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The revenues from the stamp taxes shall be dealt with in the same way, and one-third thereof will be similarly distributed by the Chinese and foreign chiefs of the Stamp Tax Administration pro ratá amongst the provinces.
On the coming into force of the supplementary article of the present treaty, all internal and external debt obligations will be met as far as possible out of the customs revenues alone, leaving the excise, wine and tobacco, stamp tax and salt revenues completely or pro tanto free for the general purposes of the Chinese Government and Provincial Administrations. The Chinese Government declare that it is not their intention in the future to hypothecate for internal or external loans or monetary advances or any other purpose any portion of these, or any other national or provincial revenues, excepting only customs, railway and municipal revenues, which will, however, only be so hypothecated with the sanction and on the responsibility of the Central Government, and in the case of railway and municipal revenues only for railway and municipal purposes.
ARTICLE 7.
The Chinese Government declare their intention of reorganising immediately the Railway Administrations and the collection of railway revenues and the operation and policing of the railways with increased foreign assistance, including the employment of foreign chief accountants and traffic managers and inspectors on those lines where they are not already employed; and they further declare their intention of adhering strictly in the future to the principle that railway revenues shall be expended solely for railway purposes, that is to say, for meeting railway obligations, including loan services and debts, and for maintaining and developing the present lines and for new construction.
(Note. The above article is inserted for the purpose of noting the desirability of dealing in some way with the railway problem. Doubtless opportunity will be afforded when the conference meets of ascertaining how far it is possible to go in the way of railway reform and of exploring the possibilities of a railway reconstruction and consolidation loan, and of reorganising the railways under one effective administration with foreign assistance. Under existing conditions in China, however, it is improbable that it will be found possible to go far in this direction, and failing anything else the declaration sketched above would be better than nothing.)
ARTICLE 8.
The Chinese Government undertake to enter immediately into separate negotiations with the Governments of the Powers concerned for a settlement of outstanding claims of those Governments against the Chinese Government, and of the claims of their nationals arising out of the civil wars and disturbances of recent years, or out of the actions of Chinese civil or military officials, or out of business contracts concluded with or obligations otherwise incurred by Chinese Government Departments or officials. The Chinese Government further undertake that payment of all admitted claims which cannot be settled out of other revenues will be made out of customs revenues as increased by the surtaxes as soon as a surplus is available after meeting all indemnity and loan obligations due, and that, failing such a surplus being available, payment will be made out of the first loan contracted by China for administrative or other purposes, It is understood that the principles governing the negotiations for a settlement of foreign claims will be based inter alia on the recognition by the Chinese Government of claims for losses suffered by foreign nationals directly arising out of civil warfare, or the actions of Chinese soldiers or disbanded soldiers or civil or military officials, or directly arising out of acts of brigandage or piracy, for which the Chinese Government can properly be held responsible on account of such brigandage or piracy being due to civil war conditions, or on account of the neglect on the part of local officials to afford proper protection: that a reasonable rate of interest will be allowed; that claims of which the validity has already been recognised by the Chinese Government will not require further discussion; and that disputed cases on which agreement cannot be reached shall be referred to arbitration. It is further understood that claims for losses of goods and cash while in the hands of Chinese agents in the interior will be cancelled, and that in return the Chinese Government will in future throw no obstacles in the way of the agency trade in the interior as at present conducted, will afford all possible protection to such agents of foreign firms, and foreign property, whether goods or
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cash, in their hands, and will give such Chinese agents the same measure of compensation for any losses suffered in time of civil warfare or disturbance in respect of the foreign goods they hold as may be granted to other Chinese merchants of the locality.
(Note. It is not proposed to burden this paper with an exposition of the native agency claims question, which has been fully reported on in separate correspondence. It seems most improbable that the Chinese Government will ever be induced again to recognise the validity of foreign claims for goods lost or looted while in the hands of native agents in the interior, and a settlement of this question on the lines indicated above is long overdue.)
ARTICLE 9.
It is agreed that the customs duties levied on the frontiers, land and maritime, of China shall be uniform, and that the preferential duty treatment now applicable to goods imported into and exported from China by land shall be abolished from the date of the enforcement of the surtaxes provided for in article 2 of the present treaty. It is understood that the equitable adjustments (referred to in article 6 of the Chinese Customs Tariff Treaty signed at Washington on the 6th February, 1922), in cases in which this preferential duty treatment was granted in return for some local economic advantage have been made outside the conference by the Governments of the Powers concerned.
(Note. The above is drafted on the assumption that the French and any other Governments concerned come to terms with the Chinese Government outside the conference.
The Special Conference has also to arrange for —
The formulation of rules for future tariff revision-as provided for in article 4 of the Washington Chinese Tariff Treaty; and
The framing of a detailed scheme for the constitution of the Board of Reference contemplated in the relevant Washington Conference resolution- but this scheme, having to be submitted for the approval of the Powers concerned, would hardly fall within the scope of the present treaty.)
ARTICLE 10.
The Chinese Government declare that all the provinces, as represented by the Provincial Administrations and the Provincial Assemblies, have formally accepted the present treaty, and have undertaken to abide by and carry out its provisions so far as they concern the affairs of the provinces.
(Note. This article is inserted for the purpose of noting the desirability of securing the formal acceptance of the treaty by the provinces in some way or other.
There are of course various alternative methods of procedure, including that of securing the seals of the Provincial Administrations and
Provincial Assemblies to a separate protocol.)
PART II.
Supplementary Article.
It is agreed that the provisions of this supplementary article shall be carried into effect as soon as the opinion of a two-thirds majority of the Governments of the contracting Powers the provisions of the preceding articles of the present treaty shall have been satisfactorily and completely carried into effect, and a sufficient measure of unification and stability of Government shall have been attained to render practicable the complete abolition of internal taxation of commodities as hereinafter provided for.
The Governments of the contracting Powers, recognising that the conditions laid down in article 8 of the treaty of the 5th September, 1902, between Great Britain and China, and in article 4 of the treaty of the 8th October, 1903, between the United States and China, and in article 1 of the Supplementary Treaty of the 8th October, 1903, between Japan and China, are no longer entirely in accord with the circumstances of the present day, have agreed upon the following arrangements to be substituted therefor.
The Chinese Government, recognising that the system of levying li-kin and other dues on goods at the place of production, in transit, and at destination, impedes the free circulation of commodities and injures the interests of trade, hereby undertake
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