The Consul General at Shanghai (Gauss) to the Ambassador in China (Johnson)48
Sir: With reference to my despatches No. 851 of June 21 and No. 855 of June 22, 1937,49 I have now the honor to enclose as of possible interest a copy of a confidential memorandum, with attached papers,50 which was handed to me on the afternoon of June twenty-second, by Mr. Stirling Fessenden, Secretary General of the Shanghai Municipal Council.
This memorandum relates to the opium situation at Shanghai and the desire of the Chinese authorities that the authorities of the International Settlement extend a measure of cooperation in the enforcement in the Settlement of the so-called Chinese opium suppression plan which contemplates the registration and licensing of opium addicts and the control and licensed sale of opium.
It will be observed that this additional information confirms the active part which Mr. Tu Yueh-seng (Y. S. Doo), the one-time “opium king” of Shanghai, is taking in the negotiations under which the Chinese authorities hope to extend their plan into the Settlement. I am thoroughly convinced that if success attends these Chinese efforts, we will have underworld activities here of a most distressing and dangerous character. So far the International Settlement has successfully opposed the efforts of Mr. Tu Yueh-seng to establish his opium business in the Settlement.
With the situation at Shanghai which finds the Settlement and adjoining areas without any apparent boundary or limit, there can be no complaint if the Settlement authorities insist that all registration, licensing and sale shall be confined to Chinese territory outside of Settlement limits.
At one time the situation in the French Concession was most disgraceful in connection with the operations of Tu and his opium dealers. Large bribes were being paid to French police and municipal officials, and an underworld gangsterdom controlled by Tu dominated the Concession area. I am informed that the French Concession is now comparatively clean and clear of these activities.
The Secretary General of the Council tells me confidentially, however, that all police forces here are cursed with the effects of the opium [Page 699]traffic. He informs me that complaints have repeatedly been made to him at his residence, by well-to-do Chinese residents of the Settlement who are opium smokers, of blackmail by Chinese detectives of the police force of the International Settlement who attempt to extort sums running into thousands of dollars from opium smokers under the threat of laying complaints against them with the Chinese authorities. The police have the greatest difficulty in dealing with this problem amongst their Chinese personnel. The difficulty would be even greater were the Settlement authorities to permit the licensed sale of opium in the Settlement.
At the request of the Secretary General I have passed on the copy of his memorandum and enclosures to the Acting British Consul General.