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preferably, in the form of a surtax of 2 on the existing import dues, i.e., 5 + 2 (import) + 4 (transit) 10; the concession being made conditional on the abolition of inland taxation. Such a step could be more easily retraced. There would therefore be a powerful inducement to the Imperial Government to do its best to effect reform.
A surtax granted dum bene se gesserit might be withdrawn; whereas, revision once made and higher duty conceded on the new scale, it would be much more difficult to hark back.
A promise of revision at the due date, 1898, when it can legally be demanded, and of 10 per cent. (7 + 2) on the new scale, if all goes well, would constitute an additional inducement to the Imperial Government to exert its utmost influence in favour of reform.
I should be glad if you will kindly inform me whether these considerations appear to you valid, or whether you adhere to the decision expressed.
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are sanctioned, it will be an admission on the part of the Treaty Powers that China is justified in her demands, and remonstrance from this side, which the Committee have already indicated does not appear to be necessary unless the proposed changes are made more radical than is at present anticipated, would probably arrive too late to be in any degree effective.
The breaking up of original packages (which could be carried out under Customs supervision) for the purpose of repacking in forms more suitable for interior transit, and similar other details, might appropriately be held over for adjustment in China.
I remain, &c. (Signed) F. HENDERSON,
Honorary Secretary.
Yours truly, (Signed)
R. S. GUNDRY,
Inclosure 2 in No. 1.
The Hong Kong Committee to Mr. Gundry,
China Association, Hong Kong, August 18, 1896.
HEREIN I beg to hand copy of telegram dispatched on the 8th instant, the original of which it is hoped reached you in due course. Taken in connection with previous correspondence, and read in the light of your complete knowledge of the question in all its bearings, the message will, no doubt, have made sufficiently clear to you the opinions entertained by this Committee with regard to the reported intention of the Chinese Government to endeavour to obtain the sanction of the Treaty Powers to an increase of duties on foreign goods imported into China.
Some slight doubt exists as to the exact increase that is likely to be asked, and whether such increase, if allowed, will be applied pro rata to both import and transit duties; but, as indicated in the above telegram, the pending increase, if reasonable, is of minor importance compared with the much more vital question as to how it is to be applied so as to insure to the provincial authorities an equitable division.
While willing to favour a reasonable increase, if properly apportioned, the Committee cannot too strongly deprecate a higher scale of duties being sanctioned by Her Majesty's Ministers, unless it is distinctly understood that at least a part of the increase will be specially and directly applied to completely freeing goods from all inland taxation, whether in the form of transit dues while passing through the country, or localized squeezing of any kind at the final destination and place of sale, however remote.
If the increased revenue is merely applied to repleting the Imperial coffers, and not duly apportioned among the provincial officials, the position will remain unchanged, and, as stated in the telegram, exactions and evasions of the Treaty will continue as at present.
Assuming that the Treaty Powers will be found willing to accede, in some measure at least, to the demands of the Chinese, the Committee consider that to sanction even a material increase on the present Tariff rates, which are not excessive, would not be too high a price to pay for the unrestricted distribution of goods throughout the Empire, if that privilege could be secured.
How far China would be willing, and, if willing, capable, of carrying out such an arrangement is open to serious doubt, but to insure that at least an honest attempt would be made to fulfil the contract no doubt some material guarantee would be suggested, and, as in the case of the Opium Convention, provision would be made that if, on trial, the arrangement proved unworkable, it could at any time be abrogated.
Exception might perhaps be taken to the proposed readjustment of duties on the ground that, while China would reap the benefit in the form of a large and immediate increase of revenue derived from higher duties on the entire import of foreign goods, all the importer could hope for from the change would be that the somewhat problematical successful carrying out of an improved transit-pass system might in time largely stimulate the consumption of English manufactures. If, however, the higher duties