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irregularities and abuses to which Mr. Pope refers, it is impossible to accept in good faith their professed concern for the revenues of the railway and the Central Govern- ment's liabilities in connection with the loan.
And in this connection I venture to suggest that before the change of system be effected, the Chinese Government should fulfil its promise and conform to the terms of the Loan Agreement, by appointing a Director-General. Early last March Tang Shao-yi assured you that the arrangement then introduced (appropriation of the Director-General's salary by the Yu Chuan Pu) was merely temporary, and that the necessary appointment would be made within two months; and the Corporation agreed to continue payment on that understanding. Both in the Shanghae-Nanking and the Northern Railways the non-appointment of the Director- (or Administrator-) General is a serious breach of the Loan Agreements. It is essentially necessary that there should be an individual official, accessible to the Corporation and responsible to the Chinese Government, in matters of difference arising out of the administration of these enterprises. The Yu Chuan Pu bas never done anything but draw unearned revenues from them, and I am convinced that if, instead of having to deal with that Board, I had been able to discuss the reorganization of the Shanghae-Nanking Railway system and the Nanpiao business with the respective Directors-General, we should long since have come to satisfactory arrangements. At present no one is individually responsible, and the consequence is that the management of all Govern- ment railways is steadily deteriorating. On the northern line the effect is unmistak- able, and if permitted to go on indefinitely it must impair the security.
If you approve, I would propose to send a statement of our case, re li-kin, to the Yu Chuan Pu, and ask for the appointment of a Director-General with whom, in terms of Loan Agreement, the matter may be discussed and arranged.
Yours truly, (Signed)
Inclosure 2 in No. 1.
J. O. P. BLAND.
Imperial Chinese Railways (Shanghae-Nanking) to Messrs. Jardine Matheson and Co, and Hong Kong and Shanghae Banking Corporation.
Gentlemen,
Traffic Manager's Office, Shanghae, October 8, 1907. IN continuation of my letter of the 11th September, 1907, I have the honour to address at length on the li-kin question as it affects this railway.
you
Article 14 of the Loan Agreement (paragraphis 2 and 3), which I quote in extenso for ready reference, reads as follows :--
"14.-(2.) As to li-kin for goods or passengers which may be transported over the lines from, to, or through the different provinces, the Director-General will confer with the Government Bureau of Mines and Railways and the Board of Revenue with a view to devising means to protect the traffic of the railway, and those who use the railway, for the transport of their goods from illegal imposition and other abuses.
"(3.) If the arrangements for the levy of li-kin over other railway lines is found to be more advantageous than that of the railway mentioned in this Agreement, the same advantages shall be extended to, and be enjoyed by, the Shanghae-Nanking Railway, and by those who make use of the same.”
So far the only communication we have had on the subject from any one in authority is the one contained in the inclosed translation of a despatch of the Li-kin Bureau of the Kiangsu Province to the Chinese Commissioners, dated the 17th October, 1908, which lays down the principle that the water route and the railway shall be treated alike, being made to pay 50 per cent. of the traffic rates, though some of the principal items such as cocoons, rice, and cotton are excepted.
From actual experience it is found that this tariff is not acted up to either for the water or for the railway route. New additions to the lot are inade at pleasure without any notice, and the li-kin Regulations are interpreted by various collectors as they please, and the whole process bristles with what the end of paragraph 2 terins "illegal impositions and abuses" to the complete ruin of all chances of our getting any good traffic. I have been to meetings of the Chamber of Commerce of Wusich (of which I am a member), and I have received assurances from them and the mercantile communities of all our stations that our tariff of rates is more than satis- factory to them, and very fair, but that the i-kin rates are so impossible and
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prohibitive that they cannot ship by the railway. One firm that has made a contract to pay us 2,000 dollars of freight for certain shipments in the year has had to pay forfeit and cannot give us the traffic, and is sending. it by boats on account of the li-kin.
I think the time has come for the Corporation to represent the matter to the Imperial Chinese Government in the terms of the Loan Agreement. The assessment of li-kin and loti on traffic that takes the water route is open to such illegal impositions and abuses that no one consignment that adopts that route pays more than 40 of what it should pay, and thus 60 per cent, of these dues on the water-borne traffic are illegally forgone, which has the indirect effect of penalizing the railway to this extent. I know this statement to be true. I have seen merchant after merchant who have shown me what they have paid; none of them, however, dare to put it on paper for fear of trouble hereafter, but the facts remain that prove my statements to be true, and these arc,,that with a railway rate that is acceptable to all, and lower than the boat rate, with a distinct anxiety on the part of the merchants to avail themselves of a mode of carriage which, in the case of the cocoon traffic has proved itself to be infinitely more expeditious, more safe, less troublesome, and entirely free from adul- teration, we get little or no traffic, and the water route is crowded. With great trouble I have obtained a statement, which I inclose (marked A), and can substantiate, which shows the amount of li-kin paid by the water route. I have added a column showing what the li-kin payments should have been, and what would have been charged had it gone by the railway. The return requires no comment, and is a sample of all the dealings of the Li-kin Bureau in connection with the water route.
The folly of the whole thing is inexplicable, for the li-kin authorities acknowledge that when the traffic does go by the railway as the cocoons did this season, the li-kin collections are very much increased, much simpler and honest to the last cent, and they know that if all the traffic does take to the railway the li-kin revenue will, to say the least of it, be trebled; and yet vested interests prevent anything being done; and some strong pressure should be placed on the authorities to either insist on the water route being administered even fairly honestly, or if such honesty is quite impossible, that this fact be acknowledged and the collections on the rail-borne traffic officially watered down 60 per cent.
*
The present process not only keeps the traffic off the railway, and this makes a deficit în the 5 per cent. guarantee which the Imperial Government has to make up, but it also cuts into the revenue of the Li-kin Department and makes the Government less able to make
up the 5 per cent. So much for paragraph 2 of clause 14.
With reference to paragraph 8, I have addressed the Traffic Manager of the Northern Railways, and his reply is as follows:--"Our li-kin amounts to 5 per cent. ad valorem in some parts, and in others to 14 per cent." On this railway it amounts to about 10 per cent., which does not reconcile with the undertaking in the Loan Agreement that "if the arrangements for the levy of li-kin over other railway lines are found to be more advantageous than that of the railways mentioned in this Agreement, the same advantages shall be extended to and enjoyed by the Shanghae-Nanking Railway, and by those who make use of the same.'
We shall shortly have a further and more striking anomaly. When the line is open to. Tan Yang and Chinkiang, steamers will be able to take cargo between Shanghae and these places for 5 per cent. import duty plus 2 per cent. on the transit pass system, and yet if the same cargo goes by railway it will have to pay import duty and 10 per cent. li-kin and another 3 per cent, loti.
5
per
cent.
I hope the seriousness of the position will cause the joint agents to press the matter on for early settlement.
Yours faithfully (Signed) A. POPE,
Traffic Manager.
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