CO129-205 - Public Offices - 1882 — Page 290

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who took out the certificate. This vicarious application for certificates has been, in some instances, a regular business, and the Chinese have, in some instances, retaliated by refusing the issue of certificates altogether.

The wiser remedy, we might have supposed, would have been the equalization of the li-kin or other charges with the half duty payable for the transit certificate, and this measure, in one case, where the inland dues were below the half duty, was applied to the import trade. But the abnormal taxation of produce in transitu is a widely different affair from taxation of the import trade. The deficiency that unauthorized certification may cause, quite apart, it also occasions a certain dislocation of the financial machinery of the province. Be this good or bad,-I believe it to be exceed- ingly bad, and maintained, in general, as much from corrupt motive as from ignorance,~- the Chinese have a perfect right to persist in its maintenance, and, without criticism of the morality which is not shocked by the misrepresentation indispensable to abuse of his privilege by the foreigner concerned, I am satisfied that it is expedient that the abuse be corrected. As in all similar cases, it is exaggerated, but I had had evidence enough of its existence to justify spontaneous repetition of an offer to assist in its suppression.

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Our Treaty, be it remembered, leaves large powers in the hands of the Government, where shipment of produce is concerned. Permission to export produce which cannot be proved to have paid its transit dues will be refused by the Customs until the transit dues shall have been paid " (Tariff 1858, Rule 7). But this is insufficient to prevent the transport of produce not intended for shipment, and, as such, having no claim to the benefit of the transit-duty charges.

In discussing this grievance at the Tsung-li Yamên, I had long before signified my willingness to consider whatever rule on this subject Mr. Hart might propose, and before leaving Chefoo I requested him to let me have a draft rule that would meet the emergency. I append (Appendix No. 4) the draft rule he communicated to me. I shall simply say of it that, while I entirely concurred in the principle laid down in Mr. Hart's foot-note, viz., that the object of the transit system is to enable native produce to pass from the native producer to the foreign purchaser for a foreign market on a payment of 7 per cent. (Tariff and half Tariff duty) to the revenue, and that that system is not intended to be used to exempt produce circulating in China from local taxation, I was in some doubt whether the periods within which failure to satisfy the conditions of the rule involved a heavy penalty were sufficiently extensive; whether at the same time the penalties to which the applicant for a certificate who might fail to return it, or might fail to export his produce within the term specified, would adequately protect the Chinese Government. Mr. Hart, however, did not present it otherwise than as a memorandum of suggestions; and a rule, which appears to be a modification of that here referred to, is, I understand, now being discussed at Peking.

A proposition, which I believe has been under consideration at Peking, that foreign- owned native produce on its way to a port should pay all barrier dues and other taxes demanded on it in transitu, whatever is paid in excess of the half Tariff duty being refunded by the Custom-house at the port at which the produce is exported, if it proved operative, would, I think, satisfy every requirement of simplicity and justice. I

say if it proved operative. The difficulty I apprehend is one which has on occasion been experi. enced where surcharge of dues was complained of. The barriers may refuse to give receipts for the sums levied, and the Customs at the port will then be without proof of the payment of the alleged surcharge. Could we count with certainty on the production of a receipt or other similar proof of such payments, we might cease to take out transit- duty certificates altogether, and claim all above the half duty as a drawback on exporta- tion. We must on no account surrender the privilege of certification. This retained, I should be strongly in favour of trying the arrangement proposed. Revision of our own Treaty, it must not be forgotten, may be claimed in 1879.

In Article VI agreed that the three years should be the term within which a draw- back might be claimed on duty-paid imports. The Treaty prescribes no term. In 1859-60, the new Treaty having scarcely come into operation, Sir Frederick Bruce con- sented to limit the term at Shanghae to twelve months. In 1869, Sir Rutherford Alcock agreed to a term of three years; but his Convention not having been ratified, disputes continued. In 1870-71, I caused inquiries to be made as to the extent of the term that might be accepted without disadvantage to trade. The answers I received generally led me to conclude that the term of three years might be safely adopted. I adopted it accordingly. I have, at the same time, to request indulgence for not having stipulated that its adoption should be subject to the approval of Her Majesty's Government. As the text now stands, the new arrangement was unconditionally agreed to.

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I proposed that these drawbacks should be redeemable in cash; but the Grand Secretary Li demurred, and I confess that I did not press for the concession with any ardour, the drawback being, so far as duty payments are concerned, a negotiable instrument. As your Lordship is aware, the point was, in December last, conceded; this time, I imagine, at the instance of my colleague, the Minister of Germany; supported by his brother Representatives, at whose instance also the Tsung-li Yamên has consented to direct the discontinuance of the levy of li-kin within the foreign settlement at Shanghae; the discontinuance to commence from the 13th February last.

This, however, is but a step taken pending further discussion. It is not understood to be the last word of the foreign Legations on the subject.

These were the conditions of my Agreement. I farther required, before my final Report could be made, the communication to me of the papers, eleven in number, enumerated in my note to the Grand Secretary Li, of the 12th September (see p. 1 of Report), which would, to a certain extent, guarantee fulfilment of my conditions so far as these could be given immediate effect to. This demand satisfied, in accordance with my promise contained in the same note, I declared the case closed.

(Extract.)

*

APPENDIX,

No. 1.

*

Levy of Li-kin at Shanglure.

Shanghae, July 4, 1870.

IN continuation of my inquiry, I find that piece goods sold within the settlements, or the city, pay on an average about 24 per cent, squeeze duty, or tax, as the Chinamen called it.

Goods sent into the interior, viâ Soochow, are covered by a payment from the Piece-goods Guild to the Taotai of 20,000 taels. The Guild then issues exemption certificates to the piece-goods men, which are produced at the various barriers between this and Soochow, examined at each, and, if in order, allowed to pass. When the goods reach Soochow I am told that no further payment is demanded, and, moreover, that the distribution from Soochow is also franked. This arrangement, however, is special, and applies only to Soochow and places beyond it, while goods destined to places on this side of Soochow have to be sent under separate certificates of examination, for which the piece-goods inen have to pay the Guild the usual half duty. Five years ago the barrier taxes on goods from here to Soochow amounted to 5 taels per bale, and this gave rise to a large increase in the number of transit passes under which goods could be sent up for 2 t. 23 m. per bale. The authorities, finding their gains thus slipping away from them, hit upon the expedient of compromising the whole duties for a lump sum of 20,000 taels per annum. The Guild farm it, and apportion the amount among the various hongs in the trade, according to the extent of business done in each, and I am told that the cost comes now a little less than it would under the transit-pass system.

Goods sent to Kashing or Liughoo are taxed to the amount of 3,000 cash per bale on arrival at their destination, though sent under transit pass. These passes are examined and allowed at Minghong, but apparently the authorities at the town refuse to recognize them at all. Consequently, Chinumen have ceased to apply for them. At Soochow and Hangchow, however, the pusses are recognized, and the goods permitted to circulate without any additional charge.

Replying to your other question:----

1. Gross charge ou shirtings from Shanghae to Soochow, under the commutation arrangement, reaches barely 23 per cent, on value. City and settlements I believe are exactly on the same footing.

2. Gross charge does not exceed the half duty to Soochow, so there is no occasion to apply for transit passes of that city. They would be cheaper for Kashing and Linghoo, but authorities disregard them. Transit passes are used for Soochow and Hangehow.

3. Li-kin and other charges amount, I am told, to a larger percentage on value of foreign goods than native, being about in the proportion of ten on foreign to seven on native.

4. Barriers at Minghong and Wangdoo were established after the commencement of the rebellion,

a little inside twenty years, and all the smaller barriers are of even more recent date.

I have made several inquiries about the position of barriers, and I find that stations are fixed ab every point of access to the country, so that no boat can pass in without having to stop and submit the papers for examination. The squeezes at these small stations are, I believe, small, so long as the hoat papers are in order, but if any irregularity is discovered the opportunity for a squeeze is made the

most of

It appears that all the native boats proceeding up the, or vid, Serawi Creek, must have clearance papers from the native custom-house, on the south side of the city. That, and the custom-house in the settlement, seem to be the only proper custom-houses where duties are paid and clearance certificates issued. The other stations, such as Minghong and Wangdoo, are only tax stations.

No. 2.

Difficulties of collecting Li-kin.

In 1874-5 the Board of Revenue memorialized the Throne, complaining that the rule laid down in 1960, that all duty stations should send in quarterly returns of the duties on opium levied by them, has not been observed, and that, there being no fixed contribution, there has been great laxity in

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