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pointing out the danger of the depreciation of the new coin. His Majesty's Minister reports that to this letter a reply has been sent asking for further and more precise details, and it is probable that when the desired information is received a representa- tion on the subject will be addressed to the Chinese Government by the Diplomatic Body. It is also reported that the Board of Revenue is alive to the necessity of controlling the issues of the provincial mints, and the Memorial issued by the Board on this subject (a translation of which is inclosed),* though not going as far as could be desired in the direction of supervision and control, is still a considerable step in
advance.
His Majesty's Minister has more than once reminded the Chinsse Government of the provisions of Article II of the Treaty of 1902, and he has recently been requested to urge the Wai-wu Pu to take steps for the fulfilment of the obligations incurred by the Chinese Government under that Article, by instituting the coinage of a silver dollar of uniform weight and fineness.
He was at the same time instructed to point out that such a measure need not necessarily interfere with the proposal to proceed concurrently with the reform of the copper currency to which the Chinese authorities incline; that the question whether coinage is to be carried out at one central mint or by the existing provincial mints must be determined by local considerations, but that if the provincial mints are to operate it is essential that they should do so uniformly under central control. No progress towards a settlement could be made while independent action was possible like that of the Wuchang Viceroy in the issue of the new Hupeh tael, which appeared to be inconsistent with the undertaking given on the subject by the Chinese Government.
(b.) With regard to mining, His Majesty's Government have lost no opportunity of bringing to the notice of the Chinese Government their failure to carry out the undertaking given by them in Article IX of the Treaty of 1902, in which they promised to revise the Mining Regulations in such a manner as to remove impediments to the employment of foreign capital and to afford to foreign capitalists opportunities equal to those which they would enjoy under generally accepted foreign Regulations.
On sending home a translation of the new Mining Regulations, issued by the Foreign Board and communicated to him, Sir E. Satow reported that he had pointed out to the Chinese Government that they were not in accordance with Article IX of the Treaty, and that he had expressed a hope that advantage would be taken of the preparation of the Mining Code referred to in these Regulations to provide for mining operations being carried on by foreign capitalists. He added at the same time that the Regulations applied only to prospecting or mining permits granted to Chinese subjects working either alone or in partnership with foreigners, and that he was given to understand that Regulations for permits to foreigners were being drafted.
In a subsequent Report Sir E. Satow stated that Mining Regulations had been drawn up, but that before the final arrangements could be settled the Chinese Government considered it necessary to consult the provincial authorities in the matter.
On the 5th June last Sir E. Satow complained to Natung, a member of the Foreign Board, of the neglect of the Chinese Government to give effect to Article IX, and reminded him that there was no excuse for the inaction of the Wuchang Viceroy, who was known for some months past to have been in possession of the draft of the Mining Regulations which had been drawn up by Mr. Broad, a mining expert in the employ of the Chinese Government, who, it appears, has been occupied for more than twelve months in framing these Regulations. As a result of Sir E. Satow's remonstrance, a note was received from the Obinese Government, stating that, in reply to inquiries on the subject, the Wuchang Viceroy had reported that Mr. Broad's proposals had been submitted for examination and amendment to other repre- sentatives, both Chinese and foreign, and that their detailed report was being awaited. As soon as it was received the Viceroy would embody it in a Memorial, for the consideration of the Boards of Foreign Affairs and Commerce.
For the present, therefore, British subjects can only carry on mining enterprises in China under existing Regulations, and there are good grounds for complaining of the dilatory proceedings of the Chinese authorities with regard to this question.
In the inclosure to the letter from the Shanghae merchants, marked (A),
* Inclosure 3 in Sir E. Satow's No. 242, July 11, 1905.
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reference is made to a letter written by His Majesty's Consul at Wuhu to a British merchant at Shanghae, relative to the mining rights of foreigners in China. In order to complete the extract given in the Shanghae letter, copies of the correspondence referred to are inclosed herewith,* from which it will be observed that Mr. Consul Kerr's letter to Mr. Little of the 5th December, 1904, is not accurately reproduced. A more serious error is, however, to be found in Mr. Little's letter to Mr. Kerr of the 12th December, 1904, to the effect that Clause IX of the Treaty of 1902 gives foreigners exactly the same right to buy and to hold land as the natives anywhere in the interior. China has never conferred such a right on foreigners in general, and there is nothing in the clause in question which could possibly be held to justify such an interpretation.
(c.) Taration.It is alleged in the Shangbae letter that, although it was provided that Article VIII of the Treaty was not to come into force until all the other Treaty Powers had agreed thereto, China nevertheless, recognizing certain "fundamental principles," engaged to reform and systematize her taxation as far as merchandize is concerned.
This is an incorrect description of the wording and intent of Article VIII, Independently of that. Article China bas entered into no "engagement to reform and systematize her system of taxation as far as merchandize is concerned,”
The "fundamental principles" alluded to in the Article are, firstly, that China would discard completely the system of levying hi-kin and other dues on goods at the place of production, in transit, and at destination, with the limitation that she should be at liberty to impose a consumption tax on articles of Chinese origin not intended for export; secondly, that the British Government would, in return, consent to a surtax on foreign goods imported, and on Chinese produce destined for export abroad or coastwise; thirdly, that no attempt should be made to revive li-kin barriers and other stations for taxing goods in transit; that the surtax should in no case exceed one and a-half times the import duty leviable in terms of the Final Protocol of the 7th September, 1901; that payment of import duty and surtax should secure for foreign imports complete immunity from other taxation, examination, or delay; and that the total amount of taxation on native produce for export abroad should under no circumstances exceed 7 per cent. ad valorem.
It is stated in the Article that, "keeping these fundamental principles steadily in view, the High Contracting Parties have agreed upon the following methods of procedure."
It is plain, however, that neither the methods of procedure nor the fundamental principles on which they are based can come into operation or receive application until, in accordance with section 15, all the Powers shall have signified their acceptance of the engagements embodied in the Article.
The cases referred to under Inclosures (B), (C), (D), and (E) consequently are not violations of the Treaty of 1902, but, in so far as the acts complained of are violations of Treaty, they must, as stated in Earl Percy's reply to Sir Gilbert Parker in the House of Commons on the 19th April last (of which a copy is inclosed),† be referred to Treaties concluded with China at an earlier date.
Sir P. Warren, His Majesty's Consul-General at Shanghae, has reported that there is an apparent tendency on the part of local officials in the district of Shanghae to levy li-kin under other names. Since his return to Shanghae in October 1903 three cases of the kind have been brought to his notice. In the first case a lengthy correspondence with the Governor of Chekiang led to the officer in fault being superseded, and to a promise from the Governor that the levy en route of destination tax should not be permitted in future.
The second case is that of Messrs. Ilbert and Co., given in. Inclosure (D) of the letter to Lord Lansdowne from the Shanghae merchants.
As no definite reply was received to the representations made to the Officer Administering the Government of Soochow, a Consular officer proceeded to Haimen to inquire into the case. It was fully established that the li-kin officials were in the wrong, and Sir P. Warren has reported that the only point in question is the amount of compensation to be paid to Messrs. Ilbert and Co.
The third case is that of Messrs. Brunner, Mond, and Co. (Limited), forming Inclosure (C) in the letter to Lord Lansdowne from the Shanghac merchants,
In this case, as in the other two, Sir P. Warren hopes to arrive at a settlement locally,
* Inclosure 23 in Sir E. Satow's No. 242, July 11, 1905.
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† P.Q., Sir G. Parker, April 19, 1905,
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