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Government to carry out the agreement forwarded to you in my despatch No. 111 of the 19th March.
I informed them that, as the agreement had not been communicated to you by the Chinese Government, official cognisance could not, I understand, be taken of it; and I reminded them that this agreement, like that of 1915, was negotiated privately without any reference to any British officer. Their obvious course was to take such proceedings as they were advised against the other parties to this private compact.
Mr. Ezra favoured me with a full account of the reasons for and the course of the negotiations, which he was sure were constantly reported to the Cabinet.
I replied that, if they could prove this latter fact, their position would of course be strong, though even so, China's failure to notify His Majesty's Legation of recognition of the agreement would be a serious omission.
After further conversation, during which I was told that China was to take over opium to the full extent of 10,000,000 Shanghai taels at 8,200 taels a chest, and that as to the balance of some 300 chests left over out of the total stock, the combine had made an agreement with the Chinese to buy it at its own risk, I insisted that all I could do was to forward to you any written statement they might make of their position.
They left after begging me to support their claim.
Their statement, however, did not reach me till yesterday and this morning Mr. White-Cooper wrote to say that, as I have telegraphed, be and Mr. Ezra were proceeding to Peking on the morning of the 29th instant in order to put their position fully before you. I was asked nevertheless to send on the statement, copy of which is enclosed.
I have, &c.
Sir,
Enclosure 2 in No. 1.
E. H. FRASER.
Messrs. D. Sassoon and Co. to Consul-General Sir E. Fraser.
Shanghai, April 26, 1917. WHEN the merchants concluded their agreement with the Chinese Government last January it was confidently anticipated that the interest of British subjects in the opium trade would entirely cease when the month of March came to an end. It was believed that a satisfactory solution for the disposal of the residue of the stocks had been found, and that it would be unnecessary ever again to invoke the assistance of the British Government in the difficult, but most important, question of opium.
We regret to say that our anticipations have not been realised, and we appear to be again faced with that callous disregard of obligations by the Chinese Government which has unfortunately been so conspicuous in their dealings with the opium trade during the last eight or nine years.
The agreement which was entered into on the 28th January last was the outcome of prolonged discussion and negotiation between the merchants and the duly authorised It differed in no essential from such representatives of the Chinese Government. contracts as a Government makes from time to time when it purchases something The merchants were which it desires to acquire from merchants or manufacturers. anxious enough to sell their stocks, and though they would have preferred to sell them for cash, they were willing to accept the depreciated bonds of the Chinese Government in order to finish with the trade. The bargain doubtless suited the Chinese Govern- ment, as it secured the continuity of the contribution of 3,500 dollars per chest which we had threatened to stop last October, and enabled them to acquire the stocks at a figure which, when expressed in the cash value of the bouds, was a very moderate one.
The contract was duly signed, and bears the signatures and official seals of Feng Kuo Chang, the Tuchun of Kiangsu; Zee Yao Ling, the civil Governor of Kiangsu and Wong Che Shwui, the special envoy for the probibition of the sales of opium in Kiangsu, Kiangse, and Kwangtung.
The fact that this agreement had been entered into by the Government was soon announced in the public press, both Chinese and foreign, and questions were asked about it in the Chinese Parliament and answered by the Government, who took full responsibility; and it will be noted that no suggestion has ever been put forward that the signing was not duly authorised by the Cabinet of the Chinese Government. Not only has there been no repudiation on this account, but both the agreement itself and
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the acts of the representatives of the Chinese Government have been recognised by the Government, and they have actually acted on the agreement.
For immediately after the 31st March the Customs were closed to opium by orders of the Government, and not a chest could thereafter be imported or removed from the bonded godowns. The effect of this closing was that the Government took possession of the stocks which they had agreed to acquire, and deprived the owners of all powers of dealing with them. That this closure was contrary to treaty is obvious, but as it was treated by the merchants as part and parcel of the completion of the arrangement for the purchase of the stocks, no protest was of course made.
Immediately after the agreement was signed it was produced to you in order that His Majesty's Governinent might be informed of what had been done; and in the ordinary way the Chinese Government should also have officially informed His Majesty's Minister of the agreement; but this, we understand, hus not been done so far, in spite of our repeated requests.
When the agreement was signed the merchants assumed, and, we think, were entitled to assume, that it would be carried out, and they acted on this assumption.
The action of the Chinese Government completely misled the merchants, and the closing of the Customis was regarded as having clinched the matter, and the result is that the merchants are now left with large stocks in hand.
We need hardly say that the merchants would have acted very differently if they' had any reason to believe that the stocks would not be taken over in accordance with the agreement.
By the 18th April the merchants had become anxious at the delay in completing the bargain, and we addressed a letter to His Excellency Feng Kuo Chang and the other signatories as per copy enclosed.
Recently suggestions were put forward, chiefly by the anti-opium party, that there had been underhand dealing (which we indignantly deny), and the Government there- upon sent two Commissioners to Shanghai to investigate and report.
It appears from the Chinese press that the report of the Commissioners sent to investigate has now been made, aud that it exonerates all parties from the suspicion of corruption; but it is stated that it was decided, at a Cabinet meeting held on the 18th April, to cancel the agreement.
It is, perhaps, hardly realised what huge sams are involved, and what disastrous results would follow cancellation at this late hour, but it must be noted that the loss would amount to a vast sum, as the stocks would be unsaleable and practically valueless.
The merchants have no remedy at law which is of any value, and they therefore trust that representations may be inade to the Chinese Government to prevent so great a breach of good faith as cancellation of the agreement in question. The fact that the Chinese Government has abstained from reporting the agreement to His Majesty's Minister (as it should have done) seem: hardly sufficient to justify it in inflicting this immense injury on the merchants without protest from His Majesty's Minister, and we therefore confidently hope that the support of His Majesty's Minister may be accorded to us in our efforts to prevent the Government of China being guilty of so great an injustice.
We are, &c.
Your Excellency,
(For David Sassoon and Co., Limited),
A. HOWARD, Manager
[On behalf of British opium merchants.]
Enclosure 3 in No. 1.
Shanghai Upium Combine to Feng Kuo Chang.
Shanghai, April 18, 1917. ON behalf of the members of the Shanghai Opium Combine, I have the honour to approach your Excellency as a signatory, on behalf of the Government of China, of the agreements concluded with the combine for the purchase of the residue of its stock of opium existing on the 31st March, 1917. The sale was to be completed on the following day, but we are very much concerned to find that though over two weeks have since elapsed the Government has not yet taken delivery of its opium nor handed us our bonds in payment as stipulated. It seems to be suggested in your Excellency's
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