CO129-371 - Public Offices - 1910 — Page 305

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According, therefore, to Mr. Hughes's calculations the cost of the entire conser- vancy scheme will be as follows:---

Deepening the bar and otherwise improving the approaches to the port Protecting Duck Island Bend

Dredgers for the upper river

Total

Dollars.

482,974

44,000

150,000

676,974

To which sum must be added the annual working expenses of the dredgers on the upper river, estimated at about 28,000 dollars.

In his despatch, a copy of which I also enclose, covering Mr. Hughes's report, the taotai points out that, by extending the period of collection of the proposed taxes from ten to twenty years, a loan could be raised which would amply cover the whole of this expenditure. It would in that case be unnecessary, he says, to ask for further financial assistance from the provincial Government, which, in its present impoverished condition, it was quite unable to afford. The improvement of the upper river, the cost of which it was proposed should be met by his Government, was, as we all knew, quite as essential to the prosperity of Newchwang as the deepening of the bar, a work which would be of little use if the river above the port was unnavigable. He therefore proposed that the period during which the taxes were to be collected should be extended to twenty years, and the entire cost of the conservancy scheme met out of the revenue they would produce.

Both Mr. Hughes's report and the taotai's despatch have been carefully considered at two meetings of the consular body which have been held for the purpose. The report is regarded as a satisfactory one in every respect by all my colleagues, but the taotai's proposals have been the cause of much fruitless discussion. The difficulty is that Mr. Ohta, the Japanese consul, claims to have explicit instruc- tions from his Government to withhold his consent to any scheme by which Japanese trade pays any portion whatsoever of the cost of the upper river improvements, which will be detrimental, it is held, to the interests of the South Manchurian Railway. Nor is the Japanese Government even willing, he tells us, that the trade of the port should bear the entire cost of the bar and Duck Island works, of which, in its opinion, the Chinese Government should also pay a share. In fact he moved a resolution, which, however, was not pressed, that, to prevent the possibility of a surplus, the proposed taxes be reduced by one-half. We all, I need scarcely say, agree with the view that it would be unfair to burden the trade of the port with the entire cost of the conservancy works, by which the rest of the province, and particularly the Chinese Government, have even more to gain than the port itself, yet it appears to me and my other colleagues that, unless some compromise can be arranged between the views of the taotai, who represents the provincial Govern- ment in the matter, and those of the Japanese Government, there is every danger that the whole scheme will be shelved.

At our first meeting no solution of the problem presented itself to us, but at the second, which was held on the 16th instant, I was able to suggest a compromise, which meets to a great extent the views of both parties.

The gist of this compromise is that, while the taxes collected by the Imperial Maritime Customs are to be devoted entirely to the bar and Duck Island works, those collected by the Native Customs may be expended on the upper river improvements. As the Native Customs deals only with the junk trade, which is a purely Chinese trade, this arrangement does not conflict with the Japanese view that their trade is to contribute nothing towards the cost of the upper river works. I also propose that the tax of 1 per mille on the imports and exports of the port be levied, not on the actual value of the goods passing through the customs, but by adding an equivalent per- centage to the duties. By adopting this system of collection, which is by far the more convenient and inexpensive of the two, the amount raised from the tax by the Imperial Maritime Customs-I have taken the figures of 1908, a normal year, as the basis for my calculations-will average about 25,000 tacls per annum, whereas, if collected on the actual value of the trade, the gross revenue from it would be nearer 45,000 taels. In this way, without actually agreeing to the Japanese consul's proposal that the taxes be reduced, I met his views on the point as far as it is practicable to do so. In explanation of my figures I should mention that the value of the trade in 1908 was 41,336,000 taels, and the duties collected, including those on goods brought up from Shanghae under exemption certificate, 1,097,600 taels. Imports,

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it would appear, pay little more than 33 per cent, ad valorem and exports than 2 per cent. I have estimated the annual amount that will be raised from the tax at 25,000 taels instead of 22,000 taels, which is what 2 per cent. on the duty actually represents, because the levy on the coast trade portion of it will be 4 per cent,, and the tax will also be collected on duty-free goods, of which no small quantity enter and leave the port.

If we add to this 25,000 taels the dues on shipping, which should produce another 15,000 taels, we have an annual income from an Imperial Maritime Customs of 40,000 taels, on which, if we agree, as I suggest we should, for otherwise our income would be insufficient, to an extension of the period of collection to twenty years, there should be no difficulty in raising a loan which will amply cover the cost of the bar and Duck Island works. At the same time if, after the satisfactory completion of the two works, the revenue produced by the taxes permits the repayment of the loan before the expiry of the twenty-year period, the loan is to be paid off and the collection of the taxes to cease. The contribution of the provincial Government to the work, another sine qua non of the Japanese Government, is to be the services free of charge of the Government engineer, Mr. Hughes.

For the upper river improvements there will then be available the entire revenue from the native customs, which should amount to anything between 10,000 taels and 15,000 taels a-year, a sum which, under economical management, will be almost sufficient to pay the working expenses of the dredgers. The value of the junk trade in 1908 was 11,000,000 tacls and the number of junks engaged in it nearly 5,000.

If my proposals, therefore, are agreed to all the additional assistance needed to enable the entire scheme to be carried out will be a contribution from the provincial-- or, if its resources do not permit, from the central-Government of 200,000 dollars for the purchase of the dredgers required for the upper river and for preliminary expenses-a sum the provision of which should not present any insuperable

difficulties.

The compromise I have suggested appears to me to be an equitable one, and one against which the Japanese should find it difficult to raise any objection. The Japanese cousul himself is not unfavourable to it, but in view of his instructions he informed us that he could not accede to it without reference to Tokyo. It would be about a fortnight, he thought, before he could receive a reply. My other colleagues will all support it.

I have also discussed the matter privately with the taotai, who, though naturally not entirely satisfied with my proposals, tells me that as long as the central Govern- ment can be persuaded to make the contribution of 200,000 dollars required there will be no opposition from his side. If the Viceroy, however, is called upon to find the money the scheme will make no progress, as his Excellency will most certainly insist on his inability to do so. The taotai also reminded me that the deepening of the bar would be of no benefit to the junk trade, but rather detrimental to it, since Mr. Hughes's scheme involved the closing of the west chanuel, which was the one ordinarily used by native shipping. Therefore, unless the improvement of the

upper river, the necessity of which was fully realised by everyone, was put in hand at the same time as the other two works, a very strong protest against the proposed taxes would be made by the Chinese Chamber of Commerce, whose views nowadays could not be ignored.

I am also enclosing with this despatch two copies of the chart referred to by Mr. Hughes in his report. The Admiralty were good enough last year to express an opinion as to the merits of Mr. de Rijke's scheme for the conservancy of the Whangpoo, and it is possible that they may again be so kind as to furnish you with their views on Mr. Hughes's proposals for the deepening of the bar at this port.

I have, &e.

F. E. WILKINSON,

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