CO129-417 - Public Offices - 1914 — Page 182

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

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OPIUM.

CONFIDENTIAL.

[30113]

(No. 239.) Sir,

30545

Reco

REOE 17 AUG 14,

No. 1.

177

[July 4.]

SECTION 1.

Sir J. Jordan to Sir Edward Grey.-(Received July 4.)

Peking, June 18, 1914.

I HAVE the honour to acknowledge receipt of your despatch No. 142, Confidential, of the 25th May, enclosing copy of correspondence with the India Office regarding the traffic in Indian opium in this country, and informing me of the decision arrived at in consultation with the Secretary of State for India, that the proposal to withdraw from China the stocks remaining unsold shall not be proceeded with.

The chief reason which has led you to this decision is, I understand from your despatch under acknowledgment, a statement in my despatch No. 126 of the 23rd March, that "in the ordinary course of things these stocks. would, if Shanghai and Canton are kept open, all pass into consumption before the end of the current year."

But, as I had the honour to report in my despatch No. 203 of the 20th May, the ordinary course of things" which had prevailed, and which justified a forecast of the probable date of the end of the stocks, was not maintained.

During the year 1913 some 17,000 chests of certificated Indian opium were placed

in circulation by the importers, giving a monthly average of 1,416 chests.

On the 1st January, 1914, the unsold stocks amounted to 11,739 chests, an additional amount of 2,509 chests still in bond having been already sold for cash to Chinese dealers.

During January 2,226 chests, and during February 1,382 chests, were sold by the importers, the average sales being thus well maintained, and justifying a forecast in March that the net balance of unsold stocks on the 1st March, amounting to 8,131 chests, would be sold before the end of 1914.

Serious changes in the sales market, however, have put a very different complexion on the matter. My despatches Nos. 163, 167, and 203 have reported at length on the great falling off in the sales figures. Thus in March only 1384 chests, in April eighteen chests, and in May 197 chests were sold by the importers, giving a monthly average for the three months of 116 chests. Unless this rate is improved the net balance of 7,782 chests remaining unsold on the 1st June will require about five and a half years to find its way into consumption.

I have no reason to suppose that the present extremely limited sales output is otherwise than a temporary manoeuvre on the part of the importers. I have endeavoured to show in my despatch No. 203 how difficult, if not impossible, it is to bring official influence to bear upon the business tactics of the importers; and they control the market to such an extent that any forecast must be purely conjectural, and based upon an average over a reasonable past period, bearing in mind the abnormal nature and conditions of the trade.

The monopoly which the importers have enjoyed is quite unprecedented in my experience, and their manipulation of the stocks appears to be the dominating factor in the duration of the Indian opium traffic in China.

Apart from the prejudice which the continuance of the trade for an indefinite period may cause to British interests in general, there are other considerations which may probably require to be taken into account at no very distant date. *

The ratification of The Hague Convention and its effect upon the opium situation at Shanghai are matters which will doubtless receive the attention of His Majesty's Government.

The closing of the provinces of Kwangtung, Kiangsu, and Kiangsi to Indian opium will almost certainly be requested by the Chinese Government next spring. There is already a movement in Kiangsu for the closing of that province under the 1911 Agreement, and importation of native opium into Shanghai and Canton has ceased. All these provinces are likely to be qualified to be placed on the prohibition list next spring, and in that event any balance of stocks of certificated Indian opium will be automatically barred from entry into China.

With no Chinese market available, the question of the disposal of such surplus stocks will then demand the attention of His Majesty's Government.

I have, &c.

J. N. JORDAN.

[2205 d―1]