"The second element in the ethical situation is the actual attitude of the Council not only towards the Chinese national movement, but also towards its own official assurances, protestations and promises.
"It is on this second branch of the subject before us that I specially desire to focus attention, and for the facts here stated that I would bespeak the most searching examination. The protestations of the Council as to its own virtuous attitude in regard to opium reform in China are made the more emphatic, and also the more open to criticism, by being coupled with some very severe insinuations made at the time, as to the insincerity and unreliability of the Chinese authorities in what they were professing, and in what they were planning to do in the same matter of opium reform. It so happens, as the event proves, that these sneers and insinuations were not only quite uncalled for, but were absolutely and utterly unjust. When a comparison is instituted between (a) 'official pronouncements' made two years ago by the Chinese authorities as to what they then intended to do for the suppression of the opium habit, and (b) the 'actual administrative results' that in the meanwhile have been accomplished, the Chinese have no cause to be ashamed of the verdict of impartial judges. What they have done may not always have been wise, it may sometimes have been very stern, but the outcome has been to awaken the astonishment and admiration of the whole civilized world! When, on the other hand, a comparison is instituted between (a) the fine professions and assurances of the Shanghai Municipal Council made six or seven years ago as to its own attitude towards the 'eradication of the opium evil' and (b) the 'actual administrative results' of the Council's own proceedings, the feelings awakened are of very different order. Here, not to mention any other consideration, two hard facts stare one in the face: First, in October, 1907, there were eighty-seven licensed opium shops in the International Settlement. In May, 1914, there were six hundred and sixty-three. In 1907 the average monthly revenue from opium licenses, dens and shops combined, was Taels 5,450. In May, 1914, the revenue from licenses and opium shops alone was Taels 10,995. The Council will not dispute these figures."
At the beginning of the anti-opium campaign in 1907, there were 700 dens (for smoking) in the Native City, and 1600 in the International Settlement. The Chinese closed their dens and shops at once. In the Settlement, the dens were not all closed until two years later, and the number of shops in the Settlement increased by leaps and bounds. Table I shows an outline of the Municipal opium-shop profits concurrent with the closing of the opium houses—and subsequently:
| Year | Month | Dens | Shops | Monthly revenue, shops only |
| 1908 | Jan. | 1436 | 87 | Taels, 338 |
| Oct. | 1005 | 131 | 623 | |
| 1909 | Jan. | 599 | 166 | 1,887 |
| Oct. | 297 | 231 | 2,276 | |
| 1910 | Oct. | Closed | 306 | 5,071 |
| 1911 | Oct. | 348 | 5,415 | |
| 1912 | Nov. | 402 | 5,881 | |
| 1913 | Dec. | 560 | 8,953 | |
| 1914 | March | 628 | 10,188 | |
| April | 654 | 10,772 |
Mr. Arnold quotes part of a speech made by the Chairman of the Municipal Council, in March, 1908. The Chairman says in part: "The advice which we have received from the British Government is, in brief, that we should do more than keep pace with the native authorities, we should be in advance of them, and where possible, encourage them to follow us." It must have been most disheartening to the native authorities, suppressing the opium traffic with the utmost rigor, to see their efforts defied and nullified by the increased opportunities for obtaining opium in that part of Shanghai over which the Chinese have no control. A letter from a Chinese to a London paper, gives the Chinese point of view: "China ... is obliged to submit to the ruthless and heartless manner in which British merchants, under the protection of the Shanghai 'Model Settlement' are exploiting her to the fullest extent of their ability."
There is lots of money in opium, however. The following tables compiled by Mr. Arnold show the comparison between the amount derived from opium licenses as compared with the amount derived from other sorts of licenses.
| 1913. | Wheelbarrows | Taels, | 38,670 | ||
| Carts | 22,944 | ||||
| Motor cars | 12,376 | ||||
| Cargo boats | 5,471 | ||||
| Chinese boats | 4,798 | ||||
| Steam launches | 2,221 | Total, | 86,480 | ||
| Opium shops | 86,386 | Opium, | 86,386 |
Another table shows the licensed institutions in Shanghai representing normal social life (chiefly of the Chinese) as compared with revenue from opium shops:
| 1913. | Tavern | Taels, | 16,573 | |
| Foreign liquor seller | 19,483 | |||
| Chinese | wine shop | 28,583 | ||
| " | tea shop | 9,484 | ||
| " | theater | 8,714 | ||
| " | club | 3,146 | ||
| Total | 85,983 | |||
| Opium shops | 86,386 | |||
Treaty Ports are those cities in China, in which the foreign powers have extra-territorial holdings, not subject to Chinese jurisdiction. Shanghai is one of them, the largest and most important. The Statistical Abstract Relating to British India for 1903-4 to 1912-13 shows the exports of British opium into these Treaty Ports.