This Document is the Property of His Britannic Majesty's Government.
CHINA TRADE.
CONFIDENTIAL.
No. 1.
C. O.
429
29509 [July 29,]
IRECT
SECTION 22 AUG 041
Chang Ta-Jen to the Marquess of Lansdowne.--(Received July 29.)
My Lord Marquess,
Chinese Legation, July 27, 1904.
I HAVE been directed by the Wai-wu Pu to invite your Lordship's attention to a matter connected with the taxation of opium, to which the Imperial Government attach much importance from a fiscal point of view, and which they think calls for the immediate attention of the two Governments.
I shall not here revert to the unfortunate troubles to which the importation of the fatal drug gave rise in days past, but will merely mention that after many attempts to suppress its consumption by the people of China, and many futile protests against its introduction into the country, the Imperial Government, in 1858, as the lesser of two evils, felt themselves constrained to legalize its importation and sanction its being included in the Tariff, hoping by this means to terminate the evils of smuggling. Considering the nature of the traffic, the duty then imposed on the drug was exceedingly moderate, consisting of an import duty of 30 Haikwan taels per chest of 100 piculs, or 133 lbs. avoirdupois. But this payment covered the import duty only, the free and unrestricted taxation of the drug on its passing into Chinese hands being left entirely to the discretion of the provincial authorities.
Freed from the risk of foreign complications, it was hoped that, once in the interior, the consumption of the drug might be held in check by increasing the war tax then leviable on it and all other goods under the designation of li-kin. But the operation of this expedient was soon found only to have been to remove the evils of smuggling from the seaboard to the interior. Daily, and often sanguinary, feuds took place between the contrabandists and the excise. Another expedient had to be sought, and happily was found for this, in the Additional Article of the Chefoo Convention, signed in London in 1885.
By this Article, which is still in force, the import duty and the li-kin were to be paid simultaneously at the Treaty port; and the latter, instead of being leviable as heretofore at the discretion of the provincial authorities, was limited to 80 taels, making with the original import duty of 30 taels, 110 taels per chest, an amount which, calculated at the exchange of the date when the new arrangement came in force, was equivalent to 27 per cent. on the then value of the opium, but which now, owing to the depreciation of silver and the greatly enhanced tael-value of the drug, amounts to no more than 13 per cent.
In 1885, when the Additional Article came in force, 400 taels was the price of a chest of opium and 5s. the value of a Haikwan tael, thus making the value of the drug to be £100 per chest, and the combined import and li-kin duties, calculated at the same rate, £27. 10s.
In 1904 opium sells for 800 taels per chest and the tael for 2s. 6d.; the sterling value of the opium thus remains at £100 per chest, whilst that of the combined import and li-kin duties amounts to only £13. 15s., or exactly one-half of what it was in 1885.
Here it will be seen that, in spite of the depreciation of silver, the action of economic laws has enabled the price of the drug to be maintained at the same gold value. But in the case of the duties it has been far otherwise, for, regulated by an unyielding Convention, no change, no power of adaptation to circumstances, was possible in them without the common consent of the two High Contracting Parties; the consequence of this being that, whilst remaining nominally the same, they have shrunk—and shrunk—always to the betterment of the merchant and the detriment of the Government—until what was equal to £27. 10s. in 1885 is now worth only £13. 15s.
A similar shrinkage concurrently took place in the gold value of the duties on all other goods, but this was rectified in principle by the Final Protocol of September 1901, and subsequently in practice by the Mackay Treaty of last year.
The effect of this and the latter rectification when it comes in force will, with the surtax, be that the gold value of the duties on ordinary merchandise will fall but little short of that now levied on opium.
[2056 -1]
This Document is the Property of His Britannic Majesty's Government.j
CHINA TRADE.
CONFIDENTIAL.
No. 1.
C. 0.
429
29509 [July 29,]
IRECT
SECTION 22 AUG 041
Chang Ta-Jen to the Marquess of Lansdowne.--(Received July 29.)
My Lord Marquess,
Chinese Legation, July 27, 1904.
I HAVE been directed by the Wal-wu Pu to invite your Lordship's attention to a matter connected with the taxation of opium, to which the Imperial Government attach much importance from a fiscal point of view, and which they think calls for the immediate attention of the two Governments.
I shall not here revert to the unfortunate troubles to which the importation of the fatal drug gave rise in days past, but will merely mention that after many attempts to suppress its consumption by the people of China, and many futile protests against its introduction into the country, the Imperial Government, in 1858, as the lesser of two evils, felt themselves constrained to legalize its importation and sanction its being included in the Tariff, hoping by this means to terminate the evils of smuggling. Considering the nature of the traffic, the duty then imposed on the drug was exceedingly moderate, consisting of an import duty of 30 Haikwan taels per chest of 100 picuis, or 133 lbs, avoirdupois. But this payment covered the import duty only, the free and unrestricted taxation of the drug on its passing into Chinese hands being left entirely to the discretion of the provincial authorities.
Freed from the risk of foreign complications, it was hoped that, once in the interior, the consumption of the drug might be held in check by increasing the war tax then leviable on it and all other goods ander the designation of li-kin. But the operation of this expedient was soon found only to have been to remove the evils of smuggling from the seaboard to the interior. Daily, and often sanguinary, feuds took place between the contrabandists and the excise, Another expedient had to be sought, and happily was found for this, in the Additional Article of the Chefoo Convention, signed in London in 1885.
By this Article, which is still in force, the import duty and the li-kin were to be paid simultaneously at the Treaty port; and the latter, instead of being leviable as heretofore at the discretion of the provincial authorities, was limited to 80 taels, making with the original import duty of 30 taels, 110 taels per chest, an amount which, calculated at the exchange of the date when the new arrangement came in force, was equivalent to 27 per cent, on the then value of the opium, but which now, owing to the depreciation of silver and the greatly enhanced tael-value of the drug, amounts to no more than 13 per cent.
In 1885, when the additional Article came in force, 400 taels was the price of a chest of opium and 5s, the value of a Haikwan tael, thus making the value of the drug to be 100% per chest, and the combined import and li-kin duties, calculated at the same rate, 277. 10s.
In 1904 opium sells for 800 taels per chest and the tael for 2s. 6d.; the sterling value of the opium thus remains at 1001. per chest, whilst that of the combined import and l-kin duties amounts to only 131. 158., or exactly one-half of what it was in 1885.
Here it will be seen that, in spite of the depreciation of silver, the action of economic laws has enabled the price of the drug to be maintained at the same gold value. But in the case of the duties it has been far otherwise, for, regulated by an unyielding Convention, no change, no power of adaptation to circumstances, was possible in them without the common consent of the two High Contracting Parties; the consequence of this being that, whilst remaining nominally the same, they have shrunk. and shruuk-always to the betterment of the merchant and the detriment of the Government-until what was equal to 271. 10s. in 1885 is now worth only 131. 15s.
A similar shrinkage concurrently took place in the gold value of the duties on all other goods, but this was rectified in principle by the Final Protocol of September 1901, and subsequently in practice by the Mackay Treaty of last year.
The effect of this and the latter rectification when it comes in force will, with the surtax, be that the gold value of the duties on ordinary merchandize will fall but little short of that now levied on opium,
[2056 -1]
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