PUBLI
ה
RECORD OFFICE
Reference -
C.O. 882
3
PUBLIC RECORD OFFICE, LONDON
ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC- COPYRIGHT PHOTOGRAPH-NOT TO
Sir,
26
Inclosure 2 in No. 15.
Canton, January 18, 1876. I FEEL some hesitation in addressing you upon this long-vexed question when you have other more important matters pressing upon your attention, but, as the matter of the so-called blockade of the port has been mooted afresh in Hong Kong, and that, too, by the Governor in Council, I think it right to bring it to your notice.
You are aware that the Colonists complain that the approaches to the harbour are watched by the cruizers of the Canton Customs, and that all junks and native boats are boarded by them, searched, and often captured, taken to Canton and confiscated, whereby the trade of the Colony is threatened with annihilation.
Of course, if this was true to the letter, it would be difficult to understand how Hong Kong could have the large native trade it possesses; but, allowing for exaggeration, there is little doubt that a very strict cordon is established, and there may possibly be cases of hardship, as there are also cases of attempted smuggling.
Before, however, bringing the immediate subject of this despatch before you, it will be well to give some explanation of the situation. Independently of smuggling, pure and simple, between the Colony and the mainland of China, and which can rest upon its own merits, there are other causes for Customs surveillance which are not so well understood, and which I will endeavour to explain.
Y
When goods are transported from place to place in Chinese territory, the Customs regulations require that the payment of what is called a "nei ti shui," literally the "inland duty," at the port of departure, and of a similar duty at the port of arrival. These are what we should call the export and import duties leviable on goods taken from one place in China to another. There is also a small tax levied at Canton and some other places, the amount of which varies greatly, and which is called the "siao hao."
Now, when Hong Kong rose to importance as a depôt for native trade, the Customs Authorities found that junks clearing for that Colony paid only one duty, the export; they lost the import one, and the siao hao," and they therefore devised the following plan :—
We have for various reasons frequently impressed upon the Chinese Authorities that Hong Kong is a foreign port, and is under British jurisdiction, and they on this occasion took advantage of the information. If, they said, Hong Kong is a foreign port, the Tariff of the Tien-tsin Treaty applies to it; and, as all goods going from China to, or coming to China from, an English possession, must pay duties according to that Tariff, then junk. conveying them to Hong Kong must do the same, and they forthwith put junks trading with the Colony under the Foreign Tariff, besides making them pay the "nei ti shui," or export duty at the place of departure, and if they did not call at the stations in the vicinity of Hong Kong and pay the tariff duties, they were seized, notwithstanding they had a clearance from their port of departure.
Something of the same kind occurred with regard to the Portuguese Settlement at Macao, but under different circumstances. The Chinese Government still consider Macao to be Chinese territory, it having been taken by force from it in 1849. Now Macao bas a considerable native trade with the coast places, and the Customs Authorities discovered that junks clearing for Macao paid the " nei ti shui," or export duties, but not the "nei ti shui," or import duties, or the "siao hao," because the Portuguese had proclaimed it a free port, and exempt from Chinese jurisdiction.
This was intimated to the Chinese traders and hongs there, and they were called upon to pay “nei ti shui," or import duties with the "siao hao," on the grounds that Macao was Chinese territory and a Chinese port, which they refused to do, and Macao was in consequence blockaded, and junks making for it were seized and compelled to pay or be confiscated.
You will observe the distinction made between Hong Kong and Macao, the former being treated as a foreign Possession, and therefore coming within the operation of the Treaty Tariff, and the latter as Chinese territory, and therefore subject to the Chinese Customs Tariff.
I need scarcely say that no efforts have been wanting on my part to press upon the Provincial Government claims for redress which were preferred by the Hong Kong Govern- ment under the plea of protecting the trade of the Colony, and it was only lately when warning the Viceroy and the Haikwan that the blockade of the Colony, which I had reason to believe was more stringent than ever, would certainly result in becoming a subject of diplomatic intervention, that the latter seemed nervous about it, for I believe orders were given to lighten the pressure, and deputations of the Hong Kong and Macao Chinese merchants sent for, and who in due course attended at the Yamên for the purpose stating their complaints and suggesting a remedy.
of
27
With the Macao merchants an understanding was soon arrived at, and they consented to pay the "nei ti shui," or import duty, on goods landed at Macao, and were directed to petition the Haikwan to that effect who would memorialize for the Imperial sanction tbereto. But with the Hong Kong merchants the case was different. They too offered to agree to the same terms as the Macao people, but the Haikwan said that could not be as Hong Kong was foreign territory, and he could not levy a nei ti shui," or import duty,
[[
on goods arriving there, nor an export one on goods leaving it. Kao, the grain Com- missioner, who was present at the interview, suggested that the two might be levied together at the port of departure in the case of exports, and the port of arrival in the case of imports, but the Haikwan said be would lose by such an arrangement, as the sum of the two duties in the case of many articles would not amount to what he is entitled to levy, and he instanced white sugar as an example. The "nei ti shui" upon it when taken from one part of China to another is 1 m. 2 c. per 100 catties at the place of export, and the same at the place of import, making a total of 2 m. 4 c. per 100 catties. Now by the Regulations any produce exported from any port in the four lower Prefectures of the Province for a foreign port is subject to the levy of the "nei ti shui at the port of shipment, and before being taken to its destination, must be brought to Canton, where, besides paying a local tax called the "siao hao," it has to pay export duty according to the Foreign Tariff. What, therefore, he is entitled to levy at present on white sugar intended for Hong Kong is the 1 m. 2 c. per 100 catties at the port of shipment, the "siao hao," or local tax, which would perhaps amount to 8 c. per 100 catties, and the export duty of 2 m. per 100 catties provided by the Treaty Tariff, in all about 4 m. per 100 catties, so that in the case of white sugar he would lose 1 m. 6c. if he adopted the Grain Com- missioner's suggestion. He had established duty stations at Chang Chow, &c., to do away with the necessity of goods being brought to Canton, and hence foregoes his "siao hao," but he must have the other two items. This the Hong Kong merchants objected to as taxing goods too heavily, and so no arrangement could be made."
Subsequently the Grain Commissioner, Kao, asked the Hong Kong merchants if they could suggest a plan themselves, and they replied, if the Macao plan was brought into operation it would answer their purpose, as they would simply have their goods conveyed between Hong Kong and Macao by steamer, and make the latter the port of export to and import from places on the coast of China, and thus pay merely the two "nei ti shui duties as arranged. This proposed evasion of the Haikwan's claim evidently took that official by surprise, for I hear that Colonel Pêng, Commandant at Kowlong, and an officer well known in Hong Kong, has been deputed to see the merchants and try to bring them
to reason.
You will see from the above that, independent of actually smuggling, the casus belli at Hong Kong arises from the system of levying duties on goods destined for the Hong Kong market; that is to say, both exports and imports to and from the Colony, according to the Tien-tsin Treaty Tariff, besides the "nei ti shui," or Chinese import or export duties, and which former the native merchants of Hong Kong refuse to pay, and avoid paying if possible, their argument being that only the one, import or export, "nei ti shui," is really leviable, but they are willing to pay both as a compromise; the levy according to foreign Tariff they are opposed to.
Whether the Haikwan is authorized by any reading of the Treaty of Tien-tsin to levy upon goods conveyed in Chinese vessels to and from a British Possession in accor dance with the Tariff annexed to such Treaty may be a question, but in my opinion he is; for the intention of the Treaty, in spirit, not in word, is, that goods exported to or imported from a foreign market should pay duties according to a certain scale, irrespective of their being British or Chinese owned, and that, in fact, the destination, and not the ownership, governs the levy of duties.
Having thus, as far as am able, given an exposition of the situation, I will now turn to the more immediate purport of this despatch.
On the 2nd of December last, Governor Sir Arthur Kennedy arrived in Hong Kong from England, and shortly afterwards I went to see him. He showed me Lord Carnarvon's despatch on the subject of the blockade, which appears in the Report annexed hereto, and which he said he intended to bring before his next Council, in order that it might be generally known that the interests and appeals of the Colony were not disregarded by the Secretary of State for the Colonies. On glancing over the despatch, for I did no more, I saw nothing in it to authorize its premature publication, and much that would render a reserve desirable, but, of course, that was for the Governor to judge. My own view was to say nothing to the Provincial Government of Canton about it, and so I told Sir Arthur Kennedy, adding I would await his declaration in Council. On the 7th of January the Legislative Council met, and the Governor made his statement, a report of which, taken