Mr. Denby to Mr. Blaine.

No. 1513.]

Sir: In my dispatch No. 1501, of March 29 I had the honor to send a copy of my communication to the foreign office relating to the action of the lekin authorities at Canton adverse to the issuance of transit passes.

I have now the honor to inclose a translation of the reply of the yamên to my communication. This reply consists mostly of denials that any opposition has been manifested to the issuance of transit passes. But the matter is too evident to require any proof except to note that in 1891 there issued two thousand transit passes, and in January, 1892, one hundred and twenty-six. The proclamations complained of appeared January 26, and in February the number of transit passes fell to six, all of which were for cotton yarn.

These figures are reported to me by Mr. Seymour. There can be no doubt that the hostile action of the lekin authorities caused this practical extinction of transit passes. The foreign office has been requested to wire its directions to the viceroy, and further correspondence will ensue.

I have, etc.,

Charles Denby.
[Inclosure with No. 1513.]

The tsung-li yamên to Mr. Denby .

No. 5.]

Your Excellency: The prince and ministers had the honor to receive, on March 26, a communication from the United States minister in regard to the posting of proclamations by the lekin authorities at Canton, setting forth that unprincipled and crafter [crafty] Chinese merchants had assumed the names of foreign merchants and falsely used transit passes for the purpose of smuggling and evading the payment of lekin, and offering a reward for their arrest. The United States minister furthermore states that complaints have reached him from Canton that lekin was levied on imports sent into the interior under transit passes as well as an extra lo-ti-shui after such imports had reached their destination; that in consequence of the action of the lekin officials the trade under transit passes had entirely ceased, and thus harm had been done to the general import trade. Reference is made to section 3 of the Chefoo convention, under which Chinese and foreigners alike are entitled to use transit passes, and it is therefore difficult to understand how Chinese could fraudulently use transit passes; that the levy of lekin on imports under passes on their way into the interior is forbidden by treaty, and the duty leviable on goods covered by transit passes on arrival at their destination can not, under treaty, be greater than on goods not covered bypasses. The lekin office has acted in violation of treaty stipulations, and the minister of the United States must hold the Chinese Government responsible for any losses American merchants may suffer through such illegal action.

The yamên at the time telegraphed to the governor-general at Canton to investigate the matter, and a cablegram in reply has been received from that officer as follows: “Chinese merchants as well as foreign merchants are alike permitted to take out transit passes without the payment of lekin on the goods they cover. The rule of action hitherto taken in Yuet [sic] provinces has been in accordance with, treaty stipulations. No prohibitions have been enacted against Chinese merchants taking out transit passes and no extra lekin has been levied on the goods these documents cover. But foreign merchants should apply for passes in their own names and also the Chinese merchants in their names. They should not borrow or use the names of others. Recently Chinese merchants have applied for transit passes and many have [Page 103] assumed the names of foreign merchants, the evils resulting from this being very great. Foreign merchants of regular bona fide standing are men naturally of respectability, and in applying for transit passes they, as a matter of course, observe and respect the treaties. But among Chinese merchants there are those who are avaricious and greedy for a little gain, and who secretly carry goods and smuggle, and they, therefore, assume the names of foreign merchants, as they wish by such a plan to avoid suspicion. Such crafty merchants by their acts not only prove detrimental to the collection of lekin in the interior, but they injure and destroy the reputation of foreign merchants. Again, the importation recently of foreign goods has not fallen off. A reference to the custom returns is evidence of this fact. Since the native authorities at Canton have never prohibited the application for transit passes, they have never detained merchandise or refused even once to grant transit passes. The statement in regard to paying indemnities for losses is decidedly one that the viceroy can not understand.”

The yamên would observe that the Cant on authorities have never prohibited Chinese from obtaining passes. Their action has been in accordance with treaty stipulations. The expression “assuming” in the proclamations issued by the lekin office meant that Chinese had assumed foreign merchants’ names for the purpose of smuggling by the art of deception, and the prohibition of such practices is certainly in accordance with the stipulations of section 3 of the Chefoo convention. Further, the action taken is also in accordance with the terms of Article X of the rules appended to the tariff, which reads that it is at the option of the Chinese Government to adopt what means appear to it best suited to protect its revenue. But the wording of the proclamations was not perfectly clear in its meaning, and, therefore, on reading them it has led to doubt. From the reply of the viceroy no chin has been levied on goods covered by transit passes. The yamên will, as a matter of course, address the viceroy at Canton to again issue strenuous instructions to observe (?) the treaties.