Mr. Denby to Mr.
Sherman.
Legation of the United States,
Pekin
,
July 26, 1897
.
(Received Sept. 17.)
No. 2784.]
Sir: I have the honor to inclose copies of the
following sectional reports compiled by the special committee on
taxation at Shanghai: (1) Report on the piece-goods trade; (2) Sundry
imports; (3) General exports. I inclose a copy of a letter from the
chairman, C. J. Dudgeon, esq., covering these reports.
In the present condition of the questions involved it is not necessary to
make a minute comment on these reports.
I concur with the chairman in the statement that “so long as the present
system of arbitrary and unlimited provincial taxation continues, the
satisfactory development of the resources of the China trade must He a
matter of impossibility.”
The true theory is the substitution of one fixed duty payment for the
irregular and vexatious levies in force in China. It is plain that if as
soon as goods are landed and pass into the hands of a native consignee
they can be taxed inimitably, the trade in such goods is as injuriously
affected as if the tariff were increased to the amount of the local tax.
I have had several occasions to present this question to the Tsung-li
Yamên, and have succeeded twice in procuring a reduction of local
taxation, but such concessions were matters of grace. China still
asserts that she has the right to control at her own will her internal
taxation. Within certain limits she has this right, but the local tax
should not be prohibitory, and, of course, should affect all
nationalities alike.
Whether she has this right or not is not now the question. It is
understood that she desires to increase the existing tariff so as to put
duties on a gold basis.
The reports now submitted and others heretofore transmitted grew out of
the idea that when China makes application to the treaty powers [Page 93] for a revision or an increase of
the tariff the powers might well demand, in consideration of their
consenting to an increase, the inauguration of certain reforms in the
treatment of foreign trade. These reforms are fully set forth in the
reports made by the committee on taxation, and will be minutely
discussed by me should there be occasion to do so.
I have, etc.,
[Inclosure in No. 2784.]
Mr. Dudgeon to
Mr. Denby.
Shanghai
,
July 10,
1897
.
Sir: I have the honor, as chairman of the
special committee on taxation, to forward herewith inclosed copies
(in duplicate) of the following sectional reports compiled by this
committee: (1) Report on the piece-goods trade; (2) Report on sundry
imports; and (3) Report on general exports.
With these reports the work of the committee ends, in so far as it
bears upon the general subject of taxation and possible tariff
revision; in forwarding these documents I would therefore venture,
on behalf of my colleagues and myself, to express the hope that the
result of the committee’s labors may serve to throw some light upon
the obstacles which chiefly stand in the way of commercial progress
in China, and to point out those measures which seem best calculated
to remove the disadvantages now affecting the Empire’s foreign
trade.
Putting aside for the moment the subject of tariff revision as a
matter upon the initiative of the Chinese Government, this committee
would point out that the general question of internal taxation is
one which per se calls urgently for reform. While it is fully
realized that, in the interest of the Chinese producer, certain
remedial measures—notably as regards the preparation of tea and
silk—are highly necessary for the stimulation of exports, the
keynote of each sectional report will be found in the conclusion
that so long as the present system of arbitrary and unlimited
taxation continues the satisfactory development of the resources of
the China trade must be a matter of impossibility.
Without going into the history of a question which has occupied the
attention of diplomatists at Pekin for forty years, there can be no
doubt that the object held in view by the framers of the Tientsin
Treaty was the substitution of one fixed duty payment for the
irregular and vexatious levies even then in force. This is
sufficiently proved by the correspondence which took place between
Lord Elgin and the foreign office in November, 1858, wherein this
object was unmistakably set forth. From the date of the Tientsin
treaty, however, until the present day, this important point has
been but imperfectly upheld in the face of the continual evasions
and complications wherewith the Chinese Government has surrounded
both the spirit and the letter of the treaty itself. Many years have
elapsed in the fruitless discussion of points which are undoubtedly
beside the main and vital principle; and the original intention of
Article XXVIII of the treaty, which was evidently to protect foreign
goods, irrespective of ownership, has
been too frequently lost sight of.
At the present time, although the protection afforded by the transit
pass system has been extended, such levies as grower’s taxes,
loti-shui, [Page 94] and other forms
of local and terminal taxation show a distinct tendency to increase.
The right claimed by the Chinese provincial authorities to impose
such charges as they may think fit, both upon native produce before
it reaches the foreigner’s hands and upon foreign goods when they
have passed into possession of the native purchaser, must result in
restricting, if not frustrating, the objects for which the treaties
were made. To the foreign merchant it is a matter of indifference
from what class of natives—i.e., whether traders or
consumers—illegal levies are exacted. For him the essential point is
that they shall not be levied at all, and that his goods, having
paid the treaty duties leviable thereon, shall thereafter be free to
circulate throughout the length and breadth of China.
Around this question, therefore, center the grievances and
difficulties under which the foreign mercantile community labors
to-day, and upon its solution are founded this committee’s hopes of
a development of the China trade commensurate with the resources of
the Empire. It is the opinion of this committee that if any local,
terminal, or other taxation is recognizedly leviable by the
provincial authorities, such levies should be commuted once and for
all by a clearly defined increase in the existing tariff duties, and
that, this addition having been made, foreign trade should
henceforward be exempt from all further taxation whatsoever. The
question of assessing the proportion of the increased tariff duties
to be put aside for the compensation of provincial exchequers is one
with which the Chinese Government should be fully able to deal. Vide
the successful working of the opium Lekin collection by the I. M.
customs.
Hopefully commending to your consideration the work and aims of this
committee, I have, etc.,
