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3. A list of places at which launches are to anchor has been drawn up and submitted for approval to the Viceroy.

4. The officers and men of the guard-boats are to be selected with particular care, and each man of the force must be guaranteed by people of good repute.

5. The guard-launches at their various stations will in future, whenever a launch passes, signal to it to stop for inspection. If she still proceeds witbout heeding the signal they are to pursue her. If robbers are found on board they are to be handed over for trial and punishment to the nearest authority. If there are no robbers on board, and if the master has simply and deliberately refused to stop for inspection, note must be taken of the number and name of the launch, and report will be made to the Chief Police Office with a view to the infliction of a fine.

6. Guard launches are being posted at all important points for the special purpose of exercising supervision over launches. The latter must in future proceed by direct and regular rontes to their destinetion. If they follow by-routes or anchor at places where there is no guard-boat, and are plundered in consequence, the master ("ch'uan chu") will be responsible for compensation. In any case he will be liable to fine.

7. A system of patrol has already been devised, but having been now some time in force it has proved unsuccessful. The officers concerned are now being called upon to consult together and devise some more satisfactory plan.

Visit of the Kao Lien-ch'in Taotai.

Ch'in Ping Chih, the newly-appointed Taotai of the Kao-Lien-Ch'in circuit (south- east Kuang-tung), which includes the Treaty port of Pakhoi, paid a visit to His Majesty's Consul-General before starting for his new post. Mr. Kung, the Viceroy's Secretary, stated that this officer had received special instructions with reference to the preservation of order, not to make his permanent residence in any one place, but to visit all parts of his jurisdiction in turn. He has been intrusted with a special force of 2,000 armed men and two armed launches, and has authority, should emergency arise, to employ any of the marine or land forces which may be within call.

Arrest of Prisoners on British Ships.

The Viceroy, upon the representation of certain military and police officers, has applied to His Majesty's Consul-General for permission to allow detectives and police officers to travel on board British steamers coming from Hong Kong to Canton, with a view to arresting in the ship, and before they can escape in the throng of landing passengers, or by jumping over the side, any criminals whom they may detect board. It was pointed out that assent could could not be given to any request of the kind, as such procedure would be altogether contrary to the privileges belonging to British ships.

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During the past quarter two persons accused of robbery with violence have been arrested in Hong Kong at the instance of the Chinese authorities, and they will pro- bably within a few days be sent up under the Extradition Ordinances to Cantou for trial and punishment, when the procedure established in the "Perseverance" piracy case will be adopted.

Local Taxation and Provincial Finance.

A Board has lately been established in Canton by the Viceroy for the purpose of devising sources of revenue. It is called the Ch'ou Hsiang Chu, and the personnel is the same as that of the Shan Hou Chu-viz., the Treasurer, Judge, Salt Commissioner, Grain Intendant Taotai, and the chief local civil authorities of Canton. The following schemes, among others, have resulted from their consultations:-

Li-kin on native opium to be raised from 18-20 taels to 23-66 taels per picul. Li-kin on tea, tobacco and sugar, to be increased by 30 per cent.

The above has been approved, and the public have been notified by the head Li-kin Office by Proclamation.

Tax on prepared opium.

Particulars of this tax were given in No. 25, General.

Tax on distilleries: Wine distillers to pay 24 taels per annum on each still in their factories, with an additional charge of 2 taels for intercalary months.

This scheme was duly sanctioned by the Viceroy, and came into force in the first month of the present Chinese year.

At the beginning of January the Hoppo called for a Return, showing the estimated increase or decrease in revenue on foreign imports which had resulted from the change of Tariff on the 11th November, reckoning up to the 31st December. The result showed an increase of 8,440 Haikuan taels over the estimated revenue for imports on the old basis.

Indemnity Matters (Confidential).

The following is a translation of a telegram received on the 3rd March by the Viceroy from the Grand Council ("Chün Chi Chu") on the subject of provincial contribu- tions for the service of the indemnity :-

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Imperial Decree.

"Memorial received some time ago from Liu Kun Yi and others referred to the immense amount of the indemnity and the difficulty of raising funds to meet the instal- ments. They pointed out, however, that the increase of the tax on foreign goods to an effective 5 per cent. and the tax on foreign wines and provisions, in addition to the Native Customs revenues now passing through the Imperial Maritime Customs, will make, in all, an increase of about 4,500,000 taels. They add to this 1,000,000 taels on account of grain supply commuted for money payments, making, in all, 5,500,000 taels, which, they point out, represents about three-tenths of the total amount proposed by the Board of Revenue, and sanctioned by the Throne, as annual indemnity contributions from the provinces. Memorialists proposed, therefore, that these contributions should be reduced by 30 per cent."

This proposal was sanctioned at the time because it seemed likely that the funds raised during the half year would be sufficient for the service of the indemnity.

Prince Ching (I Kufang) and others have memorialized, stating that the monthly contributions, as originally arranged for, must be paid in full, and that the proposed reduction by 30 per cent, cannot be allowed. The Tartar Generals, Viceroys and Governors, will, therefore, see to the provision of the sums originally decided upon by the Board as the contributions from their respective provinces, and make monthly remittances to the Shanghae Taotai, to be handed over to the banks in payment of the indemnity.

At the end of the year, when the foreign and Native Customs collections have been completed and the benefit of the grain tax contribution has been realized, it can then be seen whether the additional sums thus derived is equal to the amount of the proposed reduction, and if so, or if it is more than equal to that amount, then the proposed reduction can be made. This will avoid the danger of delay in payments due.

Jui Lu, Supervising Censor and Taotai in Chekiang, has memorialized proposing: (1) a tax on all shops throughout the provinces; and (2) a tax on prepared opium. The chief arguments which he brings forward in support of his schemes are -

1. The salt revenue and Native Customs having been given as security for the indemnity loan, the provincial revenues will be so decreased as to be insufficient to meet the ordinary yearly expenses of administration, while anything like improvements and reform will be out of the question.

2. A tax could be levied upon the shops of well-to-do merchants without inflicting any great hardship upon them. The tax could be levied in proportion to the capital and value of the shops. The Province of Chih-li, lately overrun by troops, could be exempt temporarily.

3. The evil inflicted by foreign opium on China is great, and the check upon this is taxation. Even a heavy charge upon this article would not be in the nature of an injustice. Taxation on import would be extremely difficult to arrange, and if a tax ou native opium he proposed, that would only extend the sale of foreign opium. The only plan, then, is to make a charge upon prepared opium.

4. Memorialist hears that some such scheme has already been put into practice in Kiangsu and Hupei, and with great success as regards amounts collected. He begs, there- fore, that the Board of Revenue be instructed to find out what system has been adopted there and whether it cannot be applied generally throughout the provinces.

The Report of the Board of Revenue upon this Meinorial recommends the adoption of the proposal for a shop tax. With regard to a tax on prepared opium, they say

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