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to examine northward trains on the frontier I am not prepared to say without fuller information than I at present possess regarding the working of the customs at Dairen, In this connection I have the honour to enclose copy of a despatch addressed by Mr. Gordon, His Majesty's vice-consul at Dairen, to His Majesty's acting consul- general at Mukden, commenting on Mr. Willis's despatch on this subject. Mr. Gordon, while confirming the suspicion that wholesale smuggling of goods must have been carried on from the Kwantung leased territory into Manchuria during the takes the view that if the work of the Chinese customs at Dairen were efficiently year 1908, performed it should be impossible for goods to pass into the interior illegally. I think that Mr. Gordon has perhaps not given sufficient weight to the considerations, firstly, that the Customs have no control whatever over foreign imports until they are declared for the interior, and, secondly, that the Dairen agreement expressly provides that the Customs staff shall be wholly Japanese. However, his despatch shows that it is not certain that the establishment of a customs station on the frontier would provide an effective remedy.
The question is one which directly concerns the customs Mr. Willis states that it has been referred by the commissioner of customs at revenue, and Mukden to the inspectorate-general at Peking, I understand from Sir Robert Bredon that he has called the attention of the commissioner of customs at Dairen to the points raised, and has instructed him to furnish a full report on the existing customs procedure at Dairen and the posts on the frontier, and on the measures that can be taken under the agreement, or any modification thereof, to prevent the passing of the frontier by uncertificated goods, whether by rail or otherwise. the matter is engaging the attention of the customs, and as the acting inspector- general has promised to communicate to me the result of his enquiries, I defer further consideration of the question until I am in possession of the information thus to be obtained.
As
I am forwarding a copy of this despatch to His Majesty's Ambassador at Tokyo.
(No. 39.) Sir,
Inclosure 1 in No. 1.
I have, &c.
J. N. JORDAN,
Acting Consul-General Willis to Sir J. Jordan.
Mukden, September 1, 1909. IN my despatch No. 62 of the 28th September last I pointed out that there was no examination of goods entering Manchuria from the Kwantung leased territory, and that, although there was no proof that advantage had been taken of this fact to smuggle goods into the country, under the existing procedure the Chinese Customs relied entirely on the good faith of the South Manchurian Railway.
I have recently received a despatch from the acting commissioner of the foreign board at Mukden, in which he states that Mr. Tachibana, the acting commissioner of Chinese customs at Tairen, has recently brought to the notice of the provincial authorities that many foreign merchants neglect to take out the exemption certificates provided for in the provisional regulations of November 1907, and that consequently orders have been issued to the Fengtien Board of Revenue to collect li-kin and other inland taxes on goods not accompanied by such certificates.
The figures given in the Customs returns of trade from the 1st July, 1907, up to the end of last year appear to indicate that certain merchants are taking advantage of the fact that goods declared for the leased territory enter free of duty to afterwards forward these goods into Manchuria in considerable quantities without having recourse to any customs formalities.
The value of foreign imports into Tairen for the last six months of 1907, excluding railway material, was 7,412,365 taels, of which goods value 1,567,587 taels only were forwarded into the interior by rail. For the year 1908 the imports into Tairen, again exclusive of railway material, were valued at 13,104,834 taels, of which goods value 4,645,079 taels went forward into Manchuria by the South Manchurian Railway.
The total import of foreign goods at Newchwang for 1907 amounted to 10,587,235 taels, and for 1908 15,151,734 taels,
Taking the year 1908, as the figures for 1907 show the trade of Tairen for the latter half of the year only, it appears that the total import viâ Newchwang and
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Tairen, which ports practically supply between them the wants of South Manchuria, amounted to 28,256,568 taels, of which according to the statistics goods of a value of to less than 8,459,755 taels, or roughly 30 per cent. of the whole, were consumed in the leased territory, the total population of which is less than 500,000," and in which, with the exception of Tairen itself, there is not a single town of even second-class importance.
In the body of his report for 1998 Mr. Tachibana mentions that the greater part of the foreign imports were for Japanese enterprises and for the use of Japanese residing in the leased territory and in Manchuria. The only articles, he states, imported in any quantity for the use of natives were cotton piece-goods, American flour, cigarettes, and sugar.
Sugar is not mentioned in the table of statistics showing the import by rail, but a detailed examination of the three other articles referred to by Mr. Tachibana seems to support the inference I have drawn from a consideration of the statistics viewed as a whole.
The total import of cotton goods into Tairen was 1,002,712 pieces, of which 591,922 pieces only were sent into the interior. The Newchwang imports for the year were 1,452,641 pieces, so that out of a total import of 2,455,353 pieces, 410,790 pieces were consumed in the leased territory, which works out very nearly to an allowance of one piece to each inhabitant.
The import of Japanese cotton goods (unclassed), via Tairen, rose 82,907 pieces in the last six months of 1907 to 566,278 pieces in 1908.
from
The cigarettes imported into Tairen were valued at 648,965 taels, of which 222,170 taels were sent into the interior, leaving a balance of 426,795 taels to be consumed in Kuantung.
The total sales of the British American Tobacco Company for the year for the whole of Manchuria, exclusive of the leased territory, were 716,000 taels only.
As regards American flour, out of a total import of 163,121 piculs, 38,019 piculs were sent into the interior.
If it is the case, as appears probable, in my opinion, from the above considera- tions, that the Chinese Customs are being defrauded by dishonest traders, the remedy proposed by the provincial authorities, namely, to levy li-kin and inland dues on goods unaccompanied by exemption certificates, appears to me entirely inefficacious, as there are no li-kin stations along the line of the South Manchurian Railway nor in any of the railway settlements.
In the case of imports into Tairen, and thence forwarded into the interior, the exemption certificate constitutes the proof that import duty has been paid, and the unless the Chinese Customs establish a customs station at Pulantien on frontier between the leased territory and Fengtien Province, where goods are sub- jected to an examination similar to that which now takes place at Manchuria and Pogranitchnaya stations on the Chinese Eastern Railway, I do not see how there can be any effective check on imports via Tairen, and foreign merchants will continue to suspect that Japan is making an unfair use of her railway facilities.
In connection with this subject there is another point to which I would like to draw your attention.
It seems to me very probable that within a few years Tairen will become a considerable manufacturing centre.
An experimental laboratory has been established there under the auspices of the South Manchurian Railway Company, and it is claimed that important economic discoveries in connection with the extraction and refining of bean oil, the treatment of the wild silk cocoon, and the distilling of spirit from "kaoliang" have been made already.
A cement factory, I am informed, has been completed, whilst a tobacco factory is in course of erection, and other important enterprises appear to be contemplated both At at Tairen and in the South Manchurian Railway settlements along the line. Tiebling there is already a flour mill. At Changchun a model factory, I understand, is already working, whilst at Mukden a large distillery is approaching completion.
The question of the taxation to be levied on such enterprises appears to me one of considerable importance. Whilst their establishment seems likely in the main to affect Chinese interests and Chinese revenue, yet in the case of the cement and the tobacco factories British and other foreign interests are directly concerned.
I understand from Mr. Bowra, the commissioner of customs here, that in the case of the cement factory a claim has been already made to Mr. Tachibana to allow the export into Manchuria on condition of payment of li-kis on arrival at the li-kin
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