This Document is the Property of His Britannic Majesty's Government.]
CHINA TRADE.
CONFIDENTIAL.
No. 1.
20
[January 3.]
SECTION 1.
Sir E. Satow to the Marquess of Lansdowne.-(Received January 3, 1903.)
(No. 848. Secret.) My Lord,
Peking, November 19, 1902.
I HAVE the honour to forward translation, obtained privately, of a secret Memorial on the subject of Chinese finances, addressed to the Throne by the Board of Revenue and the "Cheng Wu Ch'u," or "Council of Government." The latter body, originally instituted, as reported in my despatch No. 241 of the 4th July, 1901, for the purpose of examining schemes of reform, seems likely to become permanent, and to discharge some of the functions of the Grand Council.
The Memorial is interesting, as throwing some light on the probable financial policy of the Chinese Government in the event of li-kin being abolished. As here foreshadowed, there is little in that policy to suggest that they have grasped the principles of sound finance.
The argument of the memorialists is that absolute reliance cannot be placed on the maritime customs revenue to make good the deficit due to the contemplated abolition of li-kin, because the customs revenues might be suddenly cut off by a blockade of the Chinese coast during a foreign war. Considering that there has never been a general blockade of Chinese ports in modern times (the operations of 1860, 1884, 1894 and 1900 having only affected Formosan ports, Tien-tsin and Newchwang), it is a little strange to find Chinese officials, who are not generally conspicuous for forethought, taking into their calculations so apparently remote a contingency, and it may be doubted whether it is not put forward mainly as a pretext for the attention they urge should be devoted to internal taxation. With regard to this they make no definite proposal, but they declare that when li-kin is abolished, the provinces must place their main reliance on loti, &c. This term has hitherto been applied indifferently to a tax on produce at the place of production, and to a duty on goods on reaching their destination. The former class of taxation would seem to be prohibited by the preamble to the VIIIth Article of the new Commercial Treaty. As a "destination duty," loti seems indistinguishable from the consumption tax authorized by section 8 of the same Article, and, presumably, what is intended is that taxation of this kind shall be heavily increased.
To the effects of this policy in crippling internal trade and diminishing the purchasing power of the people, the memorialists show themselves altogether indifferent.
I have, &c.
ERNEST SATOW.
(Signed)
Inclosure in No. 1.
Secret Memorial respecting Chinese Finance.
THE Cheng Wu Chu (Council of Government) and the Board of Revenue have jointly presented the following secret Memorial to the Throne:--
When li-kin has been abolished throughout the provinces in China, it appears to us impossible that the customs duties should be solely relied upon for revenue, and a trustworthy scheme—which will bear the test of time—must be evolved as a means of support (lit., something to fall back upon).
Now, the peace of the Empire cannot be absolutely guaranteed for a generation; and, putting aside the land tax and grain contribution, li-kin constitutes the greater proportion of the revenue which should accrue to each province in China from within itself. It is now intended to abolish li-kin, and the whole deficit thereby entailed is to be looked for from the customs revenue of the various ports. But if by any chance the Powers engaged in war with us, and there was a sudden blockade of the coast, the customs dues would diminish enormously, and to what source would the provinces then look for funds? Whence would the Board of Revenue derive means to supply them? This question continually vexes your Majesty's Ministers, the present memorialists, as a great danger.
[1817 c-1]
This Document is the Property of His Britannic Majesty's Government.]
CHINA TRADE.
CONFIDENTIAL.
No. 1.
20
[January 3.]
SECTION 1.
Sir E. Sutou to the Marquess of Lansdowne.-(Received January 3, 1903.)
(No. 848. Secret.) My Lord,
Peking, November 19, 1902.
I HAVE the honour to forward translation, obtained privately, of a secret Memorial on the subject of Chinese finances, addressed to the Throne by the Board of Revenue aud the "
Cheng Wu Ch'u," or "Council of Government." The latter body, originally instituted, as reported in my despatch No. 241 of the 4th July, 1901, for the purpose of examining schemes of reform, seems likely to become permanent, and to discharge some of the functions of the Grand Council.
The Memorial is interesting, as throwing some light on the probable financial policy of the Chinese Government in the event of li-kin being abolished. As here foreshadowed, there is little in that policy to suggest that they have grasped the principles of sound
finance.
The argument of the memorialists is that absolute reliance cannot be placed on the maritime customs revenue to make good the deficit due to the contemplated abolition of li-kin, because the customs revenues might be suddenly cut off by a blockade of the Chinese coast during a foreign war. Considering that there has never been a general blockade of Chinese ports in modern times (the operations of 1860, 1884, 1894 and 1900 having only affected Formosan ports, Tien-tsin and Newchwang), it is a little strange to find Chinese officials, who are not generally conspicuous for forethought, taking into their calculations so apparently remote a contingency, and it may be doubted whether it is not put forward mainly as a pretext for the attention they urge should be devoted to internal taxation. With regard to this they make no definite proposal, but they declare that when li-kin is abolished, the provinces must place their main reliance on loti, &c. This term has hitherto been applied indifferently to a tax on produce at the place of production, and to a duty on goods on reaching their destination.. The former class of taxation would seem to be prohibited by the preamble to the VIIIth Article of the new Commercial Treaty. As a
"destination duty," loti seems indistinguishable from the consumption tax authorized by section 8 of the same Article, and, presumably, what is intended is that taxation of this kind shall be heavily increased.
To the effects of this policy in crippling internal trade and diminishing the purchasing power of the people, the memorialists show themselves altogether indifferent.
I have, &c.
ERNEST SATOW.
(Signed)
Inclosure in No. 1.
Secret Memorial respecting Chinese Finance.
THE Cheng Wu Chu (Council of Government) and the Board of Revenue have jointly presented the following secret Memorial to the Throne :--
When li-kin has been abolished throughout the provinces in China, it appears to us impossible that the customs duties should be solely relied upon for revenue, and a trust- worthy scheme-which will bear the test of time--must be evolved as a means of support (lit., something to fall back upon).
Now, the peace of the Empire cannot be absolutely guaranteed for a generation; and, putting aside the land tax and grain contribution, li-kin constitutes the greater proportion of the revenue which should accrue to each province in China from within itself. It is now intended to abolish li-kin, and the whole deficit thereby entailed is to be looked for from the customs revenue of the various ports. But if by any chance the Powers engaged in war with us, and there was a sudden blockade of the coast, the customs dues would diminish enormously, and to what source would the provinces then look for funds? Whence would the Board of Revenue derive means to supply them? This question con- tinually vexes your Majesty's Ministers, the present memorialists, as a great danger.
[1817 c-1]
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