Sessional_Paper_1884 — Page 209

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lately called attention to the undesirability of the Chinese Governinent largely enhancing the Import duty on Indian Opium, and more especially because recent observations show that the market for Indian Opium will be confined for the most part to the South of China.

The next question is, the existence of these local Collectorates being shewn, whether the Government should take immediate notice of the levy.

There is little doubt but that the system is not of yesterday. It was found out, and stopped by Sir R. G. MACDONNELL, during his Government. It is clearly contrary to international law, (see Lord CLARENDON's despatch, Revision of Tientsin Treaty, China, 1871, page 400), and the Canton authorities know it-see Sir BROOKE ROBERTSON's representation to the Canton Government, (Command paper 1189 of 1875, page 36,) where he told the Viceroy "that the collection of Imperial duties in the Colony was against the law."

Nevertheless the Hongkong traders say it is a matter of convenience to them to pay duties here, which they would have to pay at the K'ap-shui Mun Station, a distance of 7 miles, and where there is often trouble about the tender. They also say that they can clear their Opium for any place along the Coast north or South, without going to K'ap-Shui Mun. Besides being contrary to international usage, a system of espionage is established, which places the Chinese residents of the Colony very much in the power of the Canton Officials, a power which may be used often to their disadvantage. Otherwise than the principle involved and the drawbacks to some Chinese residents, I am not sure that there is much to be objected to in the collection, and the convenience to many is obvious. But if there is to be an arrangement, as seems in contemplation, for the future regulation of the Opium traffic, and if this Colony is to have stations estab- lished within its jurisdiction, care should be taken that a proper recognition is made, that the concession, if made, is only granted for a good consideration, and because that our nearness to China warrants our making it. For such facilities granted for collecting, we should perhaps have some of the large revenue which has been over and over again alleged to be lost to the Chinese Government through Hongkong smuggling.

In 1868 Sir THOMAS WADE said that "by the contraband trade of junks frequenting Hongkong "and Macao, the Customs Revenue is defrauded in import and export duties little less than 1,000,000 taels "per annum." Revision of Tientsin Treaty China No. 5, 1871, page 460.

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The Governor states that "the Hongkong Government gets at present $205,000 per annum from "the Opium Farm, which is practically levying an ad valorem tax on it of more than 100 per cent. to the consumers," and that he agrees "with Sir THOMAS WADE that by the opium smuggling from Hongkong "into China, the Government of China loses at least a million of taels of revenue per annum." (See H. M. Colonial possessions C. 3094 of 1881).

Putting aside the disparity in the Estimates of the amount of smuggling, there can be no doubt but the geographical position of the island does afford a basis of operations for smuggling, and that a considerable amount does exist. The undersigned, however, ventures with all respect to point out that a comparison of the figures given by Sir THOMAS WADE, on page 3 of Command paper 2,716 China No. 2 (1880) shows that not more than 3,357 piculs of opium (leaving out Macao which takes up a large quantity) can be smuggled into China from Hongkong. The revenue on that, in 1876, would have been less than $300,000. In 1875 there were left at Hongkong 21,670 piculs of the whole import. In the financial year 1875-1876 the Hoppo admitted collecting duty on what Sir THOMAS WADE estimates as piculs 10,813, of that amount Sir THOMAS WADE also allows 7,500 piculs for Hongkong boiling, for export and local use, (and export elsewhere than to China in the raw state) whilst the Governor's figures would lead to the conclusion that only 310 chests were boiled or prepared here. His Excellency states that the payment of the tax by the Opium Farmer of $205,000 is an ad valorem tax of more than 100 per cent. i.e., the value of the opium used is at the most $205,000, or equal about to 340 piculs. The capital of the last Company was $1,400,000, and as a first return, Shareholders got 12 per cent. interest on the capital.

However, if the Chinese Government lose annually anything like what is estimated from opium smuggling here, it would certainly pay them well to give this Colony a large percentage to collect their duty for them, or to allow a Foreign Inspectorate Station within the jurisdiction, because they would then get rid of all their Cruisers and save large expenses.

'24th October, 1882.

(Signed)

J. RUSSELL, Colonial Treasurer and Registrar General.