In 1826, the retail sale of opium in Bengal was conducted under the farming system. By this system certain tracts were farmed out to selected persons either by tender or by auction. These farmers were obliged to purchase Excise opium from the Government opium factories at a fixed price, which included the cost price and duty. This system was extended to Arakan and Tenasserim. As time went on, this system of opium farms was found to be bad and was replaced by the issue of free licenses to respectable persons. As Arakan was in a favourable position for smuggling, this system of free licenses was introduced there also, but Tenasserim, which did not afford the same facilities for smuggling, was allowed to retain the old system. That the system was unsatisfactory, chiefly on account of its tendency to cheapen opium, is apparent from a statement made by an old inhabitant of Akyab to Colonel Strover during the inquiry of 1891 that he had seen Government opium hawked about for sale in the streets during the early days of British rule. In 1864 Sir Arthur Phayre strongly condemned this new system, and in 1865 he drew up a set of rules which were brought into effect in 1866. The spirit of these rules is observed up to the present day in regard to the limit placed upon the quantity of opium which may be purchased by a licensee during a year for sale at his shop. How things stood in Upper Burma at this time can be inferred from a report made to the Government of India by Sir Charles Crosthwaite under date 20th March, 1888. “On our taking over the country, stringent rules were enacted and somewhat rigorously enforced against the sale of opium. Many Chinese were flogged and otherwise punished for engaging in a traffic which, although it may have been nominally prohibited, was allowed to go on under the Burmese Government.” From the statement of an official of the Burmese Government it would appear that the Burmese Government never openly recognized the opium traffic in Upper Burma; those persons only were punished who sold opium to Burmans. The Burmese Government admitted the existence of the traffic by levying customs dues on all opium imported into Upper Burma. In 1872, the British Political Agent reported that large quantities of Shan and Yünnan opium were being imported into Upper Burma and also smuggled. A Mr. Adams, of the American Baptist Mission, who was at Mandalay from 1874 to 1879, states that the _pôngyis_ took great pains to suppress the consumption of opium by Burmans, with the hearty support of King Mindon, who was a great zealot in religion, much under the influence of the priesthood, and active in supporting every endeavour to enforce the law of prohibition. But this law was personal to the Burmans, and not a territorial law. Other races were under no restrictions in the matter of opium or liquor, and when our troops took Mandalay in 1885, enormous stores of opium were found