CO129-205 - Public Offices - 1882 — Page 284

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in the aggregate amount to the half-transit duty. Where they do, the purchaser or the importer covers them naturally by a transit duty certificate; that is, if he have faith that the certificate will be respected, which at some centres not very far from Shanghae it has not been. Refusal to recognize these certificates constitutes a distinct breach of Treaty; but of this I do not propose here to say more. What has to be borne in mind is this, that whether the li-kin charges levied in the settlement, or in the country port- wards of barriers immediately beyond it, be onerous or light, there is more than a strong presumption that, under Treaty, they ought not to be levied at all; that the Tariff duty should clear all imports, opium excepted, until they reach the barrier, to pass which, free of other taxation, they must be covered by the half-duty certificate: My complaint has been that no distinction is admitted at Shanghae between opium and other imports.

With no port area defined there has arisen (I am still speaking simply of Shanghae) another complication. To insure the levy of the li-kin the collectorate of course has had to maintain an executive, and in more instances than one this executive, when attempting the arrest of Chinese alleged to be evading the li-kin, has come into collision with the foreign police of the resident community. The collisions 1 refer to were more notably in the case of opium, for which, once more, I do not claim the benefit of a port area; but the action of the li-kin collectorate, as I have said above, has extended equally to all other imports bought in the settlement; all the com- modities, in short, for which I do claim the benefit of a port area.

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The right to any port area whatever being practically ignored, I have come face to With face with the necessity of defining the area to which I conceive we are entitled. the full conviction that we are entitled to some area, I found, as I have indicated, an exceeding difficulty in the way of making any definition that I could declare to be exact. It is possible that this difficulty might have been surmounted had I been able to count upon the cordial assistance of the Chinese Government, Central and Provincial. purposely distinguish the one from the other. But I certainly could not count in a question of the kind on the cordial assistance of either. The needs of both, needs that we recognize as lawful besides other needs, and the convictions of both, are against any measure that will withdraw any commodity from the net of li-kin taxation. However, let us suppose the Central Government, with which the Tsung-li Yamen, the Chinese Foreign Office, is undoubtedly identical, let us suppose the Central Government so convinced or intimidated as to declare itself willing to go the length of conceding, as a port area, either the country within a fixed distance, at a radius of so many miles; the area, that is, proposed in 1869 by Sir Rutherford Alcock; or the country lying portward of the barriers proved to have existed before 1843; the area claimed by myself. The latter, as I have intimated, would be at some ports far less than at others; less, for instance, at Foochow than at Shanghac, while at Tien-tsin it is probably far greater than at the latter port. In most cases, however, it might be a tract of con- siderable dimensions. Suppose, I say, that the Central Government had circulated instructions to the Provincial Governments to exempt foreign imports from li-kin taxation within an area so agreed to, would such instructions have been given effect to in the provinces? The papers annexed (Appendices 2 and 3) will go far to prove that they would not. The Memorials to the Throne and the Imperial Decrees there referred to do not, it will be seen, address themselves exclusively to foreign trade. I am not sure that they have all appeared in the "Peking Gazette." They were certainly not specially intended for the foreigner's edification. They embody in various forms a complaint, which in my experience is not new, to wit, that neither as regards opium or any other commodity on which li-kin or other abnormal taxation may be laid, is the Central Government kept duly informed; that much of the revenue collected is not remitted; that instructions to send up Returns to Peking are utterly disregarded by the Provincial Goveruments, who have their own reasons for winking at the dishonesty of the sub-collectors of li-kin in their respective jurisdictions.

I have no expectation, until the Empire is governed with far greater vigour than at present, that this state of things will improve. Its administration in most of its depart- ments, and certainly not least in its finance, will for long continue to a certain extent matter of compromise between the Central Government and the Provincial.

I have heard it argued in China that the ability of the Central Government to control provincial exactions is proved by the fact that in the Convention of Sir Rutherford Alcock it engaged to control them; entirely to exempt our imports in the Treaty port provinces from li-kin or any other form of taxation, if we would pay down the composition half-duty with the full Tariff duty. I repeat that I think it much to be regretted that we did not test the value of this stipulation. If it was given effect to, we were gainers.

If it was violated, we were the stronger for remonstrance, or, failing justice, for reprisal. But that it would have been observed I thought in 1869, and still think, doubtful. The li-kin or other abnormal impost, be it remembered, is not laid upon our import trade alone. Our imports form but a small portion of the trade abnormally taxed. The tax is laid, in different degrees, upon almost every article in circulation. It is, for the present, indispensable to China. When it ceases to be so, we may rely upon it that li-kin collectorates will not be kept up for the taxation of foreign trade alone. It would not pay to keep them up. But so long as they are kept up for the taxation of the general trade of the country it is to the last degree improbable that foreign trade will escape li-kin, except within such limits as can be efficiently watched by a foreign Consul or like agent. Beyond his ken the li-kin collectorates will too probably levy li-kin upon our imports, the only evidence to the fact being that of the Chinese merchant who has to pay it, and who it is vain to expect will appear, in support of our reclamations, as a witness against his own authorities.

We have felt this embarrassment even when imports are travelling inland protected by transit-duty certificates and along the greater lines of traffic. We must be à fortiori prepared for it in places less prominently in evidence. Lastly, when our fight as against li-kin has been well fought, our flank may always be turned by a change in the form or style of exaction. Districts, guilds, corporations may be called upon to pay a charge upon their operations which would tell, not exclusively, nor perhaps directly, but still would tell upon our import trade, though they might be unassailable under the provisions of the Treaties.

While this Report has been in process of preparation, news has been received of the imposition of a tax upon native vessels on the Yang-tzu River, to be levied only when no duty can be levied on their freight. The revival of some of the inland barriers which existed before the outbreak of the Tai Ping insurrection (1853) is also said to be in contemplation,

Well then, to come at last to what I have recommended; believing conscientiously that a weight is laid upon our import trade from which by Treaty it should be exempt; unable to declare to my own satisfaction the precise limits of the area within which our import trade can claim exemption from the weight complained of; doubting exceedingly that, if an area of the dimension which I believe we might legally claim were conceded, our imports would be exempted from taxation over any larger portion of it than we could conveniently watch, I have agreed (Section 3, Article I), if the Government of China consented to relieve the weight upon our trade by conceding certain measures that would conduce to its expansion, to move Her Majesty's Government not to press our claim to exemption from li-kin except within a limited area, the surveillance of which is perfectly within our reach.

I did not arrive at this decision without long and careful deliberation. Mr. Hart, who was present when the arrangement was last discussed, advocated strongly the prescription of such an area as was proposed in 1869, a circle of which the circumference should be a given number of miles from the custom-house as a centre. The Grand Secretary Li was opposed to this; but I confess that I did not warmly support the proposition. I should feel no security against squabbles about the levy of li-kin within or without a boundary-line several miles in extent that was not so defined by hills, streams, or other features of the ground, as to put the limits of the area within them beyond dispute. While I write, it is telegraphed from Hong Kong that the Chinese Government is prepared to deal more liberally with the port area question than my stipulations provide. I shall rejoice, of course, in any measure by which British interests are advantaged, even if it leaves my late efforts in the shade; but I adhere to my conviction that, so long as li-kin taxation is a recognized necessity of the Empire, it will be wiser to accept an expansion of our trade than to continue to press for a right of exemption that we shall have great difficulty in defining, and of which, could we make sure of a definition of it, we can never assure ourselves for certain of the exercise.

Beyond this, the exchange of concessions which form the matter of Articles I and VI of this, the commercial section of the Agreement, there is scarcely anything in it that, but for the circumstances that brought about negotiation of that instrument, might not have been arranged with less solemnity. For the delimitation of the foreign settlement area proposed in Article II is but a pendant to the provisions of Article I. On opium, as I believe I can show, Article II but secures to the Chinese Government what it is entitled In Article IV, it but confirms to us rights of which, though more than once disputed, the existence under Treaty has been long maintained by us. In Article V we concede a term for the expiry of drawback which is but fair to both parties. By Article VII a

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