CO885-11 — Page 148

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PUBLIC RECORD OFFICE

اسيا

Reference :-

C.O.882/11

PUBLIC RECORD OFFICE, LONDON

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

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by "the proper Chinese authorities," and this evidently meas by the Government of which he himself is a member, i.e., the present Canton Soviet.

11. The taxes in question are "a special consumption tax of 24 per cent, on ordinary imports and 5 per cent. on imported luxuries, together with a special production or producers' tax on export, and it is proposed to arrange for the Customs authorities to clear papers only on production of vouchers verity ing payment of such new special taxes." The proposed taxes, therefore, appear to be an increase or surtax on imports and exports; and reference to the Treaty between nine Powers relat ing to the Chinese Customs Tariff, signed at Washington on the 6th February, 1922, shows that it was then laid down that a Special Conference, composed of representatives of the Signatory Powers and of such other Powers as might desire to participate and adhere to the Treaty, should consider the interim provisions to be applied prior to the abolition of likin and should authorise the levying of a surtax on dutiable imports as from such date. for such purposes and subject to such conditions as it might determine. The Treaty then recites in Article IV:-"The sur- tax shall be at a uniform rate of 23 per centum ad valorem, pro- vided that in case of certain articles of luxury, which in the opinion of the Special Conference can bear a greater increase without unduly impeding trade, the total surtax may be increased It seems quite but may not exceed 5 per centum ad valorem." clear, therefore, that, while the special production or pro- ducers' tax on exports" is something vague and not hitherto contemplated, the consumption taxes of 24 per cent. on ordinary imports and 5 per cent. on imported luxuries are to all intents and purposes equivalent to the Washington surtaxes,

12. In the Canton Gazette of the 23rd September (copy en- closed)* it is stated that the Canton Government desires the co-operation of the foreign-controlled Maritime Customs in the collection of the proposed new taxes, although it could (if neces- sary) create its own entirely independent machinery for coller- tion; also that the Canton Government is anxious to abolish likin and the other obnoxious multiple taxes which harass trade; and that, if the new taxes prove successful, the Government will sule stitute for likin a further imposition of 21 per cent., thus making a total tax of 5 per cent. on ordinary goods. No doubt these statements in the Canton Gazette have been inspired by the Canton Government; but in this connection I refer you to the 10th paragraph of my secret despatch of the 21st May,† in which I reported that Colonel F. Hayley-Bell, the Commissioner of Customs at Canton, told me that the present Canton authorities are unlikely to forgo the collection of likin and that they are even making the collection of this tax more severe.

13. The officials of the Chinese Maritime Customs in Kuang- tung must, of course, in this matter take their instructions from the Inspector-General at Peking. Sir Francis Aglen is absent * Not printed. t C.12715 20; not printed,

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on leave; and it remains to be seen what view he and the acting Inspector-General will take; but I venture to refer you to my secret despatch of the 13th July,* from which it appears that, if the Chinese provinces, led by Canton, attempt to seize the Wash- ington surtaxes, and if the foreign Powers will not use force to protect the Chinese Maritime Customs, Sir Francis, in order to preserve his administration as a revenue-collecting machine, in- tends to yield to provincial demands and hand over surtax pro- ceeds to the local authorities. Such a dénouement would indeed be deplorable, and it would concede all that Great Britain, America, Japan, France, Italy and Portugal united to protect by joint naval demonstration at Canton in September, 1923; please see the 5th paragraph of my secret despatch of the 21st May.†

14. In a series of secret despatches, dated the 21st May, 14th June, 21st June, 13th July and 3rd August, I have expressed the opinion that a less opportune time than the present for experi- mentation with likin and with the Chinese Customs tariff could hardly be found, that the effective abolition of likin under existing conditions is most unlikely, that the whole political situation in China is full of hazard and that any attempt to make changes at the present time in the Chinese Customs tariff might precipitate a local crisis and produce an emergency necessitating warlike action. I, therefore, urged delay and as little change as possible, as well as a frank discussion with the Governments of the United States of America, Japan and France. I have received no reply to any of these despatches nor any expression of the views of His Majesty's Government; but all that has happened since my despatches were written confirms me in the opinion which I have already laid before you. At all events it is perfectly clear that, if the Canton Government actually levies the proposed new taxa- tion, the proceeds will go into its war chest and will be a material assistance to the southerners in their campaign against the north. The other Chinese War Lords are sure to follow suit, and we may expect to see similar taxation imposed at the treaty-ports all over China. Trade will, therefore, be burdened with increased duties for no other purpose than to fill the pockets of the War Lords, who are already milking China dry.

15. The proposed new taxation is evidently an attempt by the unequal present Canton Government to abrogate the so-called treaties" without the prior consent of the Treaty Powers; and it would also involve the grant of practical tariff autonomy to Canton, because the new taxes would be contrary to treaty and could be increased by the Canton Government at pleasure. If, therefore, on the one hand we tacitly acquiesce in the levy of the new taxes without our consent thereto being asked or obtained, we shall (as Sir R. Macleay points out in his telegram to the Foreign Office No. 331 of the 23rd September) abandon our right in regard to China's Customs tariff and concede to local authorities or various provincial or regional governments the right to levy what additional Customs surtaxes they please. But

C12715,26, C.18183/26; not printed. + C.12715/28; not printed.

C.14586/26, C.14704 20 and C.17104/26; not printed.