CO129-587-9 Smuggling of kerosene oil and other commodities into China 22-4-1940 - 19-6-1940 — Page 14

14

15

carried on in tugs and lighters between this

Colony and Canton, and it must be admitted

that this affords a channel for trade which

the Colony could ill afford to lose.

4.

Kerosene,

on which the Commissioner

lays some emphasis, provides a particular case

in point, for it is well known that, despite

the prohibition of the Chungking Government,

the Japanese are importing vast quantities

of kerosene from Formosa to Canton and Swatow

under the guise of Military supplies, and it

would appear inequitable that legitimate

British interests should alone be handicapped

by pretending that lawlessness does not exist

and by adopting a course of action which the

rivals of those interests overcome by force

of arms.

5.

Since the importation of kerosene

>

is prohibited by the Chungking Government it

would appear that the present question is

not one of revenue since no duties can be

collected on articles subject to embargo,

but rather one of currency conservation, as

Mr. Pritchard points out. In this respect,

however, our national interests are at least

equally concerned. This Government is

constantly urged to take all possible steps

to sell sterling products to non-sterling

Enclosure No.3.

groups, and I presume that it is not the desire of His

Majesty's Government to hinder that process simply to

assist the currency of a friendly nation.

6.

Whatever embargo the Central Government may

impose it appears certain that the consumer in China is,

with some justification, determined to have his kerosene

oil. If the flow of that commodity were to be seriously

checked in Hong Kong there can be little doubt that this

would be rapidly transferred to Macao, and any attempt

to ration that colony, by means of the Defence Regulations

to which I have referred above, to quantities considered

legitimate for consumption there, would almost certainly

be considered at least as an unfriendly act. The

Japanese interests, in the meantime, would reap an even

richer harvest than at present.

7.

I enclose also herewith a copy of an interin

reply to the Commissioner of Chinese Maritime Customs

which I have directed to be sent pending the receipt of

your advice in connection with the general questions of

policy involved.

I have the honour to be,

Sir,

Your most obedient, humble servant,

1.

And Norther

Governor.