893.114 Narcotics/2084

The Consul General at Shanghai (Gauss) to the Secretary of State

No. 922

Sir: I have the honor to acknowledge the receipt of the Department’s telegram No. 202 of August 4, 6 p.m., in reference to the Chinese opium suppression regulations and the attitude of the Anti-Opium Advisory Board of the League of Nations.

Copies of the telegram have been sent to the Nanking and Peiping offices of the Embassy and the substance of the message has been communicated [Page 701]orally to the United States Treasury Attaché at Shanghai, Mr. M. R. Nicholson.

My several despatches subsequent to those mentioned in the Department’s telegram record the developments in the matter of the proposed cooperation of the International Settlement and the French Concession at Shanghai in the enforcement of the Chinese regulations.

So far as concerns the International Settlement the present position is as follows:

Following the disclosure in outline by the Secretary General of the Council of the result of a police investigation of the manner in which the Chinese regulations are enforced in Chinese territory at Shanghai outside the Settlement and Concession areas, the Council, at the instance of its chairman, finally decided to refer the matter to a subcommittee of the Council consisting of three members, American, British and Chinese. This subcommittee held one brief hearing and then adjourned for the summer.

Officers of the Council interested in the matter believe that the proposals for cooperation have definitely been set aside for the time being.

So far as concerns the French Concession, negotiations with the Chinese authorities have not been opened.

The English language press at Shanghai—with the exception of the China Press (American incorporated; Chinese owned, with Tu Yueh-seng, the underworld opium king of Shanghai, a member of its board of directors)—has been forthright in its condemnation of proposals for cooperation which would introduce into the International Settlement the gangster-dominated “opium suppression” régime in control of the Chinese areas at this port. But until recently their criticism has been destructive and not constructive. The editor of the Shanghai Evening Post and Mercury (American), who has bitterly opposed the Chinese efforts, mentioned this difficulty to me some days ago, and I made the quiet suggestion, briefly, that if it is true that the Chinese opium suppression regulations are not being enforced at Nanking and at Tsingtao—those areas being held free from sale of opium—it seemed to me that the proper effort at Shanghai should be to obtain the same exemption for the foreign areas, with appropriate regulations or legislation under which the Chinese courts having jurisdiction over Chinese and non-extraterritorial foreigners in the Settlement and Concession could deal with violations of the prohibition.

This suggestion was received with enthusiasm and was made the basis of editorial comment in the Post and Mercury. It was also taken up in an article by Mr. H. G. W. Woodhead, the editor of Oriental Affairs (British), and later reprinted in the Post and Mercury.

Up to this time I have not been able to ascertain what provision is made by mandate, decree, law or regulation of the Chinese Government [Page 702]under which Nanking and Tsingtao are relieved of the vice of the Government opium monopoly. The present tense political situation is imposing other and heavy burdens on this and other offices in China; but if the situation returns to normal I propose to make inquiry into the matter through the Embassy at Nanking and the Consulate at Tsingtao.

So far as concerns this Consulate General, I may say that I have emphasized to the Chairman of the Council and also to the Secretary General, that any proposed agreement with the Chinese authorities providing for cooperation in the enforcement of the opium suppression regulations in the International Settlement at Shanghai must be submitted by the Council to the interested treaty power Consuls, and I have made it plain that I am opposed to any scheme of cooperation which would introduce the gangster-ridden opium “suppression” organization of the Chinese areas into the Settlement area. I am satisfied that I would have substantial support for such opposition in the Consular Body.

The question, however, is not a simple one for the Settlement. It must be remembered that the Chinese courts have jurisdiction over Chinese and non-extraterritorial foreigners in the Settlement. Those courts will not punish Chinese or others transporting or carrying opium if they have licenses or permits from the Chinese opium suppression authorities. Further, Chinese and others sentenced for offenses in the Settlement against the opium and narcotic laws and regulations are imprisoned in the municipal gaol, which is already overcrowded. The cost of maintaining persons serving sentences in that gaol falls on the International Settlement. As I stated in my despatch No. 887 of July 6, 1937, to the Department,55 the Ward Road Gaol of the Municipal Council was constructed to accommodate about 4,000 prisoners; there were some 6,000 prisoners in the gaol on May 31, 1937; of this total over 2,000 were serving sentences—and usually heavy sentences—in connection with opium and narcotic offenses. If this is the situation under normal conditions, before arrangements have been made to enforce Chinese regulations in the Settlement, one can understand how difficult the position would be if additional measures were taken in accordance with detailed Chinese regulations properly enforced.

This matter of the opium suppression regulations in China has, of course, been put aside by the Chinese and other authorities during the present emergency and crisis in China. But if there is a return to normal conditions the subject will certainly be revived.

The Department will be kept informed of developments.

Respectfully yours,

C. E. Gauss
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