C.O.
[This Document is the Property of His Britannic Majesty's Government.]143
CHINA TRADE.
CONFIDENTIAL.
[September 10.]
SECTION 2,
C
42543
[30587]
No. 1.
Mr. Carnegie to Sir Edward Grey,-(Received September 10.)
Rece 16 NOV OF
(No. 312.) Sir,
Peking, July 23, 1906. I HAVE the honour to inclose copies of correspondence relating to special privileges which are accorded by the Chinese Government to the China Merchants' Steam Navigation Company in regard to the transport of brick tea from the ports of Foochow and Hankow to Tien-tsin.
The matter was first brought to the notice of Sir E. Satow in a despatch of the 14th February from His Majesty's Consul-General at Tien-tsiu, inclosing copy of a From this it appeared that on the letter from Messrs. Butterfield and Swire.
28th October, 1905, that firm applied to the Imperial Maritime Customs at Tien-tsin for an overland pass to cover 1,000 packages of brick tea to Kalgan, inclosed a letter of guarantee that this tea was to be sold in Kalgan, and mentioned that they wished to import this cargo and transport it to Kalgan "under the lowest terms and charges as granted for other similar importations." The reply of the Customs was that the application was refused by the Taotai, who stated that he was "in the habit of granting such passes to merchants of Russian nationality only."
Messrs. Butterfield and Swire's object in making this application was to secure a share in a carrying trade which is at present almost wholly in the hands of the China Merchants' Steam Navigation Company. It appears that the latter, a purely Chinese concern in which Chinese officials are largely interested, and which is in consequence considered to be semi-official, undertakes to carry brick tea manufactured in Hankow and Foochow from those ports to Kalgan via Tien-tsin-that is, by sea to Tien-tsin and by land from Tien-tsin to Kalgan-and their steamers are preferred by persons engaged in the brick tea trade (so far as I know, only Russians and Chinese) to those of foreign Shipping Companies, who do not undertake the overland transport from Tien-tsin to Kalgan.
Another reason for this preference disclosed in the correspondence is the privileged position of the China Merchants' Company in regard to duties. Messrs. Butterfield and Swire point out that a shipment by one of their steamers of 1,110 piculs of brick tea had to bear the coast trade duty of 3 taels a-picul, a native customs duty of 3 taels, and a li-kin levy of 15 taels, while the same shipment by a China Merchants' steamer would have been free of the coast trade duty and would have been charged only 12 tacls and 04 taels a-picul for native customs duty and li-kin respectively. The result was a preferential duty of 59 taels a-picul in favour of the brick tea carried by Chinese steamers. Messrs. Butterfield and Swire assert that the greater part of the tea in question is known as "Shansi brick tea," because the buyers in Kalgan are Shansi people who resell it to the Mongols, and it would seem that only a small proportion of the brick tea imported into Tien-tsin and classed in the Customs Returns as brick tea for Russia really passes the Russian frontier. Messrs. Butterfield and Swire's repre- sentatives referred chiefly to the Shansi brick tea," and not to the bond fide Russian trade, and they quoted Article XIV of the French Treaty of 1860 and Article XXIV of the British Treaty 1858 in support of their objections to the preferential position enjoyed by the China Merchants' Steam Navigation Company,
On the 20th March Sir E. Satow addressed a note to Prince Ching on the subject, objecting to the privileges given to the China Merchants' Company as a contravention of Article XIV of the French Treaty of Tien-tsin, and requesting that British firms should be treated no less favourably than this Chinese Company. His Highness replied on the 26th May inclosing a communication from the High Commissioner of the northern ports, Viceroy Yuan Shih-K'ai. According to this, the China Merchants' branch office at Hankow contracts to transport the tea to Tungehow and Fengtai (both places near Peking, the first on the river route to Kalgan and the second on the railway route), where it is handed over to the owners to take it on themselves to Kalgan. His Excellency says that as regards the duties and li-kin payable at Tien-tsin, the cstablished Regulations are always conformed to, the native customs duty being calculated at 12 taels a-picul, li-kin at 04 taels, and "Industrial Contribution"
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