2
to renew the proposal of last year to the Chinese Government upon their account.
I am, in accordance with the instructions which I have received, to inform the Chinese Government that the British Government are willing to accept payment in silver for their share of the yearly payment of 18,829,500 Haikwan taels up to the year 1910 as a provisional discharge of their obligations under the conditions of Article 6 of the Final Protocol. The offer is made conditional upon the signature of the fractional bonds as presented by the Shanghae Commission of Bankers to the Taotai. The difference between the sum received in silver and the full amount to which the British Government are entitled under the Protocol is to be considered as a debt remaining due to Great Britain, and the question as to whether payment should or should not be required will form the subject of future decision.
I have the honour to request you to be so good as to bring the above statement of the action taken by me to the knowledge of the Representatives of the Powers who signed the Final Protocol, and greatly oblige yours, &c.
(Signed)
Inclosure 2 in No. 1.
WALTER TOWNLEY,
This Document is the Property of His Britannic Majesty's Government.]
231
[August 4.]
SECTION 1.
CHINA TRADE.
CONFIDENTIAL.
No. 1.
Mr. Townley to the Marquess of Lansdowne,.--(Received August 4.)
(No. 224.) My Lord,
Peking, June 10, 1903. WITH reference to my despatch to your Lordship, No. 223, of the 4th June, I have the honour to transmit herewith a copy of a note from the Board of Foreign Affairs in reply to my protest against the proposed farm for the collection of duty on opium at Canton.
I have, &c. (Signed)
WALTER TOWNLEY.
Your Highness,
Mr. Townley to Prince Ch'ing.
IT will be within the recollection of your Highness that last June His Majesty's Government arrived at the conclusion that there should be some relaxation of the burden of the indemnity payable by the Chinese Government in accordance with the Protocol signed at Peking in 1901, and they proposed that the Powers to whom a share of the indemnity was due should accept their proportion of a yearly payment by China of 18,829,500 Haikwan taels up to the year 1910, without regard to the amount of gold to which this amount in silver may be equivalent.
His Majesty's Government were prepared either to accept the payment of the annual amount in silver as a full discharge of China's debt for the years mentioned, or, if the other Powers would not agree to that arrangement, they proposed to reserve for subsequent settlement the question of the manner in which the difference between the amount actually due in gold from the Chinese Government and the amount paid by them should be made good.
The other Powers did not accept either of the above proposals, and though there have been many discussions between their Representatives at Peking, they have not led to any agreement.
His Majesty's Government, therefore, now intend to take separate action in accordance with the views they expressed last year, and they have instructed me to inform the Chinese Government that they are prepared, as soon as the fractional bonds are signed, to accept up to the year 1910 payment in silver for the share due to the British Government of the yearly payment of 18,829,500 Haikwan taels as a provisional discharge of the obligations of the Chinese Government towards the British Government under Article 6 of the Final Protocol. The difference between the sum received in silver and the full amount to which the British Government are entitled under the Protocol is to be considered as a debt remaining due to Great Britain, and the question as to whether payment of it shall or shall not eventually be made will remain for future decision.
I avail, &c.
(Signed) WALTER TOWNLEY.
Sir,
Inclosure in No. 1.
Prince Ching to Mr. Townley,
Peking, June 6, 1903. I HAVE the honour to acknowledge receipt of your despatch of the 3rd instant, stating that, from a report received by you from His Majesty's Consul-General at Canton, it appeared that the provincial officials had devised a fresh mode of taxation of foreign opium which was, equally with the previous system attempted, an infringement of the provisions of the Additional Article of the Chefoo Convention. According to the proposed Regulations of the new farm which had been established, all existing prepared opium shops would have to obtain a licence from the farm. The farm even proposed to place a tax of 1 m. 2 c. on each ounce of Indian opium already in the hands of the opium dealers without any regard for the question as to whether the conditions of the Treaty regulating the imposition of additional taxation on opium had been satisfied. Moreover, the number of licences issued to prepared opium shops was to be limited, and it was evident that the farm would in time obtain a complete monopoly of the sale. Such a monopoly was opposed to the Vth Article of the Treaty of Nanking, whereby British subjects might carry on their mercantile transactions with whatever persons they pleased. You therefore requested me to telegraph to the Canton Government that the proposed farm could not be permitted.
It appears that last year the farm which proposed to levy the tax on prepared opium consumed in the Canton Province calculated the consumption of the drug on the amount of raw opium imported. The Board considering this an infraction of the Additional Article of the Chefoo Convention, ordered the Canton Government to withdraw the tax and devise some other system of collection.
Subsequently, a telegram was received from the Canton Viceroy, stating that it was a matter of extreme difficulty to find the heavy sums required for the indemnity, and that the licence system on prepared opium must be developed and extended. It was proposed therefore to intrust the business to the Heng Chi farm.
Both foreign and native opium would pay 2 m. 2 c. per ounce, and the total proceeds of the tax would be handed over yearly to the authorities by the farm. The British Consul having however objected to the tax as being too heavy and likely to diminish the consumption of foreign opium, it was decided to reduce both the tax and the sum to be paid over by the farm by one half. The question of licences for the sale of prepared opium is one which concerns China's internal administration, If the system is to be extended, it will only affect the opium after it has reached its place of consumption, when the bales have been opened and the opium prepared. The foreign and native drug will pay both the same amount, and there will be no preferential treatment and infringement of the Additional Article of the Chefoo Convention.
The third clause of the Additional Article referred to is to the following effect: "After the import and li-kin duties on foreign opium have been paid, the owner shall apply for a transit certificate. Such certificate shall free the opium to which it applies, provided that the package has not been opened." The present extension of the licence
[2091 d-1]