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tion saw their revenue and system in danger of being upset as this concession would interfere with the coast trade duty collected, and by the celebrated dictum of the late Sir Robert Hart, namely, that interport boats shall not engage in inland water trade the whole concession was effectually blocked. True, it was subsequently modified by the Mackay Treaty. but it still remains with a few exceptions non- operative.
When the Mackay Treaty was negotiated I was here at the time and remember the circumstances quite well. I gave evidence before the commission.
Big discussions followed and innumerable arguments were raised as to what was li-kin and what was not, until the average man got into the mental state of the man who vetoed his own resolution and was then found not to be a member of the club. We have been at this for fifty or sixty years, but we have not tackled a thing which is at our very doors-namely, this tax which is just as much a li-kin tax as anything which we have protested against. If we want to do anything with regard to li-kin let us start on this, get this abolished. When we agitate against li-kin stations, one of the most difficult questions we have to answer is, Your custom house does it, why should we not do it?
This whole question has had greater effects than would appear on the surface. The li-kin officials who have stationed themselves along the railway and are collecting li-kin are following the procedure more or less of the Maritime Customs. I will not encroach upon your time any more, but this is a system which it is advisable to counteract, and we will be doing something which will commend itself to every reasonable man. It is not reasonable that when goods come into the country, or before they leave, they shall be subject to all these delays and various obstacles before they can pass into circulation in the case of imports and finally get out of the country in the case of exports. What the customs did in the early Manchu days was the best that could be done, and everybody will agree that we are under a great debt of gratitude for the work the customs has done, but the time has come when we should strike for the freedom of internal trade in China. If you don't agree with what I have advocated I will ask you to throw out this resolution. If it appeals to you as commonsense and a thing to be pressed for, then give this resolution your unanimous support, but give it support with the determination that if it is not put through now we will bring it up next year and push it again and again until we get it through.
Do away with the coast trade dues and then our hands will be clean. We can then start on the li-kin gradually and might well begin on some specific railway. Go to the Chinese Government and say, You have expressed willingness to abolish li-kin. Abolish it on that railway for a start. It is useless talking of the abolition of li-kin in general terms, the thing is too vast and you are only talking to the air. It is useless to try and do away with it all over China in one sweep, it must be tackled piecemeal and on the lines I have indicated."
In the discussion which followed, Mr. M. E. Weatherall, the Peking Chamber's delegate, said in part:-
With regard to the second part of the resolution, the Chinese Government for many years has expressed willingness to entertain this and it has always been held up because somebody or other would not agree. If you ask the Chinese Government to give us the coast trade duties, they will say, you are asking us to give up 5,000,000 dollars. You are asking us for privileges over certain trade and are giving us nothing in return for it. Why should we do it?' The coast trade dues are very old treaty stipulations and before they could be abolished you would have to obtain the agreement of all the interested Powers. I think the Chinese Government is willing to take a step forward as regards the question of inland taxation, and if the conference were to come forward with some practical suggestion the Chinese Government would be willing to put it into effect. If the foreign merchants will agree upon what they want, the Chinese Government will let them try and see whether it is successfuil or not. You would be able to see after a short time whether any scheme had the elements of success in it or not. Nobody knows how much is raised by inland taxation, but the Chinese officials think the sum is probably about 43,000,000 dollars in a good year. This is collected by the provincial authorities who retain a fixed quota for their own uses. But when the money is remitted to the Central Government it is merged with other contributions from other sources so that the Government cannot tell how much this inland taxation is worth.
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"I think there is another thing which affects all us merchants. In order to restore the Chinese Government's control over the provinces money is required. The provinces will not follow the Central Government unless it makes it worth their while to do what it tells them. There are tremendous difficulties in the way. The provinces will oppose any removal of the taxation by which they benefit so largely, and I think the only way it could be done would be by agreement with foreign Powers that a fixed percentage should be taken by the Central Government and a fixed percentage by the provincial Government, and that all sums which went to the latter should be divided among the different provinces on a fixed scale. The payments of the Central Government's proportion and that of the provincial Governments' should be paid through the agency of the Chinese Maritime Customs so that there would be no hanky-panky, and they would know where they would get it and the amount they were to get. That would benefit both sides, because the Central Government would get a definite revenue and the provincial Governments would know where they were. I think that would have a stabilising effect upon conditions in China and that would mean an increase in British trade.
KK
Mr. Sheppard pressed for the abolition of the coast trade dues. I wonder if the conference would consider a suggestion to go a little further than that—an empirical remedy for internal taxation! Could we find an article which is traded in principally by ourselves and Americans? If such an article could be found, would merchants interested in it agree to try for a specified period paying an increased import duty at the port of import and being provided with a special document freeing them from all sorts of taxation whatever?
Mr. Archibald Rose, chairman of the conference in committee, dealing with the inland taxation aspect of this question, said in part :—
"The Chinese (in recent discussions) said: "Let us divide li-kin stations into three classes: (A), (B) and (C), and all imports into (A), (B) and (C). And let the Chinese Government communicate with the foreign Powers telling them all the li-kin stations in the country and let them abolish one-third of them. And when they have done that let one-third of the imports pay an added tax on entry, and let them go free right through the country. After a year, close another third of the li-kin stations and let classes (A) and (B) of the imports come in on the higher duty, and then take the remaining third of the li-kin stations and let all imports be taxed on the higher scale. I may say a considerable number of the members of the Govern- ment said they would be willing to proceed with this. They have approached the Chinese Chambers of Commerce who have, however, preserved a very discreet silence."
OTHER NOTABLE RESOLUTIONS.
The following resolutions were passed unanimously :-
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1. Affiliation with the Association of British Chambers of Commerce in Great
Britain.
"That this conference recommends that the Associated British Chambers in China and Hong Kong be affiliated with the Association of British Chambers of Commerce in Great Britain.'
2. Support of British Educational and Medical Mission Work in China,
"That in view of the importance from a national standpoint of ensuring the adequate maintenance and development of British educational and medical work in China, this conference urges upon British merchants the necessity for unified effort to that end.
"As a means of applying the above principle the conference recommends the adoption of the following proposals:-
(1.) That the Associated Chambers shall entrust to a central committee the work of formulating proposals for the support of British educational institutions and hospitals in China, and of allocating such funds as may be contributed for the purpose.
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