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1
to claim.
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Our merchants, however, did not believe that the Chinese Government would observe the essential conditions; that if the half-duty were paid down, their imports would have the run of the Treaty port provinces free of further taxation. One of the foreign Ministers, Sir Rutherford Alcock's colleagues, declared his conviction to the same effect: that the payment in advance, of the half-duty, would be but so much added to the li-kin or other burdens which it was sought to lighten. Consistently with their theory, as above set forth, our merchants further contended that, in the provinces inland of the Treaty port provinces, the Chinese ought not to tax our imports carried into these under transit duty certificate, even when, by passing into consumption, they had become separated from the certificate. The counter-concessions obtained in other Articles of the Convention from the Chinese Government, it was argued, were not of sufficient value to justify the surrender of the area of exemption from all but Tariff duty (the port area), or of the option to use or decline the privilege of certification by payment of the half-duty. In the end the new Agreement was not ratified.
My own disposition, when I read Sir Rutherford Alcock's Convention, in 1869, was, I confess, to doubt that, the half-duty paid, our imports would be any the more secure against such taxation as "the rapacity or necessities of Chinese administration" might inflict upon them. I doubted the good faith of its officials, where breach of faith could only be established by the evidence of those subject to their authority, and entirely in their
I have since found reason to believe that the control of taxation in the power. provinces is a matter of no small trouble to the Central Government as at present constituted, if, indeed, it be possible at all. The State Papers, of which the sense is given in Appendices 2 and 3, prove this. But the Convention had hardly been rejected, untried, before it became apparent that its rejection had greatly added to our difficulties. It was the first instrument affecting British trade that had not been extorted from the Chinese by force of arms. It was the first in which there was at least a show of reciprocal interchange of concessions. It was the result of two years' negotiations, during which, in one or two instances, the Chinese bad spontaneously adopted a course of action implying a more liberal interpretation of Treaty engagements.
It was not wonderful, therefore, that its rejection without a trial should pique the high officer who had, in effect, represented the Chinese Government throughout the negotiations (the Grand Secretary Wênsiang); or that his pique should show itself in renewed obstructive- ness. Whether the forebodings of myself and others regarding its operativeness were well-founded or not, I have, almost from the day rejection of the Convention was made known to the Tsung-li Yamên, found occasion to regret that it had not been allowed at least a term of probation.
As it was, complaints of the unlawful detention or taxation of goods in transitu continued, and a concession of great value was practically withdrawn. I mean the right of certificating imports carried inland, no matter what the nationality of the holder." I speak of it as a concession, because our demand that the nationality of the goods, uot of the owner, entitled them to clearance inwards by payment of half-duty had earlier been resisted. In 1868, however, the Tsung-li Yamên had by Circular intimated to the Provincial Governments that the transit duty clauses affecting imports were henceforth to be so construed. This action of the Yamen was the more noteworthy because it was taken without communication with the foreign Legations. The Circular was not brought to my knowledge until after I had received complaints, in 1871, that the provision which it recognizes had been set at nought. I pressed for enforcement of its injunctions, but without effect. I was always met with the old argument that the Chinese Government had the right to tax any property held by Chinese subjects. This principle had been violated, said the Grand Secretary Wênsiang, when I represented that the Circular of the Yamên, in reality, surrendered it, violated by the issue of that Circular, and its prescriptions, he said, had been generally declared by the Provincial Governments impracticable. He refused me a copy of it.
It is scarcely needful here to notice in detail a negotiation on the subject of transit duties undertaken in concert with some of my colleagues in the year 1871-72. It resulted in a draft of rules proposed by the Tsung-li Yamên, which were accepted by none of us, and remonstrance was continued as before, I imagine by all, certainly by myself, as occasion required. I have mentioned in the earlier portion of this Report the circumstances under which I thought it my duty more formally to reopen the discussion with the Tsung-li Yamên in 1874-75. The statements of fact, which have run to such a length, were a necessary preliminary to my arguments in favour of the modification of Treaty right which I have agreed to recommend to Her Majesty's Government, in consideration of certain counter-concessions.
I must first re-state my own construction of our right. I believe that by the Treaty
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of Tien-tsin (1858) our imports, opium excepted, should be free to be sold on payment of Tariff, without imposition of other taxation, until they are sent for sale to an inland centre past the barrier or barriers between the port of entry and the inland centre in question. To pass these barriers free of other dues, they must be accompanied by a certificate proving that, in lieu of the dues leviable in transitu, the half-duty composition has been paid upon them. Without this certificate they must pay what dues may be demanded. On arrival at the inland centre, when they pass into consumption, I hold them liable to local taxation. I am here at issue with many of my countrymen, as well as with others whose opinion I am bound to respect, who maintain that, the half-duty paid, no taxation should be leviable at an inland centre. I maintain that its levy is just, and for this reason, that the imports can only claim exemption from it so long as they are accompanied by the certificate attesting payment of the half-duty composition, which payment it is at the option of the importer to make or to decline making. Where he finds, as may be sometimes the case, that the transit duties amount to less than the half-Tariff duty, he will, of course, decline it. But as he has this right of option, the Chinese Government, it seems to me, cannot be denied the right to infer, whenever goods are found without a certificate, that the importer has elected not to pay the half-duty.
At the inland centre, it has been suggested, a system of sub-certification might be established. Such a system would, I think, involve a more costly establishment (for it must be in the nature of a foreign Inspectorate, that is, of a highly paid staff) than it would be fair on our part to require, and such an establishment could not undertake to protect more than the larger operations in imports. Certificates could hardly follow goods consumed in the retail trade inland. As the Treaty now stands, however, I concede the right of the Chinese to tax imports inland, once they are separated, by lawful sale, from their transit duty certificate.
But the question earlier put remains unanswered. At what point does the liability of imports to taxation in transitu begin i What are the limits of the port area; the area of exemption from other taxation to which the imports are entitled upon payment of Tariff duty? As the validity of the Treaty of Nanking (1842) was reaffirmed by the Treaty of Tien-tsin (1858), and as the Declaration of 1843 (in which it was agreed that the charges to be levied as transit duties were never to be raised) was signed as possessing equal value with the Treaty of Nanking, I have been wont to contend that the barriers at which the liability to transit duties commenced could only be those existing in 1843, at which the moderate charges never to be raised were then levied. But the severity of a condition so sweeping apart, I am compelled at the same time to admit that if my hypothesis of right be unassailable, it still advances me but little towards practical solution of the difficulty before me, for the simple reason that I cannot myself, nor do I know any one that can, affirm what barriers existed in the year 1843.
Of the more modern date of some I am satisfied; but I am unable to say positively of others that they bave not the right of taxation which I admit a certain seniority would give them. I have been unable, consequently, even at Shanghae, to define my port area to my own satisfaction, and at some of the other ports the definition of the area would present even greater difficulties; eminently at Canton and Foochow, where there lies between the foreign settlement and the country inland a large city and suburb, in which I think it certain that octroi barriers existed long before 1842.
The Chinese, however, have in general ignored the port area. In general, not always. That is to say, that where the country inland, from its formation or its poverty, would render the establishment of li-kin collectorates near the port inconvenient, they have not been established. Otherwise, at Shanghae, for instance, collectorates bave been established close to the foreigners' dwellings, and l-kin taxation has been laid through these, not alone upon opium, on which, as I contend, the Chinese have a right to lay it, but upon all other British imports; and when my Agreement was signed at Chefoo last September, a bale of shirtings was as certainly taxed at Shanghae the moment it left the foreign importer's door as a chest or less quantity of opium. The bale of shirtings could not be sold by the Chinese purchaser in the city of which the foreign settlement is the suburb, without payment of a certain charge as li-kin, which made it free of but a limited district. Passing out of this, it paid the li-kin charges that
freed it in a second district, and so on. The authorities, as a rule, have evaded com- munication of the li-kin tariff when applied to for it. Our information (see Appendix No. 1) comes from the native constituents of our merchants, whom we cannot put in the witness-box.
The charges in these li-kin districts are not stated, each taken by itself, to be very burdensome. At Shanghae, up to a certain distance from the settlement, they do not
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