[This Document is the Property of His Britannic Majesty's Government.]
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As regards proof that any duty or tax had been paid on the British-American Tobacco Company's cigarettes at Antung, Mr. Walsh was unable to adduce anything. As I have shown above, the Company or its agents have paid none, and, though Mr. Walsh took me to see two or three native dealers who had imported cigarettes, they were either unable or unwilling to produce proof of payment of duty. One firm acknowledged that they had avoided the payment of any duty or li-kin at all, while the other two could only give the dates and amounts of their importations. The native Customs do not issue duty receipts, and the firms could not produce any accounts showing payment of duty on cigarettes specifically. I hear that it is the practice of native importers to compound the duties by a lump sum, covering either a whole consignment of general goods, or else their importations during a certain period, so that it would be impossible to point out any one amount of duty as having been paid on a certain consignment of cigarettes, cloth, or other article.
To sum up, the root of the whole matter is the refusal of the Japanese Consul to allow his subjects to pay duty and li-kin. Chinese dealers have to pay these taxes on whatever they import, and accordingly native trade in British cigarettes is handicapped in the Antung market to that extent. Mr. Walsh distinctly stated that his Company did not wish to make any claim for compensation, but merely desired that Chinese dealers in their goods should be relieved of this disadvantage, so that the Company's eigarettes could compete on equal terms with those of Japanese origin.
The discrimination, if it may be so termed, in favour of the Japanese arises in two ways. Firstly, in the non-payment of import duty which the Chinese have to pay. During the winter months trade at Antung is at a standstill, except for traffic by the Corean Railway, which is entirely in Japanese hands. The matter is therefore as yet not pressing, and the remedy that suggests itself as being the most simple and satisfactory is the establishment, before the Yala opens to navigation in the spring, at Antung, and at Tatungkon-for the same conditions exist thereof foreign maritime custom- houses, to which Japanese, as well as other foreign and native importers of foreign goods, will be required to pay the normal duties levied at other Treaty Ports in China.
Secondly, in the non-payment of cigarette tax or li-kin. The question of the levy of this tax in Antung forms part of the general question of the right to levy h-kin or other inland dues in Treaty Port areas, which is now being raised in all the new ports of Manchuria. The Chinese officials at Antung with whom I conversed main- tained that they had the right to levy this tax anywhere in Autung except in the foreign settlement, which they propose to lay out. I pointed out the incorrectness of this view, but I fear without bringing conviction, and the tax on cigarettes, as well as the new consumption tax on other merchandize, will, no doubt, continue to be levied on Chinese traders in Antung, while, under the protection of their Consul, Japanese subjects will be able to pursue their business at that port unhampered by the imposition of these taxes in defiance of the Treaties.
Newchwang, January 14, 1907.
(Signed) O. R. COALES, Assistant.
AFFAIRS OF CHINA.
CONFIDENTIAL.
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No. 1.
[March 911 983
SECTION
bf2.
RECS APR 07)
Sir J. Jordan to Sir Edward Grey.-(Rec.ired March 9.) (No. 38.) Sir,
Peking, January 22, 1907. WITH reference to your despatch No. 138 of the 1st May, 1906, I have the honour to inclose copies of correspondence relating to the right of British subjects to establish places of business inside the city of Changsha,
It was clear from Mr. Giles' despatch of the 3rd October, 1906, that the Hunan authorities preferred to flout the instructions of the Wai-wu Pu rather than oppose the wishes of the Changsha gentry, who are exerting their great influence to prevent an open recognition of the Treaty rights. It was not possible, with due regard to our interests, to overlook this treatment of the matter, and I accordingly addressed a note to Prince Ching on the 27th October exposing the inconsistency and erasion of the Governor, and asking for the issue of a Proclamation in Changsha which would make known the Treaty privileges in plain language. At the same time I instructed Mr. Giles to press the local authorities in conjunction with his Japanese colleague in the same
sense.
The steps taken by Mr. Giles in pursuance of these instructions are reported in his despatch of the 5th December, the gist of which was telegraphed to me, and to support them I addressed another note to Prince Ch'ing on the 10th December. I also spoke at the Wai-wu Pu on the 11th December to the Grand Secretary Ch'ü Hung Chi, who is a native of Changsha, and known to take the side of the gentry.
A telegram received from Mr. Giles on the 24th December led me to bring the matter up in an interview at the Wai-wu Pu on the 4th January. I produced the Wai-wu Pu's note of the 5th March, 1906, to Sir E. Satow, and asked directly whether the recognition of Treaty rights therein stated was or was not adhered to. I had to put the question more than once, before the Grand Secretary Cheü Bung Chi, who was present, grudgingly admitted the Treaty rights, but he begged me not to press for the issue of the Proclamation at present, and urged the well-worn difficulty of the Central Government in running counter to local feeling.
I pointed out that the Governor of Hunan had taken it on himself to ignore the express instructions of the Wai-wu Pu, and had addressed an official communication to both the Japanese and British Consuls explicitly denying the right of foreign merchants to reside and trade in Changsha City. I insisted that this communication could not remain on the records of the Consulate, and after some discussion it was agreed thar I should instruct Mr. Giles to return it to the Governor. I arranged subsequently with my Japanese colleague, Mr. Hayashi, that his Consul should do the same, and on the 14th January I telegraphed to Mr. Giles to act in concert with the Japanese Consul at Changsha, and return the Governor's despatch of the 21st December, pointing out that, as its contents were contrary to Treaty and the Wai-wu Pu's instructions, it could not remain on record.
I shall continue to press this matter, in conjunction with my Japanese colleague, with a view to securing a public recognition by the Changsha authorities of the Treaty rights which are admitted by the Chinese Government,
I have, &c. (Signed) J. N. JORDAN.
Inclosure 1 in No. 1.
(No. 21.) Sir,
Acting Consul Giles to Sir J. Jordan,
Changsha, October 3, 1906. IN continuation of my despatch No. 8 of the 27th April, I have the honour to report further on the question of Treaty port limits at Changsha.
After telegraphing to Sir Ernest Satow on the 23rd April that the local authorities denied having received any instructions from Peking anent the inclusion of the city
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