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the suppression of the traffic in opium and narcotics and to give fairly detailed information concerning the efforts being made and the measures adopted by the Settlement authorities to suppress the traffic. Attention might also be called to the fact that offenders are being constantly apprehended by the Settlement police and turned over to the Special District Courts where the new opium and narcotic laws and regulations are being applied. I am inclined to favor the second course of action for the reason, firstly, that I feel this request for cooperation is not genuinely concerned with the question of suppressing the opium and narcotic traffic in the Settlement and French Concession; and secondly, that it is doubtful whether the enforcement of the administrative provisions of the Chinese opium law would assist the Settlement authorities in the fairly satisfactory efforts being made by them to suppress the traffic in drugs and opium; on the contrary it might conceivably gradually undermine the Council's administrative rights and powers. Respectfully yours,

C. E. Gauss

893.114 Narcotics/1972

48

The Consul General at Shanghai (Gauss) to the Ambassador in China

(Johnson) No. 817

SHANGHAI, May 24, 1937. SIR: I have the honor to refer to my despatch No. 811 of May 18, 1937, concerning opium suppression in the International Settlement and French Concession, and to page four of that despatch in which it was stated that the Consular Body at its meeting on May fourth decided to forward a copy of the Acting Mayor's communication on this subject to the Shanghai Municipal Council requesting an expression of its views.

There is now enclosed for the information of the Embassy a copy of Senior Consul's circular No. 76-M-II,“ quoting a letter dated May 19, 1937, from the Secretary General of the Shanghai Municipal Council to the Senior Consul on this subject. It will be noted the Secretary General states that on May seventeenth he discussed this matter with various officials of the Municipality of Greater Shanghai, including the Acting Mayor, and suggested that it would facilitate matters if they were to submit to the Council definite and concrete proposals as to the kind and extent of cooperation which they wish to secure. The Secretary General adds that the officials in question

46

Copy transmitted to the Department by the Consul General at Shanghai in his despatch No. 788, May 24; received June 16.

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agreed to this suggestion and undertook to prepare and submit proposals which in due course will receive the consideration of the Council. Respectfully yours,

C. E. GAUSS

48

893.114 Narcotics/2014 The Consul General at Shanghai (Gauss) to the Ambassador in

China (Johnson) No. 865

SHANGHAI, June 24, 1937. Sir: With reference to my despatches No. 851 of June 21 and No. 855 of June 22, 1937, 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 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.

* Copy transmitted to the Department by the Consul General at Shanghai in his covering despatch No. 852, June 24; received July 26.

Neither printed. 50 None printed.

At the request of the Secretary General I have passed on the copy of his memorandum and enclosures to the Acting British Consul General. Respectfully yours,

C. E. GAUSS

893.114 Narcotics/2024 : Telegram The Secretary of State to the Consul General at Shanghai (Gauss)

WASHINGTON, August 4, 1937–6 p. m. 202. Your despatches No. 836, June 21, No. 841, June 22 51 and No. 852, June 24.52

(1) The statement by Acting Mayor Yu in his communication dated May 29 “the above-mentioned plan for the suppression of opium has been approved by the Anti-Opium Advisory Board of the League of Nations" is not strictly accurate.

While the Opium Advisory Committee has expressed approval of the general principle of registration and rationing of addicts that Committee has never either approved or disapproved the existing Chinese plan for the suppression of opium and has not recommended the establishment in foreign settlements or foreign concessions in China of registration offices. The Committee has gone no further than is shown by the following:

(a) In November 1934 at the Nineteenth Session of the Opium Advisory Committee at Geneva the Chinese representative made a statement concerning the new Chinese drug laws. As stated in the Advisory Committee's Report to the Council on the Work of the Nineteenth Session, "several members of the Committee, particularly the representatives of Spain, Italy, Portugal, Japan and Siam, congratulated the Chinese Government on the energy which it displayed in adopting these new measures.” Other members of the committee, however, while paying tribute to the activity displayed by the Chinese Government, supported the opinion of the Polish representative, who expressed the view that the new measures introduced a system of monopoly, and “hence, in his opinion, the Committee should neither approve nor disapprove the new policy adopted by China, but should first await the results it might produce. The

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representatives of Austria, Belgium, Canada, the United States of America and the United Kingdom also said the Committee could not give an opinion without a full knowledge of the results achieved, and for this reason the Belgian representative asked for an assurance that the Committee would be kept informed of the progress made.”

(6) In 1935 the Advisory Committee in its report to the Council paid a tribute to the determined efforts which were being made by the Chinese Government against the abuse of narcotic drugs” but certain members and the American representative continued to reserve judgment.

(c) In 1936 the Committee, in a resolution noted "with great satisfaction the measures already taken by the Chinese Government for the purpose of suppressing the clandestine manufacture and the illicit traffic in narcotic drugs in the territory under its control”.

(2) The Department would regard with concern the establishment in the International Settlement of an office for the registration of opium addicts and the issuance of permits.

(3) Please inform Nicholson 58 of the above and tell him that the American representative at the Opium Advisory Committee (a) has never supported the plan of suppressing opium smoking by means of monopolies, (6) at the last session urged abolition of the monopoly system and initiated a movement to embody in any future convention for limiting raw opium production provisions which would reduce by a stated percentage annually the quantities of raw opium to be made available for manufacture of prepared opium thus implementing the provision of the Hague Convention 64 that suppression of prepared opium while it may be gradual must be effective.

The Committee in a formal resolution expressed the opinion that a convention for limiting production of the poppy “must necessarily contain provisions aiming at a gradual reduction of supplies of raw opium to monopolies.” (4) Mail copies of this telegram to Nanking and Peiping.

HULL

893.114 Narcotics/2084 The Consul General at Shanghai (Gauss) to the Secretary of State No. 922

SHANGHAI, August 9, 1937.

[Received October 5.] 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 AntiOpium 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 orally to the United States Treasury Attaché at Shanghai, Mr. M. R. Nicholson.

* M. R. Nicholson, United States Treasury Attaché at Shanghai. * Signed January 23, 1912, Foreign Relations, 1912, p. 196.

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 Yuehseng, 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 Govern

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