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-032 taels, but that exemption from coast-trade duty is granted under an old rule of thirty years' standing in return for services rendered to the State by the China Merchants' Steam Navigation Company. And his Excellency denies that this is a contravention of Article XIV of the French Treaty.
It would appear at first sight that the question involved is the application of the coast trade duty Regulations. I inclose for your information a précis which will furnish an outline of the history of the subject, and show how the Regulations of the 30th October, 1861, came to be issued and the coast-trade privilege conceded to foreign shipping. So far as I am able to judge, these Regulations and the subsequent Treaties lay no obligation on the Chinese Government to levy a coast trade or any other duty on Chinese produce borne coastwise, and for local consumption in Chinese bottoms. They seem free to tix such merchandize as they please, and if it entered into the plans of the Chinese Government to follow the example of Japan, and encourage the formation of a mercantile marine by special revenue or financial arrangements, I know of no Treaty provisions which could be advanced in opposition other than the Article XIV of the French Treaty already relied on by Sir E. Satow.
On the point of monopoly it seems to me that the contention of the Viceroy that the privileges accorded to the China Merchants' Company are payment for services rendered to the State---justifies me in referring the matter for your consideration before pressing it further at the Wai-wu Pu. It is known that this Company does perform State services, such as the carriage of the tribute rice at special rates, and though the form of payment disclosed in the correspondence herewith may be objectionable to our shipping firms, there is, if eventually the Chinese Government could be brought to vary it, nothing to prevent them from arranging a secret drawback, or, in the last resort, au open subsidy.
In any case I do not see my way to supporting Messrs. Butterfield and Swire's application of the 28th October, 1905, to the Imperial Maritime Customs at Tien-tsin. British subjects are entitled to transit passes inwards for foreign goods and outwards for native produce purchased by them in the interior, but in the present instance Messrs. Butterfield and Swire applied tor an "overland pass "to cover native goods not their property (they are only the carriers) for sale at an inland place (Kalgan) which is not a Treaty port. The Treaty provisions governing the overland trade are the Russian Land Trade " Règlement of the 12th (24th) February, 1881, of which Article 16 forbids the transport by Russian subjects of Chinese-owned goods, and Articles S and 10 impose penalties on the sale of Russian-owned goods en route at Kalgan or elsewhere.
It is important to remember that the privileges complained of have been enjoyed by the China Merchants' Steam Navigation Company for some thirty years, and though, as Messrs. Butterfield and Swire point out, the way is open, if these privileges cannot be attacked, to further preferential treatment in items of coasting trade," as a matter of fact there has been no attempt of recent years, so far as I am aware, on the part of this Chinese Company to add to the advantages in this respect acquired long ago. I am not sure that an argumentative discussion on the subject might not direct their attention seriously to the possibilities open to them, for however natural it may appear to a British firm to wish to consider themselves entitled to the same advantages as a Chinese firm, it is evident that in matters of purely domestic trade the Treaties do not entitle them to such a position as a matter of right.
I have, &c.
(No. 15.) Sir,
(Signed)
LANCELOT D. CARNEGIE.
Inclosure 1 in No. 1.
Consul-General Hopkins to Sir E. Sutow.
Tien-tsin, February 14, 1906. MR. EDKINS, the representative at this port of Messrs. Butterfield and Swire, has on several occasions lately consulted me on a subject which his firm, if possible, is very anxious to bring within their business activities. This is the transport by the steamers of their line of brick tea to Tien-tsin, and its conveyance thence, under overland passes, to Kalgan, on the same terms as are in force for brick tea shipped by vessels of the China Merchants' Steam Navigation Company.
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I have the honour to inclose copy of a letter, dated the 9th instant, which Messrs. Butterfield and Swire have addressed to me on this question, in which they explain fully what they desire, and put forward the grounds on which they base their request to be allowed to take part in this branch of trade.
Much as I should like to sec British shipping firms enjoying a share of this large carrying besiness, I have told Mr. Edkins that I feel very doubtful if the Treaty provisions which he cites in his letter will sustain the claim. But much will depend on the interpretation to be given to the words of Article XIV of the French Treaty of 1858: Aucune Société de commerce privilégiée ne pourra désormais s'établir en Chine, et il sera de même de toute coalition organisée dans le but d'exercer un monopole sur le commerce." Messrs. Butterfield and Swire would argue that tho China Merchants' Steam Navigation Company, in view of the privilege granted to it in 1884 by the late Viceroy Li Hung-chang, referred to in their letter, has become a "Société de commerce privilégiée" within the meaning of the French Treaty. I cannot myself adopt this view, but being unwilling to stand in their way in such an important matter, I have the
for respect honour to refer the question of their rights in this
consideration. your I have, &c.
Sir,
(Signed)
Inclosure 2 in No. 1.
L. C. HOPKINS.
Messrs. Butterfield and Swire to Consul-General Hopkins,
Tien-tsin, February 9, 1906. WITH reference to our conversation on the subject of the privileged treatment accorded by the native authorities to shipment of native brick tea by the steamers of the China Merchants' Steam Navigation Company, we beg to request you to lay the matter before His Majesty's Minister at Peking, for his consideration and guidance as to the best means of securing a share in the carriage of this trade for British
steamers.
For this purpose we submit the following
On the 28th October last we applied to the Customs as follows:
We
"Kindly grant us an overland pass for 1,000 packages brick tea to Kalgan. This cargo came forward per Nanchang from Foochow, and weighs 1,110 piculs. inclose letter of guarantee that same is to be sold in Kalgan.
"We wish to import this cargo and transfer it to Kalgan under the lowest terins and charges as granted for other similar importations."
They replied:
"Gentlemen,
"Your application for an overland pass re brick tea to Kalgan has been refused by the Customs Taotai, who states that he is in the habit of granting such passes to merchants of Russian nationality only.
"I return herewith your letter of guarantee.
"I am, &c. (Signed)
"R. F. HEDGELAND, "Acting Deputy Commissioner of Customs.”
As we applied for importation and transfer to Kalgan under the lowest dues, such as are granted to the China Merchants' Steam Navigation Company, this reply is evasive, which the Customs semi-officially admit. They further inform us that the Customs Taotai will not discuss the privileged terms granted to the China Merchants' Steam Navigation Company, nor will he seriously consider the question of most-favoured-nation treatment which naturally applies in view of what he writes. They add that they cannot press the matter further, and refer us to our Consulate.
We have reason to believe, from private information, that the China Merchants' Steam Navigation Company's representative has heard of our application for the same privileges as they enjoy, and that he has taken steps to acquaint the native authorities concerned of the undesirability of their monopoly being in any way interfered with.