J
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objection to the proposal. So long as the pledge is
regarded as holding good no customs dues will be levied,
so that China loses nothing by waiving her claims; and
as there is, unquestionably, a certain amount of smuggling
from Weihaiwei into Chinese territory, the imposition of
customs duties in Weihaiwei would tend to safeguard the
revenues of the China Customs.
31.
The fact that revenue from this source is
necessary to enable the territory to be developed for the
benefit of the Chinese inhabitants would be sufficient
argument to justify the proposal and any objection on the
part of China due to a fear of "losing face" could probably
be overcome if Great Britain were to offer in return to
abandon the right conferred by the Convention of erecting
fortifications and stationing troops in certain districts outside the leased territory a right which in present
ciroumstances is of no possible value.
32.
Another pledge, given I believe to the Government of Germany, was that Great Britain would not construct railways into the interior. I do not know whether this promise is still regarded as binding but, if it is, I would suggest that it would be desirable, if possible, to withdraw it. It is not a matter of practical importance at present; probably it never will be, as the cost of haulage to the nearest point on any Chinese line, coupled with the fact that customs duties would be levied where the line crossed the Chinese frontier, would certainly kill any possible traffic, but if the lease is for a long period it would be desirable to obtain a free hand for the
future in case circumstances alter.
33.
The question of customs duties stands on a different footing and I regard it as of the greatest importance that the present restriction should be removed.
I do not mean to suggest that an attempt should be made to
raise