

cent.

--

(a.) Local consumption limited to 500 chests, to be reduced annually by 10 per

(b.) Export limited to 1,500 chests, to be reduced annually by 15

per cent.

The present farm was let under the conditions of the agreement of the 14th June, 1913 :-

(a.) 260 chests for local consumption.

(b.) 240 chests for legitimate export, provided that if further legitimate export can be proved, this amount can be increased on payment of a proportional increased rental.

This farm was let on the 15th July 1913, at an annual rental of 1,056,666 dollars. The difference in price is alarming, but if everything is taken into consideration is capable of explanation.

2. In any opium farm or monopoly there are three main points to consider :- (a.) The extent of the market for prepared opium.

(b.) The price at which prepared opium can be sold without reducing that

market.

(c.) The price of raw opium.

To explain the Macao situation it is necessary to go back some years and consider the position before the last farm came into existence.

3. In 1903 a farm was let in Macao at a rental of 330,000 dollars per annum for a period of ten years. The supply of raw opium was not, I believe, limited by the Macao Government. In addition to the local consumption at Macao the farm had a practical monopoly of the export trade to America and a considerable proportion of the trade to Australia. That is to say they had a wide market. The profits were, however, limited owing to the competition from Hong Kong, Canton, Amoy, and other places in South China who could all obtain their raw opium at the same rate, and all of them having a certain connection with America and Australia.

4. In April, 1909, the American market was entirely closed owing to anti-opium legislation. The markets of Canada and Australia had been closed previously. As a result the Macao farm shut down and forfeited their security, 100,000 dollars, to Government (vide Imperial Chinese Customs Return, 1909, Part II, Vol. IV, p. 643). The Macao Government asked for tenders for a new farm, but the highest tender being 141,700 dollars they rejected it and started a Government Opium Monopoly. The result is shown in the number of chests of raw opium actually boiled in Macao during that period:-

1908 1909 1910

2,176

181

150

5. During 1909-1910 the Macao Government found that they were not making as much out of the farm as they had been offered in April, 1909. They had only local consumption to rely on which could not exceed 130 chests per annum with a danger of smuggling from neighbouring ports. They decided to ask for tenders for a new farm from the 1st August, 1910. The conditions laid down were at the moment in fact immaterial; there appeared no possibility of the farmer being able to use

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