Lubenclosure to Enclosure (19) Subenclosure
0020
# MEMORANDUM
## RE INLAND NAVIGATION
In order that the nature and meaning of these restrictions may be fully understood, it is necessary to enter into somewhat lengthy details, but the importance of the stake at issue will, we think, be ample apology for doing so. At the opening of the West River to foreign trade, two lines of steamers were started by us: one for the direct trade between Hongkong and Wuchow via Samshui and the "ports of call"; the other between Canton and Wuchow, also via Samshui and the ports of call. On the direct route, the advantage accruing to merchants from the payment of a fixed sum for import duty and transit dues, which franked their goods through to the remote parts of Yunnan and Kweichow, caused a considerable rush of imports to find their way in from Hongkong by water carriage instead of via Pakhoi overland route, etc., which they had followed previous to the opening of the river.
The Likin authorities have from time to time held out threats of reducing their import duty on goods, thus diverting them from foreign to native craft, but although the Canton provincial authorities have adopted these tactics with the success which usually characterizes their actions of this sort, there has been, up to date, no systematic attempt to extend them throughout the length of the West River, so that to a large extent, the competition we encounter, although keen, is but the natural result of rivalry in trade.
When the inland waters of China were first declared to be open, a good deal of doubt existed as to the conditions under which the navigation of them would be allowed, and with a view to gaining information on this important point—important to us, not only from the expansion of trade that would result but also that it might seriously modify the plans of vessels we were then contracting to have built—we applied to the Imperial Maritime Customs at Samshui to register the steamer Kongpak for inland navigation. After reference to Peking, this was refused by the Inspector-General of Customs, whose decision on the matter is given in the Samshui Commissioner's letter, copy of which is attached.
While we still think that the privileges asked for might be accorded without danger to the safety of the revenue of China, we must at the same time admit that there are considerable difficulties in the way, and that probably the only effective way of meeting them would be to open Kongmoon or some other place situated at the mouth of the river as a treaty port, whence, and also from Samshui and Wuchow, after payment of duties, goods would be free to find their way inland, carried either by the importing or other steamer, as was found most convenient.
So far, we have only dealt with the effect the opening of waters has had on the direct trade with Hongkong, the craft engaged in which come under the heading of vessels engaged in trade with ports outside Chinese jurisdiction and are therefore excluded from any direct participation in the benefits which should result therefrom. There still, however, remains the Canton-Wuchow trade, the steamers on which, being vessels engaged in inter-treaty-port trade, are also, by the Inspector-General's ruling, debarred from inland water privileges. It is to this decision, as affecting this class of vessel, that we would beg your most earnest attention, as we are of the unanimous opinion that if enforced, it will, as we have already stated, render the whole concession valueless.
From the beginning, our vessels on the Canton-Wuchow line have been subjected to such restrictions that it seemed quite hopeless for them to attempt to compete with their more favoured Chinese rivals, who, by means of specially constructed lighters towed by steam launches, secure the great bulk of the cargo and, until recently, of the passengers. The system adopted at the treaty ports is for these lighters and their cargoes to come under the Likin administration, and the steam launch, which is merely the means of propulsion and carries no cargo, comes under the I.M. Customs, a dual system of control which gives the advantage of the quickness of steam transit and an elastic tariff for the payment of duty on the cargo carried on the lighters.
Nor is it so much the fact that the Likin collected on this cargo is less than the one and a half duty which would be levied by the I.M. Customs if it were carried in our steamers, as it is that, if so carried, Likin taxes before shipment and after discharge would be payable in addition to the Customs duty and half. The foregoing facts are only too well known and have been frequently commented on, notably by H.B.M. Consul at Canton in his trade report for 1897; but if further proof be needed, it is abundantly supplied by the fact that the only domestic trade of which we secure the carriage is a few piculs of goods between Samshui and Wuchow, whereas the merchants refuse to ship the same goods by our vessels between Wuchow and Canton, even although the freight charged by us is the same in both cases! That is to say, taxation and cost of transport being equal for both distances, they will ship by our vessels over the shorter one but steadily refuse to do so over the longer one! The explanation of this is simple: at Samshui, by vigorous protests made at the opening of the port, the native goods carried in foreign vessels are to a certain extent exempt from Likin taxes before shipment and after discharge, while at Canton, the reverse is the case, and as the bulk of the domestic trade of the West River districts is destined for or comes from Canton, as being the great centre or mart of trade, the natural result of this differential taxation is that our Chinese rivals secure the carriage of the whole of it.
Nor does the evil stop at this, for knowing that our earnings must be made out of the carriage of foreign goods, into which, as far as the carrying in steamers between treaty ports goes, the question of taxation does not enter—they can either conform to our rates of freight and compete against us or, by lowering them slightly, get the monopoly of the carriage of these, as they do of the domestic trade.
Although the subject of this representation is the disadvantages under which we suffer as British Shipping Companies engaged in the carrying trade of China, we will, for the moment, waive this question and look at it from the broader standpoint of trade in general. From the foregoing, it might be argued that although we, as individual concerns, suffer, the great circulation of goods is facilitated by steam traffic. Were such the case, we might well find compensation for our losses in the general prosperity that would result, but it is only to the privileged few that permission is given to run this class of vessel, and any attempt to encroach on the monopoly thus secured, either on the part of Chinese or Foreign steamers, is rendered nugatory by differential duties in the manner we have shown.
Again, with the passenger traffic, the Chinese vessels had the option of using all routes connecting Canton with the West River, whereas we were confined to one only, laid down by the Customs, entailing an increase in the distance traversed of some thirty miles. They were also privileged to stop at any and all places en route for the embarking and disembarking of passengers or cargo, while we were confined to the four ports of call (See Canton Commissioner's Trade Report, 1897, paras. 4 and 7).
The question of opening the shorter routes to foreign vessels was made the subject of representation to H.M. Consul at Canton, but so scandalous had the disabilities under which we laboured become, and so heavy the losses incurred in running steamers practically empty, that the question of withdrawing them altogether from the trade was being seriously considered when the throwing open of the inland waters gave the I.M. Customs the chance, of which they gladly availed themselves, of attempting to place us on terms of equality with our opponents. This equality, in respect to the carriage of passengers, we now enjoy, and we...
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Lubenclosure to Enclosure (19 Subenclosure
0020
MEMORANDUM
RE INLAND NAVIGATION.
In order that the uature and meaning of these restrictions may be fully understood it is necessary to enter into somewhat lengthy details, but the importance of the stake at isans will, we think, tori ampie apology for doing so. At the opening of the West River to foreign trade two lines of steamers were started by us
gage in tun carrying trade of it-ons for the direct trade between Hongkong and Wachow vis Samshui and the "ports of call"; the other between Canton and Wuchow also via Samshni and the ports of call." On the direct route the advantage Boeruing to merchants from the payment of a fixed sum for import duty and transit dues which franked their goods throngs to the remote parts of Yunnau and Kweichow caused a considerable rush of imports to find their way in fro Hongkong by water carriago instead of via tho Pakhoi overland ronte, etc., eta., which they had followed previous to the opening of the river. The lekin authorities have from time to time held out threats of reducing their import duty on goods, thus diverting them! from foreign to native craft, but although the Canton provincial authorities have adopted these tactics with the success which usually characterizes their actions of this sort, there has been, up to date, no systematic attempt to extend them throughout the lengib of the West River, so that to a large extent the competition we encounter although keen is but the natural result of rivalry in trade.
When the inland waters of China were first declared to be open a good deal of doubt existed as to the conditions under which the navigation of them would be allowed, and with a view to gaining information on this important point--- important to us, not only from the expansion of trade that would result but also that it might seriously modify the plans of vessels we were then contracting to have built-we applied to the Emperiai Maritime Customs at Samshui to register the steatner Kongpak for inland navigation. After reference 10 Peking this was refused by the Inspector-General of Customs, whose decision on the matter is given in the Sauchni Commissioner's letter, copy of which is attached. While we still think that the privileges asked for might be accorded without danger to the safety of the reveans of China we must at the same timo admit that there are considerable difficul- ties in the way and that probably the only effective way of meeting them would be to opon Kongmoon or some other place situated at the month of the river as a treaty port, whence and also from Samshai and Wnchow, after pay. ment of duties, goods woull be free to find their way iuland carried either by the importing or other steamer as was found most convenient.
So far we have only dealt with the effect the opening of waters has bad on the direct trade with Hongkong, the craft engaged in which come under the heading of vessels engaged in trade with ports outside Chinese jurisdiction and are therefore excluded from any direct participation in the benefits which should resni therefrom. There still, bowever, remains the Canton-Wuchow trade, the steamers on which, being vessels engaged in inter-treaty-port trade. are also, by the Inspector-General's ruling, debarred from inland water privileges. It is to this decision as affecting this class of vessel that we would beg your most earnest attention, as we are of the unanimous opinion that if ea- forced it will as we have already stated, render the whole concession valueless.
From the beginning our vessels on the Can. ton-Wuehow line have been subjected to such restrictions that it seemed quite hopeless for them to attempt to compete with their wore favoured Chinese rivals who by means of specially constructed lighters towo by steam. launches secure the great bulk of the cargo and, Inetil recently, of the passengers. The system adopted at the treaty ports is for these lighters and their cargoes to come under the lokin ad- ministration, and the steam launch, which is
merely
adrely the means of propulsion and carries no cargo, comes under the I.M. Customs, a dual system of control which gives the advantage of the quickness of steam transit and su elastic Lariff for the payment of duty on the cargo car ried on the lighters. Nor is it so much the fact that the lekin collected on this cargo is less than the one and a half duty which would be levied by the I.M. Customs if i were carried in our steamers, as it is if so carried, lekin taxes bofore shipment and after discharge would be payable in addition to the Customs duty and half. The foregoing facts are only too well known and have been frequently commented on, notably by H.B.M. Consul at Canton in his trade report for 1897; but if further proof be needed it is abundantly supplied by the fact that the only domestic trade of which we secure the carriage is a few piculs of goods between Samshui and Wuchow, whereas the merchauts refuse to ship the same goods by our vessels between Wuchow and Cantou even although the freight charged by the same in both cases! That is to say, taxation and cost of transport baing equal for both distances they will ship by unr ressels over the shorter one but steadily refuse to do so over the longer one! The ex- planation of this is simple At Samsbui by vigorous protests made at the opening of the port the native goods carried in foreign ressols are to a certain extrat exempt from lekin taxes before shipment aud after discharge, while at ¦ Cauton the reverse in the case, and as the balk
of the domestic trade of the West River districts | is destined for or comes from Canton as being the great centre or mart of trade the natural result of this differential taxation is that onr Chinese rivals secure the carriage of the whole of it. Nor does the evil stop at this, for know- ing that our earnings must be made out of the carriage of foreign goods. into which, as far as the carrying in steamers between treaty ports goes, the question of taxation does not enter- they can either conform to our rates of freight and compete against us or by lowering them slightly got the monopoly of the carriage of these as they do of the domestic trade.
Although the subject of this representation is the disadvantages under which we suffer as British Shipping Companies engaged in the carrying trade of Chiun we will for the moment waive this question and look at it from the broader standpoint of trade in general. From the foregoing, it might be argued that al though we as individual concerns suffer, the great circulation of goods is facilitated by steam traffic. Were such the case we might well find compensation for our losses in the general prosperity that would result, but it is only to the privileged few that permission is given to run this class of vessol and any attempt to
encroach on the mouopoly thus secured, either on the part of Chinese or Foreign steamers, is rendered nugatory by differential duties in the manner we have shown.
Again, with the passenger traffic the Chinese vessels had the option of using all routes sou- neoting Canton with the West River, whereas we were confined to one only, laid down by the Customs, entailing an increase in the distance traversed of some thirty miles. They were also privileged to stop at any and all places en route for the embarking and disembarking of passen- gers or cargo while we were confined to the four ports of call (See Canton Commissioner's Trale Report, 1897, pars, 4 and 7).
The question of opening the shorter routes to foreign vessels was made the subject of re- presentation to H.M. Consul at Canton, but so scandalous had the disabilities under which we laboured become and so heavy the losses in- curred in running steamers practically empty that the question of withdrawing them afto. gether from the trade was being seriously con- sidered when the throwing opeu of the inland waters gave the IM. Customs the chance, of which they gladly availed themselves, of attempt- ing to place us on terms of equality with our opponents. This equality in respect to the carriage of passengers we now enjoy and wo
were
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