Mr. Denby to Mr. Foster.

No. 1609.]

Sir: In my dispatch No. 1385, of September 10, 1891, I referred to my correspondence with the foreign office relating to the Yangtze regulations. I therein urged that these regulations should be rescinded, as by their terms they were to endure only until tranquillity was restored, which had long since happened. The inspector-general of maritime customs took the same view, and the foreign office intimated that it would rescind or modify the said regulations.

Nothing, however, was done touching this subject. The 19th day of November last I again addressed the Yamênon the subject. I inclose herewith a copy of my communication, together with a copy of the reply thereto.

The Yamênsets out at great length a report on this subject from the northern and southern superintendents of trade, wherein they make a forcible argument against the doing away with the existing regulations respecting bonds. The Yamênconcludes that as long as foreign merchants charter native junks in trade on the Yangtze they must give bonds. If foreign merchants should cease to employ native junks then the system may be abolished.

There has been a great deal of illicit traffic in munitions of war on the Yangtze during the past year. Under the bond system such importations can in a measure be checked and bad characters can be found out and bona fide merchants protected.

I shall, for the present, let the question rest where it is.

I have, etc.,

Charles Denby.
[Inclosure 1 in No. 1609.]

Mr. Denby to the Tsung-li-Yamên.

Informal.]

Your Highness and your Excellencies: On the 1st day of September, 1891, I had the honor to receive from your highness and your excellencies a communication relating to the case of Messrs. Burnett & Co., American merchants residing at Hankow, which involved the construction of the Yangtze regulations. This communication embodied the report of the inspector-general of imperial maritime customs on the case stated, and in that report the following language was used: “With reference to doing away with the present regulations respecting bonds, as tranquillity has been restored on the Yangtze, this would seem proper, but until instructions are issued by the Yamênon this question the present regulations should be adhered to.” And, in the conclusion of the communication of your highness and your excellencies the following language was used: “As to modifying the present regulations regarding bonds, when the Yatmên has adopted a satisfactory modus operandi the prince [Page 226]and ministers will then inform the minister of the United States. Pending this, however, the present regulations are to remain in force.”

As more than one year has elapsed since the above communication was received, and as no steps have been taken to do away with the existing regulations, which have long since become unnecessary, and stand only as an annoyance to shippers, I have to request that the matter be taken up by your highness and your excellencies and that the regulations be rescinded.

I have, etc.,

Charles Denby.
[Inclosure 2 in No. 1609.—Translation.]

The Tsung-li-Yamên to Mr. Denby.

The prince and ministers had the honor, on the 19th instant, to receive a note from the minister of the United States relating to the case of Messrs. Burnett & Co., which involved the construction of the Yangtze regulations, etc. The minister cited the Yamên’s remarks “as to modifying the present regulations regarding bonds when the Yamênhad adopted a satisfactory modus operandi the prince and ministers would then inform the minister of the United States. Pending this, however, the present regulations are to remain in force.”

As more than one year had elapsed and no steps had been taken to do away with the existing regulations, the minister of the United States requested that the matter be taken up and the regulations be rescinded, etc.

With regard to the case of Messrs. Burnett & Co., it had been frequently discussed, and the Yamên, considering the very small amount of money involved, addressed the governor-general of the Hu-Kuang provinces to be yielding, considerate, and reasonable in taking action in the premises, and this fact was communicated to the minister of the United States in September last.

As to whether the system of bonds should be done away with or not, the Yamên at the time addressed the ministers superintendent of northern and southern trade to instruct all the superintendents of customs and customs Taotais to consider the matter and report thereon. The ministers superintendent of trade have presented their reports to the Yamên embodying the views submitted at different times of the various customs Taotais, which are to the following effect:

The issuance of bonds to foreign merchants who charter native vessels is not only for the purpose of a security against discrepancies in the cargo manifest, but, further, as a security that the cargo and vessel will reach the port cleared for.

These documents or bonds must be returned to the commissioner at port of departure within two months from the date of issue. They apply to native junks, and not to steamers, as may be known.

Still further, the shipment or illicit discharge of cargo en route, or the conveyance of cargo to other than the place of destination, without these bonds there would be no way of ascertaining whether this was done or not. These irregularities are committed by the merchants, and it would not be convenient that the captain alone should be responsible, hence it is necessary that a guarantee, or bond, should first be given, and any violation of the regulations will subject the offender to a forfeit of a sum to the value of vessel and goods shipped. These regulations have been in force for a number of years and have not been detrimental in any way to the interests of foreign merchants of bona fide and good standing. They are in keeping with the intent and purpose of the fourteenth article of the treaty between the United States and China, signed at Tien-tsin, which, in substance, reads: “* * * And any vessel (under the American flag) violating this provision (and carrying on a clandestine and fraudulent trade) shall, with her cargo, be subject to confiscation to the Chinese Government, and any citizen who shall trade in any contraband article of merchandise shall be subject to be dealt with by the Chinese Government without being entitled to any countenance or protection from that of the United States.”

A fine interpretation of the regulations, that this provision is only valid until tranquillity has been restored along the river, would seem to mean the stopping of foreign merchants chartering Chinese junks. If foreign merchants still continue to charter Chinese junks, then the system of bonds can not be done away with. If the bond system is to be abolished, then foreign merchants must be instructed that they can not employ native junks for the purpose of trade in the inner waters of China. This would be fully in harmony with existing regulations, but it is to be feared foreign merchants would not be pleased with the change.

[Page 227]

Again, there are numbers of outlaws on the Yangtze at present engaged in the illicit traffic of conveying munitions of war and there is evidence beyond doubt that native junks are employed for the purpose, and it is right that extra precautions be taken to strenuously guard against this traffic at the places and ports along the river. A stipulation should, furthermore, be inserted in the bonds covering this point. How could the bonds, therefore, be done away with?

Cargo that is shipped from Hankow to Chin-kiang, for instance, when payment of duty has been made at Hankow, the commissioner of customs at Hankow sends, under sealed cover, to the commissioner of customs at Chinkiang a certificate of the cargo, which is opened by the latter officer, who is then able to ascertain on examination whether the cargo agrees with the amount specified on the certificate, and when the vessel’s dues have been paid the bond can be canceled.

The certificates are not examined when the vessel passes the native inland customs barriers, but the bond specifying the cargo is examined, and if these documents are to be done away with the native inland barrier officials would have no means of holding an examination.

Then, again, captains of native vessels may secretly carry goods with baggage, merchants may make false representations by getting a certain article shipped when specifying another, and from Hankow to Chin-kiang by water is a journey of over 1,000 li or Chinese miles, with any number of branch streamlets running into the Yangtze, where junks may stop or discharge cargo, and such practices would prove detrimental to the revenue.

As to foreign merchants chartering native junks for the conveyance of cargo, they are exempted from paying likin at the barriers under existing regulations, which shows that they are treated with every kindness. It is right, therefore, that they should continue to give bonds, which is in harmony with the purpose and intent of the forty-sixth article of the Tien-tsin treaty.

The Yamên is requested not to make any order doing away with bonds.

The Yamên would observe that as foreigners will or must charter native junks, in trade on the Yangtze, they must give bonds. If foreign merchants will stop employing native craft then the system of bonds can be done away with. These two conditions in effect are connected together and the principle is easily understood. Since the system of bonds was put in force, it has worked in no way detrimental to trade. The past year has witnessed more and more illicit traffic in munitions of war on the Yangtze River and the Yamên had in mind the discussion of the question with the diplomatic body with a view to making the rule of action more prohibitive against this practice.

Under this system of bonds the authorities are enabled to find out bad characters as well as give due protection to merchants of bona fide and good standing.

The system can not but prove advantageous. Further, China can of herself exercise such authority as she deems necessary to guard against abuses. This is in accordance with treaty.

Having received the report of the ministers superintendent of southern trade and of northern trade, embodying the views submitted by the various customs Taotais, the Yamên do not find it convenient to make any change in the regulations.

As in duty bound the prince and ministers send this communication in reply for the information of the minister of the United States.

A necessary communication addressed to his excellency, Col. Charles Denby,