[This Document is the Property of His Britannic Majesty's Government.]
184
OPIUM.
CONFIDENTIAL
[25069]
[June 5.]
82601
SECTION 2.
EC
REG 27 G 14
:
:
Sir J. Jordan to Sir Edward Grey.--(Received June 5.)
(No. 203.) Sir,
Peking. May 20, 1914. WITH reference to my despatch No. 103, Confidential, of the 21st April, I have the honour to enclose copy of a further letter, dated the 12th instant, addressed by the importers of Indian opium at Shanghai to His Majesty's consul-general at that port
The importers endeavour to maintain that the present stagnation of the Shanghai opium market is due to (1) a general depression of trade, and (2) recent overstocking by the Chinese dealers. They profess to regard as irrelevant to the position of the opium market the abnormal and inflated prices fixed by the importers combine. The contention, however, that prices arbitrarily fixed at prohibitive rates cannot effect the position of the market is hardly tenable, and I am still of the opinion that the importers' action in forcing prices up to prohibitive rates is one of the chief factors in retarding sales.
As reported in my despatch No. 119 of the 18th March the balance of stocks of certificated Indian opium held in bond by the importers at the end of February was 8,131 chests; there being also in bond, but already purchased by Chinese merchants, a further amount of 3,903 chests. By the end of March the balance in the hands of the importers was 7,998 chests, with 3,714 chests lying to the order of Chinese purchasers. Thus, during March, importers had sold only 133 chests, while the Chinese dealers had passed out of bond 322 chests.
During April transactions fell to an even lower figure, importers selling only 18 chests, and the Chinese dealers passing out 282 chests. At the end of April the balance of stocks still in importers' hands amounted to 7,979) chests, with 3,450 chests lying to the order of Chinese purchasers. Information from Shanghai states that deliveries were improving somewhat from the commencement of the current month, but that no real improvement was anticipated until July.
The assurances of the importers that they are doing their utmost to expedite consumption of stocks in hand must be received with some reserve, seeing that they have made enormous profits within the last year or two and that they must have visions of continuing to benefit largely so long as they still have stocks for disposal. Their intention of regulating their prices so as to meet liberally the demands of the market is not likely therefore to err on the altruistic side. But, as I had the honour to report in my despatch No. 163, Confidential, of the 21st April, the importers have received ample warning of the danger to themselves of retaining stocks; and, while it was to be hoped that the stocks would proceed steadily month by month to a vanishing point, I regret that it does not appear feasible to assist that hope by bringing any further pressure to bear on the importers.
I bave, &c.
Enclosure I in No. 1.
J. N. JORDAN.
(No. 58.) Sir,
Consul-General Fraser to Sir J. Jordan.
Shanghai, May 14, 1914. IN accordance with your telegraphic permission I communicated to the importers of Indian opium here your comments on their justification of their action in letting the price advance; and I have now the honour to forward copy of their further explanation of their position.
It is still true that purchases from the combine have ceased since the beginning of
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