[This Document is the Property of Her Britannic Majesty's Government.]
Printed for the use of the Foreign Office. August 8, 1896.
CONFIDENTIAL.
C.O
20577
3.COT
134
Memorandum presented by Li Hung Chang, August 4, 1896.
WHEN Treaty relations were first entered on in Tao Kwang's time a Tariff was established for the collection of duties on imports and exports, and the amounts to be paid were expressed in silver taels. Treaties were again negotiated in Hien Fung's time and the Tariff was revised; but, although various changes were introduced, the Tariff remained much the same as before, and the silver tael was again the designation used for the money in which duties were made payable in China. In determining the number of taels or fractions of taels to be inserted as the duty to be paid by any specified commodity, what the foreign negotiator chiefly had in view was a certain fixed amount in foreign coin with which the tael amount was then supposed to accord.
2. Since those days, however, silver has been changing its character; it can no longer be said to hold the same position as money, and it is not only more and more becoming an ordinary item amongst the many items of merchandize, but it is less and less valuable as compared with all other items, so that the Tariff silver tael of to-day no longer retains the exchange value it showed when Tariffs were first arranged. In the time of Tung Chih, 3 Customs taels could purchase the equivalent of an English pound sterling in all money markets, but during the last twenty years it has gone lower and lower, so that now it takes from 6 to 7 silver taels to purchase 1l. or its money equivalents, thus causing a loss to China of from 50 to 60 per cent.
3. At first the depreciation was comparatively trifling and was supposed to be the result of some temporary derangement which would soon right itself; but not only has depreciation continued but increased, and it is now evident that silver is no more what it was, and that the Tariff unit, the Haikwan tael of to-day, is not now what it was intended and ought still to be the third of a pound sterling. This fact is of itself enough to justify action in the matter, but other circumstances have come into existence which make action imperative. During the last twenty years China has established Legations abroad, has been purchasing machinery, building ships, initiating various works involving long and continual expenditure abroad, and has been going to the foreign money market for loans which have to be expressed in pounds sterling or the equivalent, and all this while the very same money which China has been receiving for duties, as if 3 Customs taels still made l., has to be paid out to foreigners at the rate of from 6 to 7 taels for every l. The loss is great: it is becoming too great to be silent about; it is making itself felt to too serious an extent to be borne, and both the necessities of the day and considerations of what is fair and right demand that the original value of the Customs tael be re-enunciated, and that the value of silver at which China consented to collect duties, viz., 3 taels to the l., be observed and adhered to.
4. The matter is not one requiring either revision of Treaty or disturbance of Tariff, and as a matter of fact the Tariff as a whole is so light that to require its application in sterling not only accords with its fundamental idea of ad valorem duties, but can be no hardship to anybody, while it is, besides, what China is entitled to. But in order to avoid the inconvenience of unexpected changes, the relative value of the Tariff tael and the l. sterling ought to hold good, say, for a whole year, for revenue purposes and ought to be fixed and published in advance. Hitherto, 1,000 Customs taels have equalled 1,114 Shanghae taels, and when the Tariffs were negotiated their equivalent in gold was 333l. 6s. 8d., that is, while 1 Customs tael equalled 80 pence, the Shanghae tael equalled 71 pence; but the average value of the Shanghae tael during the last twelve months has been per tael not quite 36 pence, and accordingly there has been a loss of 36 pence on every Shanghae tael paid in as duty, and therefore, to make up silver enough to buy 80 pence, the sum of at least 2,222 Shanghae taels is required. The arrangement proposed for 1897 is therefore this :-
1784]