CO129-445 - Public Offices - 1917 — Page 178

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

175

OPIUM.

12707

CONFIDENTIAL.

REC

[October 16.]

SROTION 1.

REG 8 MAR 17

[206571]

No. 1.

Sir J. Jordan to Viscount Grey.-(Received October 16.)

(No. 247. Confidential.) My Lord,

Peking, September 13, 1916. I HAVE the honour to transmit herewith copy of a despatch* which I have received from His Majesty's consul-general at Shanghai, reporting on the present situation there in regard to the trade in Indian opium.

I have already reported the attempts that have been made to arrange for an extension of the agreement between the opium combine and the Chinese authorities, which expires on the 31st March next, and my refusal to associate myself in any way with this design. Your Lordship's approval of my attitude in this matter was conveyed in your despatch No. 113 of the 23rd May. At the time when the combine was concluded, I expressed the hope that the transaction, although a retrograde step in the policy of opium suppression, would at least have the merit of solving the problem of the disposal of the stocks of Indian opium accumulated in China. The statistics quoted in Sir E. Fraser's despatch show that this expectation has been disappointed. The stocks in Shanghai and Hong Kong at the end of July last amounted to 3,549 cliests as compared with 5,349 chests at the end of July, 1915. At this rate of clearance, namely 150 chests a month, the stocks would last for nearly two years more. But a closer examination of the returns show that even this rate of clearance, diminished as it is compared with that of previous years, is not likely under present conditions, to be maintained. From the enclosed memorandum of the clearances from the 1st May, 1915, the date of the Agreement, to the 31st July, 1916, it will be seen that in the seven months ended the 30th November, the rate of clearances averaged 263 chests a month, that the clearances in December dropped from 249 to 85 chests, and that in the following eight months from the 1st December to the 31st July, the average monthly amount cleared was only 86 chests, at which rate it would take nearly three and a half years to exhaust the stocks.

Sir E. Fraser justly attributes the diminished sales to the exorbitant prices charged by the guild. The following statement, based on weekly returns furnished by the opium merchants, of the prices in Shanghai as between the combine and the guild, shows, however, that the responsibility for the rise by no means rests on the Chinese guild alone :-

The prices quoted on the 26th February, 1915, were: Malwa, 6,675 to 6,925 taels; Bengal, 6,905 taels. Subsequent returns gave prices unchanged," until the 29th October, 1915, when the quotation was: Malwa, 8,950 to 10,000 taels; Bengal, 8,905 taels; these prices being raised on the 5th November, 1915, to: Malwa, 10,000 to 10,500 taels; Bengal, 9,405 taels. Prices remained unchanged until the 17th March, 1916, when the quotations were given as Malwa, 12,500 to 13,000 taels; Bengal, 11,500 taels, a note being added to the effect that these rates were nominal, no business having been done. As prices rose, clearances decreased. The last quotations received (1st September) show that prices have gone down by 2,000 to 3,000 taels a chest, and it will be interesting to note whether this decrease will continue and whether it will be concomitant with a corresponding increase in the rate of clearance.

It appears to me that the effect of the policy of Mr. Ezra and his friends, in checking consumption by keeping up prices, is to relieve the British and Chinese authorities from all responsibility in regard to realisation of the stocks. The former have had ample opportunity to dispose of their holdings, and if the intention of total suppression contemplated in the agreement of 1911 is eventually completed, and the opium merchants are then left with stocks on their hands, they cannot reasonably complain if they have to surrender these on the narrowest possible terms of com- pensation.

The situation created in Shanghai by the coutinuance of the trade in Indian opium is certainly, as Sir E. Fraser points out, somewhat embarrassing. One result is * Not printed.

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