Papers Relating to the Foreign Relations of the United States, Transmitted to Congress, With the Annual Message of the President, December 5, 1881

No. 179.
Mr. Angell to Mr. Blaine.

Legation of the United States,
Peking, September 14, 1881. (Received November 4.)

No. 212.]

Sir: Since I wrote my No. 151, April, 30, on transit passes outwards, the diplomatic body have considered the subject in several conferences, and Mr. von Brandt, the German minister, has most industriously carried on the negotiations with the Tsung-li Yamên. We seemed to be on the very verge of a tolerably satisfactory agreement with the foreign office, when suddenly the Chinese ministers came forward with so important and unacceptable modifications that the diplomatic body at their meeting of July 11 were agreed that it was useless to prolong negotiations on such a basis. As some of the ministers have been absent from the capital during the summer, negotiations have been suspended for some weeks. It seems proper, therefore, that I should report what has been attempted since April. I cannot do this better than by inclosing a memorandum which Mr. von Brandt submitted July 6, with, a draft of provisional rules on transit passes outwards. The foreign representatives were prepared to adopt this with but slight modifications or additions, and it was supposed the Tsung-li Yamên would agree to them. The memorandum gives a brief review of the negotiations from the beginning. I inclose also the provisional rules. I do not deem it necessary to give a detailed account of the discussions in the conferences and of the various steps by which the rules were brought into their form as here given.

Mr. von Brandt’s communication (confidential) of July 10 gives so fully the particulars of his interview with the foreign office that I need not dwell upon it. You will observe that the Tsung-li Yamên insisted on two concessions which we could not think of making. 1st. Foreign goods admitted free of duty shipped coastwise should pay coast-trade duty. 2d. Goods manufactured from native produce bought at the port should be subjected to the same restrictions as goods manufactured from produce brought down under transit pass. We believe that there is no ground in the treaties on which either of these claims can rest, and as the Tsung-li Yamên insisted on both of them, the negotiations were necessarily brought to a standstill.

The diplomatic body have recently had further conference on the subject and have decided to renew the effort to gain the assent of the Yamên to the provisional rules.

I have, &c.,

JAMES B. ANGELL.

[Inclosure 1 in No. 212.]

Mr. von Brandt’s memorandum.

Peking, July 6, 1881.

Mr. von Brandt has the honor to lay before his colleagues the final result of his negotiations with the Tsung-li Yamên on the subject of the treatment of Chinese produce in the hands of foreigners.

Before proceeding to review the scheme now before his colleagues, Mr. von Brandt begs to draw their attention to the purposes for which the negotiations were begun and to the different stages through which they have passed.

The aim of the foreign representatives in bringing this question to the notice of the Yamên was to do away as much as possible with the complaints raised on the one hand by foreign merchants on account of the failure of the Chinese authorities honestly and completely to carry out the treaty provisions; and, on the other, by the Chinese Government against abuses and frauds, which it pretended to be perpetrated by foreigners under cover of the treaty provisions. This last complaint has been one of long standing on the part of the Chinese Government. Several times in 1872 (on March 23, and again on December 25), and in 1877 (on January 29) proposals to remedy the existing abuses had been laid before the foreign representatives by the Yamên, without, however, bringing about the desired end. Similar attempts had been made with no better success by some of the local Chinese authorities, until at last rules for the issue and use of transit passes outwards were arbitrarily introduced and enforced by the Chinese local authorities at some of the open ports, viz., at Chin-Kian, Pakhoi, and Hoihow, while a similar attempt at Shanghai proved abortive.

Though no objections could be raised against some of the provisions contained in these rules, others were contrary to existing treaty stipulations and oppressive, while the mode of their introduction, without the consent of the treaty powers having been first obtained, gave rise to grave apprehensions.

To do away with these local regulations, and to replace them by a general and uniform rule for all the open ports, was, therefore, the first object to be kept in view, while it seemed not less desirable and necessary to facilitate by the adoption of such uniform rules the bona fide introduction of the transit-pass system into those southern provinces, where, to the knowledge of all, it had not yet found any practical application.

It seemed further necessary to make use of the present opportunity to remove some complaints, repeatedly pressed upon the attention of the foreign representatives by the illegal action of Chinese local authorities, viz:

1. The levy of export duty on (by treaty, duty free) native produce when carried coastwise;

2. The imposition of the payment of inland taxes on native produce bought at the port, when exported; and

3. The imposition of the payment of inland taxes on goods manufactured at the port from native produce bought there, when exported.

It was from these points of view and with these intentions that the first draft of the proposals to be laid before the Yamên by Mr. von Brandt in the name of his colleagues was discussed and adopted by the foreign representatives then resident at Peking.

The draft was handed to the Chinese ministers on May 18, 1880, when they declared that as far as they could see there was nothing in the proposals laid before them to which the Tsung-li Yamên could not assent, but that they would have to take the opinion of the two superintendents of trade on the subject.

It was only on September 27 that the ministers came forward with counter-proposals, the chief features of which were that in Rule I the provision for a joint investigation in cases of fine and confiscation (article 9) was omitted, while Rule II was completely eliminated under pretext that the treaties made no mention of duty free native produce.

In Rule III, with regard to the proposal that goods manufactured at the port from native produce bought there should, on exportation, not be called upon to pay any other duty or tax than the export duty, the Yamên claimed that the native produce, before being submitted to any manufacturing process, ought to undergo inspection by the customs authorities.

Some of the minor changes introduced by the Yamên in their counter-proposals were accepted by the foreign representatives in a conference held among themselves on October 25, while the changes above mentioned in Rules I, II, and III were rejected, and the former tenor either maintained or only altered in so far as to render it more precise.

This new set of proposals was laid before the Yamên on October 29.

On November 19 the ministers returned a verbal answer that they were willing to agree to Rule I, article 9, as well as to the remainder of the rule, but that in view of the strong objections raised by the provincial authorities they could accept neither Rule II nor Rule III. They proposed, therefore, to omit these two sections.

The answer returned to this, first verbally on the same day, and in writing on November 26, was that the aim of the measures proposed being to do away as much as possible with all causes of complaint and irritation, the foreign representatives had to insist upon the acceptance by the Yamên of Rules II and III, without which any arrangement would be incomplete and unacceptable to them.

In their answer of December 5 the ministers of the Yamên, while pointing out the discrepancies existing in the list of duty-free goods as contained in the treaties, objected to the introduction of Rule II into the arrangement on the ground that, as it was intended only to reassert a right granted already by the former treaties, its repetition seemed superfluous. With regard to Rule III the ministers repeated their proposals of an inspection of the native goods bought at the port and intended for manufacturing purposes.

In a note dated January 9, 1881, Mr. von Brandt replied to this, with the concurrence of his colleagues, that the foreign representatives were willing to recognize that the list of duty-free goods inserted in the treaties was not as clear and distinct as might be desired; they, therefore, proposed to the Yamên to accept in lieu of Trade Rule 2 another version of it which would do away with the discrepancies complained of. With regard to Rules II and III, the foreign representatives repeated their former arguments.

The reply of the ministers, dated February 9, 1881, raised some further questions with regard to the list of duty-free goods, while maintaining their former position on the other subjects.

Owing to the absence of the first interpreter of the German legation, it was only on June 2 that Mr. von Brandt had an interview with the Tsung-li Yamên. On this occasion he insisted on the necessity of settling all the pending questions at the same time, and declared that though he was not authorized to speak in the name of his colleagues, he, for himself personally, could not but regard the acceptance by the Yamên of some stipulations similar to those contained in Rules II and III as the conditio sine qua non of the conclusion of any arrangement whatever. In the ensuing discussion the ministers of the Yamên abandoned most of their objections formerly raised against Rules II and III, and they promised to give their best attention to the proposals before them.

On June 9 they presented two counter-proposals for Rules II and III, which, while not yet being quite satisfactory in all their details, showed a decided progress compared with the former attitude assumed by the ministers.

At a conference on June 15 the discussion resulted in a new proposal by the Yamên, which, coupled with some verbal declarations by the ministers and the assurance of their readiness to repeat them in writing, seemed to do away with the principal difficulty encountered until then in the course of the negotiations.

At another conference on June 25 new difficulties arose, however, with regard to the treatment of duty-free native produce shipped coast-wise, notwithstanding some further concessions on this point on the part of the foreign negotiator. His excellency Wang, who throughout all the conferences had been the spokesman of his colleagues, stated that the Yamên did neither know nor understand the reason which had prompted his former colleague, Shen, to accept the proposal of a new list of duty-free goods; that the Yamên would prefer by far to leave matters as they were, but that in any case, if the revised list was to be maintained, some changes ought to be introduced with regard to the items, “household and ship stores,” by either restricting their exoneration from duty to foreign stores only, or by adding some characters in the Chinese text which would be indicative of small quantities of such stores only being admissible free of duty. Mr. von Brandt, being unable to agree to these proposals, the conference came to an end without an understanding on these points being arrived at.

A further conference on July 1, between Mr. Arendt (the German interpretor) and the Yamên, brought no better results. On the contrary, the opposition of the ministers to Rule II took a still further form, and they asked for the insertion of a clause stating that the goods mentioned as duty free were so only when imported for personal use.

They conceded, however, on this day, another important point, proposed to them for the first time on June 25, viz, that all claims now pending under one of the heads contained in the rules under consideration should be settled in accordance with the principles laid down in them.

On July 3 their excellencies Wang Mao, Ching Lien, Ch’ung Li, and Hsia continuing to offer the same resistance as formerly to the application of the treaty provisions on duty-free goods, as understood by the foreign representatives, Mr. von Brandt declared to them that the acceptance of the principle put forward in Rule II was a conditio sine qua non for the continuation of the negotiations, and that unless the ministers were ready to agree to it, he would prefer to break off all further pourparlers on the question now before them. This brought matters to a climax, but it was not without still much further discussion that the ministers agreed to Rule II as it now stands.

With regard to the annexed draft, the result of long and tedious negotiations, Mr. von Brandt has the honor to lay the following remarks before his colleagues:

Rule I, for the issue and surrender of transit passes outwards, may be considered as nearly entirely satisfactory. While doing away with the just complaints of the Yamên, by reasonably limiting the time within which use has to be made of the transit passes and certificates, or within which native produce brought to a port under transit certificate has to be exported, the uniform treatment of this question by the local authorities, which is to be one of the results of, the arrangement, will help in bringing about the practical application of the transit-pass system in all the provinces of the empire. At the same time the joint investigation in all cases of confiscation and fine, instituted by Article 9 of this rule, will very materially contribute to render the settlement of claims more easy and rapid, and thereby diminish the chances of foreigners having to suffer from the illegal action of the local authorities.

The only not quite satisfactory point in this part of the arrangement seems to be in Article 5, paragraph 2, where the Yamên will only consent to grant one month’s extension of time in case the original six months should prove insufficient for the purposes of exportation. It may, however, be safely assumed that seven months in all will meet the requirements of every case that will present itself. The reason given by the Yamên for their desire to limit thus the powers of the customs authorities is, that the principal rule itself would be nullified if the customs were at liberty to extend ad libitum the time originally named for exportation.

Rule II, for the treatment of duty-free native produce, and foreign imports, is in its present form very nearly a reproduction of trade Rule II, of the treaties with an addition referring to the payment of coast-trade duty, by duty-free native produce. The list of duty-free goods has been revised and rectified, where its provisions were in contradiction with the tariffs, and slightly modified in so far as a number of less important articles were, at the desire of the Chinese ministers, made duty free only when of foreign origin.

The clause giving the customs power to act according to their judgment in the case of household-stores and ship-stores when being imported in excessive quantities, does little more than reaffirm the right which they have undoubtedly always possessed to protect the revenue against fraud. The clause may therefore be regarded as superfluous; but as the ministers seem to attach great value to it, it may perhaps be inserted without any apprehension of complications arising through it. From every other point of view, Rule II, as it reads now, is by far preferable to the former trade rule 2, as it finally does away with the objections constantly raised by the Chinese Government, that only foreign articles ought to be considered duty free, and even those only when imported for personal use.

Rule III, for the exportation of goods bought or manufactured in the port, is on the whole very satisfactory. The changes which were introduced into it in the course of the negotiations can hardly be said to have taken away from its thoroughness; on the contrary, the present text appears to be even more to the point than the former one, as instead of only asserting in general terms certain principles it condemns expressly the use of those illegal exactions by the Chinese local officials, which gave rise to so many complaints. The obligation imposed on the foreign merchant to furnish the customs with a statement that the goods to be exported by him were bought at the port, seems little dangerous, hedged in, as it is by the positive assurances that nothing more shall be asked; while the previous inspection of native produce intended to undergo some manufacturing process ought hardly to give rise to suspicion. This part of the agreement has besides the advantage of giving a legal status to the manufacturing of goods at the port out of native produce brought there under transit pass, which, until now, could be done only with the tacit acquiescence of the customs.

All the rules are to be provisional and in force only for a few years, after the expiration of which they may continue so, if they give satisfaction, until formally denounced by one of the contracting parties. With regard to the date of their introduction, it seems best to put them in force provisionally, and, pending the approval of the governments of the treaty powers, without any further delay. Not only would the existing abuses thereby be remedied immediately, and a cause of much irritation and complaint be removed, but the time which must necessarily elapse between the date of the provisional putting in force of these measures, and that of the arrival of the approval of the home governments will give an opportunity to judge of the good faith of the Chinese officials and the working of the new rules. It might perhaps even be well to recommend to the home governments to grant their approval of the measures only on the condition of their having worked satisfactorily in the mean time.

[Inclosure 2 in No. 212.]

draft of provisional rules.

I.

for the issue and surrender of transit passes (outwards).

Article 1. These rules coming into force on the —— day, —— moon, —— year of Kwang Hsü all outward transit passes issued before this date shall, after the expiration of one year, if the merchant has not (within that time) reported for examination to the customs authorities by whom the passes were issued the native produce stated in the pass as to be bought and the corresponding transit certificate, be forthwith canceled by the superintendent of customs, and the corresponding transit certificates recalled, and all goods which the holders of such canceled passes may attempt to bring down under them will be confiscated.

All outward transit passes issued subsequently to the —— day, —— moon, —— year of Kwang Hsü, and not used within one year from date of issue, will be canceled at the expiration of such year.

Art. 2. Henceforward all outward transit passes^* which may not have been availed of for the purchase of produce within one year from the date of issue will be forthwith canceled by the superintendent of customs and the corresponding transit certificates recalled, and all goods which the holders of such canceled passes may attempt to bring down under them will be confiscated.

In any case of loss of a transit pass by theft or otherwise, the merchant to whom it was issued must report the loss at once to the customs of the port, that the pass may be canceled and the corresponding transit certificate recalled. For any unlawful use of such canceled transit pass after the loss has been reported the original holder shall not be held responsible.

No further passes will be issued to a merchant whose passes have had to be canceled, their time having expired, or who, in opposition to this rule, does not surrender his passes.

Art. 3. Produce purchased under transit pass must arrive at the barrier nearest the port within six months (one year at Tientsin) from the date of the exchange of the transit pass for a transit certificate. In default of this the goods will be liable to confiscation.

Should, however, produce be detained en route, either by the action of barrier or other officials, by force majeure, or by unforeseen accidents, such as floods, rebels, or the like, and be unable, in consequence, to arrive within the time allowed, the circumstances of such detention must be reported at once to the authorities on the spot, and to the superintendent of customs at the port, who will grant such an extension of time as the circumstances of the case may require. The goods, meanwhile, will not be liable to confiscation, unless they arrive at the port within the extended time allowed.

Art. 4. On the arrival of the produce at the barrier nearest the port, or, where there is no further barrier, on the shortest and most direct line between the one at which the transit certificate was issued and the port at the custom-house, an application giving the full particulars of the packages, and their contents, must be sent in to the commissioner of customs, who will issue a permit to allow the goods declared to pass the last barrier. The produce, on arriving at the port, must be brought direct to the customs jetty for examination and payment of transit dues, which being done, the goods may be stored in the merchant’s go-down. Any merchant failing to comply with this rule the goods will be liable to confiscation.

In case of alleged damage and deterioration of the goods en route the customs, on the application of the merchant, will inspect the goods, and if the damage, &c., be proved, grant a proportionate diminution of the transit dues.

Art. 5. Produce brought from the interior under transit pass must be exported to a foreign port or to another treaty port for reshipment to a foreign port within six months from the date of its arrival at the port. If the produce be not exported within the said period, the merchant shall pay to the customs a sum equal to two and a half times the export duty and be released from the obligation to export.

The customs authorities shall be at liberty to grant an extension of the time for re-shipment of one month in every case where it is proved to their satisfaction that shipment within the prescribed time will be impossible.

When the produce is shipped to another treaty port for subsequent reshipment to a foreign country the merchant must produce a certificate from the customs of the other port to the effect that the goods have been shipped to a foreign country within twelve months of their arrival in that port; or, in default in addition to forfeiting the half duty deposited, he should pay to the customs a sum equal to an additional export duty (so that the whole payment made will be equal to two and a half times the export duty) and be released from the obligation to export.

Art. 6. A merchant desirous to repack prior to shipment the native produce which he has brought down under transit pass, must first make application to the customs, who having verified the goods will issue a “permit to repack,” and will depute an officer to repair to the go down and superintend the repacking.

Any unauthorized repacking of goods or willful alteration of their condition by the substitution or addition of other goods will render them liable to confiscation.

Art. 7. In cases of alleged damage and deterioration in intrinsic value, sustained by goods while at the port, the customs, on the application of the merchant, will depute an officer to examine the goods and appraise the actual amount of damage sustained. A deduction in the amount of export duty payable will be made in proportion to the ascertained damage, and should the merchant desire to be released from his obligation to export such damaged goods, his obligation will be canceled on his paying to the customs a sum equal to two and a half times the diminished export duty.

Art. 8. Should a merchant be about to give up his business and leave the port he shall return to his consul for immediate cancellation all transit passes which have been taken out by him and not yet used. Should there be at the time of his closing business any goods which have been bought in the interior under transit pass or passes taken out by him, but which have not yet arrived at the port, or which are awaiting shipment to a foreign country, at this or another treaty port, the persons to whom such goods or the disposition thereof may be transferred will be held responsible for the observance of these rules.

When transferring such goods the merchant shall report the nationality and the name of the merchant to whom the goods are transferred, to the consul, by whom they will be communicated to the superintendent of customs to be placed on record, in order that the merchant may not throw off any responsibility afterwards.

Art. 9. In all cases in which under these rules goods are liable to confiscation and the whole or some part of them is not forthcoming, the person in default is liable for the goods not produced.

Art. 10. In all cases of fine or confiscation arising out of these rules the same procedure will be followed, which is laid down in the rules for joint investigation in cases of confiscation and fine by the customs authorities of the seventh year of Tung Chih (1868).

If a fine awarded remains unpaid no new transit passes will be issued to the merchant who is in default, and all passes already taken out by him may be canceled by the superintendent, and the corresponding transit certificates recalled.

Rule II..

for the treatment of duty-free foreign imports and native produce.

The following goods shall be duty free:

Of Foreign Manufacture or Origin.	Of Foreign or Native Manufacture or Origin.
Coins.	Gold and silver in bullion.
Confectionery.	Biscuits.
Clothing.	Preserved meats and vegetables.
Candles.	Cheese.
Tobacco.	Soap.
Cigars.	Charcoal.
Butter.	Fire wood.
Flour.	Household stores.
Indian meal.	Ship stores.
Sago.	Personal baggage.
Plated ware.	Cutlery.
Jewelry.
Perfumery.
Wine, beer, and spirits.
Stationery.
Carpeting.

The above enumerated articles are free from duty. With regard, however, to the two items, “household stores” and “ship stores,” if their quantity as to weight or number of packages should be excessive, the customs authorities shall, as heretofore, be at liberty to act after their best judgment according to the merits of each case.

Whenever any native produce declared to be duty free is shipped, it is to be shipped accordingly, exempt from tariff export duty; when relanded it is exempt from tariff import duty, but it has to pay a coast-trade duty, the amount of which is declared to be 2½ per cent, ad valorem.

Duty-free goods of foreign manufacture or origin are exempt from import and coast-trade duty, but if they are transported into the interior, they shall, with the exception of personal baggage, gold and silver bullion, and foreign coins, pay a transit duty at the rate of 2½| per cent, ad valorem.

A freight or part freight of duty-free commodities (personal baggage, gold and silver bullion, foreign coins excepted), will render the vessel carrying them, though no other cargo be on board, liable to tonnage dues.

Rule III.

for the exportation of goods bought or manufactured in the port.

• Art. I. Native merchandise bought at a port is to pay tariff export duty when shipped, but is not called upon to pay any other duty or tax whatsoever. When native produce is to be exported, with the exception, however, of native produce brought down from the interior of the country under transit pass, that is to say, as regards, such native produce as has been purchased at the port, merely a declaration shall be required to the effect that it has really not been brought down under transit pass from the interior. The production of duty and lekin certificates shall not be demanded.
• Art. 2. Whenever native produce, no matter whether arrived under transit pastor purchased at the port, is to be manufactured within the port, notice thereof shall previously be given to the custom-house, whereupon the customs authorities will at once dispatch an officer to inspect the produce in question, before the commencement of the manufacturing process. Fees for such proceeding shall not be demanded on the part of the custom-house. The goods so manufactured on being shipped shall have to pay only the tariff export duty applicable to them in their present state, but be exempt from all other taxes (duties and lekin) whatsoever. But if such goods are exported to another treaty port, they shall be dealt with according to regulations in force with regard to native produce.

Clause to be inserted in Rule III, Article 2.

With regard to goods manufactured out of produce brought down under transit pass to the port, an exception shall be made to the terms of shipment, as mentioned in Rule I Article 5. The merchant who, at the expiration of the period of six months, there I. ated, has not yet shipped his goods, and is unwilling to pay the additional duty which would liberate him from the obligation of exporting them, will, however, have to store them in a go down at his own expense, under the supervision of the customs authorities, whence they will not be allowed to be taken out except for the purpose of exportation, it being forbidden, under penalty of confiscation, to sell them in the port where they have been manufactured. He shall, however, be at liberty to transfer them to another merchant for purposes of exportation, due notice of such transaction being given to the customs through the consular authority of the seller.

All the rules under heads I, II, and III to be provisional and to remain in force for a period of four years; after the expiration of this period they shall also continue in forcr, unless formally denounced by one of the contracting parties, when they shall cease to be in force six months after the date on which notice was given.

All claims now pending under any one of the heads contained in these rules shall be settled in accordance with the principles laid down in them.

[Inclosure 3 in No. 212.]

Mr. von Brandt to Mr. Angell.

Peking, July 10, 1881.

Confidential.]

My Dear Colleague: I regret to have to inform you of the unfavorable turn which my negotiations with the Chinese ministers on the subject of transit passes outwards, &c, have taken at the conference which I had at the Yamên to-day with their excellencies Wang, Chmg Lien, Mao, Lin Shu, and Hsia.

The ministers began by stating that further reflection had shown them the necessity making some changes and additions in the rules now under discussion. Foreign duty-free goods shipped coastwise ought to pay coast-trade duty, and goods manufactured by foreigners from native produce bought at the port or brought down under transit pass ought to be exported within the term of six, resp. seven months mentioned in Rule I, Art. 5. To my objection to the first proposal, that all foreign imports could freely and without payment of coast-trade duty be transported from one oxen port to another, the ministers replied that trade rule 2 contained nothing on the subject, and that consequently foreign duty-free goods were subject to coast-trade duty exactly in the same manner as duty-free native produce and that, if imports having paid import duty were free from coast-trade duty, they were so on account of their having paid some other duty already.

Not thinking it worth my while seriously to discuss such a proposal I replied that if such were the views of the ministers I was quite willing to agree to a rule by which foreign or native goods having paid import or export duty were freed from coast-trade duty, while duty-free goods of foreign or Chinese origin would have to pay the coast-trade duty equal to 2½ per cent.

This for the moment effectually silenced the ministers on this point.

With regard to the second proposal, referring to the time within which goods manufactured at the port from native produce were to be exported, I informed the ministers that my colleagues and I had also felt the necessity of providing some rule on this subject, and that I was authorized by my colleagues to lay before them the inclosed proposal, which we hoped would meet their views, as, while giving sufficient facility for the exportation of manufactures made at the port, it protected effectually the customs against any attempt at fraud: regulations on this subject restrictive as to the time of exportation could, however, of course, be made only for such goods as had been manufactured at the ports from native produce brought there under transit pass, goods manufactured from produce bought at the port being subject to no such restriction.

This proposal gave rise to a good deal of discussion, the ministers objecting to the exemption from the restrictions of goods manufactured at the ports from produce brought there, and bringing forward several counter proposals, in which both classes of goods were subject to the same restrictions, consisting mostly in a limitation of the time within which they ought to be exported. In the course of this rather desultory conversation I was struck by a casual remark from the minister Hsia to the effect that foreigners could not be allowed to compete with Chinese in the trade in native produce. The remark not having been addressed directly to me, I did not feel called upon to take it up then and there, but it seemed to me to contain the keynote of the Yamên’s new objections.

Finally, after more than two hours’ discussion, in which no progress had been made, the ministers draughted the inclosed proposal, to which I replied that, while I was willing, though seeing very grave objections against any limitation of the time for exportation, to lay the part of the proposal referring to such a measure before my colleagues, I could not do so with any hope of success with the port applying the same restrictions to goods manufactured from produce bought at the port as to those made from produce brought there under transit pass. The Chinese Government had the right to exercise the strictest supervision over native produce brought from the interior under transit pass, such produce having been exempted from the payment of inland taxes, under the express condition that it was intended for export, this obligation only to be canceled in case of the payment of two and a half times the export duty, which payment was to compensate the Chinese authorities for the loss of the inland taxes. With regard, however, to goods bought at the port, the foreigner was at liberty to deal with them as he liked without any restriction as to time or use; he might export them, sell them to foreigners or natives, manufacture them, forward them for sale to the interior, or destroy them without any hinderance or supervision from the Chinese authorities, provided he paid, on exportation, the tariff export duty due on them in the state in which they were at the time of exportation, or, when transported inland, all native charges and duties.

To this the ministers replied that, by treaty, foreigners had the right to buy produce either in the interior or at the port for exportation only to some foreign country or some other treaty port, and that they were not allowed to put it to any other use nor sell it at the port unless they paid two and a half times the export duty to the government, to make good the loss of the export duty to which the Chinese Government was entitled on all produce bought by a foreigner, either at the port or brought there under transit pass; that Chinese having to pay taxes and duties on all commercial transactions amongst themselves within the ports, foreigners could not be allowed to compete with Chinese under more favorable terms; they would therefore have to pay the same taxes as Chinese if they wished to sell Chinese produce bought by them at the port.

The government, however, were willing to make a concession to foreigners by not insisting upon their treaty right as far as native produce in its natural state was concerned, but they must insist upon goods manufactured out of native produce bought at the port, being not disposed of at the port without having paid two and a half times the export duty.

Another hour having passed in useless attempts to prove to the ministers that the views put forward by them were not only contrary to treaty, but also to all sound principles of commerce, I finally declared that unless the ministers were prepared to accept the treatment of native produce, in its original state or manufactured, when bought at the port, the rules as laid down by me in the course of the conversation, I could but consider any further discussion as useless. The ministers agreed to this, adding that the imposition of the same restrictions on goods manufactured from produce bought at the port, as from produce brought there under transit pass was the last word of the Yamên.

Though I do not believe this to be the case, I cannot but consider any further discussion with the Yamên of the whole question as worse than useless, the general impression I have received from the two last conferences being that while the Yamên will not fail to stretch to the utmost every concession made to it by the foreign representatives, there seems to be very little chance indeed of seeing the foreign complaints done away with by a strict execution of the new rules agreed upon in their favor. The whole spirit in which the whole discussion during the two last conferences has been conducted by the Yamn has been one eminently unfair, distorting the stipulations of the existing treaties so as to make, them seem to uphold the most unjustifiable pretensions, and making use of every concession obtained from the foreign representatives in the course of these negotiations to base some new claim upon it. As an instance of this I may state that the first part of Rule III—2. “Whenever native produce, no matter whether arrived under transit pass or purchased at the port, is to be manufactured within the port, notice thereof shall previously be given to the custom-house”—was brought forward by the ministers as a proof that the foreign representatives themselves had recognized that the two kinds of goods ought to be treated alike. It is these proceedings which render any concessions to the Chinese so dangerous. For example, were the foreign representatives to agree to the treatment of goods bought at the port and manufactured there, as proposed by the Yamên, this concession would be claimed in after days, when the arrangement now before us was denounced, as implying the recognition on their part of the claim put forward by the Chinese that foreigners could buy native produce only for purposes of exportation.

I am unwilling to take the responsibility of recommending to my colleagues the acceptance, as a whole or in part, of the arrangement negotiated under their instructions and approval with the Tsung-li Yamên. Nothing, therefore, remains to me but to return to them the powers which they had confided to me, and to express to them my most sincere thanks for the forbearance which they have shown in the course of these very lengthy negotiations, and the support I have invariably received from them.

I avail myself, &c.,

M.von BRANDT.

[Annex to Inclosure No. 3.]

Yamên’s proposal of July 10, 1831.

Native produce brought down under transit pass to the port, as well as native produce which has been subjected to a manufacturing process, shall, with regard to the term of shipment, be dealt with in the manner set forth in the above stipulations; as, however, native produce bought at the port, when it is subjected to a manufacturing process, cannot be put on the same level with native produce which, without having been subjected to such a process, is directly exported, so that cases may arise in which the term of six months, fixed in Article 5, might not be sufficient, the customs toatai shall, if the circumstances justify it, have the right to extend the term of shipment in such a way, however, that the whole term conceded shall not exceed a period of —— months. As regards native produce bought at the port and goods manufactured there out of native produce, if at the expiration of the six-monthly term they have not yet been exported, notice thereof shall be given to the customs, who will thereupon inspect them and put them under official lock, from where they shall not be taken out except for the purpose of exportation. A sale of them at the port is not permitted, under the penalty of confiscation. If any one of the above categories of goods are reimported into another treaty port, they shall be dealt with in accordance with the regulations in force for native produce.

1. Styled in treaties “Memoranda.”