4
Enclosure 4 in No. 1.
Consul-General Fulford to Messrs. Forbes and Co.
Gentlemen,
Tien-tsin, November 13, 1909. I BEG to acknowledge receipt of your letter of the 8th instant asking me to endeavour to obtain for you exemption from inland taxation on beans and bean oil brought from Manchuria to Chin Wang Tao for export abroad.
The question is a complicated one, and you may not be aware of all the circum-
stances.
The freedom from such taxation in the case of beans and bean oil exported through Dairen and Newchwang arises from the status of the Japanese Manchurian Railway. The Japanese refuse to allow the Chinese authorities to levy any taxes on goods in conveyance by the railway. Consequently, if the beans can be brought to any railway station on the line without being taxed en route they escape all internal taxation and only pay export duty. From our foreign merchants' point of view this is a happy state of things in the advantages of which our British merchants at Dairen and Newchwang participate. The Chinese Manchurian authorities of course claim that the beans are liable to taxation on their way to a railway station or a treaty mart and will enforce the tax if they can. I may mention that the only tax leviable in such cases is a "production tax" or transit duty in lieu thereof.
If, on the other hand, the beans were to be conveyed by the Chinese railway to Chin Wang Tao, unless they were protected by transit passes, they would have to pay the Manchurian production tax, an Imperial Board of Revenue li-kin or tax of some sort at Kou Pang Tzu (this office is quite independent of Manchurian Government control), and also the Chilli li-kin when they come into this province.
It is hopeless to attempt to persuade the Chinese Government to waive these latter taxes, because they cannot collect taxes on the Japanese railway,
It is true that it would be for the benefit of the Chinese railway to do so, but Chinese Government departments are notoriously unsympathetic for each other's welfare, and their consent would, moreover, justify to some extent the Japanese action. The only way to do the business you propose is to take out transit passes for the beans and bean oil to bring them to Chin Wang Tao for export. This should free them of all internal taxation except the transit dues.
For instance, it should relieve them of the payment of Manchurian production tax. I do not suppose that by any means all of the bean products exported at Newchwang and Dairen escape this production tax. It is a moderate tax of 1 or
12 per cent. ad valorem.
If the export trade at Chin Wang Tao will not stand even the transit duty, I do not see any prospect of better terms.
If there be any difficulty about taking out transit passes as above described, I am quite prepared to fight the matter for you vigorously.
I am, &c.
H. E. FULFORD.
[This Document is the Property of His Britannic Majesty's Government.)
-241
Rece Recf18 FEB 10 [January 25.]
AFFAIRS OF CHINA.
CONFIDENTIAL.
[2875]
(No. 7.)
Sir,
No. 1.
SECTION 3.
Sir J. Jordan to Sir Edward Grey.--(Received January 25.)
Peking, January 6, 1910. IN my despatch No. 564 of the 16th December, 1908, I reported that the British American Tobacco Company desired to consolidate all the various dues leviable upon their cigarettes and manufactured tobacco exported from Mukden to any place in Manchuria, and had suggested that this consolidated duty should be at the rate of a duty and a-half, viz., 6·75 mace per picul.
Since that date the proposal has been the subject of considerable correspondence, the course of which has been as follows :——
The first suggestion of the company was, from the very outset, not considered practicable, and their Shanghae manager, both in conversation with me and His Majesty's consul-general at Mukden, stated that the interests of the Mukden factory would best be served by an adoption of the procedure obtaining with regard to the factories at Hankow and Shanghae. According to this procedure, which is in the nature of a concession, and was obtained by Sir Ernest Satow in 1904, the export duty levied on the cigarettes manufactured by the company is to be the same as that paid on prepared tobacco, viz., 4 mace 5 candareens per 100 catties; in the event of the goods being shipped to another treaty port the coast trade duty of one-half this amount must be paid, and, if there is a further shipment into the interior, customs dues must be paid at customs stations and li-kin at li-kin barriers.
Mr. Willis accordingly applied to the local authorities in December 1908 for an extension of these terms to the factory at Mukden. They replied that they were prepared to arrange for a uniform rate of 5 per cent. ad valorem throughout the three Eastern provinces. This offer was declined by the company, and Mr. Fulford, who was temporarily in charge of the consulate-general, again asked that the procedure should be adopted which exists at Hankow and Shanghae. This second request was referred to the Wai-wu Pu, and his Excellency the Viceroy later informed Mr. Willis that it had bis support.
As no reply, however, was forthcoming from the Central Government, I addressed a meinorandum to the Wai-wu Pu on the 12th July last, copy of which I have the honour to enclose, and on the 9th August I received a reply, copy of which is also enclosed, accepting the proposal. Subsequently, however, in their enclosed memorandum of the 9th September last, the Wai-wu Pu went back upon their previous decision, and suggested the 5 per cent. ad valorem duty which had already been refused by the company. The reason for this change of front is no doubt to be sought in the representations made at the time by the new Viceroy, who disagreed with his predecessor's opinion, as reported in Mr. Willis's enclosed despatch No. 31 of the 17th August last. I replied to the Wai-wu Pu on the 15th September that I was unable to agree to a revocation of the arrangement already accepted. At the same time, I informed His Majesty's consul-general that, although I was obliged to maintain this attitude officially, I should welcome any arrangement satisfactory to the parties concerned, and that if, as indicated in a private letter from Mr. Willis to me, the company were now anxious to adopt the proposal of a 5 per cent. duty, he should support them in their endeavour to obtain a settlement on this basis.
From Mr. Willis's latest despatch (No. 64 of the 20th December), you will observe that the divergence of policy on the part of the company has been due to a difference of opinion between the managers of their branches at Shanghae and Mukden, but the London office of the company have now apparently decided to adopt the point of view of the Shanghae manager, and press for the procedure obtaining at Shanghae and Hankow.
I shall therefore do all I can to keep the Wai-wu Pu to the engagement recorded in their memorandum of the 9th August.
I have, &c.
J. N. JORDAN.
[Enclosures not printed.]
[2605 b6-3]