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PUBLIC RECORD OFFICE

Reference

C.O. 882

5 PUBLIC RECORD OFFICE, LONDON

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

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I am directed to inform your Lordship that the East India and China Trade SectionTM of this Chamber are entirely in accord with the views expressed by the Hong Kong Chamber, and I am desired to express the hope that arrangements may yet be made between Her Majesty's Government and the Government of China by which the objec- tionable features of the arrangement referred to may be removed, and the Colony, with its enlarged area and its improved strategical and defensive conditions, be enabled to reap the full advantage of the security obtained, and the development of commerce, which, as a free port, should become more and more marked. I am, &c.,

23608.

(Confidential.)

SIL,

No. 47.

KERIC B. MURRAY,

Secretary.

COLONIAL OFFICE to FOREIGN OFFICE. [Answered by No. 52.]

>

Downing Street, November 30, 1898. Wrra reference to previous correspondence on the subject, I am directed by Mr. Secretary Chamberlain to transmit to you, to be laid before the Marquess of Salisbury, a copy of a report by Mr. J. H. Stewart Lockhart, C.M.G., of his recent visit to the newly-acquired territory in the vicinity of Hong Kong.

2. Mr. Chamberlain thinks that Lord Salisbury will agree with him that Mr. Lockhart has furnished Her Majesty's Government with an extremely valuable and in- teresting report, which cannot fail to be of great assistance to them in dealing with the various important questions involved. At the present moment, however, he only pro- poses to invite His Lordship's special attention to three points:-

(a) The jurisdiction to be exercised within the city of Kowloon;

(b) The measures to be adopted for the prevention of smuggling and for the colleo- tion of Chinese Customs;

(c) The possible extension of the northern boundary of the new territory.

3. The Convention provides and the Order in Council not yet published (of which a copy is enclosed) recognizes that except in so far as may be inconsistent with military requirements for the defence of Hong Kong, the Chinese officials who are now stationed within the city of Kowloon shall continue to exercise jurisdiction there. Various repre- sentations have been made, both to Mr. Chamberlain and to Lord Salisbury, as to the evil results to be apprehended from allowing any form of Chinese jurisdiction to be exercised in any part of a territory that will now become an integral part of the Colony of Hong Kong. It would seem, however, from Mr. Lockhart's report, that the jurisdic- tion hitherto exercised in Kowloon city has been of a military rather than of a civil character; and he is of opinion that the departure of the military garrison would be followed by that of the small civil population. Mr. Chamberlain takes it for granted that the continued existence of a Chinese garrison in British territory would be out of the question; and it appears to him, therefore, that there is every probability that the difficulty anticipated as regards this article of the Convention will gradually disappear of itself. In order, however, that there should be no misunderstanding on this subject, Mr. Chamberlain would suggest that the Chinese Government should be called upon to remove the garrison with as little delay as possible.

4. The most important question to be considered at this moment is that of the pre- vention of smuggling into China, and the collection of the Chinese customs duties. Her Majesty's Government are pledged to the Government of China to use all possible pre- cautions to prevent the leased area from being used to facilitate smuggling into China, or in any other way to the detriment of the interests of China. But it appears to Mr. Chamberlain that, as has already been intimated in the letters from this office of the 20th and 29th August, the so-called "Regulations" of the Viceroy of the Two Kuang, enclosed in the Viceroy's letters to Consul Mansfield of the 15th July, and the proposals of Sir R. Hart enclosed in Sir Claude Macdonald's despatch, No. 139, of the 4th July, are both equally inadmissible; that Lord Salisbury will probably agree that the grant to Chinese authorities of permission to exercise any customs jurisdiction within the Colony

‡ Nos. 22 and 23.

• No. 38.

↑ Enclosure in No. 62. Sub-enclosure in No. 17. | Enclosure in No. 20.

or to maintain Chinese customs houses would be highly undesirable, and that some other means should be found to attain the desired object.

5. After a careful consideration of the whole question, it appears to Mr. Chamber- lain—and he finds that the same solution of the difficulty commends itself to the China Association, as shown by their recent letter to the Foreign Office-that on the whole the best means of fulfilling the pledges of Her Majesty's Government would be the establishment of some system whereby the Chinese customs duties on opium imported into China from Hong Kong, including the newly-added territory, should be actually collected by the Government of Hong Kong. This would involve regulations under which all opium imported into the Colony must be imported in bond, and none must be exported except out of bond. A certain export duty on opium would be established, which would represent the import duties now levied in China, and the whole of which, after deducting the cost of collection, would be paid over to the Chinese Government. In return it should be stipulated that not only must there be no Chinese customs houses or officers within the Colony or the leased territory, but that they should be removed from the immediate vicinity of the Colony, in order to prevent a repetition of the diffi- culties and annoyances which have been so constant in past years.

6. The above proposal not altogether free from objections, one of which would be that it would to some extent deprive Hong Kong of the prestige which it at present enjoys of being a free port. But it appears to Mr. Chamberlain to be on the whole the course least open to objection, and he would suggest, therefore, that an offer to this effect should be addressed to the Chinese Government, letting it at the same time be clearly understood that neither Sir R. Hart's proposals nor the "Regulations" of the Viceroy of Two Kuang can be entertained by Her Majesty's Government.

7. It will be obvious that this proposal, if carried out, would be to the distinct ad- vantage of the Chinese Government, as enabling them to obtain payment of thei customs duties on opium in a much easier and more effective manner than by any process of collection through the medium of their own officials; and it appears, therefore, tu Mr. Chamberlain that, in addition to a complete removal of the revenue blockade, some further reciprocal concession might fairly be invited from them in return, and invited in their own interests as well as in those of the Colony.

8. It will be seen that great stress is laid by Mr. Lockhart upon the importance of a rectification of the boundary line as defined by the Convention, and his reasons for desiring such rectification are given at some length. The general features of the country and the principal towns and villages are shown in the map accompanying the letter from this Office of the 6th ultimo,† and the boundary line as proposed by Mr. Lockhart is shown in the accompanying map, referred to in the report as "Map X.," which it is requested may be returned with as little delay as possible.

9. Mr. Chamberlain is not prepared to accept in toto Mr. Lockhart's arguments as to the advantages of what he terms a natural boundary, nor does he propose to reopen the discussion as to the shores of the bays; but he recognizes that there might be many advantages, from the administrative point of view, in obtaining inland a moderate ex- tension of the northern boundary so as to include the Chinese town of Sham Chun., It is obvious that constant difficulties, as regards both smuggling and general details of administration, are likely to arise if this town, which appears to be the administrative centre of the district, is left just outside the boundary, and its inclusion in the leased area, while not likely to be regarded as of any great importance by the Chinese Govern- ment, would be of considerable importance to the Government of Hong Kong. Mr. Chamberlain would, therefore, recommend that these considerations should be pointed out to the Chinese Government, and that they should be pressed to allow, at any rate, the inclusion in the lease territory of the town of Sham Chun.

10. It is proposed that Mr. Lockhart shall leave this country for dong Kong at the end of December; and as Mr. Chamberlain considers it of importance that he should be on the spot at the time when the new territory is formally taken over, it is proposed that this ceremony shall take place about the beginning of February. It will, however, be found desirable to address a despatch to the Governor on the general question of administration before Mr. Lockhart's departure, and Mr. Chamberlain would therefore be glad to be favoured with an expression of Lord Salisbury's opinion on the points referred to in this letter at as early a date as possible.

I am, &rc.,

• Enclosure in No. 44.

↑ No. 36.

C. P. LUCAS.

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