No. 134.
The commission to Mr. Evarts.

No. 15.]

Sir: In our two dispatches of the same date, we have informed you of the signature of the two treaties, copies of which were inclosed. We also informed you of the condition of the question as to the formal communication between consuls and the higher provincial Chinese authorities.

The only remaining subject of discussion between the two governments is that of lekin taxation, including the system of transit passes, and kindred regulations. As you are aware, this subject has been for some time under consideration by the diplomatic representatives of the treaty powers in Peking.

Since our arrival here, two conferences of the diplomatic body have been held. The result of those conferences, and communication with the Yamen is at present this: The diplomatic corps have, for many months, been engaged in an effort to secure amendments to the rules which the Chinese Government have instituted in respect to transit passes outwards. The foreign ministers have maintained that some of the rules are in contravention of treaties, and that all have been often enforced in a vexatious and unjust manner. A correspondence has been carried on with the Tsung-Li-Yamen which bids fair to produce desirable results at no distant day. But the correspondence is not yet concluded. The positions taken by the ministers, so far as we have been able to study them, meet with our entire approval.

The Chinese Government seem disposed to accept the rule that an import duty paid once for all at the port of entry, shall protect foreign importation from all other duties, to whatever extent, and in whatever direction, such importation may afterwards pass within the territory of China. But the subject is only under consideration, and there is a very serious difference between the Chinese Government and the treaty powers as to what the amount of such import duty should be.

At the conference held on the 15th instant, Sir Thomas Wade, Her Britannic Majesty’s minister, to whom the subject had been referred, made a report, a copy of which will be found in inclosure No. 1. After hearing this report Monsieur Von Brandt, the German minister, was requested to prepare a memorandum, a copy of which is also inclosed. To this memorandum you will find the names of the commissioners plenipotentiary of the United States appended, signifying their entire agreement with their colleagues.

You will observe that the question of the amount of import still remains under discussion, and that when—if that can be anticipated—the Chinese Government and the representatives of the treaty powers have agreed, then the whole scheme is to be referred back to each government for consideration and instruction. It is unnecessary to point out that this involves a negotiation of no short duration. All that we can now properly do, therefore, is to give whatever weight attaches to the opinion of our government, to the recommendation of the conference. We do not see that any useful purpose could be served by the full commission remaining in Peking during the progress of this discussion and the reference home of its result.

There can be no doubt of the great advantage to foreign trade that the settlement of this question upon the basis indicated would be, but [Page 202] the presence of the commission would, not aid materially in its completion. We have therefore deemed it our duty to address a communication to Sir Thomas Wade, as “doyen of the diplomatic corps,” stating that Mr. Angell was in full possession of the views of our government, and that, upon our departure, was fully authorized to deal with it in any stage of its progress as we would have been. The necessity of this arises from the fact that the commission in its full number was invited to participate in the conferences, and that the absence of two of its members seemed to require some explanation.

We can scarcely anticipate that any practical action in the matter can or will be taken until next spring, when it is possible that a reference may have been made to the respective treaty powers, and their instructions received.

Mr. Swift and Mr. Trescot will accordingly leave this capital for Shanghai on the 20th instant, going thence to Yokahama, whence Mr. Trescot will take the treaties by the first Pacific steamer that he can conveniently reach.

We have, &c.,

[Inclosure 1 in No. 15.]

Memorandum on a conference held at the Tsung-li-Yamen on the 13th November, 1880, regarding exemption of foreign imports from taxation inland.

The origin of all discussions on this point, it will be borne in mind, is the difference of interpretation put by the Chinese authorities and the foreign merchant upon the clauses in the treaties affecting taxation of imports.

The construction most favorable to the foreign merchant has been that his imports, having paid import tariff duty, and a half duty, which it was at the option of the foreigner to pay or not, were thenceforward free of all possible charge, no matter to what part of the empire they might be carried. Some of the treaties, it is held, would scarcely justify so sweeping a claim to exemption, but by the favored-nation clause if so large a measure could be established under any one treaty, all foreign traders alike would of course be equally benefited.

The Chinese have argued that the half duty should clear inland duties leviable in transitu only from port to inland market, the treaties specifying none but the dues leviable at transit duty barriers. These barriers they have multiplied at pleasure, and they have taxed imports long before they could be said to have reached any barrier at all.

The continual altercation to which conflict of opinion on the point at issue has practically given occasion being scarcely less injurious to foreign interests than the unauthorized taxation itself has proved directly to trade it was proposed some time since to draw from the Tsung-li-Yamen the suggestion of some arrangement by which a single payment made in the first instance should clear imports of all further taxation whatever throughout the empire. This was, with a certain difference, the proposition of Sir Rutherford Alcock when negotiating a revision of the British treaty in 1868. The Chinese Government then consented, if the option to pay or not to pay the half duty were extinguished—if the payment of it, that is, were made as obligatory as the impost tariff duty itself—to free imports of all taxation in the maritime provinces. In the inner provinces certificate of the payment of the half duty was still to clear imports in transitu of barrier dues. On arrival at inland centers they were to become liable to taxation once they were separated from their certificate. The present proposal is to effect an arrangement for the clearance of imports by a single payment throughout the empire.

The ministers of the Yamen being called on to say under what conditions this might be secured promptly replied, by increase of taxation. Being pressed to state in what degree, they proposed a reference to the provinces; and this made, they signified their wish that the foreign representatives conferring with them should first declare their estimate. This was the point reached before the conference of the 13th instant. The ground on the foreign side taken on the 13th instant was the following:

[Page 203]

The negotiators of the foreign treaties called in question had undoubtedly been of opinion that if the Chinese Government had secured to it the tariff duty, roughly estimated at five per cent, ad valorem, and the half duty—a total, that is, of seven and a half per cent. upon value—it ought to be content. This total it did not now receive. The customs returns of 1879 showed that the duties collected on imports, opium excluded, for the right of the Chinese to tax opium once purchased by Chinese is not contested was, taels 2,262,299. Had immediate payment of the half duty been obligatory there would have been further collected the sum of taels 1,131,149.

The sum collected on transit-passes, the application for these being optional, was but taels 342,795, or little more than one-third of this sum. The obligation to pay down the half duty would, therefore, manifestly be a concession very favorable to Chinese revenue. This was stoutly denied. The li-kin, the chief item of the abnormal taxation, imposition of which on his imports is protested against by the foreigner, amounted, it was affirmed, to a far larger sum than half the tariff duties. Could the Yamen, it was asked, produce statistics? There was some difficulty about a direct answer to this question; but, in the end, it was stated that according to the report of some provincial governments, the li-kin equaled twice, of others three times, the tariff duty. One reason earlier, given for the Yamen’s unwillingness to name the amount to be added to the old tariff, had been its apprehension that the demand of the provinces would be far in excess of the expectations of foreign ministers; and the provincial estimates now referred to prove that the Yamen’s surmise had been correct.

The natural rejoinder to these arguments was that the provincial estimate was far too high, and that the foreigners’ experience authorized a conviction that whatever the amount really levied, but a limited proportion of it found its way into the public chest, central or provincial.

These conclusions were, of course, deprecated, and a suggestion being pressed for as to the utmost increase of tariff duty that foreign representatives might consent to move their governments to adopt, the ministers were assured that taking the tariff duty and the half duty at 7½ per cent., a rise of one-half per cent., or, at the most, of 1 per cent., would be regarded as a very liberal concession. An addition of a half per cent. would have given, in 1879, a total of taels 3,619,677; of 1 per cent., a total of taels 3,845,906.

The ministers were confident that this arrangement would not be satisfactory to the provincial governments, and, if not, would fail of its end. In some jurisdictions at this moment, the li-kin, as it had been stated, equaled three tariff payments; that is to say that, including the tariff, imports paid 20 per cent. In other jurisdictions they paid 15 per cent. Finally, after much discussion, they expressed a belief that 12½ per cent.—that is, a tariff and a half in addition to the present tariff duty—was the minimum that would satisfy the provinces.


[Inclosure 2 in No. 15.]

Draft of memorandum prepared by Monsieur de Brandt, as representing the opinion of himself and his colleagues, after hearing Sir Thomas Wade’s report of his conference with the Tsung-li-Yamen on November 13, 1880.

The proposal that a single payment at the port of entry should be substituted for the optional payment of the transit duty, all transit dues, as well as the illegally levied inland and li-kin duties, seems admissible; less so the amount of this single payment as proposed by the Yamen.

By the payment of half the tariff duty the merchant can, under existing treaty stipulations, carry his imports free from any taxes, duties, or li-kin to any place in the interior named in the certificate.

The making the payment of the half tariff duty compulsory instead of optional should therefore free all imports from all further taxation, whatever it may be called or whatever its purpose, from the port of entry to any place in the interior to which they might be sent.

Admitting, for argument’s sake, that the Chinese Government has the right to tax imports ad libitum on leaving this place in the interior, all that can, in justice, be claimed by them is that the loss which may arise from the suppression or abandonment of this right shall be made good to the Chinese Government. Imports forwarded from a first market to a second or third will, as long as the means of conveyance remain what they are, represent only a comparatively small percentage on the whole trade. The Chinese Government can therefore not expect more than a small compensation for the abolition of this right.

As Sir Thomas Wade has reminded his colleagues in the Anglo-Chinese convention [Page 204] of 1868, the Chinese Government agreed to free imports from all further taxation in the treaty port provinces in consideration of a compulsory payment of the half-tariff duty at the port of entry, reserving to itself the right to tax the imports ad libitum in other provinces.

If, therefore, fifty per cent. of the tariff duty was considered a fair equivalent for all taxes, dues, or li-kin legally or illegally levied on the large amount of imports within the treaty port provinces, twenty or at the utmost thirty per cent. of the tariff duty would be a fair compensation for the abandonment on the part of the Chinese Government of its right or pretension to levy taxes, duties, or li-kin on the much smaller amount of imports reaching the other provinces and distributed through them.

A proposal to this effect seems all that the representatives of the treaty powers could venture to submit to their governments, and all that these latter would be likely to consider.

[Inclosure 3 in No. 15.]

The commissioners to Sir Thomas Wade.

Sir: As we have had the honor to receive at your hand, as the representative of the diplomatic corps in Peking, an invitation to join you in conference upon certain subjects of common interest to all the Treaty Powers, it becomes necessary to inform you that two members of the Commission Plenipotentiary sent hither by the Government of the United States, Messrs. Swift and Trescot, will leave this capital on the 20th, upon their return home.

Of several subjects commended our care, we have fortunately succeeded in making such treaty arrangements as we hope will be acceptable to our government. We would feel it our duty to remain and join in any negotiations with our colleagues upon such subjects as remain unsettled were it not that we feel ourselves authorized to believe, from what has passed in the conferences which we have attended, that at present no further result can be attained than a reference to their home governments of such propositions as they may agree upon, by the diplomatic representatives of the Treaty Powers. As we have already had the honor to signify our entire and cordial agreement with the views of the diplomatic body as to the recommendation to be submitted to the consideration of the Chinese Government, and, upon its consent, to be referred home for approval, we beg to inform you that any further discussion which may arise will be left to the charge of Mr. Angell, one of the commissioners, and who remains in Peking a Minister Plenipotentiary and Envoy Extraordinary.

We have, &c.,

  • W. H. TRESCOT.