Chapter 112 National Narcotics Concern

In 1935, Chiang Kai-shek's army entered Guizhou to hunt down the Communist Party in the Long March.If Chiang wanted to subdue the Southwest Local faction and the Guangxi faction, he would destroy their opium monopoly.Joseph Stilwell, the U.S. military attache to China, reported: From Stilwell's observations, it is easy to see why Chiang turned his military campaign in Guizhou into an opportunity to create a central government monopoly on opium control, why instead of allowing opium to be transported to the South via Guangxi, it was shipped to Yangtze River Basin, and then transported downstream through Hankou to Shanghai.Li Zhonggong, a native who was appointed finance commissioner after the Kuomintang entered Guizhou, was appointed as the leader of the opium monopoly.At the same time, Du Yuesheng and his opium enterprise were granted the monopoly of exporting opium from Guizhou to Hankou and Shanghai. In May 1935, in order to ensure that the entire opium system in the country was under his personal jurisdiction, Chiang Kai-shek abolished the National Opium Control Commission and replaced it with himself in charge of national opium control.

Chiang's control of opium in Guizhou forced the Guangxi clique to turn to Yunnan for alternative sources.In retaliation, the Nanjing government built a road between Yunnan and the unfinished Hankou-Guangzhou Railway.But even after the road was completed in the autumn of 1935, opium caravans from Yunnan continued to pass through Guangxi, where transit taxes were much lower.But despite this, Guangxi's warlords felt the financial pinch, and Chiang's cash box continued to swell, earning income from his special agreement with Du Yuesheng on the opium monopoly and the profits from Shanghai's narcotics production.But the problem is that as China and Japan increasingly compete in drug smuggling, refining and retailing in Shanghai has suffered an unprecedented collapse. On January 1, 1937, Chiang Kai-shek announced new laws punishing those who used opium extracts.According to the report of the Shanghai municipal police, this is a new climax in the battle between Japan and China to control drug smuggling.The Chinese government eventually effectively monopolized the opium trade, but with refineries in northern China and the Japanese military protecting it, the Japanese increasingly gained control over smuggling of morphine and heroin.

Also, there is a growing link between drugs and espionage.As Japan expanded its influence in the Northeast, their secret service units became increasingly involved with narcotics. After the Marco Polo Bridge Incident in 1937, the Japanese invaded Central China, and immediately began to take over the drug network in South China by recruiting Du Yuesheng's people or directly putting their own agents into the smuggling network.