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Province pay only the barrier dues, which are comparatively trifling, but the certificates only authorize the goods to be conveyed to the provincial city, where the certificate must be delivered up and cancelled, and if the goods are intended to be transported elsewhere, another duty must be paid. If intended for Hong Kong, they must pay duty according to the foreign Customs Tariff, but if intended for any inland ports, they must pay another barrier dues. As Macao is still considered by the Chinese to be Chinese territory, junks As there is no Chinese clearing for that port are provided with inland certificates. barrier in or near Macao, the position of the Chinese Government is anomalous. The Customs officials, therefore, require all junks from the south going into Macao to call at As the Canton to cancel the certificate, pay another duty, and then proceed to Macao. custom has hitherto been to sail direct from the south to Macao, the Hoppo considers that he has lost a considerable revenue, and puts in force, without the slightest notice, a law that is almost obsolete, hence the numerous arrests that have taken place, until trade is nearly at a stand-still. As to Hong Kong, it is considered a foreign port, but as the southern part of Kwangtung, whence all the junks chiefly come, is not open to foreign trade, there can be no foreign Customs offices, hence nothing can be exported other than to the ports on the mainland. Therefore the junks, according to law, must put in at Canton to cancel their inland certificates and to pay duty on their goods according to the foreign Customs Tariff before they can proceed to Hong Kong. The Patera station is mooted to meet the wishes of the merchants, who, instead of having to make the detour to Canton, can pay what is required of them without the least inconvenience. The station sought to be erected is independent of the existing one, which levies only a Lekin Tax. If China, says our native contemporary, possesses the right to levy taxes at all, she should exercise it with the least possible inconvenience. So if the Macao authorities would not have the barrier station at Patera Island, she should place one in Ma-low-chow, the place where the Lekin Tax station is situated. It recommends, however, that the Viceroy should put down arbitrary arrests by the Customs officials, and reorganize the whole system.

Patera Island, as it is called, but really a part of the Mainland of China, forms the western side of the Harbour of Macao. The Haikwan or Hoppo of Canton lately attempted to establish a station on a point of it exactly opposite the city for the more effectual levy of duties upon the junk trade with the Settlement. This was resisted by the Governor of Macao, who notified to the Chinese authorities that he would level any station they erected there by force. The latter accordingly desisted, and thus the matter remains.

B. ROBERTSON.

Canton, March 13, 1876.

No. 18.

(Signed)

Colonial Office to Foreign Office.

Downing Street, May 20, 1876.

Sir,

IN continuation of the previous correspondence relating to the complaints of the mercantile community in Hong Kong, against the proceedings of the Chinese revenue cruizers, I am directed by the Earl of Carnarvon to state that he has read, with great interest, Sir Brooke Robertson's despatch to Sir Thomas Wade, of the 18th of January last, a copy of which was transmitted, for his Lordship's information, in your letter of the 10th of March.t

2. The intelligence conveyed in this despatch appears to Lord Carnarvon to be of the greatest importance, as it removes all doubt as to the main object of the Viceroy of the two Kwang, in maintaining the so-called "blockade" of the island.

3. In reply to the remonstrances of the merchants of the Colony, it was urged by Sir Brooke Robertson that although cases of misconduct and illegality on the part of the the Customs' officials must be expected occasionally to occur, the establishment of Cus- toms' stations in the immediate vicinity of Hong Kong, and the maintenance of revenue cruizers, and armed boats about the harbour, and round the island, were solely directed to the prevention of smuggling, and had no other object than the protection of the Viceroy's legitimate revenue. Notwithstanding these assurances, a conviction has generally pre- vailed in the Colony that illegal exactions were being levied under the authority of the

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Viceroy; but their precise nature and amount were a matter of conjecture. Every effort was therefore made by the Hong Kong Government to obtain from the Viceroy the Tariff of duties levied at the Customs' stations on the junks frequenting the Colony; but the Viceroy absolutely refused to impart this information. At last, however, the insistence of Sir A. Kennedy, and the good offices of Sir B. Robertson, have brought to light the real state of affairs; and we learn that the native trade between Hong Kong and the main- land of China is subjected to the payment of double duties, that is to say, the foreign Tariff duties imposed under the Treaty of Tientsin, on the trade carried on with China by British subjects, in addition to the "nei ti shui," or native export and import duties to which the native trade has always been liable.

4. Sir B. Robertson's despatch places the whole controversy on a clear footing, and may be said to afford a fresh point of departure in the discussion of this question. The issue now involved is whether a large portion of the duties admittedly levied by the Viceroy on the trade of Hong Kong is or is not illegally exacted. Lord Derby is aware that goods carried in Chinese junks between Chinese ports pay an export duty at the port of depar ture and an import duty at the port of arrival. These duties are called the "nei ti shui," or native duties, and are lower than the Foreign Tariff duties charged under Article XXIV of the Treaty of Tien-tsin on goods exported or imported by British merchants at the Treaty ports. Sir B. Robertson states that, "by the Regulations" (but to what Regu- lations he refers does not appear) "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." This is the first time that the existence of such regulation has been mentioned in the correspondence, and, so far as Lord Carnarvon has been able to learn, it has hitherto been unknown to the Hong Kong Government, and is repudiated altogether by the Chinese traders in the Colony. They are willing to pay the native export duty, but to the Foreign Tariff duty they most strongly object.

any

5. That the Foreign Tariff imposed by the Treaty of Tien-tsin has reference only to the trade carried on with China at the Treaty ports by British subjects appears to Lord Carnarvon to be indicated by the terms of Article XXIV of the Treaty and by the Rules and Regulations agreed to by the Earl of Elgin and Kincardine in pursuance of Articles XXVI and XXVIII.

6. It may be urged that the Chinese Government have the right if they please to impose these double duties on the trade carried on by their own subjects with foreign ports, but unless this regulation applies equally to Macao, Manila, and Saigou, places Hong Kong at an unfair and very serious disadvantage.

7. It is a significant fact that the Chinese traders should repudiate any such regu- lation, and there is much reason to believe that, as Sir B. Robertson himself suggests, it has been put forward by the Viceroy as a device to make up for the loss of the duties which he is unable to levy directly on the Island of Hong Kong by reason of its being British territory.

8. Sir Brooke Robertson draws attention to the attitude of the Viceroy towards the Portuguese Settlement of Macao, which is only forty miles distant from Hong Hong. He states that the Viceroy has forced the junk masters trading with Macao to pay the export and import,native duties, or "nei ti shui," on goods entering or leaving that port, on the plea that Macao, though occupied by Portugal, is still Chinese territory. With respect to Hong Kong, Sir Brooke Robertson remarks that we have, "for varicus reasons, frequently impressed on the Chinese authorities that Hong Kong is a foreign port, and is under British jurisdiction," and that they took advantage of the "information" and "devised the following plan." He proceeds to state that, as Hong Kong is a foreign port,

and not Chinese territory, they refrain from levying the "nei ti shui," or native export and import duty on goods entering or leaving the Colony, as in the case of Macao; but, in order to make up for this loss, they force the junks trading with Hong Kong to pay the Foreign Tariff duties under the Treaty of Tien-tain in addition to the native duties.

9. He adds that the Chinese merchants of Hong Kong protest against this exaction, but, as a compromise, they are willing to be placed on the same footing as the Macao traders, that is, to pay two "nei ti shui" duties, as if Hong Kong were a Chinese port; but "the levy according to the foreign Tariff they are opposed to." The Grain Commis sioner, Kao, did not hesitate to suggest, as a convenient solution, that the two "nei ti shui duties which the Viceroy admits he has no right to levy as regards Hong Kong, should be levied together at the Chinese port of departure in the case of exports, and at the Chinese ports of arrival in the case of imports. But the Haikwan pointed out that he would lose by such an arrangement. He prefers levying the one "nei ti shui" duty on

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goods entering or leaving China plus the foreign export and import Tariff duty; and Sir B. Robertson shows by figures that this alternative is more profitable. He observes that, "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 accord- ance with the Tariff annexed to such Treaty, may be a question ;" and he adds that "in his opinion he is."

10. Lord Carnarvon is unable, in the absence of further explanations, to understand how the Treaty of Tien-tsin can have any bearing on the case.

11. The terms of Article XXIV of the Treaty which relates to the foreign Tariff apply solely to merchandize exported from or imported into China by British subjects, and has no reference to goods shipped by native traders in native junks to or from Hong Kong.

But even if it were conceded that the Treaty applied to Chinese as well as British subjects, Lord Carnarvon fails to perceive how any reading of it can justify the exaction of both the foreign duty and the native duty, in the case of Chinese subjects, while British subjects only pay the foreign duty, the effect of which would be to prevent all foreign trade from being carried on by Chinese.

12. For these reasons it appears to Lord Carnarvon highly probable that, as suggested by Sir Brooke Robertson, the imposition of the foreign Tariff on junks trading with Hong Kong has been adopted by the Viceroy as an indirect method of drawing a Customs revenue from the Colony, and a device to make up for one of the "nei ti shui" duties, which he admits cannot be levied on British territory. It places the native trade of Hong Kong at a great disadvantage even with that of Macao, where the two "nei ti shui" duties which are levied amount to less than the duties levied on the trade of the Colony. Lord Carnarvon trusts that Lord Derby will take this grave difficulty into his early considera. tion, especially as it appears from Sir B. Robertson's despatch that deputations of the Chinese merchants of Hong Kong are being invited to approach the Viceroy at Canton, with a view to "coming to terms" without the knowledge of the Government of the Colony, or any previous communication with Her Majesty's Government.

13. I am further directed to acknowledge the receipt of your letter of the 6th instant,* transmitting a communication on the same subject from Sir Brooke Robertson, in which he incloses a copy of a despatch addressed by him to Her Majesty's Minister at Peking, drawing attention to an article in a Chinese journal published in Hong Kong, on the subject of the difficulties between the Viceroy and the authorities of Macao.

14. In this article the writer details the process by which the Viceroy levies taxes on the trade of Hong Kong," according to the foreign Customs tariff," and recommends that the Viceroy should put down arbitrary arrests by Customs officials, and reorganize the whole system.

15. It appears to Lord Carnarvon that it would lead to no practical advantage to discuss the objections of Sir Brooke Robertson to Sir A. Kennedy's suggestions, nor his own proposal that a European Consul or Vice-Consul should be appointed to reside in Hong Kong for the purposes indicated in the last paragraph of his letter to Sir Thomas Wade of the 18th of January, until a solution has been arrived at of the question which has now arisen as to the right of the Viceroy to levy the double duties which he claims to impose on junks frequenting the Colony.

16. His Lordship trusts that the Earl of Derby will shortly be in possession of Sir Thomas Wade's views on this subject, and that it inay be possible to come to an under- standing with the Chinese Government, whereby some tariff should be accepted on the condition that no other duty of any kind, import or export, "lekin" or "siao-hao," should be levied on the junk trade of Hong Kong.

I am, &c.

ROBERT G. W. HERBERT.

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of Commerce of Hong Kong, and dated the 8th of February, on the question of the action of Chinese revenue cruizers in the neighbourhood of the Colony.

I request you will inform the Chamber of Commerce in reply that the question continues to occupy my serious attention. The principal difficulty appears to be to arrive at some understanding with the Chinese authorities as to the nature and amount of the duties which they are entitled to levy on native junks trading with Hong Kong without placing the Colony at a disadvantage as compared to other foreign ports.

As regards the steps taken by the Chinese Government for securing the collection of their legitimate revenue, I have already explained that they afford no ground for diplo- matic remonstrance, and I cannot hold out to the Chamber of Commerce any hope that the extreme demands which they invite me to urge on this point can be approved of by Her Majesty's Government.

Sir,

No. 20.

I have, &c. (Signed)

CARNARVON.

Foreign Office to Colonial Office.

Foreign Office, May 26, 1876.

I HAVE laid before the Earl of Derby your letter of the 20th instant, relative to the Chinese Revenue cruizers near Hong Kong; and I am directed by his Lordship to state to you, for the information of the Earl of Carnarvon, that copies of this letter will be forwarded to Sir T. Wade and Sir Brooke Robertson, and that they will be instructed to report their views as to the best means of obtaining the establishment of a fair and regular Tariff for the junks trading with the Colony,

(No. 78.)

I am, &c.

(Signed)

TENTERDEN.

No. 21.

The Earl of Carnarvon to Governor Sir A. E. Kennedy, K.C.M.G., C.B.

Sir,

Downing Street, June 8, 1876. WITH reference to my despatch No. 21 of the 29th of February last,† I have the honour to transmit to you a copy of further correspondencet with the Foreign Office on the complaints of the mercantile community in Hong Kong against the proceedings of the Chinese Revenue cruizers.

I request that you will supply me with such information as you can obtain in reference to the regulation refered to by Sir Brooke Robertson, whereby both the native and foreign duties are levied on junks trading with Hong Kong.

I

am, &c.

(Signed)

CARNARVON.

No. 22.

• No 18.

+ No. 18.

Nos. 15, 18, and 26.

§ No. 12.

PUBLIC RECORD OFFICE, LONDON

ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC- COPYRIGHT PHOTOGRAPH-NOT TO

(No. 73.) Sir,

(Signed)

No. 19.

The Earl of Carnarvon to Governor Sir A. E. Kennedy, K.C.M.G., C.B.

Downing Street, May 24, 1876.

I HAVE the honour to acknowledge the receipt of your despatch No. 27 of the 15th of February,† transmitting a printed copy of a letter addressed to me by the Chamber

Sir,

Foreign Office to Colonial Office.

Foreign Office, July 27, 1876. WITH reference to my letter of the 18th of February,§ I am directed by Her Majesty's Secretary of State for Foreign Affairs to transmit to you, to be laid before the Earl of Carnarvon, a copy of a despatch from Her Majesty's Consul at Canton, in regard to the alleged blockade of Hong Kong by Chinese revenue cruizers.

I am, &c.

(Signed)

TENTERDEN.

• No. 17.

↑ No. 16.