CO129-431 - Governor Sir May - 1916 [1-2] — Page 447

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when the goods in question are to be removed to warehouses outside the free port zone. a matter of form, and will The import duties thereon will have to be paid, but this is only not affect the importers' pockets. In case of the same goods being re-exported, the Dairen Custom House is prepared to issue certificates which will entitle the consignors to land the It may be easily arranged also to re-export cargoes duty-free at the port of destination. refund as drawbacks the import duties already paid on the cargoes to the Dairen Customs at the time of the first import. Then the much talked of question of smuggling goods over the boundary line of the Kwantung Leased Territory interests the Japzuese very little. It is the Chinese who reap the ill-gotten profit. Taking Cotton Cloths for instance, $15 tons, viz., 150,000 rolls, of them a year are sent by railway as far as Pulantien, where the Chinese By dealers buy the goods from the Japanese and smuggle them beyond the boundary line. reason of the smuggling operations thus going on in defiance of the Law, the Chinese have the advantage of being able to quote lower prices than the Japanese, who honestly pay the duties. So much business is being lost to the Japanese in the interior.

As a free port, jewelry, precious metals, and such like are much cheaper 10 the Kwantung Leased Territory than in Japan. This circumstance is openly taken advantage of by people visiting Japan. These treasures may easily be carried in good quantities in the So much the interests pockets, and their total value must run up to an enormous amount.

of the jewellers at home are encroached upon and also the Customs revenue in Japan.

Reverting to the necessaries such as rice and flour. building materials for public institutions like hospitals, schools etc., together with machinery, implements, etc., for factories, these are to remain duty free. Miso and soy are now produced in the Leased Territory enough to meet all possible demands. Therefore, the fear of seeing prices rise in the wake of the proposed limitation of the free port zone is much exaggerated and may be called illusory.

On the other hand, the rebate to be derived by the Kwantung Government as its share of the Customs duties may enable it to do away with the business and miscellaneous taxes and probably also the sanitaty rates.

In the correspondence which follows a portion has been "edited," and one or two letters wholly omitted because of their confidential nature, but what remains will be found of much interest and well worthy of attention.

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regarding the formation of an Association tormed the Japanese Cotton Exporters' Association. This Association you will notice has been formed to preserve and improve the quality of Japanese cotton, yarn and tissues, to improve the packing, to reform dishonest trading in Manchuria, to extend the market and to do away with excessive competition,

You will notice that it is stated in the confidential letter of April 20th that the Japanese Cotton Exporters' Association had addressed an application to the Railway Board in Tokio for a special rebate of one and a half yen per ton on the railway freight, while in the later letter of May 9th, it is stated that the agreement between the Association and the Railway Board for a special rebate has been abandoned. On the other hand, in the cutting from the Manchuria Daily News of the 19th June, it is stated in comparing the transportation rates between Osaka and Darien, and Osaka and Antung, via Chosen, that account has been taken of the reduced Customs duties at Antung, and the rebate offered by both the Imperial Government Railways and the Chosen Railway to the Members of the Japanese Cotton Exporters' Association.

* #

It is certain, however, that there was some friction between the Railway Board and the South Manchuria Railway Co.; the former urging no rebate on goods introduced to Manchuria by the latter's Dairen-Yinkow line.

• + The South Manchuria Railway Co. took the next move and notified a special rebate on all goods transported on the Dairen-Yinkow line in direct opposition to the Railway Board. What influence has been brought to bear since May 11th it is impossible to know, but from Moukden, under date of the 24th June, I learn that the reduction on all goods made by the S. M. R. Co. was to be withdrawn as from the 1st instant, and that the reduction in future will only be made on goods coming from Japan on through Bills of Lading to points north of Moukden.

From the foregoing and the enclosures you will see that the question becomes one of preferential treatment in favour of Japanese goods, and a gross violation of the policy of the open door and equal opportunity so often declared and advocated by Japan.

Asking the careful consideration of the London Committee to the foregoing,

DEAR SIR,

China Association, Shanghai, to General Committee.

China Association,

Shanghai, 4th July, 1914.

I beg to enclose several newspaper cuttings and other matter relating to railway freight on goods destined for Manchuria from Japanese Ports, and also information

I am, &c.,

H. C. Wilcox, Esq.

(Signed) L. E. CANNING,

Secretary, China Association, London,

Secretary.

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