CO129-343 - Public Offices & Foreign Office - 1907 — Page 376

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[This Document is the Property of His Britannic Majesty's Government.]

AFFAIRS OF CHINA.

8373

[January 22.]

CONFIDENTIAL.

Rec2

SECTION 1.

REC 6 MAR 07,

[2013]

No. 1.

Sir,

China Association to Foreign Office.--(Received January 22.)

159, Cannon Street, London, January 18, 1907. THE Committee desire to thank His Majesty's Secretary of State for affording the opportunity desired by the Association of explaining more fully the grounds on which it is held that the Chinese authorities should be required to pay, for the piratical attack on the "Sainam," damages in excess of the direct loss which the owners sustained.

The grounds on which that contention is based are stated in the inclosed Memorandum by the President, which the Committee fully approve and indorse.

The Committee desire particularly to bring to Sir Edward Grey's notice that the owners of the "Sainam" do not desire to profit by the penalty, which they advocate as a measure of political consequence for the protection of British interests and trade.

I have, &c. (Signed) JOSEPH WELCH,

Hon. Secretary.

Inclosure 1 in No. 1.

Memorandum on the Claim for Consequential Damages in the Case of the Steumer

S

Sainam."

THE British steamer "Sainam" was attacked by Chinese river pirates in July last, the captain and several of the crew were severely injured, Dr. MacDonald shot dead, and the passengers robbed.

The owners have asked His Majesty's Government to support claims on the Chinese authorities for 15,555 dollars direct, and 150,000 dollars consequential damages.

The question at issue is the principle of consequential damages, the Companies concerned having affirmed their willingness that the money be employed, say, for some charitable purpose in Hong Kong, at the discretion of His Majesty's Government, desiring only that a penalty be exacted in the interests of British trade.

The contention is that the prevalence of piracy in the Kwang Viceroyalty is due to laxity of administration, and that the only hope of amelioration lies in penalizing those who are responsible.

The principle is not novel. It has been admitted and enforced on former occasions ; It will be found asserted, for and it would be regrettable that it should be abandoned. instance, in a letter from Sir Claude MacDonald, communicated to the Association, by the Foreign Office, on the 27th November, 1897. A British merchant had sent up to Fatshan, under transit pass, 350 cases of kerosene oil, which were seized on arrival, by a Chinese Syndicate to whom the tax on kerosene had been farmed out, on the ground that it had not paid a so-called "destination" tax before starting; and Sir Claude, in pointing out the incompatibility of such an exaction with the Treaty of Tien-tsin, went on to affirm that "the direct loss incurred by the British merchant in such cases is no measure of the injury done to him by violent interference with his business, his reim- bursement merely to that extent consequently leaves him still a sufferer, and with him suffers the trade of all other importers."

The occasion was taken by the Association to submit, for the consideration of the Foreign Office, a Memorandumu on the question of transit taxation, in which it was remarked that the question must not be considered in the light of local conditions, which are F

so complicated and so different from those prevailing in more highly organized States, that a course of action which is essential to international comity in one case opens the door to encroachment in the other."

Lord Salisbury acquiesced in Sir Claude MacDonald's contention, and the issue (communicated to the Association, by the Foreign Office, in a letter dated the 6th January, 1898) was "the payment of a fine of 10,000 dollars for the breach of the Transit Pass Regulations committed."

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