of one and a-half times the import duty leviable in terms of the Final Protocol of the 7th September, 1901.
Last year the French successfully resisted the application of the Protocol effective 5 per cent. to the Mengtse route, on the grounds that their own special Treaties were concerned, and that the Imperial "Maritime" Customs, strictly speaking, could not be held to include the land frontier customs. Duty is now levied under the old pre-Protocol Tariff, with the special local privilege of deducting three-tenths the duty for imports, and four-tenths for exports. I claimed and obtained the same terms for Tengyueh when it was opened last May.
If, then, the Final Protocol is held not to apply to Yunnan, what duties are to be levied there under the new Treaty?
Orders have now been received at Mengtse to enforce specific duties of the new Tariff, but the French authorities, as I am informed, will resist any increase of duties or, at least, try to maintain the three-tenths and four-tenths privilege, without which they might either have to give up their transit dues, or see a share of the trade go to the West River, if that waterway were to be cleared of pirates.
Further, on the route from Burmah to Yünnan-fü unlawful imposts have been almost wholly suppressed, though they are rampant in other parts of Yunnan. The actual duties paid by our Tengyueh trade (including transit passes fee) do not amount to 5 per cent. in all.
While the trade is still in its infancy, it seems a doubtful policy to apply to it the full 12 per cent. Tariff contemplated by the new Treaty. I would suggest that, if possible, with the co-operation of the French, it should be agreed to apply the surtax in Yunnan to the new Tariff duties reduced by four-tenths and three-tenths for exports and imports respectively.
2. "Fu Shui," or Prefect's tax, does not appear to be specifically mentioned, but it is quite as troublesome as li-kin in Yünnan, and I presume it will be abolished under Article VIII, Preamble.
3. "Sheng Shui," or a tax (usually 8 per cent. on the price) on beasts, obtains in Yünnan, and is a source of much peculation and irritation. The proceeds are supposed to be pocketed by the Magistrates, and there are offices in most cities. Are these included in the general prohibition against inland barriers?
4. Is the consumption tax to be leviable on cotton cloth woven in Yünnan from Bombay yarns?
If such cloth is not to be considered (Article VIII, section 8) an article of Chinese origin, the tax will not be leviable. This is a point of great importance, on which I would ask for an authoritative decision.
5. Article VIII, section 3.-Junks, boats, and carts shall not be taxed. It is to be regretted that mules and ponies were not also mentioned. In the French Convention of Tien-tsin, 1886, Article VII, section 8, beasts are freed from "peage" but when I reached Tengyueh last spring, I found that squeezes on transport mules were one of the principal evils from which the trade was suffering. To remedy this and to obtain a fund, otherwise not to be procured, which the local officials could use to pacify the frontier, it was agreed and provisionally approved by you that a small toll should be levied on mules using the Tengyueh-Burmah trade route. This toll is: 75 tael on mules coming in from Burmah, and 25 tael on mules going out to Burmah, and it is collected by the Imperial Maritime Customs.
In return for this toll, a written guarantee was given by the local authorities that no other secret imposts should be levied on mules, and a Proclamation by the Provincial Judge, Tsuan, was issued at my instance prohibiting all such exactions. In view of the very low Tariff now obtaining at Mengtse and Tengyueh, this mule toll seems fair and reasonable. But the case will be altered if the duties are to be largely increased.
On the other hand, if the toll were to be suppressed altogether, the old irregular imposts on mules and the abuses connected therewith might revive, and it is doubtful, as the mules are owned by Chinese in China, whether we should have any right to protest.
When, therefore, the surtax is applied to Tengyueh, I would suggest not that the toll be abolished altogether, but that it be, if possible, reduced to one-third of its present amount.
6. I have found that exactions by the gentry on foreign trade are common in every part of Yunnan. These imposts go under various names: "pao shang" (trade protection), "kung fang" (public guild), "tuan fei" (train bands), &c., but they are all, in fact, squeezes for the benefit of the "Tu-shu-jen," the literati.
I trust that these exactions will be considered as within the scope of the Treaty, and this, I submit, should be specially stated in the Proclamations which are to be issued previously to the abolition of the barriers.
I have, &c. (Signed)
Inclosure 2 in No. 1.
Memorandum.
G. LITTON,
73
MR. LITTON reported in May 1901 that M. François, French Consul-General in Yunnan, had successfully resisted an attempt of the Mengtse Customs to raise the import duties to an effective 5 per cent. "on the ground that Mengtse was not 'Douanes Maritimes,' and that the procedure should be regulated by the local Treaty between France and China.”
In a later despatch he reported that, under instructions from Sir Robert Hart, the Customs authorities had reverted to the old rate.
I reply, Sir E. Satow instructed Mr. Litton that the terms of the Protocol refer to sea-borne commerce only, and that the French were entitled by their Treaties to an abatement on the General Tariff of three-tenths on imports and four-tenths on exports.
He further explained the grounds on which His Majesty's Government had reserved their rights in case it should at any time appear that the special rates for overland frontier trade operated in such a manner as to give general, as distinguished from local, produce an advantage over sea-borne goods.