CO129-383 - Public Offices - 1911 — Page 481

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It is stated--

1. When Japanese goods are sold to the natives at such places as Mukden, Tiehling, &c., the Mitsui people permit the carts carrying such cargo to fly a Japanese flag, which frees the goods from the li-kin and consumption tax-ranging from 4 per cent. to 8 per cent. which British and American goods have to pay.

2. The entire customs staff at Dalny, except one man, are Japanese, and some of both the indoor and the outdoor staffs are ex-employés of the Mitsui Bussan Kwaisha as are the Dalny superintendent of wharves and his assistants, the railway's traffic manager and a number of his subordinates, the station-master and other officers in responsible posts on the railway.

3. Four of that kwaisha's directors are also directors of the South Manchurian Railway.

4. The system of sealed cars in the railway is valueless in face of the above facts. 5. The Dalny commissioners alleged admission that there were irregularities only in connection with transportation out of that port by cart which could not be controlled, is inconsistent with the Japanese assurance that by means of guards of ten men at Pulantion and of sixty at Chinchou, all Chinese cart and foot passengers could be kept out of Dalny and Port Arthur during the plague alarm.

6. Although since 1902-3 the population of Manchuria has risen 30 per cent., and the people's economic condition and purchasing or consuming power have improved at least as much, the combined importation of sheetings, shirtings, drills, and jeans for 1908-9 have increased by only 116,750 pieces; the people are as well clothed and have not abandoned cotton for silk or woollen garments.

7. Further, sheetings and drills in which Japan especially competes with the United States of America, have, according to the customs returns, fallen from 2,228,922 and 921,377 pieces respectively in 1902-3 to 1,681,124 and 699,977 pieces in 1908-9. Is there any reason to suppose the actual consumption was really less ?

8. By the customs returns Dalny had 124 per cent. greater shipping, but Newchwang a 27 per cent, greater trade value, although the latter port is closed for several months yearly.

9. The Japanese customs returns give the value of Japanese exports to China as 39,347,000 Haikwan taels; but the Chinese customs returns put the imports into China from Japan at 52,501,000 Haikwan taels. What is the explanation if not evasion of duty?

10. Is there any sound reason why Japan should object to leased territory being put on the same footing as the German leased territory at Tsingtau, ie., all imports pay duty, and 20 per cent. of the collection go to the civil administration for municipal purposes ?

11. Is there any sound reason against Chinese custom-houses at Pulantien and other points on the frontier of the leased territory to see duty paid on all goods going thence into the interior?

12. Finally, why is the customs commissioner at Dalny forced to state in a footnote to his 1909 report that he has to be content with import statements, and so his figures must be taken as only approximate? Surely customs requirements would include ascertaining the actual arrivals of commodities in order to judge of the consumption within and without the leased territory.

13. According to his own figures 495,457 more pieces of imported sheetings, shirtings, drills, and jeans were shipped out of Dalny into the interior during the years 1908-9 than were brought into that port; it is alleged that this cannot be due to accumulation of stocks as needless storage charges would not be incurred by a large company so near its home base and with branches and agencies and a complete warehousing system at all the chicf places in Manchuria, this being the position of the Mitsui corporation.

In order to save time I am sending a copy of this despatch to His Majesty's Minister as well as to our colleague at Dalny.

I have, &c.

E. H. FRASER.

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Enclosure 2 in No. 1.

Memorandum compiled by Acting Consul-General Willis and Consul Horne in reply to Consul-General Fraser.

(Very Confidential.)

1. The Chinese Government have never accepted the contention of the various foreign Governments that the open marts in Manchuria are open in their entirety.

The Mukden consular body have, however, practically succeeded in maintaining that goods imported under exemption certificate as long as they are in the hands of foreigners or their agents are freed from consumption tax or other local levies in the

open marts.

In Fengtien province the consumption tax is about 2 per cent. The officials maintain the tax is not levied on foreign goods, and as far as this consulate-general is concerned no complaints have been received for nearly two years past.

In Kirin province, where consumption and other local taxes are much higher, the provincial authorities openly maintain the right of taxing foreign goods once such goods have passed into Chinese hands. Expostulations from the various foreign consuls have been ineffective, and the Mukden consular body in December last referred the matter to the legations.

The foreign retailer, therefore, has an advantage over the Chinese dealer, and as there are about 13,000 Japanese subjects resident in the open marts who are potential distributors of Japanese goods, whereas British and American goods are distributed almost entirely through Chinese, it would seen as if Japanese goods had a distinct advantage.

Practically, however, Japanese goods are almost entirely distributed through Chinese agents in the same manner as British or American articles, and I am not aware that the Japanese consuls are any more successful than their colleagues in protecting foreign goods in native hands.

In the various consular protests that have been made against taxation in the treaty marts in Manchuria, the Japanese consuls have played a leading part, a policy one would not expect from them if it were true that they could protect their own goods whilst, for lack of foreign retailers, their competitors were powerless to escape

native exactions.

2. These statements are correct with one important exception. So far as can be ascertained no ex-employés of the Mitsui Bussan Kwaisha are on the indoor or outdoor staffs of the Dalny customs.

3. It is true that four of the directors of the South Manchurian Railway have interests in the Mitsui Bussan Kwaisha.

4. If the above amendment to allegation No. 2 be considered it will be realised that this argument loses what value it possessed originally. It is unnecessary here to enter into detail on the subject of the sealed car system, which seems to give general satisfaction, but it might be well to point out that full cars are sealed both by the customs and by the railway. Unless unauthorised collusion takes place between the subordinate officials of the two departments no serious criticism can be directed against the system.

5. It is submitted that the words underlined in this paragraph" are the result of some misunderstanding. The Dalny commissioner has not been known to admit the impossibility of controlling the cart traffic from the leased territory into the interior; he maintains, however, that the expenditure, which would be necessitated by adequate measures of control, is incompatible with the problematical advantages to be obtained. The amount of smuggling carried on in this manner must be insignificant, and the salaries and wages of employés detailed for frontier inspection would be considerably in excess of the revenue there obtained.

6. Tables are enclosed showing the combined import of drills, sheetings, shirtings, and jeans for 1903, 1908, 1909, 1910; also the average import for the years from 1899 to 1904. The figures for 1902 are not accessible here.

Trade in Manchuria was for a variety of reasons disorganised throughout 1906 and 1907 and during the early half of 1908.

If the average imports of the above articles for the years 1899 to 1904, or for the year 1903 singly, are contrasted with the years 1909 and 1910 the increase appears quite as much as can reasonably be expected.

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* Printed in italics.

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