4
stocks being liable to mildew cannot be kept for long, and that it is greatly to the advantage of China to give every facility to the mills. I have further informed him that, as the Tariff makes no provision for taxing cereals sent abroad, the China Flour Mills are prepared to pay a duty of 5 Haikuan taels per bag of 50 lbs. for the permits, which roughly speaking is the equivalent of 5 per cent. ad valorem. The Viceroy has now civilly but definitely refused to grant the permits, and the China Flour Mills must get rid of their surplus as best they can.
While of course the Viceroy is within Treaty rights in refusing to allow the export of flour to foreign countries, it is difficult to understand his short-sighted policy. With flour selling at about 2d. a pound, a large stock in hand, and a bountiful harvest in prospect, it is surely good policy to allow the mills to reduce their surplus, and at the same time contribute to the revenue. You will be conferring a great boon both on the British Company and on the Chinese themselves, if you can induce the Central Government to make some concession on this point, with any restrictive safeguards they may wish. Under present conditions the vast granary of the Yang-tsze Valley is being rendered useless and its agricultural population ruined.
I have, &c.
5
If, as you hold, the export of flour abroad should come under Article 2 of the Rules of Trade, it should be duty free, but if the payment of duty would facilitate negotiations on the subject there would be no objection on the part of the flour mills to an export duty. This would check over-export, and bring in a considerable revenue to the Chinese Government. The present price of the flour produced by the mills is 1 dol. 80 c. per bag of 50 lbs. for best, and 1 dol. 20 c. for coarse, or say an average price of 4 dollars per picul of 1331/3 lbs.
At 5 per cent. ad valorem this would be 20 cents. per picul. A specific duty should, however, be fixed for 50-lb. bags on this basis. It would be most advisable that Taotai's permits should not be required for the export, as experience has shown to what unlimited extortion and delay such permits lead.
Trusting I have made the matter clear, and earnestly requesting your cordial support for this new and promising industry.
I have, &c. (Signed)
R. W. MANSFIELD.
(Signed)
R. W. MANSFIELD,
Sir,
Inclosure 2 in No. 3.
Acting Consul-General Mansfield to Mr. Townley.
Shanghae, July 8, 1903.
I HAVE the honour to acknowledge receipt of your despatch No. 14 of the 1st instant, with regard to the Viceroy's refusal to grant permits for the export of flour from Shanghae.
The Viceroy's refusal to grant these permits is based on the fact that flour is ground wheat, and that the exportation of all grain whatsoever is prohibited by Treaty (Rule 5, paragraph 3). He also alluded to the impending scarcity in the north, and to the fact that in September, 1900, at the Consul-General Warren's request, his predecessor, the late Viceroy Liu, had, as a special favour, granted a permit for a part of the amount applied for on the clear understanding that it should not be taken as a precedent. He further mentioned that he had last year refused a similar request of an American, and used the well-worn argument of the necessity for protecting the food supply of the people.
A brief history of the China Flour Mills Company, Limited, the pioneer in this new industry, may be of use.
The Company was formed in 1896 and came into operation in December, 1897. The flour was at first shipped in the ordinary way, duty free, through the Customs to Vladivostok, no permit being required. This apparently went on till 1898, when a firm at Tien-tsin proposed to start a Company to manufacture flour, and asked the Commissioner of Customs if export abroad would be allowed, and, after reference to Peking, received an answer in the negative. On representation being made that the export was allowed in Shanghae, the Shanghae Customs was instructed to disallow the export abroad, with the note that if the manufacturers of flour desired other treatment they should apply to their Minister.
In August 1899, accordingly, Messrs. Schärff and Co., who, though General Managers of the British Company, are a German firm, applied to their Minister, the late Freiherr von Ketteler. I have the honour to inclose translation of his reply, covering the correspondence with the Tsung-li Yamên on the subject. (It is noteworthy that he does not claim as a Treaty right the export abroad of flour.) In August 1900, Consul-General Warren applied, under conditions similar to the present case, to the late Viceroy Liu Kun-yi for a permit for the China Flour Mills Company, Limited, to export their surplus stock of 100,000 piculs, and his Excellency as a special favour granted permits to export half that amount. This is the case referred to by the present Viceroy.
It does not appear therefore that hitherto the export of flour abroad has been claimed as legal under Article 2 of the Rules of Trade annexed to the Treaty of Tien-tsin, but its authorization has been asked for as a concession, and as sound policy under industrial conditions not existing when the Treaties were made.
(Translation.)
Inclosure 3 in No. 3.
Baron von Ketteler to Messrs. Schärff and Company.
Imperial German Embassy, Peking,
September 9, 1899.
IN reply to your letter of the 4th August, I beg to say that, based upon the particulars placed at my disposal, I have again written (on the 24th August) requesting a conditional restriction of the export prohibition of the mill's products, and attach copy of my letter.
You will observe from the inclosed copy of a reply from the Tsung-li Yamên, dated the 4th September, that the Tsung-li Yamên has again declared that they are unable to agree to your wish for granting a permit for a limited quantity.
It is therefore much to my regret that, at present, I cannot hold out hopes of a successful carrying on of the correspondence, but as soon as a favourable opportunity offers, I shall take up the matter again, and shall not fail to inform you later on of further steps taken in this matter.
The Imperial German Ambassador,
(Signed)
Inclosure 4 in No. 3.
VON KETTELER.
Baron von Ketteler to Prince Ch'ing and the Tsung-li Yamên.
Peking, August 24, 1899.
REFERRING to my letter of the 10th July, transmitting a request from the German firm of Walter Schärff and Company to cancel an export prohibition of the products of their flour mill.
This request has not been acceded to on the plea that through such export scarcity of food supplies would be arrived at. Your decision has been passed on to the firm in question, and I am now requested to reply that the question of a decrease in food supplies will not be raised by such export.
The mill in question manufactures two kinds of flour, viz., fine flour and coarse flour.
The fine flour is not consumed to any extent by the poorer classes, but principally by foreigners living in China, and by people living in adjoining countries. The other product is coarse flour, which is consumed by the working classes living in China. Only the fine grade of flour, which is not required even in times of scarcity, is wanted for export, while the coarse flour remains in the country. Both grades of flour are made simultaneously. Without fine flour a mill cannot make coarse flour. The larger the quantity of fine flour, the more coarse flour is made for the consumption of the poorer classes. The export permission would therefore assist the manufacture of food for the masses.
Attention is further drawn to the fact that in this year, owing to a rich wheat crop, prices of wheat have declined considerably.
304
4
stocks being liable to mildew cannot be kept for long, and that it is greatly to the advantage of China to give every facility to the mills. I have further informed kim that, as the Tariff makes no provision for taxing cereals sent abroad, the China Flour Mills are prepared to pay a duty of 5 Haikuan taels per bag of 50 lbs. for the permits, which roughly speaking is the equivalent of 5 per cent. ad valorem. The Viceroy has now civilly but definitely refused to grant the permits, and the China Flour Mills must get rid of their surplus as best they can.
While of course the Viceroy is within Treaty rights in refusing to allow the export of flour to foreign countries, it is difficult to understand his short-sighted policy. With flour selling at about 2d, a pound, a large stock in hand, and a bountiful harvest in prospect, it is surely good policy to allow the mills to reduce their surplus, and at the same time contribute to the revenue. You will be conferring a great boon both on the British Company and on the Chinese themselves, if you can induce the Central Government to make some concession on this point, with any restrictive safeguards they may wish. Under present conditions the vast granary of the Yang-tsze Valley is being rendered useless and its agricultural population ruined.
I have, &c.
5
If, as you hold, the export of flour abroad should come under Article 2 of the Rules of Trade, it should be duty free, but if the payment of duty would facilitate negotiations on the subject there would be no objection on the part of the flour mills to an export duty. This would check over-export, and bring in a considerable revenue to the Chinese Government. The present price of the flour produced by the mills is 1 dol. 80 c. per bag of 50 lbs. for best, and 1 dol. 20 c. for coarse, or say an average price of 4 dollars per picul of 1834 lbs.
At 5 per cent. ad valorem this would be 20 cents. per picul. A specific duty should, however, be fixed for 50-lb. bags on this basis. It would be most advisable that Taotai's permits should not be required for the export, as experience has shown to what unlimited extortion and delay such permits lead.
Trusting I have made the matter clear, and earnestly requesting your cordial support for this new and promising industry.
I have, &c. (Signed)
R. W. MANSFIELD.
(Signed)
R. W. MANSFIELD,
Sir,
Inclosure 2 in No. 3.
Acting Consul-General Mansfield to Mr. Townley.
Shanghae, July 8, 1903. I HAVE the honour to acknowledge receipt of your despatch No. 14 of the 1st instant, with regard to the Viceroy's refusal to grant permits for the export of flour from Shanghae.
The Viceroy's refusal to grant these permits is based on the fact that flour is ground wheat, and that the exportation of all grain whatsoever is prohibited by Treaty (Rule 5, paragraph 3). He also alluded to the impending scarcity in the north, and to the fact that in September, 1900, at the Consul-General Warren's request, his predecessor, the late Viceroy Liu, had, as a special favour, granted a permit for a part of the amount applied for on the clear understanding that it should not be taken as a precedent. He further mentioned that he had last year refused a similar request of an American, and used the well-worn argument of the necessity for protecting the food supply of the people.
A brief history of the China Flour Mills Company, Limited, the pioneer in this new industry, may be of use.
The Company was formed in 1896 and came into operation in December, 1897. The flour was at first shipped in the ordinary way, duty free, through the Customs to Vladivostok, no permit being required. This apparently went on till 1898, when a firm at Tien-tsin proposed to start a Company to manufacture flour, and asked the Commissioner of Customs if export abroad would be allowed, and, after reference to Peking, received an answer in the negative. On representation being made that the export was allowed in Shanghae, the Shanghae Customs was instructed to disallow the export abroad, with the note that if the manufacturers of flour desired other treatment they should apply to their Minister.
In August 1899, accordingly, Messrs. Schärff and Co., who, though General Managers of the British Company, are a German firm, applied to their Minister, the late Freiherr von Ketteler. I have the honour to inclose translation of his reply, covering the correspondence with the Tsung-li Yamên on the subject. (It is noteworthy that he does not claim as a Treaty right the export abroad of flour.) In August 1900, Consul-General Warren applied, under conditions similar to the present case, to the late Viceroy Liu Kun-yi for a permit for the China Flour Mills Company, Limited, to export their surplus stock of 100,000 piculs, and his Excelleney as a special favour granted permits to export half that amount. This is the case referred to by the present Viceroy.
It does not appear therefore that hitherto the export of flour abroad has been claimed as legal under Article 2 of the Rules of Trade annexed to the Treaty of Tien-tsin, but its authorization has been asked for as a concession, and as sound policy under industrial conditions not existing when the Treatics were made.
(Translation.)
Inclosure 3 in No. 3.
Baron von Keiteler to Messrs. Schärff and Company.
Imperial German Embassy, Peking,
September 9, 1899. IN reply to your letter of the 4th August, I beg to say that, based upon the particulars placed at my disposal, I have again written (on the 24th August) requesting a conditional restriction of the export prohibition of the mill's products, and attach copy of my letter.
You will observe from the inclosed copy of a reply from the Tsung-li Yamên, dated the 4th September, that the Tsung-li Yamên has again declared that they are unable to agree to your wish for granting a permit for a limited quantity.
It is therefore much to my regret that, at present, I cannot hold out hopes of a successful carrying on of the correspondence, but as soon as a favourable opportunity offers, I shall take up the matter again, and shall not fail to inform you later on of further steps taken in this matter.
The Imperial German Ambassador, (Signed)
Inclosure 4 in No. 3.
VON KETTELER.
Baron von Ketteler to Prince Ch'ing and the Tsung-li Yamén.
Peking, August 24, 1899. REFERRING to my letter of the 10th July, transmitting a request from the German firm of Walter Schärff and Company to cancel an export prohibition of the products of their flour mill.
This request has not been acceded to on the plea that through such export scarcity of food supplics would be arrived at. Your decision has been passed on to the firm in question, and I am now requested to reply that the question of a decrease in food supplies will not be raised by such export.
The mill in question manufactures two kinds of flour, viz., fine flour and coarse flour.
The fine flour is not consumed to any extent by the poorer classes, but principally by foreigners living in China, and by people living in adjoining countries. The other product is coarse flour, which is consumed by the working classes living in China. Only the fine grade of flour, which is not required even in times of scarcity, is wanted for export, while the coarse flour remains in the country. Both grades of flour are made simultaneously. Without fine flour a mill cannot make coarse flour. The larger the quantity of fine flour, the more coarse flour is made for the consump- tion of the poorer classes. The export permission would therefore assist the manufacture of food for the masses.
Attention is further drawn to the fact that in
this year, owing to a rich wheat crop, prices of wheat have declined considerably.
304
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