Mr. Conger to Mr. Hay.

No. 1228.]

Sir: With reference to the question of the establishing of customs stations at Dalny and other Manchurian ports under Russian control, mentioned in my dispatch No. 1175, of December 17 last, which was the subject-matter of Department instruction No. 606, of January 3, and of which I hereby acknowledge receipt, I have the honor to report that the Chinese Government still refuses to agree to the Russian scheme, and as yet it has not been put in force.

The Chinese are insisting upon the adoption of the plan now operating at Ts’ing-tao, in the German-leased territory, to wit, a customs station under the management of the Imperial Chinese customs, but operated by German employees of the customs service. In this case the Chinese wish the stations to be under the direction of the imperial customs, but operated by Russians detailed from the customs service. The Russians insist upon having the entire management and are using every argument and pressure to make the Chinese consent, and threaten to establish the stations whether or not the Chinese Government agrees, claiming, under the provisions of their railroad agreement, that they can do so.

At present large amounts of cotton goods are arriving at Niuchwang, through Port Arthur and Dalny, without paying any import duties whatever, and considerable quantities of raw silk and other commodities are exported through the same way. * * *

I inclose copies of two dispatches from Consul Miller upon the subject.

I have, etc.,

E. H. Conger.
[Inclosure 1.]

Mr. Miller to Mr. Conger.

No. 156.]

Sir: I have the honor to acknowledge your dispatch, No. 1749, of February 16, 1903. In reply thereto I find that no customs have yet been established by the Russians either at Dalny or at any other place in Manchuria.

They have endeavored to engage the services of men here to enter the service at Dalny, but so far none have accepted.

Mr. Protassieff is established at Dalny with a force of men ready to begin the collection of customs duties, but is waiting for orders. I am inclined to the opinion that the Russians will make a demand that they have charge of the customs at Dalny and other points on the railway in return for turning over the customs at this port.

Agents of the Chinese Eastern Railway have been at work here recently endeavoring to secure contracts for carrying millet from here to Japan via Dalny. By this means they would evade the native customs. They have made some very cheap rail and steamer rates and some shipments have been made, but I have not been able to learn how much cargo has been engaged.

Quite a large quantity of goods are now coming into this place through Port Arthur and Dalny, and much is going that way into the interior without paying customs duties.

I am, etc.,

Henry B. Miller, Consul.
[Page 49]
[Inclosure 2.]

Mr. Miller to Mr. Conger.

No. 158.]

Sir: I have the honor to report that during this month something over 5,000 bales of piece goods have come to this place through Dalny without paying any customs duties, and 2,500 bales of raw silk have been exported through Dalny without duty; also large quantities of millet have been exported to Japan.

The Russians have taken over some temples here and are fitting up a school to teach Russian to the Chinese.

It is also reported that they do not propose to turn over to the Chinese the temple grounds and buildings where their troops are quartered, but will retain them for purposes of their own. They acquired a large tract of land in the heart of the foreign settlement from the Chinese at nominal cost and have constructed a large and substantial building to be used as a consulate. This building is now about completed.

I have, etc.,

Henry B. Miller, Consul.