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It is suggested that opium affords the key of the situation. The temptation to smuggle a highly-taxed article which represents a large value in a small compass is great, and a good deal of what the Imperial Maritime Customs authorities call smuggling used, no doubt, to go on. That is to say that although the opium exported from Hong Kong to the mainland contributed, measurably, to the provincial revenue and to the private incomes of the provincial officials, it failed to benefit the Interior Exchequer.
There is not, in casting this side-light on the situation, any purpose of deprecating the attitude which Her Majesty's Government saw fit to adopt. It is desirable, however, to throw all the facts of the situation into relief when we encounter ulterior demands such as those which the Association is concerned to combat. The practical question is how willingness to assist a service and a purpose, towards which Her Majesty's Government has naturally been sympathetic, can be reconciled with the desire of the Colony to see the Chinese revenue stations and revenue- cruisers removed beyond the limits of British territory and British waters.
It has been suggested that this might be accomplished by taking the collection of the opium revenue into our own hands. Hong Kong is rightly jealous of the status as an absolutely free port, to which its commercial prosperity is largely due. The creation of bonded warehouses, and insistence that all opium imported into the Colony shall be deposited therein, would be a certain infringement upon that status: but the inconvenience of admitting a foreign preventive service would be immeasurably greater.
That is, then, the solution which is proposed.
The Hong Kong Government would, presumably, in such case undertake to collect as an export tax, and hand over to the Chinese authorities (after deducting the cost of collection) the recognised amount which the latter ought properly to collect as an import duty on their own soil. The service would be great, and the consideration required should be the complete removal of the Chinese Customs and all its accessories beyond British limits
It would be desirable, as a corollary, that the proposed boundary-line of the new concession should be rectified. That which has been indicated appears arbitrary and unsatisfactory, in that it presents no natural division, whereas a good natural frontier exists in a range of hills a little farther to the north. The extension would be slight, and the change would be au advantage to the Chinese not less than to ourselves, as passes through hills can be more easily protected against smugglers than the open frontier which was at first proposed. The terms of the Convention appear sufficiently elastic to permit the rectification as a logical consequence of surveys, which have, presumably, for their object to ascertain the line along which a boundary can be most conveniently drawn.
It would be desirable, also, as a second precaution, to cease to recognize the Customs revenue-cruisers as men-of-war, as it is in that capacity that they haunt the waters of the Colony, to the constant vexation of all who have its prestige and independence at heart. The importance of this reservation becomes evident in face of the stipulation that "the existing landing-place near Kowloon city shall be reserved for the convenience of Chinese men-of-war, merchant, and passenger vessels, which may come and go and lie there at pleasure."
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The trade of Jersey with France is not comparable in volume to the trade of Hong Kong with Kwangtung. The situations are, however, analogous, and the mere supposition of the French authorities making, in regard to Jersey, such demands as the Chinese authorities are understood to have made in regard to Hong Kong, appears sufficient to demonstrate their inadmissibility.
I have, etc.,
(Signed)
R. S. GUNDRY,
Honorary Secretary.
P.S.-I have the honour to inclose a duplicate of this letter, which the Committee trust that your Lordship will be good enough to communicate to the Secretary of State for the Colonies.
INCLOSURE 1 IN No. 389.
Hong Kong Branch of China Association to General Committee, London.
HONG KONG, July 30, 1898.
DEAR SIR,
Important information has reached this branch in regard to the demands made upon the Hong Kong Government by the Imperial Maritime Customs in connection with the recent accession of territory to this Colony. The matter has been before the Committee of this branch, and, at their request, I address you on the subject. I am sending you at the same time a short wire as follows:-
'Customs demand plenary powers Hong Kong new territory. Strongly oppose.
Letters follow."
You are fully acquainted with the position occupied by the Imperial Maritime Customs in Hong Kong, at the present moment, under the arrangements made in September 1886 by the late Sir James Russell, under the provisions of the Chefoo Convention. For present purposes it is sufficient to say that their presence in the Colony is simply tolerated. They have no official position. They are not recognized and, in theory, the whole work of the Customs is done on the opposite mainland of China.
Under the Convention of the 9th June last the whole of the mainland opposite Hong Kong, and for a considerable distance east and west becomes practically British territory (the City of Kowloon, about which we wired you, excepted) under a lease for ninety-nine years. This Convention has not yet been published in Hong Kong, so that we do not know what special
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