Papers Relating to Foreign Affairs, Accompanying the Annual Message of the President to the Third Session of the Fortieth Congress
Mr. Williams to Mr. Seward
Sir: I have the honor to forward to you a series of papers (inclosures A to K) relating to the revision of the British treaty, which, though of considerable length, will repay perusal, and give you a clear idea of the present views of this government upon many points brought to their notice by the British minister, and their decision upon many of those most fully discussed. These papers are connected with the memorial of Tsang Kwohfan, given in my dispatch No. 16, and the sentiments and arguments expressed by him illustrate the train of thought given in the remarks of the Chinese officers in some of these papers.
They divide themselves into three parts: Inclosure A contains the leading points brought before the commission by the English legation as most desirable to be considered in revising the treaty; and inclosures B C are the replies from the Foreign Office, taking up each point in order. The second of these papers was written by Wansiang, and gives the views of this most enlightened and liberal of the Peking ministers upon the general principles of trade and protection of native interests. The effects of a trade carried on in the country itself, in which the foreigner has the advantage over the native in conducting it, are here set forth in a way worthy of your consideration. The commission referred to was mentioned by me in a former dispatch, and consisted of Mr. Hugh Frazer and Mr. T. Adkins on the part of Sir Rutherford Alcock; and two of the oldest clerks in the Foreign Office, aided by Mr. Robert Hart, on the part of Prince Kung. The next five inclosures, D to H, contain the remarks of the British minister upon the preceding papers when he submitted them to his colleagues, and their replies upon such points as demanded particular attention. At the time these documents were submitted to them the details of the discussions had not been very fully understood; and their remarks are therefore valuable, as showing their independent views as to what the trade in and with China most required, as well as their estimation of the labors of the British minister in urging the Chinese authorities to begin these important changes.
The last three inclosures, I, J, K, contain his remarks in again submitting to them his minute to Prince Kung, in which he urges upon this government the need of guarding the trade against unjust exactions, of permitting British merchants to open warehouses in the interior, and of [Page 576] furnishing other facilities in carrying on the trade; and advises them to reconsider other points which they had previously rejected. The reply to this minute has not yet been received.
I think that you will agree with me that these various papers contain clear evidence of the desire of the central government of China, at least, to move on in the march of improvement as soon as they can see their way plain to do so. This is not a little, when you recur to the views expressed in the series of papers given in Mr. Reed’s dispatches, (dispatch No. 33, page 443,) which contain the general opinions on matters of trade and intercourse held by the colleagues and peers of the same officers who now discuss them so much more intelligently. This advance has been in a great measure the result of their constant contact during the last seven years with many foreigners, wherein opportunity has been afforded them to learn the truth about such things as heretofore they had really no means of acquiring correct information, even if they had then had the desire or the permission.
Seeing that the changes proposed in these papers will affect the interests of American trade as soon as they are accepted by the British government, especially the proposition to add the transit duty of two and a half per cent. to the tariff import duty, it is desirable that instructions be sent to this legation giving the views of the department upon this and other leading points, preparatory to the time when they will be submitted by the Chinese for its decision.
I have, in inclosure F, given my own views upon the general bearing of the proposed changes; and if there is ground for encouragement that many of them will be adopted or attempted, patience needs to be exercised in witnessing the slow advances likely to be made. Even if the government is desirous to introduce such as it sees most feasible and necessary, its leading members here in the capital know, far better than we foreigners do, the mass of ignorance, inertness, and prejudice to be encountered in carrying them into execution. In our own country an intelligent people originate and carry on such improvements; in India, an intelligent government is carrying them on over an apathetic, ignorant population, whose posterity will no doubt better appreciate the benefits derived from them; but in China, a hesitating, half-instructed, impoverished government is urged to introduce them among their unwilling subjects, though I think the latter to be the least unwilling. It is not so much the making of a treaty that improves our relations with a country in the position that this now is—and to improve those relations means to benefit both her people and rulers—as it is to help them to carry into effect those measures and enterprises which will do them permanent good.
The likin taxes which are spoken of in these papers are a certain percentage (literally, a cash to a catty, i. e., a cent to a pound) levied by the provincial authorities in times of rebellion upon articles of trade passing through the districts of their jurisdiction to raise funds for its suppression, for in China each province is required to raise and feed its own troops as far as it can. After the disturbances are quelled, this is found to be such a convenient mode of raising revenue, that the likin tax is not only not removed, but sometimes is increased, till trade is crushed and forced to find new channels.
A perusal of these papers shows very distinctly how the Chinese government is bound up by the treaties it has made to pursue a certain course of policy, and in a measure is forced to obey the will of other nations. For instance, most of the propositions contained in inclosure A refer to the reduction or abrogation of duty on certain articles of [Page 577] trade; and most of them are acceded to by the prince and his advisers. But when they propose to double the duty on tea, and silk to increase their own revenue, which is not very great upon a commerce of such magnitude, difficulties are thrown in the way, and the rectification of the tariff is declared to be now unadvisable, and must be deferred sine die. It is objected even to add to the duty on opium, though that is now rather under five per cent.; but as nearly one-third of this import enters clandestinely, it is not probable that an increased duty would help the revenue.
Thus China is placed very much at the mercy of the treaty powers in matters of finance connected with its external and internal trade; their stronger power comes in, to judge whether such a course or such a change is proper or not, and she must act accordingly. It places her in a position which may now be the best for her welfare, but will greatly cramp her action and development in future, if she improves in the way now opened out to her.
The extension of trade in the interior, by allowing foreigners to remain at the entrepôts and conduct their trade with the producers as much as they can, is an advance which promises the greatest benefits, for it will tend to bring natives into more constant contact with foreigners, and thus afford opportunity for each to better understand the other. One great cause for the mutual distrust now felt between them arises from their mutual ignorance; and contact in traffic more than some others insures mutual forbearance and trust. In the interior, this contact cannot be carried out extensively without a knowledge of each other’s language; and this will involve other results as it becomes general.
There is no limit, it may be almost said, to the degree which the treaty powers may interfere in the domestic affairs of China, for one thing involves another, and every advance compels some change in a new direction. Thus, if an officer acts in an arbitrary manner, and does things that continually interfere with trade and other rights, his removal is urged upon his superiors as necessary to mutual peace, at the place. This removal may not, however, please the gentry who urged him to adopt these measures, and his successor may find it no easy matter to please the class with whom he is probably in sympathy, and retain his official position. The carrying out of these treaties is likely to affect the whole fabric of Chinese society, and there is some danger of a reaction if the usages and principles of western countries be applied too stringently to this.
I believe this tutelage, with all its responsibilities, is the best way now available to elevate the Chinese to their proper place among the nations of the earth. They have made great progress since the ratification of the last British treaty in 1860, but the point they started from then was very low down; they knew almost nothing of the duties and rights involved in them, and would never have carried them out any better than the former treaties, had not foreign representatives seated themselves in their capital to see that this was done.
In carrying on this toilsome work, I wish to bear my testimony to the efficiency and general justice of the British government and its officials in China. Nearly every privilege possessed now by Christian nations in this empire has been obtained and maintained by them; and their present influence in the councils of its rulers is honorably used for the general welfare. It is upheld and strengthened by a trained body of consular officers versed in the language, and who, learning their duties in the lower grades of the service, are promoted as they prove themselves [Page 578] worthy to fill consular functions. It is much to be desired, for our own reputation, that Congress would institute a similar service for the American consulates, and raise up a body of men able to conduct intercourse with native officials in their own language.
I have the honor to be, sir, your obedient servant,
Hon. William H. Seward, Secretary of State, Washington, D. C.
A.
Minutes of a meeting of the commission, May 4, to recapitulate the British demands. (This table of proposals was laid before the Chinese members in Chinese.)
I.—Likin Taxes and Inland Transport.
That no levy of taxes whatever may be permitted, whether upon foreign goods or Chinese produce forming a part of foreign export trade, within a radius of 30 li (10 miles) from the custom-house at each port opened by treaty.
To take into consideration whether sums received on account of transit dues might not be divided among the treasuries of the different provinces through which the goods may pass, with advantage, as tending to give the provincial authorities a direct interest in the increase of foreign trade.
II.—Tariff.
IMPORTS—HOUSEHOLD STORES AND SHIPS’ STORES.
1. In addition to the second rule in the tariff, providing that household stores and ships’ stores should not pay duty, it shall be allowed that all articles destined for foreigners’ consumption exclusively, and not for sale to Chinese, shall be duty free. Under the head of ships’ stores shall be classed all stores used in docks for the repair of foreign ships, and stones and machinery used exclusively in the dock establishments.
The importation of these to be limited to dock companies under a license, and a sufficient bond not to lend their names, and not to import for sale to Chinese.
2. Foreign goods imported in Chinese junks shall be subject to the same duty as if imported in foreign vessels; and to effect this, such importations shall be placed under the supervision of the imperial maritime customs.
3. Guano and manure shall be free.
4. Foreign coal shall be free of duty.
5. Woolen and cotton goods shall be reduced to a standard of 2½ per cent. ad valorem.
6. White pepper shall pay 4 mace, and black pepper 3 mace, per pecul.
7. Watches shall pay a duty of 5 per cent. ad valorem, as clocks now do.
8. Tin plates to pay 2 mace per pecul.
9. A conference shall be held at Shanghai between her Majesty’s council, assisted by the Chamber of Commerce and the commissioner of customs, to arrange an equitable tariff of timber duties on a basis of 5 per cent. ad valorem.
10. Foreign salt shall be allowed to be imported under special provisions, to secure the Chinese government from loss by the competition with native produce.
EXPORTS.
11. Foreign grain landed and stored shall be re-exported free of duty.
12. Tea shall pay 5 per cent. ad valorem.
13. The duty on native coal shall be reduced.
14. Coal shall be exempt from coast trade duty.
III.—Payment of Custom Dues.
1. At each port the amount to be paid as customs duties in the currency of the place, as compared with the established standard, shall be fixed.
2. Government assayers shall be appointed, to assimilate the currency of the open ports.
3. Drawbacks for duty on goods re-exported shall be made payable in silver on presentation at the government banks.
4. No limitation shall be placed upon the time during which duty will be returned upon re-exported goods.
[Page 579]IV.—Facilities of Transport, etc.
1. British merchants shall have a recognized right to have unimpeded access, and carry their own articles of commerce, whether foreign goods or Chinese produce, in which they have a bona fide interest in their own vessels, whether propelled by oars, sails, or steam, through the interior, to and from specified marts and producing districts, under customs regulations and permits to be agreed upon between her Majesty’s minister and the Foreign Office.
2. The places and districts to which access is required shall be specified; three points have been already mentioned—the Yaugtsze river above Hankau, the Poyang lake, and the North, East, and South rivers of Canton.
3. British merchants availing themselves of this right of navigation shall be permitted to own warehouses at points where the convenience of their own commerce may require them; and for this purpose a license shall be given by the consul at the nearest treaty port, who shall exercise due circumspection in the issue of such license, and have the power to cancel it.
4. Such foreign employés as may be required for the supervision of these houses shall be permited to reside in them, and suffer no molestation from officials or people.
5. To prevent possible inconvenience from the operation of the exterritorial clause, there shall be a consular agent at certain central points, to be hereafter determined; and whatever his nationality, he will be empowered, by the, concurrence of all the treaty powers, to take cognizance of all misconduct or infringement of treaty on the part of foreigners.
V.—Landing-stages—New Ports.
1. Landing-stages for goods, produce, and passengers, shall be permitted at the following places on the Yangtsze river, between Wusung and Hankow, viz: 1. Hwang-Chau; 2. Wu-such; 3. Tung-lin; 4. Ngan-king; 5. Ta-tung; 6. Wu-hu; 7. I-ching; 8. Kiangyin; 9. Wu-sung, besides the open ports of Kinkiang, Nanking, and Chinkiang. The use of these stages shall be accorded to British vessels under license and regulations hereafter to be settled by the British minister and Foreign Office in concert.
2. The port of Wan-chow shall be regularly opened to foreign trade, but no demand shall be made for separate foreign concession or settlement, and it is rather to be regarded as a port of call for foreign shipping, where they may take in or discharge cargo.
VI.—Bonded Warehouses.
A system of bonded warehouses shall be established at the open ports, either by govment warehouses, or permission to merchants to bond goods in their own godowns, whenever a majority of two-thirds of the mercantile community shall represent such an arrangement to be desirable.
VII.—Coal Mines to be worked.
It is important to provide for the large number of steamers running on the coast a sufficient and cheap supply of coal. This can only be done by opening native sources; and therefore (referring to a previous dispatch of Sir E. Alcock) the following proposal is added: Permission shall be given by the Chinese government and high provincial authorities to foreigners to work certain specified coal mines by foreign machinery and agencies under regulations.
VIII.—Monopolies.
All monopolies being strictly interdicted by treaty, it is deemed unnecessary to make any further provision on this head. But as certain monopolies have been persevered in to the great injury of foreign trade, and entailing pecuniary loss on merchants individually, notably in the article of camphor at Tamseng, of rice at Taiwan, and (there is reason to believe) of iron at Amoy, the British minister deems it advisable that all such attempts at monopoly should be put down and formally prohibited, either by official injunctions upon the high provincial authorities or by imperial edict; and that these three should be more especially denounced.
Further, as this will not indemnify merchants who have actually suffered by such breach of treaty stipulations, that indemnity should be paid, where any clearly avouched loss can be established, in like manner as means of exaction and squeezes, whether by the illegal levy of transit dues or li kin taxes on foreign goods at the ports.
Reply of the Foreign Office to proposals for revision of treaty.
On the 2d of January the Foreign Office received your excellency’s memorandum containing five clauses for a revision of treaty, and on the 4th of May a memorandum containing 29 clauses of a like import. The prince has carefully considered both these documents. The expression of sympathy with China therein contained are gratefully acknowledged as evidence of your excellency’s friendly feelings, and of your generous interest in our affairs. Mr. Burlingame’s mission to the friendly foreign states last year will certainly bring about a mutual understanding and increase those friendly feelings.
Now, with regard to the war taxes, the fundamental revenue of China is the land tax; the system of popular loans is unknown. In time of war his Majesty has, out of compassion for the sufferings of his people, remitted the land tax wholly or partly in the disturbed districts; and as a temporary measure the national necessities must be supplied by these extraordinary levies. Even now military operations are not ended, and funds are still much required. Indeed, the apprehension that the people will not be able to bear their burden is a source of constant anxiety to the government. As peace returns and order is restored, their taxes will surely be reduced or entirely removed. Besides, the foreign merchants, relieved of all taxes on their inland trade by the payment of a full and half duty, have the advantage of the native merchants, on whom these war taxes have been levied in full.
It may be true, as your excellency states, that British merchants have sustained heavy losses during the past two years, but the increased number of ports has increased the foreign merchant’s trade expenses, while competition has tended to restrict his business. The reckless competition of so many foreign merchants must inevitably diminish the profits of trade. The prince thinks that your excellency’s experience in China will have shown this.
With regard to the complaints of the foreign merchants of inland exactions, the proclamation which your excellency has approved, and which is about to be issued at all the barriers, will remove that evil. Previous complaints may have arisen from the merchants having allowed this produce to be separated from their transit papers, as well as from an actual illegal levy, but authentic cases shall be settled on their individual merits.
Ever since the opening of the Yangtsze river the native trade there has declined, and in November of last year Tsang Kwohfan presented a petition from the native merchants begging, as remedial measures, for the withdrawal of the right to navigate it and to carry on inland traffic. These statements seemed to the prince reliable and worthy of attention, but in view of the difficulty your excellency would have of dealing with their request, though pitying the decadence of their commerce. These feelings I trust your excellency will also appreciate. If mutual advantage is to result from the present revision, consideration must be shown to the native merchants as well as to favor the foreigner.
The five points of the memorandum as contained in the 29 clauses have been repeatedly discussed by our commissioners and Messrs. Fraser and Adkins, and are now replied to seriatim.
1. Repayment in full of exactions on foreign trade in the interior.
A proclamation will be issued from this office requiring the authorities at the barriers to act in accordance with treaty, thus avoiding illegal levies in future. Previous claims will be treated as they are found to be acts of extortion by officials, or the result of the separation of the goods from their transit papers.
2. No levy of likin to be made on produce for export, or on foreign imported goods, within a radius of 30 li, to be measured from the custom-house at each port.
The war expenses of foreign countries are met by loans negotiated with the merchants. Having no such resource, China is compelled to resort to the likin. The import comes on the native, and not on the foreigner. Endless confusions and evasions would result from the adoption of this suggestion to do away with the likin within 30 li, (10 miles.) The military supplies, too, would be interfered with. After all, this is a matter for the consideration of China herself. With the disbanding of her armies and restoration of tranquillity alterations may be made in her fiscal arrangements, and out of consideration for the merchants the li-kin will be abolished.
3. That the inland transit dues leviable by treaty be divided among the treasuries of the provinces through which the goods pass with advantage, as tending to give the provincial authorities an interest in encouraging trade.
These dues as levied by treaty are applied by China for military purposes, or are remitted to the treasury, as the case may be. How, then, can the several provinces help themselves? As to fostering commerce, if the foreign merchant has proper papers, he may pass through many provinces and be protected in all alike. No official will dare to make any distinction, no matter whether any duties had been paid within his particular [Page 581] jurisdiction or not. The Foreign Office are issuing a stringent proclamation on this point, about which there need be no further anxiety.
4. In addition to ships’ stores and household stores, declared to be free by rule II of the tariff, goods imported for foreign consumption, and not for sale to the Chinese, to be duty free.
The intention of this rule in the tariff was to admit such articles for personal use duty free, but to impose a duty on those intended for sale. A list of articles so required for personal use will be drawn up, and regulations issued, to avoid confusion.
5 and 6. Under the head of ships’ stores come all stores used in dock for repairing foreign ships, and stores and machinery used in docks, to be imported only by dock companies established under license, and guaranteed for use of dock, not for sale. The opening of a miscellaneous store to be also under license.
As a dock is a trading establishment, it is considered that, except ships’ stores and machinery used in repairing ships, all materials used for building new vessels should pay a duty of five per cent. on the value of the vessel constructed. The necessary securities and regulations to be made permanent after three years, if satisfactory.
7. Manure and guano to be imported free.
Free, the discharge being under permit.
8 Foreign coal to be free. Free under permit.
9. Duties on cotton and woolen goods to be reduced to two and one-half per cent. ad valorem.
There are many varieties of these goods; their several values can be estimated with a view to a reduction of duty.
10. Watches, like clocks, to pay five per cent. ad valorem.
A reduction of duty to this amount can be granted.
11. Tin plates to be reduced to two and one-half per pecul. Reduction in accordance.
12. Timber to pay ad valorem five per cent.; the valuation to be made by the consul, commissioner of customs, and Chamber of Commerce at Shanghai.
Tariff rate can be reduced, but not to reckon ad valorem.
13. White pepper, four mace; black pepper, two mace.
14. Foreign grain to be re-exported free. [Conceded under permit.] Foreign salt to be imported under such rules as would prevent injury to the salt revenue.
The regulations in force in Kiangsu and Chehkiang are suggested as available.
The salt tariff is wholly imperial, and is a matter under special government control.
The traffic in salt is not an ordinary one; not even the highest officers in the state can engage in it at their pleasure; much less can the merchants take upon themselves to do so. This item cannot be admitted.
15. Tea to pay an ad valorem duty of five per cent.
The Foreign Office contemplates an increase of duty on tea. A separate list is made of the articles on which an increased duty is contemplated.
16. Duty on native coal to be reduced.
17. Coast-trade duty to be abolished.
18, 19. Currency to be assimilated to the Canton standard, and assays made at the ports to that end.
Shall be done.
20. Drawbacks to be made payable in cash.
The payment of drawbacks in cash will confuse the accounts, and will be troublesome from the fluctuations in the value of specie: but if this is absolutely necessary, the limit of the drawback will be only three months.
21. British merchants shall have the right to have unimpeded access, and carry their articles of commerce, whether foreign goods or Chinese produce—their own property—in their own vessels, whether propelled by sails or steam, through the interior, from specified marts and producing districts, under customs passes (Canton,) and regulations to be agreed upon between her Majesty’s minister and the Foreign Office. (The places and districts to which access is required shall be specified; three points are now indicated, viz: the Yangtsze above Hankow, the Poyang lake, the waters above Canton.)
The places named are on the inner waters, whither foreigners can proceed under proper customs passes. The use of steamers is inadmissible. The coast and (Yangtsze) river trade is already in the hands of foreigners; with steamers on the inland rivers and lakes, they would usurp the entire trade of the empire. Such preference given to the foreigner over the native would not be fair. The latter have no steamers running on the inner waters, and the foreigner availing himself of the inland traffic must use the native means thereto.
22. Inland residence at marts and en route.
Such foreign employé’s warehouse can be built at the open ports. Such establishments in the interior would injure native commerce, and both parties would have trouble, from the necessity of surveillance in an extensive and thickly populated country.
[Page 582]23. Jurisdiction of a foreign official was not discussed.
24. Opening of places above Wusung as landing stages.
It is not advisable, perhaps, to establish jetties on the river in addition to the four ports of Chinkiang, Nanking, Kinkiang, and Hankow. In the year 1862 Sir Frederick Bruce was anxious for liberty to trade temporarily at Ta-tung, Wuhu, and Nanking; but the matter was dropped, as Sir F. Bruce could not entertain some transit duty arrangements proposed in Hupeh. The present requisition for landing places may be met by the establishment of custom-houses for the levy of duty at these three places. But as the necessary funds will not be forthcoming, for the duties collected will probably not suffice to pay the expenses, it will be necessary to consider maturely as to the mutual advantages of the measure.
25. A port to be opened on the coast—Wanchow.
Yes; in exchange for Kiungchow, which has never been used.
26. Bonded warehouses where desired by a majority of merchants.
Where a majority of merchants are willing, the superintendent of customs and the commissioner can establish official bonded warehouses, under regulations.
27. On account of the large consumption of coal, it is advisable to allow foreigners to work native coal mines with foreign appliances; the mines in Wan-ping-hien are indicated. [The coal districts of China are her own estate; the working of these, whether with or without foreign aids or appliances, must be left to the minister of the southern ports, who will act as local circumstances require; he will have regard to the sovereign power of China and to the requirements of trade.]
28. Monopolies of camphor and rice.
Camphor wood is used in the government works, and has hitherto been considered to be government property. The camphor trade is not an ordinary monopoly. The merchant shall be at full liberty to purchase what he requires, without official interference; but to avoid trouble, the foreigner must not go among the savages to get the camphor for himself.
The liberty to export rice depends on the abundance or scarcity of the season. In a time of scarcity the prohibition to export will fairly lie on native and foreigner alike; it will not be specially directed at the foreigner.
29. International commercial code.
The establishment of such a code would be very advantageous, and the minister’s superintendent shall depute some properly experienced officer to confer with the chief judge on the matter.
The 29 articles laid before the commission by Mr. Fraser have been carefully considered by the prince and his colleagues. Certain articles were found to be inadmissible, but everything which was not detrimental to the sovereign power of China, while it was advantageous to the foreign merchant, has been conceded; of this a detailed statement, with remarks, has been already submitted to your excellency.
The prince has received various representations from superintendents of customs and from the mercantile communities, embodying numerous demands on your excellency; but, lest you should have difficulty in dealing with them, they have not been mooted, and a reply is requested on the points already conceded.
In the reduction of duties or abolition of them, and in putting a stop to inland exactions by proclamation, China has dealt liberally by the men from afar. The merchants (on their part) must not pervert this consideration for their commerce into a means of injuring the revenue.
In the proclamation just issued, lest the foreign merchant should suffer by being wrongfully taxed, a broad distinction has been made between him and the native trader. It would be to the advantage of both parties, and save much future confusion, if the merchants themselves would observe such distinctions. For instance, when a native craft runs under a foreign flag, there is no means of ascertaining whether she is really under a foreign charter and with a flag issued by the consul, or whether a native merchant, in fraudulent collusion with a foreigner, has obtained the flag to enable him to smuggle the more easily. Then, Chinese-owned cargoes, leaving or entering port in foreign ships, assume a quasi foreign character, and as such pay duty according to a lower tariff scale.
These two grievances, by which a foreigner gains no advantage while our revenue suffers, arise from the want of a marked distinction between the foreigner and native. It is now suggested that your excellency instruct the merchants that in future the consular papers of a native craft chartered by a foreign merchant must bear the seal of the superintendent of customs before the charter can be effected, and that the want of such papers and seal renders vessel and cargo liable to confiscation; also that Chinese consignees themselves shall report at the customs and pay the duties on goods coming to them in foreign ships, without being backed by the foreigner; non-compliance to subject the Chinese to a penalty of a double duty and the foreigner to be fined by his [Page 583] consul to the amount of a full duty on such goods. Were this done, while the native and the foreigner would each retain their own special advantage in any transaction, the complications arising from a confusion of interests would be avoided, and no wrong be done to the national revenue; the honor and good faith of the foreign merchant would be made apparent, and there would be no anxiety as to illegalities eventually arising from these present concessions. But the foreign merchant will make a poor return to China if, in spite of her liberality to him, he insists on abetting the native in his frauds, while in the future conduct of business difficulties will certainly arise. The above is submitted for your excellency’s consideration.
Memorandum of increase of duties proposed by the Foreign Office.
Tea, present duty, 2.5 taels per pecul; proposed duty, 5 taels per pecul. Silk, raw, present duty, 10 taels per pecul; proposed duty, 20 taels per pecul.
C.
1. The three memoranda formerly sent will have already been taken note of by your excellency. We now again proceed to address you on the points still under consideration.
2. [a.] Heretofore, Chinese merchants taking foreign goods into the interior, and who had not procured transit certificates from the customs, have, of course, had to pay duties and taxes at every office and barrier passed by them. Even in the case of foreign merchants themselves, those who take foreign goods into the interior without transit certificates are rightly subject to the same treatment.
[b.] Your excellency now wishes foreign and native merchants to be on the same footing [in respect of privileges to be enjoyed by those] who take foreign goods inland
[c.] After much consideration [we have resolved to propose that] opium excepted, all foreign goods, on arrival in port, shall pay to the customs, at one and the same time, both tariff, import duty, and treaty transit dues; and that thereafter, no matter whether found in the hands of native or foreign merchants, such goods, if covered by transit certificate, shall be entirely exempt from every species of taxation. The transit certificates shall be issued [at the time of payment of duties] alike to natives and foreigners; and should there be any violation of regulations, the native merchants will be subject to the same penalties as the foreigner.
3. But as regards the foreigner, who in China engages in trade in native produce, nothing is easier at present than for the native merchant to be placed, through his operations, at a disadvantage that is far from fair. For—
[a.] The foreigner who takes Chinese produce to foreign ports interferes in no way with Chinese trade, and in his case no comparisons need be made between him and the native in respect of the duties paid by each.
[b.] But when the foreign merchant either, first, buys produce in the interior, conveys it to a treaty port for sale; or second, having bought produce from the interior, sells it at the port without shipping it to another port, the fact is that such produce, on the road from the place of purchase to the port, has been freed from the many taxes at the many places to which produce in the hands of native merchants is liable; and the result is that not only is Chinese revenue thereby a sufferer, but Chinese native trade, properly so called, is affected most detrimentally.
4. Under such circumstances, we cannot but propose that some distinction be made. No new rule is required for such foreign merchants as, first, buy produce in the interior themselves, and ship it to foreign ports; or, second, who buy produce at the ports which while in the hands of Chinese had, in coming from the interior, paid inland dues, and ship the same either to foreign countries or to other Chinese ports; for in respect of such doings the treaty provision is ample enough.
5. But as regards those foreign merchants who have bought produce in the interior and brought the same to a treaty port under a transit pass, paying simply a transit due—if they then sell it to Chinese merchants it will have thus been enabled to avoid the many inland taxes levied at many points; and even if the same goods should be shipped to another treaty port, and be thereafter—as present regulations provide— subject to local taxation in common with all other Chinese goods, they will still have avoided the special taxes that they ought by rights to have paid during the first part of their journey from the place of production to the port of shipment. In both the cases referred to, the goods can be laid down for a less price than if they had been all along in the hands of a native merchant. Hence the necessity for a fair rule insuring for each merchant similar treatment.
6. But here is the difficulty: How are we to know what goods are to go to foreign countries; what to other Chinese ports; or what are to be disposed of at the first port [Page 584] to Chinese? This difficulty of dividing the various kinds of produce into classes to receive different treatment according to difference of distinction, opens a door to abuses, and necessitates the establishment of some special regulation for the repression of fraud.
7. What we have to propose, then, is this: That native produce brought from the interior under a transit pass by foreign merchants on arrival at the barrier nearest the port shall then pay there both transit due and tariff export duty; and shall in addition lodge a separate amount equal to the transit dues as a temporary deposit. Produce which shall thus have paid at the barrier transit transit dues and export duties, and lodged an additional amount equal to the transit dues as a deposit, can thereafter be treated as follows:
[a.] If, within a term of three months, it is shipped to a foreign port, the amount deposited will be returned.
[b.] If, within a term of three months, it is shipped to another Chinese port, the amount of deposits will be retained and entered in the accounts as a set-off against the many taxes avoided when protected by a transit pass.
[c.] If the term of three months expires without the shipment of the produce to either a foreign or native port, it may safely be inferred that it has been sold to Chinese at the port. Such a sale in our opinion would, properly speaking, render the goods liable to confiscation; but we also think that a difference may fairly be made between produce thus sold at a port after payment of a transit due, and produce sold while under the protection of a transit pass, but before payment of the transit due, and in reference to which latter the treaty states that sale in transitu will render them liable to confiscation. In this case too, then, the amount deposited ought likewise to be retained and entered in the accounts as a set-off against all the taxes that the improper use of the transit pass had enabled the goods to avoid. (Produce sold in transitu is of course to continue liable to confiscation.)
The mode of treatment which we thus propose is to meet the case of the foreign merchants who (in addition to carrying on their own foreign trade) desire also to engage specially in native business; such, of course, in fairness to the Chinese merchant, ought to be placed on the same footing as the natives who engage in the same business.
8. Produce purchased at the ports by the foreign merchant will simply have to pay its export duty at the time of shipment, as provided for by treaty.
9. The transit memorandum taken into the interior by foreigners who wish to make purchases inland, ought to be limited as to the time for which it is to continue valid.
10. Should the special tax barriers be hereafter abolished, and the old custom-houses re-established in the interior and along the Yangtsze, we might again rearrange these matters; in any case, the object in view is simply to place the Chinese and the foreigner on the same footing, so that neither may find himself more heavily or more lightly weighted than his competitor.
11. With regard to the special taxes levied and contributions called for by the Chinese government, [we have to repeat that] they result from the military necessities of the country. While the custom-houses in the interior are unable to be opened on the former scale, the government Could not but place the burden on the trading communities; hence the less or more numerous inland barriers, and hence the lighter or heavier contributions demanded; hence, too, the fact that their continuance or disappearance has been altogether a matter of uncertainty. The more or less pressing nature of military requirements has called for concomitant increase or diminution; if troubles were altogether at an end, and supplementary details arranged for, the barriers would of course disappear one after another, and indeed already from time to time, in proportion as quiet has been restored, many have been abolished. But on this point we need not trouble your excellency by restating what has often been said before.
12. Your excellency has, amongst other things, proposed that the duties on several kinds of foreign goods shall be decreased; and on this point we are of opinion that— opium excepted, about which there is a special regulation—the tariff of imports and exports ought to be carefully revised, and the duties on all commodities be fairly fixed, so that each may be as much as possible in accordance with the principle on which the tariff is based, and represent five per centum ad valorem.
13. We now await your excellency’s reply on the subject of the present communication, and also in respect of the matters treated of in the three memoranda formerly sent. We beg that you will soon favor us with that reply, for the ministers of the other treaty powers may have to be communicated with in order that the arrangements concluded between us may take effect on all.
D.
Mon cher Collègue et Doyen: It will be in your recollection that in November last I placed in the hands of the foreign representatives in Peking, a memorandum on [Page 585] the present condition of the Chinese empire and its internal administration in connection with a revision of treaties. My object in taking this step, as I stated, was by a free exchange of opinions to arrive at a mutual understanding on the important question of a revision of treaties. Although no written communication was received from any of my colleagues on the subject, I was led to conclude, from what passed in conversation, that there was a very general opinion of the impolicy, in the present state of the empire, and during the minority, of seeking any such modifications of existing treaties as would necessitate fundamental or sweeping changes in the government and administration, to give them effect.
Entirely in accord with what I believed to be the general sense of my colleagues, I presented, in the following month, (December,) a note to the Foreign Office, referring to the approaching period fixed by the treaty of Tientsin for a revision, if demanded on either side, of the commercial rules and tariff, and suggested that a mixed commission should be appointed, to sit at Peking and make a preliminary inquiry into various alleged abuses, and failure in giving effect to treaties, and to consider the best means of removing such grounds of complaint, if found to exist, and affording, in compensation for loss and damage already sustained by the foreign trade, increased facilities for its extension.
The Foreign Office assented to my proposition, and for the last six months a mixed commission, consisting on the British side of Mr. Fraser, the senior secretary of the legation, and on the other part of two Chinese secretaries and Mr. Hart, inspector general of customs, has been sitting.
I caused a full exposition to be laid before the commission of all the grievances detailed in the printed memorials of the merchants, with which you are acquainted, and submitted various propositions calculated, in my opinion, to remove prevailing abuses and restrictions on trade, hitherto preventing its development, in violation of the spirit if not in all cases of the letter of treaties. The result has been a declaration on the part of the Foreign Office of its willingness to accede to many of the proposals made, to some unconditionally, to others subject to certain modifications in the tariff and trade regulations.
I have hitherto kept you, our Doyen, and my colleagues generally, informed of the steps I was taking, and the object I proposed to accomplish through the commission, and this with the utmost frankness: first, because any idea of obtaining exclusive advantages for British trade or interests was precluded by the favored-nation clause in all the treaties, and therefore there could be nothing to conceal; and second, because any good obtained for Great Britain must be for the common benefit of all, and consequently whatever might be done must in the end be acquiesced in by every other treaty power before any changes or modifications could be carried into effect.
The labors of the commission having now taken a definite shape, I am enabled, in further development of these views, to communicate the result, and invite the co-operation of my colleagues by the expression of their opinion as to the acceptability of such measures as are proposed for the purpose of giving fuller effect to existing treaties and increased facilities for trade.
I may premise, by way of explanation, that the greatest burdens and restrictions upon trade, and those the most loudly complained of by the several mercantile communities in China as a violation of treaty stipulations, were all connected with the li kin taxes at the ports and other localities, and the mode of collecting the transit dues. And it was precisely under these two heads that the greatest difficulties have been experienced in arriving at any satisfactory settlement.
Under both these divisions there was, in practice, a wholly irresponsible and arbitrary power of taxation exercised by the provincial authorities, which rendered perfectly valueless all limitation of tariff rates. At the ports, the moment that foreign goods passed into Chinese hands they were liable to a perfectly unlimited and varying taxation. In the interior the same evil was perpetuated, and transit certificates did not suffice to cover foreign goods in their passage to places of consumption, even in foreign hands; and in Chinese hands they were at the mercy of the taxing authorities. The same applies to tea and silk on their way to the treaty ports. Under such a régime, the tariff rates fixed by treaty ceased to be any protection, and the whole object of their stipulation was defeated. Duties to any amount might be levied at the caprice or according to the wants of the provincial authorities, even to a prohibitive extent. And they have in effect constituted so heavy a burden as in many branches of trade to have inflicted the most serious injury, and proved to be all but prohibitive.
After long discussion, it has been admitted that treaty rights were violated by such proceedings, and that foreign trade, whether in imports or exports, by payment of the fixed transit dues of two and one-half per cent., could be certificated to any part of the interior, even though in Chinese hands.
On the other hand, the Chinese officers insist on the unceded right of the territorial sovereign to tax all goods, whether foreign or native produce not so certificated, when circulating in the interior, to such extent as the wants of the state may render necessary. But they have admitted that this should be done under imperial and responsible [Page 586] authority, and with communication to the foreign representatives, if not by public decree, so that these could have the means of judging of the incidence of such taxes, and ascertain that it did not fall disproportionately on foreign trade.
To give effect to these views, they propose that all imports should pay the transit dues on landing, at the maritime customs, receiving a transit pass certificating such goods free of all charges whatever to any portion of the interior, while in transitu, and before passing into consumption, abolishing by imperial decree all li kin and other taxes of whatever denomination, at the ports on foreign goods.
As regards the staples of the export trade, these can also be certificated for the ports and relieved from all further duties, provided that, if not shipped to a foreign country but to another port in China, they are then subjected to the same taxation as native produce in native hands. The inclosed draught of a note which the Foreign Office propose to write, if this should be agreed upon, will give the details of these measures.
It will be observed that the only possible objection to a payment of a transit due on all imports—that none ought rightly to be levied on goods sold at the ports—however true in theory, is of no weight when the right to levy that or five times as much, under another name, whether as an octroi or a li kin tax, the moment they pass into Chinese hands, is asserted and exercised. It is in the interest of the goods sold sur place even, to exempt them by a payment of two and one-half per cent. from uncertain and unlimited taxation, as they will be more salable and fetch a better price by reason of such exemption.
The inclosed memorandum concludes with a proposition to revise the whole tariff, with a view to equalize the rate on all articles to five per cent., excepting tea and silk, on which, in a former note, the Foreign Office had proposed that the duty should be doubled. This would not constitute a very heavy duty, judged by European rates of taxation, and it might well be compensated by the reduction of duty on many other articles which the proposed equalization would effect; although it is probable that such an increase would be very unpopular among the merchants, who, as a general rule, want everything reduced, and are never willing to listen to any reasons justifying an increase, though as a part of a general measure eminently calculated to benefit them.
These are the points affecting the tariff and taxation of trade. In various other directions they have expressed their willingness to make unconditional concessions, with the view of facilitating trade both in the interior and on the coast. These may be summed up thus:
1. The framing of a code and rules of precedure for mixed courts.
2. The establishment of bonded warehouses.
3. The payment of drawbacks in specie, if within the current quarter, and their receipt in payment of duties for three years.
4. To regularize payment of duties by fixing the value of sycee at each port.
5. To provide for steam requirements, by allowing foreign machinery and assistance in working coal mines.
6. To free dock materials from duty, and to admit all household goods and personal effects, not for sale, also free.
7. To issue an edict declaring the right to trade and temporary residence throughout the interior.
8. To authorize inland navigation by foreign vessels (not steamers) for the transport of foreign goods.
9. To assist the expansion of steam traffic on the Yangtsze river, by the addition of certain landing stages for shipment and landing of goods and passengers at certain places other than the ports already opened, viz: at Ta-tung, Ngan-King, and Wu-hu.
10. To open the port of Wan-chan between Ningpo and Fuhchaw, and also possibly others if desired.
They refuse to admit foreign salt, to allow steam navigation of inland waters, and right of domicile in the interior, unless as regards the latter. Treaty powers are prepared to renounce, in regard to such residents, the exterritorial privileges. These are the only three propositions discussed to which a negative has been given.
From this brief summary of facilities offered and advantages or concessions obtainable, I think, with the aid of the inclosed note, you and my colleagues will be enabled to form a clear opinion as to the policy of acquiescing in the arrangements now proposed, and as I desire, very much in the common interest, to learn with as little delay as possible how far your views and those of my colleagues generally are in accordance with my own, I think it proper, frankly and plainly, to put you in possession of these.
The British government is alone entitled, at the present time, to demand any revision, the date fixed for such demand on the part of other powers being more remote. I do not think, however, it is in the interest of any foreign power to press for any fundamental changes now; nor is her Majesty’s government, even by treaty, entitled to demand anything beyond a revision of the trade regulations and tariff. Within those limits the Foreign Office has, I think, offered with good will to grant nearly all that could for the present either be wisely asked by foreign powers or safely granted by the Emperor [Page 587] of China. If more were even to he extorted by pressure, I do not think it would practically he in the power of the Chinese government to give it effect.
I believe that the arrangement contemplated for the abolition of the li kin taxes, and the protection of all produce, foreign and native, in transit, (inland or coastwise,) if carried out in good faith, (and such I believe to he the intention and wish of the officials here,) will he an immense gain to all foreign trade, and effectually remove the greatest drawbacks and grievances under which it has labored since the last treaties were signed.
I believe that the other measures enumerated, from 1 to 10, include all that are most essential and immediately practicable for the improvement of our relations and the development of trade. With these convictions I am prepared to recommend their acceptance by her Majesty’s government, leaving it open for further consideration whether any revision of the tariff, subject to the condition of an increased tax on tea and silk, shall be declined or accepted. And so, in like manner, as to the opening of more ports on the coast, about the advantage of which there is great doubt among the merchants themselves, and some conflict of opinion.
Of course, to give such action on my part practical effect it is necessary that her Majesty’s government should also be advised how far my colleagues, the representatives of the other treaty powers, are disposed to adopt the same views, and make a similar recommendation to their respective governments; and it is with this object that I now write to you as our Doyen, and beg you to be good enough to enter into communication on the subject with the other members of the corps diplomatique in Peking.
I avail myself, &c.,
His Excellency A. Vlangaly, Envoy Extraordinary and Minister Plenipotentiary of his Imperial Majesty the Emperor of Russia.
E.
Mr. Lallemand to Sir Rutherford Alcock
Mr. Minister and Dear Colleague: Your letter of the 5th instant arrived on the 7th. In replying, I have waited until our dean should communicate the documents of which you spoke, which you had sent him. I have received them this morning, and I now proceed to give my opinion respecting them upon first impressions.
To put foreign commerce and Chinese commerce upon the same footing as far as possible is a just and worthy project—an encouraging one—and such is the tendency of the various measures proposed by the yamun. But would the ameliorations upon the present state of affairs, which would certainly result from the sum total of these measures, if carried into execution, be, or appear to be, sufficiently compensated by the raising of the duties upon silks and tea to the double of the present tariff? I somewhat doubt it, for the following reason: we know by experience, or we think we know, that the yamun, or rather the government of Peking, has no great control over the administration of the provinces; and that in the treatment—good or bad—of the commercial problem, it would be always the provincial functionaries who would play the principal part. We are consequently tempted to say: those ameliorations are offered us in good faith and good will by the yamun, as we are very ready to believe; but from the will to the deed, to the actual execution, there is an interval, for we know that the yamun’s authority is not preponderant in the provinces, and that what it here promises us cannot perchance be executed, except very imperfectly, at a distance from Peking. What will be fully carried out, if we agree to it, is the collection of the double duty on teas and silks. We are then exposed, in conceding without any precaution the doubling of the duty, to pay down and without drawbacks for the advantages which have been given us on paper at Peking, (though in good faith,) but whose execution is uncertain and subject to eventualities. I should then be of the opinion, if the doubling of the duties on teas and silks were to be conceded, that it should only be after two years probation of the promised ameliorations, and after being assured that they have become a fact. This would be the price and the recompense of the improved régime which the Chinese had commenced.
As to the concessions offered, they are small enough we must admit. The right of navigating by oar or sail on the interior waters is scarcely a concession. It is the steam navigation that we want, and that we begin to need. Even supposing that it cannot be permitted upon the canals, which we may easily admit, it ought at least to be permitted upon the great lakes, such as the Poyang and others, where the uncertainty of the winds [Page 588] causes much time to be lost by the sailing convoys. It would at least be necessary that the use there of small steam-tugs should be authorized.
I also consider as very meager and very timid the terms used by the yamun to open the foreigners access to the coal mines. “The employ of foreign material will be permitted, and the presence of foreigners for the exploitation of the coal mines.” Could it not have said clearly: “The government authorizes foreigners to exploit coal mines, using their own material,” and to make the establishments necessary for this purpose?
The right of temporary residence in the interior is not a concession. We already possess it; at least, according to the terms of the French treaty, there is no doubt about it. But as no use has been made of the privilege up to the present time, it is not a bad idea that an imperial decree should render public this right. The only limitation to it which we could admit, in my opinion, is that of owning real estate in full proprietorship; the privilege of having houses and stores, and of residing in them, ought to be complete.
With the reserve made in these observations, I ask nothing better than to recommend to the cabinet at Paris in their totality the propositions which you have received from the yamun, and it is probable that if they satisfy the (English) Foreign Office there will be no greater difficulty at Paris than at London. I do not think, however, that we shall be disposed to renounce expressly and beforehand the right of revising our treaty in 1870; it does not appear to me that it would be for the common interest that we should do so. There are besides, in the treaty, one or two clauses relating to the liberty and security of missionaries and Christians, which are not explicit enough, and which have not had the effect we contemplated.
I should be of opinion, if my advice were asked, that these clauses should be revised; but they relate only to France, and do not affect the condition of other nations which have treaties with China. * * * * * *
With a thousand kindly compliments,
F.
Mr. Williams to Sir Rutherford Alcock
My Dear Colleague: I have carefully looked over the papers which you gave me relating to the revision of the British treaty, and desire to express my gratification at the encouraging evidences they exhibit of progress on the part of the Chinese in understanding their political and commercial relations with other nations. The different position of things between Great Britain and China, under which the present discussions have been carried on, and those attending the two former treaties of 1842 and 1858, forms of itself one of the most marked evidences of beneficial progress in this part of the world.
The two noteworthy points in this précis relate to the establishment of the mixed court, and to the regulation of the li kin and other unauthorized taxes on the trade— points which, if once well established, will gradually work out most desirable results. The mixed court will become a school of instructive practice to the native officials connected with it, and I should think serve even as the beginning of a reform in the jurisprudence of the country; and we both know that that means to change judicial wrong and torture into just and legal punishment, directed by officials acquainted with their duties. It is a great step to get the Foreign Office to initiate such a court, even though its slow progress be attended with many drawbacks, and I shall most earnestly support its establishment.
It will be of lasting service to the trade if you can induce this government to subject such capricious levies as the li kin taxes to some well-understood control. In a country where an income tax is impossible and an excise tax is vexatious, and the duty on imports and exports fixed by a treaty, the rulers may, perhaps, be excused for increasing their uncertain revenue by imposing transit and other charges on produce and cargoes as they can; but if they can be only brought to see the advantages of a legal well-known rate of charges, by seeing that they produce more revenue with less irritation, the advance will be great. I think that your proposition to have all these uncertain charges brought under the cognizance of authorized accountable officers has everything to recommend it as a practicable solution of the present grievances. I am afraid that it may fail of doing even what we reasonably look for, but it is much to have the new plan agreed to and tried.
In regard to alterations in the tariff, (whose revision comes within your plan,) it will perhaps be advisable to restrict them to bringing every article under a uniform rule of five per cent, ad valorem on all imports and exports. The list of free might be made more precise with advantage, so as to avoid in future some disputes which have already [Page 589] arisen as to the kind of articles included under such general terms as ships’ stores and household stores.
The 10 points specified in your minute include some of considerable importance, and I agree with most of them as beneficial and practicable. I am afraid that all rules will be inoperative in respect to the fourth rule, however, as long as the money of China is of account, and no currency in the proper sense of the word is issued by government. I do not believe any rules can regulate the purity of sycee; for when the Chinese are able to maintain a gold and silver currency, then only will their bullion conform to it. From the nature of the case, all efforts to regulate its supply, quality, or exchange will, I fear, fail.
The opening of new ports involves so many other points than merely finding new marts for trade, that we hesitate, especially when it is seen that of the old ones Kwing-Chan, in Hainan, has not been occupied, and others have disappointed their promise. To the three proposed stopping places on the Yangtse, I would add Kwnchau, or a convenient place opposite Chinkiang, unless this port can be extended so as to include a landing place on the northern bank of the river, within its own jurisdiction. Then, too, the port of Kinkiang might be extended to include Hukan, at the mouth of the Poyang lake, for the strong current prevents native boats from getting up to Kinkiang, about 18 miles distance. This disability is so great, and causes so much delay at the entrance of the lake waiting for a fair wind, that many of them take a circuitous inland route in preference. But on this last point I suppose a joint commission could get all the information in good time respecting all the ports to be used as stopping places along the river, and their report would furnish reliable data.
The minute furnished you from the Foreign Office respecting the modifications which its members can see their way clear to adopt in the treaty, does them much credit in its spirit and argument, and is another evidence of progress and assimilation of ideas. While we are urging our privileges, they claim that native merchants should not be, in their own country, placed on a worse footing than foreigners—a most reasonable demand.
In fine, my dear Sir Rutherford, I congratulate you on the progress made, as shown in the result of your discussions upon the proposed alterations in the British treaty. It is a victory of peace, and perhaps more permanent than one of another kind. The points which the Chinese have refused are those on which they feel that neither they nor their subjects are yet ready; but these, and still greater changes, will, I hope, be introduced among them, in the same peaceful manner, as they are prepared to receive others by the natural, gradual results of the causes now going on. In effecting this, however, harmony of action among those engaged in the work is exceedingly desirable.
Very respectfully, your obedient servant,
Sir Rutherford Alcock, K. C. B., &c., &c., &c.
G.
My dear Colleague and Dean: In sending you the adjoined documents, in which Sir R. Alcock has communicated to us the result of his negotiations with the Chinese government respecting the revision of the treaty of Tientsin, I hasten to give you an account of the impression which their persual has caused me, as our colleague from Great Britain has desired I should do.
But before entering upon the examination of the different questions which here occur, I ought first to recall to you that in the treaty concluded in 1861 between Prussia and the other German states on one side, and China on the other side, a period of 10 entire years from the day of the ratification was stipulated for the revision of the treaty, so that the states interested are not called upon to demand any changes whatever, either in the tariff or in the commercial regulations in general, until the expiration of this period of 10 years, i e., in 1872. In taking, then, an active part in the negotiations between Great Britain and China concerning the revision of the treaty of Tientsin, the German states cannot and ought not to renounce their right of demanding in their turn, in 1872, the changes which they shall judge expedient to solicit. Much the less ought they, in my opinion, to renounce that privilege, since that year bids fair to be more favorable than the present moment for obtaining important concessions, in consequence of the changes which will then have taken place in the highest spheres of government, as well as in the spirit and the sentiments of the people. This very natural reservation will, I am convinced, be also made by the other governments which have made treaties with China, and I might perhaps have omitted to touch upon this point if the concluding passage of the Chinese memorial, in the following terms, “We [Page 590] ought to communicate with the other representatives of foreign countries in Peking, in order that the arrangement concluded between us may have a general effect,” did not afford reason for supposing that in the opinion of the Chinese ministers an adhesion on the part of other governments to the present arrangements between China and Great Britain would necessarily imply, on their part, a renunciation of any eventual revision at the period fixed upon by the different treaties. If such were the intention of the yamun, it would be an unacceptable condition, and the other governments would not, in that case, have any other alternative than to demand simply, by virtue of the clause of the most favored nation, all the advantages now obtained by Great Britain, and to await the period fixed for the revision of their respective treaties. In such a case, I should consider it a duty not to leave the Chinese government in any doubt in this respect.
Aside from this limitation, I am of the opinion that the interests of all the foreign governments in regard to China are identical, and that they owe to each other mutual assistance in all cases in which an effort may be made, either to obtain new concessions of general interest, or the redress of just grievances on the part of all the governments, or of one of them. In this connection, I think that all the governments are interested in the revision of the treaty of Tientsin, which is, so to speak, the foster-father of all the other treaties, and that they ought to sustain, as towards the yamun, all the reclamations of a general interest which the representative of her Britannic Majesty is now advancing with a view to the revision of the treaty of Tientsin. I am thus entirely ready to act in this spirit whenever I may be called upon to do so, feeling certain beforehand of meeting in this way the approbation of my government.
As to what relates to the different questions which have been discussed in the mixed commission, and to which Sir Rutherford alludes in his letter, I must avow, to my great regret, that I have not advanced as far as I should desire to have done before giving an opinion on the subject, with reasons therefor. I could wish to be cognizant of the negotiations which have taken place respecting some of these questions, especially those which concern the tariff and the proposition to double the duties on tea and silk; and the communication of the three memoirs of which the yamun’s last memoir makes mention would, perhaps, be very useful, in order to judge of the opportuneness and the possibility of these important changes in the tariff.
If I have fully comprehended the spirit of the negotiations which have taken place upon the revision of the treaty of Tientsin, the representative of Great Britain would seem to have taken, as his point of departure, a conviction that the treaty in itself is good, and does not demand any alteration in its principal stipulations, which are in harmony with the actual state of China, but that it is chiefly the strict execution of the treaty which has hitherto been wanting, and which it is necessary to assure for the future. It is in this point of view that the interests of all the powers are a unit, since they all equally suffer obstacles regarding these stipulations with which the ill-will and the rapacity of the Chinese administration has succeeded in surrounding all commercial transactions between foreigners and natives, notwithstanding the clear stipulations of the treaties. But nothing, in my opinion, has more contributed to denaturalize the commercial relations of China with foreign countries, than this system of arbitrary taxation, which, under the names of likin, taxes of war, transit duties, and others, have long weighed upon all foreign merchandise—and even upon native merchandise—when it passes from hand to hand, and I cannot but applaud the determination to make these abuses cease by virtue of a revision of the treaty of Tientsin.
As far as I am now able to judge, the proposals made for this purpose seem to me well conceived, and they offer perhaps the only means of remedying the abuses mentioned. In general, the principle of placing natives and foreigners upon the same footing seems to me founded in justice. It offers, besides, the advantage of terminating the animosity produced between the two parties in consequence of their difference of position and the inequality of the burdens weighing upon them. We cannot, however, refuse to take into consideration the fact that the foreign merchants will lose some advantages under the new order of things, and that they will be obliged to purchase the execution of a right guaranteed by treaties, by the payment of a transit duty of two and a half per cent. on all imported goods. The result will depend exclusively upon the spirit with which the central government and the local authorities undertake the execution of the new measures, and I do not see any other guarantee against the renewal of infractions of the treaties than the good-will—at the least, doubtful—of the local authorities.
As to the proposal to replace all the provisions of the tariff, except tea and silk, by a duty of five per cent. ad valorem, I cannot now pronounce an opinion, and I must reserve upon this subject the opinion of my government. To double the duty upon tea and silk, almost the only articles of exportation which China affords, seems to me a measure which certainly would produce serious reclamations from the Chambers of Commerce in all countries. But as the interest of Germany in relation to these two artieles is secondary to that of Great Britain, France, Russia, and America, it seems to me that the decision will depend solely upon the opinion of these governments.
[Page 591]In the Chinese memoir, nothing is said of the articles which have been hitherto imported duty free, and it remains to be known if, in the opinion of the yamun, they will continue to enjoy this exemption, or if they are comprised in the general tariff of five per cent. which is hereafter to be collected. This question is quite important for Germany, as many articles of its industry are specified in the treaty of September 2, 1861, among goods imported duty free. The same is the case respecting materials intended for the construction and provisioning of ships, as well as objects of household use, and personal effects, which, according to the plan of reform will, in future, only enjoy an exemption from duties in case they may be destined to the personal use of the importer.
To tell the truth, I fear that this idea of having only a uniform tariff of five per cent. for all kinds of goods may not present a great difficulty in coming to an understanding, as the tariffs of the different treaties are calculated according to the demands of the industries of each country, and I do not think that the government can abandon this principle unless great compensating advantages be offered them. I do not see in this proposition of the Chinese government anything beyond a desire to simplify the operations of the custom-house; and, in this case, it would be only a measure of convenience for the administration, which could only be adopted in case that its execution should be possible without injury to the important interests of different States and their industries.
According to the opinions set forth in the famous memoirs of Tsang Kwohfan and his colleagues, I have not been surprised to learn that the yamun opposes the non possumus to the admission of foreign salt from steam vessels, and of the right of domicile in the interior. The refusal to admit salt is explained by the circumstance that this article is a monopoly in China, and that commerce in it is prohibited to the natives. The navigation in the interior, which, years ago, was eagerly desired by European commerce, was that by sailing vessels, which is no longer of great use at present, if steamers are excluded. Perhaps it would be possible to admit little steamers on the lakes and the great rivers.
The vital question—that which presents at the same time the most serious difficulties—is, undoubtedly, the privilege of residing in the interior; that is to say, the right of acquiring property outside of the open ports on the coasts. If, on the one hand, the foreign representatives are not in a state to sufficiently protect their citizens established in the interior, outside of the sphere of action of the consuls, it appears inadmissible, on the other hand, that the Powers should renounce jurisdiction over their citizens established in the interior, according to the conditions proposed by the yamun, since they could not practically refuse their protection to those among them who may have serious grievances against the Chinese governmental authorities. The difficulty would remain the same if an occasional merchant had succeeded, under favorable circumstances, in establishing himself in the interior without having subscribed to the condition demanded of him by the Chinese government. Keeping in view these difficulties, one would be tempted to believe that the right of traveling, buying, and selling freely in the interior might, for the present, suffice the demands of foreign commerce.
Unless I deceive myself, the views of our colleagues upon these different points are very nearly the same as my own, and it seems to me too difficult a thing to render uniform the interests of all parties concerned. The only serious difficulty might be brought about, as I have suggested above, by the unification of the tariff and the project of doubling the imposts upon tea and silk. In every case I avow myself incompetent to pronounce, at present, upon this matter with a decisive opinion.
While submitting to you these observations, my dear colleague, and begging you to communicate them to our colleagues, it only remains for me to add that I shall hasten to report in the same spirit to my government, and that, meanwhile, I am entirely ready to concur, to the limit of my powers, and with the restrictions above indicated, which are imposed upon by the nature of things, for the establishment of a preliminary understanding in relation to the revision of the treaty of Tientsin. I have thought it useless to enter anew here upon a discussion of the questions which would need radical changes in the politics and the administration of China, since the exchanges of ideas which have recently taken place show an entire identity in the views of our colleagues, and the conviction of us all that the present moment is not favorable to put them forward.
Please to accept, &c., &c.,
H.
My Dear Colleague: The minister of France having replied to you directly upon the subject of your letter of the 5th instant, and of the Chinese memoir annexed to it, [Page 592] I hasten to send you adjoined the communication of our colleague of Prussia, adding to it my own impressions.
But before entering upon the question, permit me to express to you my profound gratitude for the obliging communication which you have made us on the result of the inquiry which has been arrived at by the mixed commission which you had established by agreement with the Tsungli-yamun. I had scarcely hoped that the Chinese ministry would consent to the modifications and to the concessions emunerated in the documents which you have had the goodness to communicate to us; notwithstanding which, I doubt if they will satisfy the demands of foreign commerce, which are very frequently excessive.
The tendency to put native merchants on the same footing as foreigners is very equitable, and we cannot but encourage the Chinese government to march in this direction, so beneficial to all.
One of the principal demands of foreign commerce is the privilege of residing in the interior. I think this is the only remedy against the abuses of custom-houses and of internal barriers. Since foreigners are permitted to travel in the interior, I do not see why they should not be permitted to buy there the products of the country for exportation, and to sell foreign imported goods. I freely admit that the Chinese government would not wish to permit to individuals not subject to its jurisdiction the purchase of landed property outside of the ports open to commerce; but I think that foreign merchants may be permitted, without serious inconvenience, to make purchases of merchandise for exportation upon the spot of production, by paying the transit duty established for that purpose. The same in regard to imported goods; it is not just to prohibit the foreign merchant, who has paid the right of transit, from taking his goods to the places where he expects to sell them most easily.
It would then be desirable that the Chinese government should permit foreigners to have deposits of their goods in whatever places they may find convenient; whether in the centers of production or in the localities of the great fairs. It is necessary that the merchant, as he buys, should place in deposit some of the acquired productions; and likewise that, as he brings in foreign goods, he should have a place to store them. As there can be no property held outside of the ports open to commerce, he must necessarily hire store-houses, which is so far a disadvantage as compared with the native Chinese merchant, who, besides being able to own his own store-houses, has the means of renting them at fairer prices, and, above all, of opening shops and selling by retail not only foreign merchandise, but also the productions of the country whose sale may happen to be prohibited to foreigners.
I would even go further and say that we might provisionally forego the conceded privilege of transit, and consent to pay the duties charged at each barrier or custom-house in the interior, provided the amount of the imports were previously, and from a year in advance, made known to the consuls and to the public. This measure would also be a restraint upon the vexations to which Chinese merchants themselves may be exposed by the lesser mandarins of the customs barriers.
As to what relates to the difficulty presented to the Chinese government by the right of ex-territoriality which foreigners enjoy, I think that certain cases might be specified in which the local authorities of the country might be empowered to arrest a foreigner and conduct him to the nearest consulate, or even set seals upon merchandise, on condition of immediately turning over the matter to the consul, as in the previous case. These grave occurrences not being numerous, it would not be difficult to regulate the mode of procedure.
The permission of navigating the interior waters with sailing vessels is certainly a great concession on the part of the Chinese government, but for it to be profitable to foreigners they ought at least to be permitted to have little steam-tugs on the great lakes, as this would remedy the slowness of transport, of which there is so much complaint.
There is still another question which I do not fully comprehend, i. e., the proposal of the yamun to double the imposts on tea and silk, in compensation of some other diminutions in the tariff. Among the objects of exportation, tea and silk occupy the first places. I can understand that the forced exportation of silk may prove prejudicial to the manufactures of the country, and that the latter industry should seek encouragement in this way; but tea is upon a footing entirely the reverse, and the direct advantage of the country would require the encouragement of its production and exportation. The teas exported from China include species not used by the natives, so that they are, so far, a product purely for exportation. Besides, the imports on tea are already considerable, even much more than 10 per cent. ad valorem, and if there were to be any modification in the direction which the yamun desires, it would be rather to classify the teas in several categories, according to their values, since at the present time the yellow and green teas of highest value pay but the same duties as the black teas very inferior to them.
These are, my dear colleague, the principal points which, according to my ideas, would complete the work of the mixed commission mentioned at the outset of this [Page 593] letter. I think that they are essential, and that they would assure in a greater or less degree the execution of the commercial spirit of the treaties.
As to the memorandum of the yamun, of which you have obligingly transmitted me a copy, I shall have but two remarks to make, and those of slight importance. In article 7, instead of leaving as a temporary deposit a sum equivalent to the transit duties, that, according to what is done in other cases, the merchant may execute a bond to the required amount; and further on, the delay of three months indicated for the confiscation of the deposit made at the barrier or at the custom-house seems to me insufficient.
Deign to accept, upon this occasion, my dear colleague, the assurances of my high consideration.
His Excellency Sir Rutherford Alcock, K. C. B., Envoy Extraordinary and Minister Plenipotentiary of her Britannic Majesty.
I.
Monsieur le Ministre and Cher Doyen: The Prussian minister, in his reply to my former communication respecting the negotiations in which I am engaged with the Foreign Office, in anticipation of a revision of the commercial articles and tariff of the treaty of Tientsin, expressed a regret that he had no cognizance of the three memoranda to which the ministers made reference in the note I forwarded to you for the information of my colleagues. I beg, therefore, to inclose the memoranda in question for communication to the foreign representatives.
I have sent a collective reply to them, with a separate memorandum on the general revision of the tariff, stating my reasons for concluding the present time to be inopportune, and proposing to defer all further consideration of the subject. In my general reply I have availed myself of the frank expression of opinion of my colleagues as to the proposed modifications in the commercial rules, &c., to point out to the prince and ministers the unanimous feeling of regret and dissatisfaction at the restrictions attached to navigation of the inland waters, residence in the interior, and the working of mines; these otherwise large concessions being deprived of much of their value by limitations calculated to render them practically useless. This joint remonstrance may possibly induce the yamun to reconsider the subject, and in some degree modify their views as the expediency of a less restrictive policy. In any case I feel assured that you and colleagues will approve of my having communicated our common sentiments on the subject.
The Baron de Rehfues will see that I entirely concur with him in deprecating at this moment any general readjustment of the tariff, and have never contemplated proposing it. As to the right of revision reserved by the French and Prussian treaties at later periods, I do not conceive that any concurrence in the partial revision which may follow, of the British treaty, can be rightly construed as prejudicing their independent action when their respective periods for revision may arrive. But my colleagues will take such steps, of course, as they may deem expedient to prevent misapprehension in such a matter. I have only sought their co-operation because any changes, either in the commercial rules or tariff of one treaty, react on all; and in some cases, as in the proposed compulsory payment of the transit due of two and one-half per cent. upon all imports of foreign goods, and their collection by the maritime customs in the manner of other tariff duties, can only be carried out as a general measure and by common consent. And as the object is to strike at the root of all irresponsible powers of taxation upon foreign trade, and to take from the local authorities all pretext for levying the li kin or any other tax upon foreign trade, such transit duty once paid, and thus remove the greatest grievance of the merchant, and the worst obstruction to the extension of trade in the interior, I conceive this would be cheaply purchased even by an addition of two and one-half per cent. to the import duties.
Such, however, is not the effect of the proposed arrangement; for as much the greater part of foreign imports are sold to proceed into the interior, they necessarily have to pay the two and one-half per cent. transit due, or to run the gauntlet of a hundred barriers with unlimited powers of exaction and taxation. Even for the small fraction sold for consumption at the ports, the foreign merchant has everything to gain, if by payment of the transit due of two and one-half per cent. he can secure their exemption from the li kin and other local taxes which have been persistently imposed upon the native purchasers even within the limits of the port to a large extent.
You and some of my other colleagues have expressed great doubts as to the efficacy of any arrangements to put down these illegal and wholly uncontrolled taxes. Nor can any one feel perfectly assured of the result until tested by experience. Yet it is much to have obtained a distinct renunciation of the right, hitherto obstinately [Page 594] maintained, of taxing all trade within the Chinese territories for state purposes, and a declaration that under no circumstances can any overcharge beyond the tariff be levied on foreign trade in exports or imports, without imperial authority and the previous sanction of the foreign representatives. Whatever difficulty may be experienced at first in giving practical effect to these fundamental principles, their publication by imperial edict will strike at the root of the present abuse of taxing power in the hands of irresponsible and provincial authorities; and I cannot doubt be productive of far greater benefit to trade than many more imposing-looking concessions—than any rights of residence of foreigners, or their navigation in the interior, or working of mines—for which, in my opinion, neither foreign merchants nor the Chinese people are yet prepared, in their ignorance of each other’s language and the unsettled state of the country, to turn to much present advantage.
I avail myself of the present opportunity to assure your excellency of my highest consideration and respect.
To his Excellency A. Vlakgaly, Minister of Russia.
J.
Note for communication to the Tsungli-Yamun on the several memoranda addressed by the ministers during the past month to the British representative on the revision of the tariff and commercial rules of the treaty of Tientsin.
The several memoranda lately received from the yamun have been carefully considered, and the undersigned British minister has only deferred his reply to give time for communication with the representatives of foreign powers, whose opinion as to the expediency and sufficiency of the modifications proposed it was desirable to obtain before any final step was taken in matters affecting the commercial interests of all.
The general result of the labors of the commission, together with the propositions or the yamun conveyed in these memoranda, having now been made known to all the representatives in Peking, and their views upon the subject communicated to the British minister, he is at liberty, with the advantage of such knowledge, to deal definitely, as he trusts, with all the various questions which have been under examination and discussion by the mixed commission during the past six months.
In response to the replies of the yamun, in which they acknowledge the friendly spirit in which the propositions of the British minister were originally conceived, he desires to assure the prince and ministers that nothing is to be gained by negotiation for the exclusive advantage of either nation to the prejudice of the other. For British trade to flourish in China, it is necessary that the Chinese interest shall flourish too, and the nation derive benefit from its extension. In measures to be adopted to this end, it is clear that the interests of both must be consulted, and a principle of reciprocity recognized in all things. On no other basis can any permanent relations of amity and commerce be established. With these convictions, the yamun may rest assured that no propositions will be made by the British minister at variance with them, or discussed, except in a spirit of fairness, with a desire for mutual accord and a reciprocity of benefits.
The undersigned cannot conclude these preliminary remarks without acknowledging the ready response made by the prince and ministers to all his suggestions, and the good-will they have so constantly shown in the consideration of all the questions brought to their notice through the commission. Several of these affected great financial interests, and, indeed, nearly concerned the whole fiscal administration of the provinces, demanding, therefore, both patience and temper for their adequate treatment. They have been discussed without acrimony or a sign of irritation on either side; and if the result has not been a perfect accord in all things, which could hardly be expected, it has led to a mutual agreement as to the practicability of a great many much-needed measures, and a better understanding as to the desirableness of others in the way of change and improvement, for which the fitting time has probably not yet arrived.
The object of the commission was to examine into the chief causes of complaint set forth in the numerous memorials of mercantile bodies at the ports; and to consider by what means these could best be removed, and remedies provided. It was easy to ascertain from them what were the principal grievances, and how their remedies were to be sought, for the unanimity of the memorialists on both heads was conclusive.
The treaty of Tientsin had for its main object the protection and development of trade in China, not along the coasts or at certain ports merely, but throughout the whole country. The merchants point out that three conditions are essential to this end, which were provided for by treaty stipulations:
1. That there should be a fixed tariff of duties agreed upon by the respective [Page 595] governments, and that no local or provincial taxes in excess of the tariff should he levied on foreign trade without the sanction of foreign representatives.
2. That liberty should be given to traverse the country in all directions for the purposes of trade, and freedom, under license and consular control, to merchants to reside in the interior wherever centers of production or consumption might make the establishment of depots necessary, and their presence essential to the successful prosecution of the trade.
3. That means of communication and transport between these different points and the coast should be adequate for the requirements of trade, without which no large and profitable inland commerce is possible; and if those already existing in the country be insufficient, that liberty should be enjoyed to increase the facilities for both.
It is unnecessary to enter into an agreement to show that there is nothing specified under these three heads which is not either expressly stipulated for, or directly implied, in the several articles defining commercial privileges, and in strict accord with the whole context, as well as the spirit and object of the treaty. The close examination which the subject has received during the past months has led to a general agreement in principle, leaving only a discussion as to the means of carrying out these stipulations compatible with the present state of the country. The bona fide admission of English goods, if it is to be more than a mere nominal privilege, carries with it whatever may be essential to its full enjoyment, without stipulating what are the means necessary to this end; for it is sufficient to show that any particular facility is essential to the fruition of the primary right, to establish a derivative right on the basis of the first.
Under the second and third heads, therefore, the only question is, can the requirements of trade be adequately met in the interior without a right of residence and the possession of depots, and without improved means of transport and communication? If not, then the limits and conditions under which it can be carried into effect remain to be considered. It is here only that any material difference of opinion has arisen, and still to a certain extent exists. The yamun proposes that the right of residence should be limited to a temporary sojourn in boats or inns; and the right of inland navigation for transport of goods to vessels propelled by sails or oars. The merchants, who know best what their trade requires, demand the faculty of acquiring land and houses in like manner as at the ports, and railroads, telegraphic lines, and steam-vessels for means of transport and communication.
Between these two schemes for advancing trade and giving effect to treaty rights there is a wide interval. If the merchants, in demanding the right of living in the interior on their own property, and railroads, telegraphs, and steamers for communication, do so with little reference to the state of the country, or what may be practical or expedient in the interest of all parties, the yamun, in the opinion of the representatives generally, stops short of what may reasonably be required and safely conceded.
It is conceived that, with exterritorial rights existing, and in the present unprepared state of the country, with no common language to serve as a medium of communication between the races, rights of real property and domicile in the interior can neither be equitably demanded nor safely conceded. But storage for their goods and the consequent faculty for renting houses and godowns at certain points is essential, together with such rights of residence as the interests engaged may indicate within specified limits.
If the yamun has deliberately decided that the time for themselves creating railroads and telegraphs, or safely permitting foreigners to introduce them, has not yet arrived, without contesting such an opinion, in which the representatives do not certainly all concur, still a limited application of steam should be conceded as essential. They would be willing in the first instance to see this confined to the employment, under license and custom-house regulations, of a small number of tug-boats on the great lakes, as the Poyang, or a small class of cargo-boats propelled by steam to be solely used for carrying goods in which foreigners had a bona fide interest, so as to avoid injurious competition with native traffic and means of transportation.
Considering how small a portion of the whole inland trade of China the foreigners’ share can be, it is impossible that a privilege so carefully restricted could materially interfere with the native interests, or their means of existence. Nor, considering the small size of the proposed steamboats, and the strict control under which they could be placed, is there reason to anticipate danger to life or property from their use on the lakes. This would not give any undue advantage to foreigners over natives—first, because it is open to all natives to employ the same means; and looking to the large amount of Chinese capital already invested in steam companies, and the free use by native merchants of steamers in their coasting trade, it is not probable they will be slow in availing themselves of whatever improvements foreigners may introduce; secondly, because, even if they did not, any advantage gained by foreigners in better means of transport would not compensate for their disadvantages in being compelled to hire houses and storage from natives, instead of having their own. They will be called upon, too, to pay more than a Chinese trader would be asked for the same [Page 596] accommodation; and as foreigners, will also be in a thousand ways at a disadvantage with the natives.
In both these directions, the undersigned is bound, therefore, to urge upon the yamun some further concession than has yet been made. This is in accordance with very strong opinions expressed by his colleagues of their insufficiency. Without some less timid advance in the way indicated, grave dissatisfaction will be felt with the present arrangements, both by the merchants and by foreign governments, however satisfactory and liberal may be the measures proposed under other heads. In that case, nothing as regards those other powers could be considered as definitively settled, even if the undersigned were disposed for the present to trust in the certainty of progress from small beginnings.
In this matter, and in the working of mines alone, is there any strong feeling that the revision now proposed will be nugatory and incomplete if carried out as at present contemplated by the yamun? It is felt that to give foreigners a right to assist in working mines and use their own machinery, but still deny them houses and workshops, or any copy or leasehold interest in them, will most likely fail in its object. If foreigners be not allowed freely to enter into arrangements for renting or leasing from the proprietors such mines as are worth working, neither capital nor the best skill will be available. The power to purchase proprietary rights is not absolutely necessary for successful working, but the permission to erect workhouses and other accommodations is indispensable. If foreigners are to engage at all in developing the boundless mineral resources of China, now lost to its government and people for want of engineering knowledge and machinery, it is certain that these further facilities can be deferred for only a short time, and would better be granted at once than withheld until natives and foreigners are driven to combine together in evading regulations only calculated to impede the development of all mining operations.
The right to the permanent residence of foreigners in the interior has been so fully conceded to one class—the missionaries—with liberty to acquire both lands and houses, that it seems inconsistent and invidious to deny a modified privilege of the same kind to merchants, who, besides being under consular control, furnish, in the interests they would have at stake, security for good conduct. The sixth article of the French treaty stipulates “that it is permitted to French missionaries to rent and purchase land in all the provinces, and to erect buildings thereon at pleasure;” and what is permitted to the French missionaries is equally so to all other missionaries; why, then, should a similar right be denied to the merchants? Of the two classes, it is impossible to doubt that the latter are least likely to give trouble to the authorities, or create popular disturbance, as experience tends to prove.
These questions have been dealt with first, because they are those upon which alone there is any serious divergence of opinion between the Foreign Office and the foreign representatives generally; and in the hope that the prince and ministers will once more take the several points here urged into their consideration, and remove the sole remaining obstacles to a good mutual understanding on matters of so much importance.
With regard to the levy of li kin and other taxes in excess of the transit dues fixed by treaty, the proposed arrangements hold out such hopes of the removal of these longstanding abuses, that the foreign representatives are disposed to see in them a practical solution to the difficulty which the persistent exactions of the local authorities have created. This has hitherto constituted the greatest of the merchants’ grievances; it has limited their trade to a small circle around the ports, and dwarfing it even there by onerous and uncertain charges.
Necessary as means of improved transport and access to the interior may be to any large development of trade, they are of secondary importance compared with impediments caused by a perfectly irresponsible power of local taxation. On the effectual removal of this source of injury, therefore, depends all improvement. The abolition of li kin dues on foreign trade has become the essential condition of progress; and the necessity of devising a remedy was too imperative to allow either side to hesitate in dealing with the difficulties which beset it. Even yet the undersigned finds his colleagues to be not fully assured that the measure proposed will be effective to the end, and deem some additional guarantee against failure desirable, and security for the additional losses such a result would entail on the merchants.
The measures now proposed, if faithfully carried out, seem adequate to the end. The principle is distinctly recognized that special taxes of any kind, if touching foreign goods, must be previously arranged with the foreign representatives at Pekin, and published for general information; and consequently that no extra taxation shall be levied by local officials and without imperial authority. All irresponsible and local taxation is thus put an end to. It is acknowledged that all foreign imports, opium excepted, should circulate free on paying the import and transit dues fixed by the tariff; and this privilege to extend to the goods even when transferred to Chinese hands. It is further agreed that all Chinese produce shall be allowed to get to foreign markets after paying 2½ per cent. transit duty and the tariff export dues; and also that every [Page 597] kind of native produce may be traded in by foreign merchants on the same footing as natives.
To bring about these advantages to the foreigner, without injuring the Chinese revenue, it is proposed that the transit due of 2½ per cent. shall be levied on all foreign imports at the time of landing, in like manner as the import duty and by the maritime customs; and that such imports shall thereafter be exempt from all further taxation, no matter in whose hands they may be found, thus terminating all further discussion about their liability to li kin taxes, which at many ports have far exceeded both kinds of duties put together.
In order to secure that native dealers in native produce shall not be placed in a worse condition than foreigners, but both be placed on the same footing, it is proposed that a further deposit of 2½ per cent., in addition of the transit due of that amount, shall be lodged at the last barrier before arriving at the port, as an equivalent for the various inland taxes it would otherwise have escaped under the transit certificate obtainable only by foreigners. In the event of its being sent to a foreign port within three months, the deposit is to be refunded.
To give effect to these principles, an edict has been draughted for publication, by which all local officials will be made fully acquainted with the foreigner’s rights in respect to the transit paper; and in the event of any attempt at obstruction or surcharge, it is provided that an appeal shall lie to the nearest customs under the foreign inspectorate; and an officer shall be deputed to make inquiry on the spot, and compensate the foreign merchant for any proved loss or injury.
Such is the general outline of the system now proposed for the due execution of the treaty clauses providing exemption from extra taxation under the transit certificate. Is there sufficient security for the due observance of these rules by the provincial officials of all classes? This seems to be the only question in the minds of the foreign representatives; and it is suggested that nothing is really certain but the addition of 2½ per cent. to the import duties. This will be vigorously exacted and paid, but whether the equivalent exemption from all further taxation will be obtained must be held to be more or less doubtful until further experience can prove the efficacy of the new order, seeing that in the past these same provincial authorities have shown the most persistent disregard of treaty stipulations where foreign trade was concerned, inflicting losses on the merchants by exactions, surcharges, and delays, to an amount difficult to calculate. The yamun has expressed its willingness in all such cases to make adequate compensation upon proof of the violation of these rights; but in the great majority of cases proof is difficult to produce, partly from the lapse of time, and partly from the imperfect knowledge of the language and the impossibility of producing documentary or other conclusive evidence. Under such circumstances it would seem reasonable that, during the first year at least, all amounts collected under the new arrangement as transit or barrier dues should be carried to a separate account by the maritime customs, and held in reserve, to meet any claims for compensation in cases of loss or prejudice sustained by failure of execution; and in lieu of depositing the amount of the extra 2½ per cent. the equivalent for charges due on native produce not going to foreign ports, a bond would for many reasons be preferable and equally secure, as it would avoid locking up the merchant’s money for a liability which might never arise, and preclude all questions about relative rates of exchange on payment or reimbursement.
Some provision must be made under this head at the port of Ninchwang of an exceptional nature, where compulsory payment of the transit due cannot be enforced, seeing that there are no inland taxes on native trade in Manchuria, (as the consul there informs the undersigned;) and to exact it would consequently put the foreigner at a disadvantage with the native dealer, contrary to the principle of placing them on an equal footing.
As to increased facilities of access to points on the coast and the river Yangtsze, the yamun proposes to establish three landing-places, with custom-house stations for the landing and shipping of goods on the river; and to open Wanchau in place of Kungchau in Hainan. It seems desirable to add at least two more to these landing and shipping stations on the Yangtsze, one at Kwachau or elsewhere on the northern bank opposite to Chinkiang, if there be a point within the same jurisdiction, and another at Hu-kan near the mouth of the Poyang lake, to prevent much inconvenience and loss of time in dragging cargo-boats with tea 18 miles against steam, which often causes a delay of many days, whereas, if a station were opened a steamer could load there at once instead of Kin-kiang.
The opening of new ports on the coast seems to be more in the interest of the Chinese revenue than of the foreign merchants. Except for Wanchau, none of the memorials have expressed a desire to have more ports; and some of them give a strong opinion that, without advantage to trade, a large addition would be made to the expenses of the merchants, if they are called upon or driven by competition to create more establishments.
Nevertheless, a free access to the coast generally, without concessions or building of settlements, would undoubtedly be an advantage to both countries. To China it would [Page 598] give an increase of revenue by the facilities custom-houses would afford by preventing smuggling in foreign goods, now carried on to a great extent by native boats at non-treaty ports; and would also tend to put down piracy, especially on the west coast. To the foreign merchant it would be convenient if the intervening ports of Wanchau, Chinchew, and Taichan were made ports of entry, where foreign vessels could land or ship cargoes; and if Pakhai, the port of Lienchau, at the head of the Gulf of Tonquin, were likewise opened in connection with the Hainan port, not only a great blow might be struck to destroy the pirates who infest those waters, but this port, being now the entrepôt of trade between the Gulf of Tonquin and Canton, might lead to the development of a large trade with Kwangsi and Yannan. All these might be mere subsidiary ports of call, with small custom-houses under the foreign inspectorate, while the placing of consular officers there might be optional, and, except at Pakhai, one or the other probably would not be deemed necessary.
The undersigned therefore proposes, in the common interest, that these additional landing places and subsidiary ports of call should be conceded as conducive to three desirable objects, viz: the extension of trade; the increase of revenue; and, in connection with both, the suppression of smuggling and piracy.
In respect to a revision of the tariff, a separate memorandum is attached giving the reasons why the present time is inopportune for a general revision. The Chinese government now seeks a revision, and proposes the equalization of duties on the bulk of the articles in the tariff to 5 per cent., but doubling those now levied on the three largest staples, tea, silk, and opium. No doubt the revenue might thereby be largely increased, or even doubled, since these articles of luxury would probably bear to have the duty doubled; but the present revenue from foreign trade, under the vigorous and honest administration of the inspector general, is large and certain in its amount, and tends to increase with the extension of trade. If the facilities to such extension be increased as now proposed, an increased revenue would be equally attained without additional taxation, and under conditions alike favorable to foreigners and natives; whereas there would be great opposition to a heavy tax on these three leading articles. Finally, if equalization of duties were alone contemplated, the treaty powers, having each arranged their own tariff in view of the exigencies of their trade, a common consent would be necessary to revise it, and great difficulties would be likely to arise in carrying out any principle of equalization.
In connection with the tariff and administration of customs, various subsidiary questions have been satisfactorily settled. The question of duty-free goods, especially dock-stores, including wood, copper, yellow-metal, and all such articles, was one of those submitted to the commission. The proposal to make the required changes under license and bonds, with a charge of only 5 per cent. on ships built in dock, will no doubt meet the object, if care be taken by the inspector general, in consultation with the merchants, to include in the duty-free list all articles that can fairly be considered solely for foreign consumption. The assurance that all restrictions and embargo on rice, sugar, &c., and especially a partial application to foreign vessels, shall be strictly prohibited, and that no monopolies, properly so called, shall henceforth be persevered in by the local authorities, will be received with satisfaction by the merchants, for they have hitherto been exposed to heavy losses from these violations of treaty.
The merchants demand some changes in the matter of drawbacks, both as to the extension of time and repayment in specie, and at some ports the opening of bonded warehouses. The yamun being willing to establish them wherever the interests of trade makes them desirable to the majority of the merchants, the question of drawbacks loses much of its importance. Wherever these merchants are established, care will have to be taken as to the plan adopted. Two systems exist in Europe, one of which enables merchants to place goods under bond in their own warehouses, subject only to the surveillance of the custom-house authorities; and the other requires the goods to be stored in government establishments. Certain advantages result from the first, not attainable by any other. The merchant always has his goods near at hand for inspection, and under his own care as to fire, &c., which greatly facilitates trade. Existing interests or property are not interfered with; and the government is able to initiate a system of bonding far more cheaply than by building extensive warehouses of their own. In a mart like Shanghai, where the vested interest in warehouses is large, it becomes very important which system is adopted; for, against the salaries of a few officers who inspect the godowns where the goods are stored, has to be set off the expense of purchasing or building large government stores. How far one would exceed the other can only be determined at each port by examining the local conditions.
It will be necessary, therefore, for the inspector general to consult with the consuls and chambers of commerce, and together determine on the best mode of attaining the end, compatible with present interests. Where it may not be advisable to establish bonded warehouses, the yamun proposes to extend the return of drawbacks from one to three years, which is considered sufficient, and to repay in specie those presented during the current quarter. But this latter time is much too short to be of practical value; not less than six months would avail, and a return in specie within the current [Page 599] year would be more satisfactory, and offers no serious difficulty in variations of exchange or complication of accounts.
Any step in this direction will be promoted by the success of the measure proposed for assimilating the currency at each port to the Canton standard of 1842, and the appointment of an assayer at each port to carry out the system. Where no gold or silver coinage exists, it cannot but be a difficult work to regularize the payment of duties by fixing the value of sycee at each port, but it is worth while to try.
All drawbacks might be entered in a separate account, to be closed at the end of the year, just as a bank keeps a record of its paper. Those issued in a given year represent so many promissory notes, which the customs is bound to make good on demand, either by receiving them in payment of equivalent value for duties or in specie at the current rate of exchange. Taels and dollars may fluctuate from month to month, but if the merchant receives the same number which the document shows he once paid, it seems to be all he can equitably claim. If either side loses from the fluctuation between specie and exchange in the interval, each may well bear it in consideration of the advantages of the system; for the custom-house has had the use of the money, and the merchant at once receives specie instead of waiting indefinitely, or discounting the paper at an increased loss. There would probably be no great loss on either side during the year. At its end a balance can be struck between the amount issued and those received back for duties, or for cash, and the difference will show the amount of such notes out as a debit against the future receipts of the customs. By this or some other way confusion in the accounts can doubtless be avoided.
Among other wants of trade is a more efficient system for the protection of foreign interests in cases of custom-house confiscation and fines; and the desire of the merchants on this head has been met by the rules recently agreed upon. Another point is a better administration of justice in the mixed cases where natives and foreigners are both concerned. The proposition made by the undersigned in reference to the last, that a code of civil law, with rules of procedure based on broad principles, should be formed, by which cases of civil suit might be tried by a mixed court, has been liberally acceded to by the yamun, and the announcement has been received with great satisfaction. It is to be hoped that the construction of this important work may be undertaken at once, for much time must necessarily be taken to work out the details. With mixed courts, properly constituted for administering justice, guided by rules of practice, that can be accepted by the treaty powers, the way will be prepared for modifying those stipulations which grant exterritorial privileges, and this difficulty will in process of time disappear.
The undersigned regrets that the admission of foreign salt is refused, for he is persuaded that the trade might be productive of great advantage to both countries and benefit the revenue; but he will not now press it further, as the subject has already been fully discussed.
In answer to the observations of the yamun in its memorandum No. 2, the undersigned agrees with the ministers, that it would be to the advantage of both parties if the merchants themselves would observe the distinction made between them and the native traders, and he will not fail to enforce this necessity upon all British subjects by every means in his power. He has to observe, however, that no ship not British-owned is legally entitled to fly the British flag. While the Taipings were at Nanking, a custom grew up in those times of confusion of covering Chinese cargoes, vessels and rafts, with British colors; but it was an abuse, and has been discontinued since his arrival in China. He will take counsel as to the best means of preventing irregular trading under this flag, and the government can take steps to move the other representatives to adopt a similar course for attaining this end.
To sum up. It appears that an agreement has been reached on many points, and those questions on which important differences exist—inland navigation, residence in the interior, and working mines—are questions of degree as to the restrictions which should properly attach to the rights conceded in view of the present state of the country and other conditions. Some relaxation and modification of these may yet remove all divergence of views, and give a completeness to the labors of the commission that would be very acceptable to her Majesty’s government; and judging from the opinions expressed by the other representatives, to all the treaty powers which have a common interest in this revision.
The undersigned, therefore, will rejoice much if the prince and ministers can so far modify the views expressed in the memorandum now under reply, in reference to the only three points on which further discussion is required. He will then be prepared to transmit the papers to his government for instructions as to a revision of the treaty of Tientsin in this sense.
K.
Separate memorandum on revision of the tariff, accompanying note of September 8, 1868.
The British minister, in his note communicated last November to the Foreign Office, classing under five heads the objects chiefly to be desired for the removal of the principal grievances of the merchants by the correction of abuses in the levy of taxes, in connection with the grant of greater facilities of trade and residence in the interior, did not propose any general reduction of the tariff, or even an equalization of rates to the original standard of five per cent. ad valorem. He contented himself with specifying some 10 or 12 articles, on which the duties pressed unequally and injuriously, without benefiting the revenue in any material degree. The yamun has met this proposal liberally, in consenting to the reductions suggested; but they propose that the duty be doubled on tea, and silk, and opium, with or without a general revision and equalization of the tariff rates, so as to bring all other articles on the large list to an average of five per cent.
To propose to double the duties on nearly the only great staples of export and import is to raise the whole question of the expediency of a fundamental change and readjustment of the duties, which for various reasons is more than doubtful. In the opinion of the undersigned, as in the opinions of the other foreign representatives, the present time is not favorable for so large an undertaking. The tariff attached to each treaty is regulated by the special conditions and exigencies of trade in each country; and thus it would be necessary to revise each separate tariff, if any extensive changes were made now, before they could take effect. On the other hand, although one of the Chambers of Commerce proposed a general reduction to two and a half per cent., it is stated in the majority of the memorials that the tariff, on the whole, is satisfactory, and the only modifications suggested were in the few articles already specified, and involved ved no general revision.
Under these circumstances, it being in the general opinion undesirable to attempt a revision of the whole of the tariffs, and as any proposition without this to double the duties on the three principal articles of the import and export trade would be generally condemned as impracticable, the question of further changes may be considered at rest for the present. But as regards the future, it may still be worthy of consideration whether, in the interests of China and foreign powers alike, great changes, both in principle and detail, might not be introduced with advantage, first, by simplification; and secondly, by a readjustment of rates. Nearly two-thirds of the whole export and import duties, taking the returns of 1866–67, are at present realized on three articles. Among the exports tea and silk furnish 3,330,000 taels [$4,657,300] out of 4,700,000 taels, [$6,573,420;] and in imports opium yields 2,000,000 taels out of 3,200,000 taels, [$4,475,520.] The remaining thousand articles in the tariff only produce about one-third, a fact that undoubtedly suggests simplification. The duty on tea is now some 10 per cent. ad valorem, or nearly double the original contemplated rate of five per cent., and it falls very unequally on the different kinds, inferior and superior. On the former it often amounts to 30 or even 35 per cent. It is true that silk, both raw and in piece, is only taxed about two and a half per cent., and might well bear increase; but even if doubled, the gain to the revenue would only be 300,000 taels. And the present tariff rate on opium, which next to tea yields the largest share of the whole customs revenue, is a little over seven per cent. An equalization of these rates to five per cent. would, therefore, produce a very considerable reduction of the revenue.
In the way of simplification, however, a great work might be done at no cost to the Chinese revenue. It may be shown that there are some 500 out of 600 articles enumerated among the reports on which it is not worth while to collect duties, and about 400 out of 500 articles in the imports on which duty is collected to no purpose. The result, therefore, of reducing the number of articles, according to the present tariff, to 100 each of import and export, striking out the other 400 imports and 500 exports, would be a nominal loss of only 200,000 taels annually, which would probably be more than covered by saving in the expenses of collection.
This process of simplification might be carried much further, and the imports be reduced on the tariff list to textile fabrics, metals, and opium; and the exports to 11 articles, not 20 altogether, with a loss to the revenue of 65,000 taels on imports and 380,000 taels on exports—total of 445,000 taels, or little more than five per cent. on the whole revenue, which might easily be met by raising the tariff rate on raw silk and piece goods to the original standard of five per cent., giving an addition on silk of 330,000 taels, and on piece goods of 120,000 taels—in all, 450,000 taels.
There may be objections of a practical nature to any such sweeping measure of simplification in the tariff derived from the intermixture of the native with the foreign trade, native merchants doing a large coasting business in foreign ships; and of course it would be necessary to take into account the revenue yielded by this native trade— both that portion carried on in foreign bottoms and the still larger part in junks, [Page 601] because if 900 articles were made free in foreign vessels, the same would have to be done for the junks, or the native trade in them would be destroyed by a differential duty, exposing them to a ruinous competition. What duties the junk trade yields can, of course, only be ascertained by Chinese authorities, but probably it is not very large. Such information would be desirable. The export duty on sugars and 17 other articles of Chinese produce, going from one Chinese port to another in foreign vessels, may be estimated at 472,000 taels; and if limited to some 20 articles, there might be a loss of about 142,500 taels.
If, on the other hand, the object were to increase the revenue with the greatest simplification, tea, silk, and opium are all articles of luxury, which might bear a considerable increase of duty, so as even to double the present revenue without probably diminishing, in any perceptible degree, the consumption, and therefore without injury to trade, save that it might somewhat check further demand and expansion. But such increase would be strongly resisted by the whole mercantile class of all nations interested in the trade with China; and probably, therefore, by their respective governments, unless it could be shown that they would obtain some compensating advantage of a very undoubted character, fully equivalent in value to what they might lose— which the Chinese government might be little disposed to grant, even for a large increase of revenue, such as inland river navigation, railroads, and telegraphs.
The revision of the tariff would seem to be a matter, therefore, that may wisely be left for further consideration, and the influence of time and progress in other directions. If, at some future period, the native and foreign customs services should be joined together as a measure of administrative simplification and economy, and the preventive service should also become effective with steamers, it might then be safe to increase the duty on opium without giving a premium to smuggling; and also to take into consideration what corresponding changes could be advantageously made by common consent and the aid of a general revision of the present tariff.