FO371-23514 — Page 228

Page 228

COPY

Ref. 2/0.43/39

S/0 No.16

Copies sent to:-

Canton No. 16

Hon.Colonial Secretary

Dear George,

Page 228

332 Gloucester Building,

28th February, 1939.

67

The local press here last week published a

Reuter report from London, dated the 21st February, stating

that in a written reply given in the House that day with

regard to smuggling in China, the Parliamentary Secretary to

the Department of Overseas Trade had said that Viscount

Halifax had received no reports of smuggling since an

answer to a similar question had been given in the House on

Nov ember 16th.

2. Such enquiries as I have had time to make

casually here tend to show that smuggling is rampant in

South China. The following extract from a letter from what

I think is a very reliable source in Canton may intere st

you:

"Meanwhile the city is being flooded with Japanese

goods of every description which are carried by naval

vessels as naval and military stores, appearing later in

Japanese shops which are opening everywhere in former Chinese

pr en is es. Prices are amazingly low and goods norma lly

sold locally by foreign firms are being retailed at figures

far lower than agents themselves can command.

Caldbeck

McGregor's whiskey has been offered to the firm's agent at

$80 per case against his own selling price of $102, and

Kerosene (A.F.C., Texaco, etc.) is on sale at lower prices

than the companies can quote. Junks are arriving openly with

kerosene, and probe bly other commodities, which are purchase d

in Hongkong and, in other words, Cant on is now a free port

for Chinese and Japanese interests".

Yours ever,

(signed) J:C.HUTCHIS GN.

A.H. George, Esquire, C.M.G.,

British Embassy,

SHANGHAI.

Page 228

Page 228

Page 228