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decided that an immediate direct reply by cable would be preferable to the course suggested by the Hongkong Committee of telegraphing the resolution of the Shanghai Committee to them in order to form a joint telegram; it being in every sense essential that the opinions of the Shanghai Committee, which you had been good enough to invite, should be conveyed in the clearest possible manner, without the risk of modification or variation, which might have resulted had the sense of the resolution been transmitted in the form of a joint message.
The following telegram was, in pursuance of this resolution, despatched on the 28th inst., and should have been in your possession early on that day:
"Refer your telegram July 17th. Committee advocate Tseng Kuo-fan's note November '68, but accept principle increased scale duties to about 7½ per cent, aggregate, condition one scale covering lekin taxes every kind entire empire. Customs receive payment settle provincial treasuries. Chinese Government to reciprocate regarding duties native produce for local manufacture consumption export or otherwise, also freedom navigation water-ways."
This telegram seems sufficiently clear; but owing to the absence, from necessity, of punctuation, it will be well to furnish you with a copy of the actual resolution, which is as follows:-
"The Committee having read Mr. Gundry's letter of May 15th, and studied his 'Memorandum on the Transit Duty question,' resolved that the true interpretation of the treaty, so far as customs duties, transit charges, and all taxation on foreign merchandise are concerned, is contained in a note dated November, 1868, made by Tseng Kuo-fan in his capacity as superintendent of trade to the Southern Treaty ports, reproduced on pages 3 and 4 of Mr. Gundry's memorandum, and that a telegram be despatched to Mr. Gundry to that effect, adding that the Shanghai Committee accept the principal of an increased scale of duties which, however, in their judgment, should be limited on a basis of 7 per cent. ad valorem in the aggregate. No separation or division of this scale of duty is practicable, because it would inevitably lead to continuous disputes. The conditions should, therefore, be one scale of duty which should cover lekin, transit dues, taxes, and imposts of every kind, making goods upon which the import duty has been paid absolutely free to every part of the Empire of China in conformity with the declaration of the effect of existing treaties by Tseng Kuo-fan. This duty to be paid to the Customs, who should take all the responsibility in regard to its sub-division or the allowances to be made to the Imperial and Provincial treasuries. In return for this the Chinese Government to undertake reciprocity regarding duties, lekin, transit, and other charges upon native produce conveyed from one part of the Empire to another, whether for manufacture in China, or export, or, in fact, for any purpose whatsoever; also that they shall grant freedom of navigation of all waterways. This resolution to be forwarded direct by telegraph to Mr. Gundry, with a copy also by telegraph to the Hongkong Committee."
In suggesting the limitation of the increased tariff to 7 per cent., the Committee are sensible that this is a point to be decided on grounds of public expediency and upon the precedent of the recently-revised convention with Japan, raising the scale from 5 to 10 per cent.; but they make the suggestion because, practically, from a combination of various causes,
27
inclusive of currency changes, the actual duty now collected under a nominal 5 per cent. standard does not exceed probably 3¼ to 4 per cent.; a revision to 7½ per cent. being, therefore, tantamount to doubling the revenue at present derived from the Customs and forming a limit which cannot prudently be passed without incurring the risk of ulterior consequences to foreign commerce in China. As only a portion of imported merchandise is passed into the interior of the country, the Imperial Government will benefit by one duty; and they will only be called upon to apportion payments, if such a course is intended, to Provincial Governments on that portion conveyed inland. It is manifestly impossible that this division could be made otherwise than through the Imperial Customs.
An arrangement on this foundation, if fairly carried out, the Committee firmly believe would prove highly advantageous to commerce generally, while materially increasing the volume of trade and, proportionately, the Imperial revenues. If, however, the principle "one duty, free goods throughout China" is disregarded, as other similar conditions have heretofore been, or subjected to variation at the caprice of individual provincial governors, the effect of any concession in regard to the scale of duty will simply be to increase the existing scale of taxation of foreign merchandise, while the obstacles which hinder its free circulation will be made stronger by a new Convention which will be regarded as extorted by the power of China from western nations.
The reciprocity the Chinese Government are asked to grant in regard to native produce is an absolutely necessary condition; because it is believed that they are extremely desirous of defeating the privileges obtained by Her Majesty's Minister at Peking, and subsequently embodied in the treaty of Shimonoseki, empowering foreigners in China to import machinery and engage in domestic manufacture; and it is now known that the Japanese Government have withdrawn from further discussion of the question of lekin and other imposts on native produce intended for manufacture, leaving to foreigners the barren right of manufacture, while the Chinese authorities reserve the power of taxation of the raw material required, rendering nugatory the previous concession.
To the right of travel and residence in the interior, the Shanghai Committee do not attach sufficient importance to make it a question worth agitating; but, having regard to the deficiency of internal communications—to the entire absence of roads, for example—they attach much importance to the freedom of navigation of all the rivers and waterways of the Empire; a right which, if once granted, will be as valuable an impetus to commerce within a few months, as will be railway construction later on.
The Committee feel that H. E. Li Hung-chang, during his visit to England, will be most gracious in promise, particularly anxious to meet the wishes of his good friends the British merchants, and to secure as much as he can obtain in return for his pledges to reciprocate in the form of commercial concessions and privileges. The Committee intend no disrespect to
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decided that an immediate direct reply by cable would be preferable to the course suggested by the Hongkong Committee of telegraphing the resolution of the Shanghai Committee to, them in order to form a joint telegram; it being in every sense essential that the opinions of the Shanghai Committee, which you had been good enough to invite, should be conveyed in the clearest possible manner, without the risk of modification or variation, which might have resulted had the sense of the resolution been transmitted in the form of a joint message.
The following telegram was, in pursuance of this resolution, despatched on the 28th inst., and should have been in your possession early on that day :---
"Refer your telegram July 17th. Committee advocate Tseng Kuo-fan's note November '68, but accept principle increased scale duties to about 74 per cent, aggregate, condition one scale covering lekin taxes every kind entire empire. Customs receive payment settle provincial treasuries. Chinese Government to reciprocate regarding duties native produce for local manufacture consumption export or otherwise, also freedom navigation water- ways."
This telegram seems sufficiently clear; but owing to the absence, from necessity, of punctuation, it will be well to furnish you with a copy of the actual resolution, which is as follows:-
"The Committee having read Mr. Gundry's letter of May 15th, and studied his "Memorandum on the Transit Duty question, resolved that the true interpretation of the "treaty, so far as customs duties, transit charges, and all taxation on foreign merchandise are concerned, is contained in a note dated November, 1868, made by Tseng Kuo-fan in "his capacity as superintendent of trade to the Southern Treaty ports, reproduced on "pages 3 and 4 of Mr. Gundry's memorandum, and that a telegram be despatched to Mr. "Gundry to that effect, adding that the Shanghai Committee accept the principal of an "increased scale of duties which, however, in their judgment, should be limited in a basis "of 7 per cent. ad valorem in the aggregate. No separation or division of this scale of "duty is practicable, because it would inevitably lead to continuous disputes. The "conditions should, therefore, be one scale of duty which should cover lekin, transit "dues, taxes, and imposts of every kind, making goods upon which the import duty has "been paid absolutely free to every part of the Empire of China in conformity with the "declaration of the effect of existing treaties by Tseng Kuo-fan. This duty to be paid "to the Customs, who should take all the responsibility in regard to its sub-division or the "allowances to be made to the Imperial and Provincial treasuries. In return for this the "Chinese Government to undertake reciprocity regarding duties, lekin, transit, and other "charges upon native produce conveyed from one part of the Empire to another, whether "for manufacture in China, or export, or, in fact, for any purpose whatsoever; also that "they shall grant freedom of navigation of all waterways. This resolution to be for- "warded direct by telegraph to Mr. Gundry, with a copy also by telegraph to the Hong- "kong Committee."
In suggesting the limitation of the increased tariff to 7 per cent., the Committee are sensible that this is a point to be decided on grounds of public expediency and upon the precedent of the recently-revised convention with Japan, raising the scale from 5 to 10 per cent. ; but they make the suggestion because, practically, from a combination of various causes,
27
inclusive of currency changes, the actual duty now collected under a nominal 5 per cent. standard does not exceed probably 34 to 4 per cent.; a revision to 73 per cent. being, therefore, tantamount to doubling the revenue at present derived from the Customs and forming a limit which cannot prudently be passed without incurring the risk of ulterior consequences to foreign commerce in China. As only a portion of imported merchandise is passed into the interior of the country, the Imperial Government will benefit by one duty; and they will only be called upon to apportion payments, if such a course is intended, to Provincial Governments on that portion conveyed inland. It is manifestly impossible that this division could be made otherwise than through the Imperial Customs.
An arrangement on this foundation, if fairly carried out, the Committee firmly believe would prove highly advantageous to cominerce generally, while materially increasing the volume of trade and, proportionately, the Imperial revenues. If, however, the principle "one duty, free goods throughout China" is disregarded, as other similar conditions have heretofore been, or subjected to variation at the caprice of individual provincial governors, the effect of any concession in regard to the scale of duty will simply be to increase the existing scale of taxation of foreign merchandise, while the obstacles which hinder its free circulation will be made stronger by a new Convention which will be regarded as extorted by the power of China from
western nations.
The reciprocity the Chinese Government are asked to grant in regard to native produce is an absolutely necessary condition; because it is believed that they are extremely desirous of defeating the privileges obtained by Her Majesty's Minister at Peking, and subsequently em bodied in the treaty of Shimonoseki, empowering foreigners in China to import machinery and engage in domestic manufacture; and it is now known that the Japanese Government have withdrawn from further discussion of the question of lekin and other imposts on native produce intended for manufacture, leaving to foreigners the barren right of manufacture, while the Chinese authorities reserve the power of taxation of the raw material required, rendering nugatory the previous concession.
To the right of travel and residence in the interior, the Shanghai Committee do not attach sufficient importance to make it a question worth agitating; but, having regard to the deficiency of internal communications-to the entire absence of roads, for example--they attach much importance to the freedom of navigation of all the rivers and waterways of the Empire; a right which, if ouce granted, will be as valuable an impetus to commerce within a few months, as will be railway construction later on,
The Committee feel that H. E. Li Hung-chang, during his visit to England, will be most gracious in promise, particularly anxious to meet the wishes of his good friends the British merchants, and to secure as much as he can obtain in return for his pledges to reciprocate in the form of commercial concessions and privileges. The Committee intend no disrespect to
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