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In forwarding application to Corps Diplomatique
His Majesty's Consul-General at Canton as senior Consul reporte that if application is rejected Canton authorities intend to declare treaty ports under their control free ports, 1.e. to collect no duty on goods entering port but to levy what taxa-. tion they please on all merchandise in Chinese hands, and points out danger of such example being followed elsewhere with result of complete disintegration of customs.
Papers are now being circulated amongst heads of missions and question will be subsequently discussed at meeting of Corps Diplomatique,
I request instructions.
My own views are (1) that there is now no customs surplus available for release.
(2) That service of internal loans which now absorbe that surplus is a matter which may be held to benefit China
as a whole.
(3) That fact that the contributions to above service of salt and wine and tobacco taxes are not forthcoming is largely due to their appropriation by authorities of verious provinces notably those of Canton.
(4) That position and sphere of influence of present de facto goverment at Canton, which does not even control whole of Kwangtung, cannot be compared with those of southern covernment of 1919 to which a share of surplus was released.
(5) If previous American attitude is maintained matter rests entirely with Chinese Government, and Corps Diplomatique must hold latter responsible for any failure of customs revenues to meet their foreign obligations due to action on the part of Canton authorities.
Copy to Canton.
Despatch follows by post.
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