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Enclosure 2 in No. 1.
Memorandum by Acting Consul Sly regarding Commercial and other particulars respecting Manchuria and Eastern Mongolia furnished by the Russian Chamber of Commerce at Harbin to the Ministry of Commerce and Industry at St. Petersburgh in connection) with the Revision of the Russo-Chinese Treaty of 1881.
The views of the chamber of commerce find expression in a document containing material for the revision of the treaty of 1881 (Annex (A)) in an explanatory memorandum (Annex (B)) and in two proposed drafts of a new treaty (Annexes (C) and (D))).
The arguments of the committee of the chamber, though sometimes specious and at others false and erroneous, are at others, again, pertinent and cogent. A study of the whole subject will be facilitated if the different points which appear to call for special mention are considered and discussed one by one.
The Importance of Manchuria to Russia in the Far East.
The committee are strongly of opinion that in the new treaty, which is about to be negotiated between Russia and China, the first place should be given to Manchuria, since they consider that Manchuria is of supreme importance to Russian trade in the Far East. Their arguments in support of this conclusion are many and varied, but it will be sufficient here to allude only to those which seem to be of chief consequence in relation to the two main propositions, namely, the great dependence on Manchuria of the Priamur and the potential change in the general economic condition of Manchuria which has resulted from the construction of the Chinese Eastern Railway,
In proof of their contention that the Priamur cannot at the present time hope to maintain itself independent of Manchuria, the committee point to the fact that the Priamur is unable to itself produce enough to satisfy the requirements of its provision market, that its industrial development is being retarded by the restrictions placed upon the use of cheap Chinese labour, and that it has to rely upon Manchuria to supply it with flour, the commodity of which it stands most in need. In substantiating their argument that the construction of the Chinese Eastern Railway, which they consider must, for some time to come, continue to be a necessary connecting link between the Transbaikal Ussuri lines, has resulted in a complete change in the general economic condition of Manchuria, the committee have obviously had little difficulty, and are able to adduce many proofs which are incontestable. Thus whereas, they state, Manchuria was not even mentioned in the Russo-Chinese treaty of 1881, and whereas previous to that year Russia had very few interests in the province outside the insig- nificant frontier trade along the Amur and Argun, now Manchuria furnishes, without question, the most important Chinese market for Russian goods, and offers the best opportunity for the development of a large trade between the two countries. In Manchuria, they declare, the energy of Russian merchants finds an outlet in three directions at one and the same time--in the importation of Russian goods, in the manufacture into finished articles of the raw material, and in the export of native products. Already, în 1906, which they consider is the year when, owing to the interruption of the Russo-Japanese war, regular trade first commenced, the value of Russian goods imported via Manchuria Station Pogranitchnaya (Suifenho) was 13,000,000 roubles---that is one-half the total value of the entire Russian import into the whole of the Chinese Empire. The annual turnover of Russian factories in Manchuria is estimated at 12,000,000 roubles, the export trade to Russia at 7,000,000 to 8,000,000 roubles, and the yearly turnover of the lumber concessions at 3,000,000 roubles. The amount of capital originally invested in Harbin is put at 50,000,000 roubles, and stress is laid on the magnitude of the Russian population residing in the province. The numbers of Russian residents in the territory of the Chinese Eastern Railway was, in 1909, as reported in Harbin despatch No. 4 of the 4th February last, 55,706; it was stated in that despatch that there had been an increase of some 1,700 at Manchuria Station, and it has since been learned that the Russian civil population of Harbin is now declared to be 39,000, a figure which has caused no little surprise, since it was generally thought that the Russian residents in this town did not exceed 30,000. Having marshalled their facts and advanced their arguments in support of their opinion that every effort should be made to strengthen the economic and political
position of Russia in Manchuria, the committee make various proposals as to the way in which effect should be given to this requirement. It is desirable to consider in the first instance the suggestions affecting their two principal contentions, which are:-
1. The necessity for the restitution of article 939 of the Russian Customs Tariff; and
2. The need for the grant by the Chinese Government of additional privileges intended to give increased facilities for the development and extension of Russian trade and interests.
The views of the committee in regard to the necessity for the restitution of article 939 of the Russian Customs Tariff are decided. They hold that the law of the 16th (29th) January, 1909, by which it was superseded, has not proved a success, and has in practice operated as a bar to the development of Russian trade in Manchuria. They instance the fact that Chinese goods exported from Manchuria to Russian territory consist exclusively of agricultural and animal products, the majority of which are free of Russian import duty, and assert that the abolition of the import duty on tea, which is the article of greatest value imported into Russia via Manchuria from China proper, would not enable this commodity to escape taxation in view of the excise duty which is levied. In a word, the committee hold the opinion that Russian customs revenue would suffer little diminution from the restitution of article 939 of the Customs Tariff, which allowed the free importation over the land frontier of Russia of all Chinese goods, saving only tea and silver and those the importation of which is prohibited by treaty. Another argument upon which they rely to support their request for the remission of Russian import duty où raw materials is that the Mongolian trade is essentially an exchange in kind which is threatened by complete destruction owing to the duties imposed by the law of the 16th January, 1909, on such articles as wool, hides, and horsehair. The mere fact that the Mongolian trade is an exchange in kind would not seem to afford conclusive proof that it is unable to bear the burden of a reasonable import duty, and a reference to the accompanying copy of the more pertinent stipulations of the law of the 16th January, 1909 (Annex (E) ), will show that the arguments of the committee on this point appear, to some extent at least, to be based on false premises. Thus, according to Part I (note 2) and Part II of this law, the undermentioned articles of overland export to Russia are exempt from import duty:
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1. Animal tallow. (Article 51, paragraph 1, of the General Customs Tariff.) 2. Undressed hides of the following kinds : Bull, ox, cow, calf, camel, buffalo, horse, donkey, and pig; also skins of fish and amphibious animals. (Article 54 of the General Customs Tariff.)
3. Undressed and undyed squirrel skins. (Article 56, paragraph 2, of the General Customs Tariff.)
4. Undressed and undyed sheep and goat skins. (Article 56, paragraph 3, of the General Customs Tariff.)
5. Undressed and undyed tarabagan skins. (Article 56, paragraph 5 (b), of the General Customs Tariff.)
6. Undyed wool, washed or unwashed, undyed wool combings, waste or scrap. (Article 181, paragraph 1, of the General Customs Tariff.)
The arguments of the committee respecting the present dependence of the Priamur on Manchuria, which are adduced as a further reason for claiming the restitution of article 939 of the Customs Tariff appear to be often sound. For example, it is not to be denied that the Priamur is not itself able to satisfy the wants of its provision market, and on this point a reference may be invited to Harbin despatehes Nos. 3 and 5 of the 14th February and the 9th March of last year, on the subject of the embargo placed by the Chinese authorities on the export of grain. Their contention, also, that Russian manufacturers were induced to come to Manchuria by grants of land and subsidies does not seem to be altogether unjustified, and the proposal that the Russian import duties levied on the products of the Russian factories in Manchuria exported to the Priamur should be assessed at a rate which would enable these goods to compete on the Priamur market on equal terms with similar articles manufactured in European Russia appears, at least from the point of view of the local manufacturer, to be eminently reasonable. It may be noted, however, that there is no Russian import duty on Manchurian wheat imported into the Priamur.
The requirements of the committee in regard to the additional privileges which should be obtained from the Chinese Government in order to encourage the extension
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