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2
li-kin. It is desirable that the Chinese population should suffer less from this tax, so that their buying power will increase.
For the same reason Germany is opposed to the industrial taxes provided for by the Mackay Treaty. The Chinese negotiators fell into the trap in the same manner as did formerly the Portuguese in concluding the famous Methuen Treaty, and only saw the new means of revenue provided by the industrial taxes, while overlooking the fact that the Chinese industry might possibly be crushed by them. In this case, as in so many others, Mackay acted in the Indian fashion. For, according to this provision, all machine yarns and tissues manufactured in China are to be subjected to an internal tax amounting to twice the import duty. Consequently these Chinese products could not be sold any cheaper than similar goods imported from England,
After the experience of the last few years we have come to the conclusion that this artificial and selfish procedure is false, not only because we supply the machines, but above all because it is a positive fact that the increase of purchasing power of the foreign countries, brought about by wages earned in industries, is of more final importance than the competition of their industrial products with ours.
In order to obtain the industrial tax Mackay made concessions by which the abolition of the li-kin may easily be made illusory. A substitute for li-kin is provided in the form of a tax on consumption for all national products that are intended to be exported. The continuation of the li-kin customs offices would thus be assured, and the way opened for a further exploitation of the Chinese people. The consumption tax may be good in India, but is useless in China, on account of the quality of the, provincial officials. It is only possible to agree to a complete abolition of the li-kin, and not to allow such substitutes for it.
Several Powers go much further than Germany in their conditions regarding the negotiations. So far, of the thirteen Signatory Powers only the United States, Japan, and Portugal have adhered to the English proposal. Sweden had concluded a Treaty with China, which was, however, not ratified by the Swedish Parliament. Russia and France are opposed to the conclusion of an Agreement similar to the Mackay Treaty, because it contains a provision forbidding China to grant to any Power special advantages of a political or commercial nature. Russia and France have land frontiers with China, and enjoy preferential duties for goods imported by land. the transport by land has considerably increased since the development of the railways, it is not to be expected that Russia and France will agree that their privileges should cease, and that there should in future be no difference between land and sea duties.
As
It cannot at present be predicted whether Russia and France will finally agree to the abolition of their privileges and to the increase of duty on goods imported by sea to 12 per cent. China's weakness and her dependence on the Powers forms a permanent danger of war which hangs over the Far East. This weakness can only be overcome by an increase of the financial power of the Government, and no Power can in the long run object to an increase of the duties. All the wishes of China, however, will not thereby be fulfilled.
By Article 12 of the Mackay Treaty the British Government is to renounce the exterritoriality of their subjects in China. China wishes, further, a gradual decrease and final abolition of foreign post-offices. Since the Chinese Post Office was reorganized by Sir R. Hart the thousands of Chinese post-offices that have been established have worked well. The Japanese, however, have covered the whole of Southern Manchuria with Japanese post-offices. Should the Chinese Postal Service. prove efficient there is no reason why the foreign post-offices should not be limited to a few principal towns, but for some time it will be impossible for the Great Powers to give up their post-offices entirely.
The German standpoint may be thus summed up: Germany has no reason to oppose the increase of the duties if the li-kin is absolutely abolished. After the negotiations that we began in 1903 failed by reason of their by no means conciliatory reception by the Chinese negotiators, we must now await the initiative of the Chinese Government for new negotiations.
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C.O. 43950
This Document is the Property of His Britannic Majesty's Government.
RECO
[March 19.09 24 APR 09
CHINA RAILWAYS.
CONFIDENTIAL.
[12032]
No. 1.
SECTION 1.
Telegrams between the Deutsch-Asiatische Bank, Berlin, and Hong Kong and Shanghae Banking Corporation, London.--(Communicated by Mr. C. S. Addis, March 19, 1909.)
loan.
From Berlin, January 12, 1909.
WE are approached by Chinese Government to offer for loan fund 3,000,000/. for railway purposes. We are informed that you or your friends have negotiated for same Wire whether share of loan will be offered to German Syndicate in case of you or your friends concluding business, as in such case we wish to avoid competition. Should like to have an answer to-night.
To Berlin, January 15, 1909.
Re your telegram British and Chinese Corporation reply as follows: Loan referred to is evidently one which is the subject of "negotiations between British and Chinese Corporation representative and Chang Chih-tung for construction of Hankow- Canton Railway. This railway falls within British sphere of interest, as defined in Anglo-German Agreement of 1898. British and Chinese Corporation therefore hope that on receipt of this information German Syndicate will decline to offer for loan in question.
From Berlin, January 18, 1909.
Have received telegram Friday, without discussing the question whether, in conformity with letter A. V. Hansemann to Mr. Brussel 19th February, 1903, understanding of September 1898 be still in force, we state that mentioned under- standing refers to Railway Concessions only which meantime have become out of question in China, and which consequently are not the subject of present negotiations. The subject of these negotiations is to provide funds for railway purposes by Chinese Government loan, which probably will not secure any influence or right similar to those of Railway Concessions, must therefore expect participation business same as stipulated in Agreement with your good selves of July 1895, as otherwise our Syndicate would have to go their own way. Please telegraph as soon as possible.
To Berlin, January 22, 1909.
German participation accepted in principle, subject to details which I hope to explain in person Berlin, probably Wednesday,
To Berlin, January 27, 1909.
Mr. Addis leaving Paris for Berlin to-day,
From Berlin, March 3, 1909.
For Addis. Our Syndicate agrees in principle with the views as laid down by your conversation with Schoeller and Erich. Erich and Rehders have been appointed to join the meeting to be fixed at Brussels earliest possible after this week. Our offer
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