2
to pay to China, but on the condition that Japan handed over her collection simul- taneously. Japan, however, on being approached on the subject, now declared that all the money had been spent on improvements at Newchwang-on the Japanese Settlement there, Mr. Tong remarked.
A copy of this despatch bas been sent to Tôkið.
I have, &c. (Signed)
LANCELOT D. CARNEGIE,
P.S.-Since writing the above I have received a despatch from His Majesty's Consul at Newchwang, copy of which I have the honour to inclose, containing the report of a conversation which he has had with the Japanese Consul on the subject of the establishment of Chinese Customs in Manchuria.
Inclosure 1 in No. 1.
Mr. Carnegie to Prince Ch'ing.
L. D. C.
Your Highness,
Peking, August 15, 1906. THE question of the duties levied on goods exported from and imported into Manchuria by the Chinese Eastern Railway has occupied the attention of His Majesty's Government. This railway is the main artery of Manchurian trade, and when it belonged exclusively to Russia it was explicitly provided by the Agreement concluded by China with the Russian authorities that China should establish Customs stations and levy the Tariff duties on goods at the north and south points where the line crosses the frontier, As the result of the late war, the south portion of the railway is now the property of the Japanese Government, and His Majesty's Government understands that the new owners are desirous of carrying out the provisions of the Chinese Eastern Railway Agreement in regard to their portion, provided that those provisions are similarly applied to the northern portion.
It appears that the Chinese Government have taken no steps to levy Tariff duties on goods passing the north or south frontiers by the Chinese Eastern Railway, and the result is an unfair discrimination against goods passing through Newchwang to and from Manchuria, on all of which duties are levied, and a large proportion of which are of British origin. Under the most-favoured-nation clause of the Treaties His Majesty's Government have the right to protest against any such discrimination.
I am instructed to impress these facts on your Highness' attention, and to recommend the simultaneous establishment of custom-houses by the Imperial Chinese Government in the north as well as in the south of Manchuria, in order that the Tariff duties may be levied alike on all goods exported or imported, either by railway or by sea.
As it is announced that Talien Wan (Dalny) will be made a free port on the 1st September, the necessity of taking the measures above recommended is urgent, and I shall be glad if your Highness will favour me with an early reply for the information of His Majesty's Government.
I avail, &c. (Signed)
L. D. CARNEGIE,
8
upon
China
Japan, Mr. Segawa said, was quite willing to arrange with China for the opening of a Chinese custom-house at Dalny, but considered it was equally incumbent to arrange with Russia for similar establishments at Vladivostock and Manchuria as contemplated by Agreements between Russia and China. The impression conveyed to me by Mr. Segawa was that Japan would await arrangements for the two latter places before agreeing to the opening of a Chinese custom-house at Dalny.
Mr. Segawa added that Dalny would be opened to foreign trade on the 1st September, 1906. He alluded to the recent representations of the European merchants at Newchwang and Shanghae on the expediency of the speedy establishment of a Chinese custom-house at Dalny, and hoped that they would now understand the Japanese point of view.
As he seemed to invite an expression of my opinion, I pointed out that the mercantile communities of Newchwang and Shanghae undoubtedly felt aggrieved by the free admission of goods to Manchuria via Dalny, and would continue in that feeling until measures were taken to collect Chinese duties at that port. It was thought that Japan was giving an undue advantage to the Dalny entrance to the markets of Manchuria over Newchwang and the old-established trade routes. There was a strong desire on the part of the merchants for equality of treatment at both ports, and fair trade competition could then be met with confidence.
In view of present circumstances in the north the southern doors of Manchuria were of much the greater importance, and hopes were expressed that Japan would in this, as in some other respects, lead the way in restoring the trading facilities of this country to their normal footing. The opening of a Chinese custom-house at Dalny would, I thought, do more than anything to remove the uneasiness which had lately been manifested by the commercial bodies of Shanghae and Newchwang to which Mr. Segawa had referred.
I have, &c. (Signed)
H. E. FULFORD.
Inclosure 2 in No. 1.
Consul Fulford to Mr. Carnegie.
(No. 45.) Sir,
Newchuang, August 18, 1906. I HAVE the honour to inform you that Mr. Segawa, the Japanese Consul at this port, called upon me this morning apparently with the express purpose of making a communication with regard to the question of the establishment of the Chinese Customs at Dalny.
I gathered that the Japanese Minister in Peking, Mr. Hayashi, wished him to explain the position of affairs in this matter with a view to removing any misunder- standing of the Japanese attitude which might be prevalent in the mercantile community
here.
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