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This being the case, native opium must be taxed as circumstances admitted.
It was to foreign opium that the Chinese had to look for a revenue, and there was no doubt that much was smuggled under present arrangements. Hankow was peculiarly situated, as far as foreign opium was concerned, for the Tariff duty was paid in Shanghae. The li-kin was supposed to be paid by the native purchasers when he took the opium out of the foreigner's godown, but in spite of every precaution short of a domiciliary visit to the foreigner's premises, at least 100 chests a-year out of those that were reported at the foreign Customs paid no li-kin.
He
He went on to explain the scheme for the checking of opium at Hong Kong, which has evidently been communicated by the Yamôn, but although he did not deny the force of my arguments when I showed him that 80 taels would be a remunerative rate, he would not commit himself to any statement of opinion as to what he thought would be fair. repeated continually that Hankow was under the Nan Yang-ta-Ch❜ên, and whatever he' agreed to would be faithfully carried out at Hankow. He did, however, permit himself to express approval of Liu Chih T'ai's scheme for handing over all the revenue on foreign trade and opium to the Board of Revenue, for he said that any other arrangement would lead to endless trouble.
This is a somewhat condensed record of the conversation, which lasted considerably over an hour, but much old ground was gone over, and I had to repeat a great deal that I have already reported to you. Pêng-ta-jên, whose last post was Fu-yin, in Peking, had much to say about the Russians and their encroachments, but he told me nothing new. with the exception of one piece of information, which struck me as singular. He said that on the occasion of the last patrol of the Corean frontier some new forts were discovered which were believed to be manned by Coreans in Russian pay.
I
I leave to-night for Shanghae, and shall have one more report to submit to you, which will be a short summary of the information contained in my letters to you. hardly know whether you will consider this necessary, but it occurred to me that the latter are hardly formal enough to be used as memoranda of interviews should you wish to employ them in that way.
(No. 38.) My Lord,
Yours, &c.
(Signed) WALTER C. HILLIER.
Inclosure 9 in No. 75.
Mr. Hillier to Sir T. Wade, October 1, 1881.
[See p. 22.]
No. 76.
Sir T. Wade to Earl Granville.— (Received July 22.)
Peking, June 3, 1882.
MY telegram will have prepared your Lordship for a final Report from me upon the question of opium taxation.
I must begin with a recapitulation of its history.
The discussion of this question now, as I trust, drawing to a close, dates, it may be said, from the signature of the Chefoo Agreement in 1876. Believing that the exemption of our imports from the abnormal taxation known as the li-kin, within the area of freedom claimed by me under the British Treaty, would prove next to impossible, so long as li-kin Collectorates for the taxation of native trade existed, I consented, if the Chinese Govern- ment would open certain ports and places of call to our shipping, to move Her Majesty's Government to ignore the collection of h-kin beyond the limits of the foreign port settle- ments as already defined; or, where these had been undefined, beyond such limits as should be accepted by our own and other Governments.
The Treaties of some of these, it should be noted, were read as considerably extend. ing the area of exemption from taxation inland of the port so far claimed by me. To return to our own Treaty, the transit duty remaining in force, imports would, as heretofore, claim to be cleared at the option of the owner to any inland centre by the payment of a half Tariff duty.
My proposal to exclude the li-kin Collectorates from the foreign settlements was suggested, not only by the complaint that their levy of li-kin upon foreign imports was in
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violation of Treaty, but by the fact that when levying li-kin, which they were entitled to levy within the settlements, they came, or were liable to come into collision with the quasi-municipal police maintained by the port communities. The levies of the Collectorate Executive, on the one part, would not always be within the bounds of their authority; on the other part, the Chinese taxed were ready enough to avail themselves of the protection from the taxgatherer, which an appeal to the settlement police might secure them.
This was not notably the case in the matter of opium. The Chinese Government had an undoubted right to tax opium as soon as it passed into the hands of the Chinese purchaser, but the attempt of the li-kin Collectorate to tax it in the settlement, of Shanghae for instance, had been more than once resisted, appeal being made to our Consul or to our Supreme Court. If the Chinese Government, as the Chefoo Agreement required, were now to withdraw its li-kin Collectorates from the settlements, it would scarcely fail to lose no little of the revenue due to it on opium; and feeling in duty bound to guarantee it against that loss, I agreed to move Her Majesty's Government to consent to the levy of the opium -kin and Tariff duty together; the action of the native li-kin Collectorate being supplied by that of the Foreign Customs Inspectorate, which had, ever since legalization of the opin trade by the Treaty of 1858, collected the Tariff duty of 30 taels per picul upon the drug.
The rate of li-kin varied at different ports, and I conceived it desirable that the rate should, if possible, be uniform. The Grand Secretary Li, however, would not accept a lower rate than 60 taels at every port, and it was accordingly agreed that if the joint collection were assented to by Her Majesty Government, the rates should, as in time past, be regulated by the requirements of the several provinces.
The arrangement I undertook to recommend regarding the general import trade did not commend itself to several of my colleagues, the Representatives of Treaty Powers then in Peking, and they requested their respective Governments to deprecate its ratification. On the other hand, the Government of India became seriously alarmed at what appeared to threaten opium with a weight of unlimited taxation.
I have no right to be surprised at the impression produced upon the Government of India. The missionary world received the same impression; and, consistently with its professed belief that the trade in foreign opium is chief among the obstacles in the way of the teacher of religion, was as much delighted as the Government of India was dismayed.
I shall not pause here to consider the moralist view of the question. I hope to submit to your Lordship elsewhere some remarks upon this subject. For the moment I keep to its material side. I believe that in reality the Government of India need have no fear for its revenue. This country is a vast opium-producing and opium-smoking region. The wealthier smoker prefers the Indian drug because it is the best. The Chinese Government, although by no means wholly insincere in its condemnation of both produc- tion and consumption, derives a large revenue from both native and foreign opium. The taxation of the latter might have been, certainly would have been, raised in some instances, but I doubt extremely that it would have so. risen as to jeopardize the revenue of India.
However, the Government of India thought otherwise, and it has consequently been my endeavour to substitute for the arrangement contemplated by the Chefoo Agreement some other that might be considered fair to the Chinese Government and not injurious to our own interests.
It was to this end that I paid a visit to India on my way back here in 1878-79, and having conversed, very informally, it is true, with various members of the Governinent upon the subject, I submitted my own views to Lord Lytton, then Viceroy, in a letter, copy of which I forwarded on my return to the Marquis of Salisbury, then my chief.
I inclose a duplicate of that letter,* from which it will be seen that, while inclining on the whole to a concession of increased Tariff duty as preferable to a fixed uniform rate of li-kin, I begged that I might be left free to ascertain which proposition might be regarded by the Chinese as the more acceptable.
On my arrival at Tien-tsin, in the summer of 1879, I again discussed the matter with the Grand Secretary Li, the negotiator of the Chefoo Agreement, and I was not long in discovering that the measure most in favour was the joint collection of Tariff and a uniform rate of li-km by the foreign Customs Inspectorate. My estimate of the uniforra rate, however, was still considered too low. Froin the data in my possession (see p. 7 of my letter to Lord Lytton), I argued that the -kin collected, taking port with port, did not average much more than 30 tacls per picul, and that, considering the small amount of
*Inclosed by mistake in despatch No. 35.--T. W.