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The Inspector General visited Canton and Macao and carefully investigated trade conditions at both places; and he sent his Secretary to Kongmoon to study conditions there: Canton and Kongmoon are the two Treaty-ports
nearest to Hongkong and Macao. The Inspector General finds
that the smuggling between Hongkong and China has now reached enormous dimensions, end is daily increasing. Kerosene Oil, etc., is being smuggled into China in very large quantities the statistics of Kerosene, etc., of the Canton Custom House show a serious decline, yet we know that the consumption is increasing. The foreign 011 Companies wish to stop this most serious illicit trade in Oil in their own interests, but unless Hongkong co- operates they are powerless! Foreign goods generally, are also being smuggled into China in increasingly large quan- tities. The Inspector General's Secretary, for example, found that the shops in Kongmoon have three times as much foreign Piece Goods as the Kongmoon Customs Returns show! How can this serious leakage of China's Revenue be stopped? It is absolutely impossible to stop or even effectively check smuggling between Hongkong and China unless the Chinese Customs are permitted to function in Hongkong itself in the manner proposed in the Agreement. imperative, therefore, that we be placed in a position to control the cargo at the source - 1, in Hongkong it- self. The sea is very wide how can Customs' launches find the smuggling junks, sailing without lights, on the broad sea at night? We must, therefore, examine and con- trol them in Hongkong before they sail from Hongkong: This is the only solution of the most serious situation brought about by the application of the new Tariff!
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