No. 155.
Mr. Denby
to Mr. Bayard.
Legation of
the United States,
Peking, February 25, 1887.
(Received April 12.)
No. 322.]
Sir: I have the honor to inclose herewith the
original of a communication this day sent to the Tsung-li yamên by me.
[Page 192]
The subject thereof is an energetic protest against the new tax of 6 mace (90
cents) on the case (two cans) of kerosene, lately levied as a lekin tax at
Canton.
Little explanation is necessary, in addition to the contents of the said
communication. I may mention that, in spite of the lekin of 40 cents per
case which was levied in 1882, and for the privilege of collecting which the
farmer thereof pays $63,000 per annum, the sale of kerosene has been rapidly
increasing. Mr. Consul Seymour writes me that prior to the new tax it was
anticipated that in 1887 the sale of kerosene imported at Canton would reach
400,000 cases, or 800,000 cans, or 3,000,000 imperial gallons, or 4,000,000
trade gallons. It is now proposed to raise 120,000 taels, or about $80,000,
by this new tax. The original tax of 40 cents remains in force.
The farmer was offered the collection of this tax, but declined for fear of
smuggling. So the lekin office will collect it by its own officials. The
lekin tax alone now amounts to $30 per case. To this the import tax of 5 per
cent. ad valorem must be added. To any article but kerosene this tax, being
more than 50 per cent., would probably be fatal. But kerosene is so largely
used, is so advantageous collaterally in permitting by its use native oils
to be applied for food, and is so cheap, that it is difficult to forecast
what effect on its consumption so enormous a tax may have.
The Chinese authorities have always contended, in the words of Tseng, uncle
of the marquis, now viceroy of Nanking, that “once foreign goods have
entered China and become the property of Chinese merchants, their taxation
is a matter wholly and solely within the direction of China.”
One answer, at least, to this proposition is, that this right is subjected to
the treaty stipulations. It is plain that the right of importation may be
valueless if, as soon as goods land, they may be burdened with a prohibitory
tax. Thus, by indirection, the treaties may be annulled.
I have endeavored in my communication to the yamên to found my argument on
the proposition that the new tax was not only prohibitory in fact, but was
levied for the purpose of prohibiting. To this end I have cited passages
from the proclamations of the lekin board.
Logically the only difficulty is to determine at what point a tax becomes
prohibitory. The extraordinary vitality of kerosene makes it doubtful when
such a point will be reached.
We have taxed fire-crackers 100 per cent., and partly on the ground that they
are hazardous. The Chinese are improving on our example.
The whole question, as you well know, is embarrassing and troublesome.
* * * * * * *
I have, etc.,
[Inclosure in No. 322.]
Mr. Denby to the
yamên and ministers.
Peking, February 22,
1887.
Your Imperial Highness and Your Excellencies: I
respectfully call the attention of your Imperial highness and your
excellencies to the late lekin tax, of 6 mace on the case of kerosene
oil, levied by the general office of lekin at Canton, by proclamations
dated November 28 and December 18, 1886.
I request the repeal of this tax for the reasons hereinafter stated.
[Page 193]
Kerosene oil, besides paying the import duty, did, before this last tax
was levied, pay 40 cents per case lekin. The entire tax is, therefore,
now about $1.42 cents per case.
A case of kerosene is only worth $2.50. Thus the whole tax is more than
50 per cent. of the value of the article. Under the treaty kerosene, not
being a specified article in the list of imports and exports, pays 5 per
cent. ad valorem.
Article 1 of the treaty of 1880 provides that the Governments of the
United States and China mutually agree to give the most careful and
favorable attention to the representations of either as to such special
extension of commercial intercourse as either may desire. Under that
clause it is proper that I should address you this communication.
Whatever may be the proper construction of the treaties relative to
lekin taxation, about which there has been so much discussion, one
thing, I think, is certain, that neither party to a treaty has the right
to abrogate it by indirect action.
China says to all the world, you may send your goods to the open ports if
you pay certain duties. Of what avail is the privilege if the moment
that the goods are landed and delivered to the consignee they are met
with a prohibitory tax? How can the foreign merchant send goods to China
if no Chinese subject can buy them because of onerous internal taxes?
The whole foreign trade may be wiped out by this process and commercial
intercourse may thereby be extinguished.
When it becomes apparent that any internal tax is levied for the purpose
of prohibiting the importation of an article, then at least it becomes
proper to protest and to ask for its repeal.
The proclamations of the lekin office above quoted disclose on their face
that the object of this new tax is to prohibit the importation of
kerosene. The language of the proclamation of November 28 is this: “Let
it be proclaimed that the article of kerosene is very explosive in its
character. The least negligence will result in a calamity of a tire with
unlimited evils. Therefore it ought to be prohibited.”
This prohibition is inconvenient. This enormous tax is levied in order to
prohibit by indirection.
In the proclamation of December 18 the language is: “If kerosene should
he suddenly prohibited it may be feared that inconvenience and trouble
will arise.” In both proclamations it is plain that the real intention
is to prohibit the introduction of this article. I submit that as long
as the treaties are in force this useful and generally used article
cannot be excluded. Kerosene is used everywhere at Peking, and elsewhere
in China, and all over the world. It has, like all other illuminating
substances, caused fires by the negligence of the consumer. It is the
cheapest of all the illuminators, and the one most used by the common
people. Its use has produced a large revenue to China. A high tax may
prevent importation and thereby do away with this revenue.
The levy of such a tax is especially unjust to the foreign merchant. He
may have bought large quantities for transportation to Canton, in the
faith that the existing duties would not be changed. Now, without notice
of any intended change of taxation, he must encounter enormous losses.
It is usual in-other countries to fix a long period in advance, at the
expiration whereof such changes are to take effect. But I do not rest my
objections to this tax on want of notice, but on the plain proposition
that it is, on its face, prohibitory and therefore contravenes the
treaties.
For these reasons I must earnestly invoke your Imperial highness and your
excellencies to examine this question in a spirit of equity and to order
justice to be done.
I have, etc.,
