No. 49.
Mr. Bayard to Mr. Denby.

No. 45.]

Sir: I have received your dispatch No. 58, of December 22, 1885, touching the claim of Mr. John P. Cowles, jr., for reduction of duty on damaged exports and your note to the Yamên upon the subject.

If Mr. Cowles has rights under the forty-fourth article of the British treaty of Tientsin and under the favored nation clause which extends the benefits of other foreign treaties to our citizens, his rights should if possible be wholly subjected to and defined by the treaty provision to which he appeals. Now the forty-fourth article expressly contemplates the case of disputes of interpretation arising thereunder and provides a mode of settlement. It says:

If any disputes arise they shall he settled in the manner pointed out in the clause of this treaty having reference to articles which pay duty ad valorem.

The clause thus referred to appears to be article 42 of the British treaty of Tientsin, which reads thus:

XLII. With respect to articles subject, according to the tariff, to an ad valorem duty, if the British merchant cannot agree with the Chinese officer in fixing a value, then each party shall call two or three merchants to look at the goods, and the highest price at which any of these merchants would be willing to purchase them shall be assumed as the value of the goods.

The dispute raised by Mr. Cowles appears to be of this character, because touching only the amount of duties to be paid. It does not appear that the mode of settlement prescribed in the Anglo-Chinese treaty has been resorted to. On the contrary, it seems to be ignored and excluded by the requirement of the Chinese customs authorities that Mr. Cowles should pay under protest full duties as charged, and then appeal.

[Page 77]

The Chinese contention that the provisions of article 44 do not apply to duties on exports is not regarded as sound. There are many provisions in the Anglo-Chinese treaty in relation to tariff duties, but there is nowhere in the body of the treaty any discrimination between import and export duties.

The assessment and collection thereof appear to be the same in either case. Thus, article 24 provides that “the duties prescribed by the tariff” shall be paid “on all merchandise imported or exported”; articles 39 and 41 show that the words “dues and duties” are applied indiscriminately whether the cargo be landed or shipped—that is, imported or exported. There is but one tariff annexed to the treaty and that contains both import and export dues.

It appears to be argued by the superintendent of the Chinese customs that the provision for rebate of duties in case of damage to the goods can only apply to imports, as they alone are liable to injury by reason of sea-transit. The very case under consideration shows the fallacy of this, because we have a positive example that teas (and other goods) destined for export may and do become damaged by water-transit during the long domestic journey in river junks to the port of shipment. It is not shown to have been the intent of article 44 that a reduction of duties should only be allowed when the damage is caused in a particular way, by salt water on the high seas and not by fresh water in the rivers. The intent seems to have been that duties are to be exacted according to the tariff upon ordinarily marketable goods, and that damaged goods may not justly be charged the same high duties as undamaged.

However this may be, one thing is clear, that a dispute has in fact arisen as to the amount of duty to be paid on a certain lot of damaged brick tea passing through a Chinese custom-house and dutiable under the tariff, and that article 44 prescribes in a particular manner. It is not shown that recourse to this mode of settlement had been had or is permitted.

I am, &c.,