BARNES, Members of the London Committee representing the Shanghai Chamber of Commerce to Edward Henry Stanley, November 12, 1877

Letter of the Chamber’s London Committee to Lord Derby, on the Chefoo convention, dated London, November 12, 1877. [Extract.]

shanghai general chamber of commerce.

To the Right Honorable the Earl of Derby, P. C., Her Majesty’s principal Secretary of State for Foreign Affairs, &c., &c., &c.:

My Lord: * * * * *

• Your lordship will observe that the section of the convention which deals with international jurisprudence has been passed over somewhat lightly by the Shanghai chamber; and we may be permitted to explain that this is not because the subject fails to be recognized as one of great practical importance, but because it requires comprehensive treatment by trained lawyers, and cannot even be discussed to advantage without having all the data thoroughly sifted.
• The chief gain from the introduction of the subject into the convention is the recognition, now, we believe, for the first time accorded to Her Majesty’s supreme court for China and Japan.
• Passing to the purely commercial portion of the convention, the Shanghai chamber (as noted in their letter) heartily approve the concession of new trading ports, two on the Great River and two on the coast. This is looked upon as a step in the right direction, and is doubly welcome as some modification of the dictum of Lord Russell that the fewer open ports we had the better. The Shanghai chamber would, however, go still further, and would urge the desirability of the whole of China being thrown open for the establishment of trading points wherever it may be found worth while for the Chinese Government to place a custom-house, and the European Governments consular stations.
• The point upon which the committee are most anxious to bring their views before your lordship is the stipulations affecting the collection of inland duties. The Shanghai chamber, in their letter, notice at some length the manner in which this subject has been treated in the previous prolonged discussions which have arisen with regard to it.
• The wording of clause 28 of the treaty of Tientsin, which refers to it, provides in clear and specific language that British subjects may convey imported goods to any part of the interior of China on payment of a commuted transit duty amounting to half the tariff duty, which commutation is to “exempt the goods from all further inland charges whatsoever.”
• A “rule,” however, which was appended to the tariff some months after it was signed, tends to complicate and needlessly to limit the due operation of this provision, and the faithlessness of the Chinese officials has, to a large extent, rendered it a dead letter.
• It was found by experience to have been a mistake to secure the option of commuting the inland dues as a personal privilege to British subjects instead of a privilege in re or an exemption attaching to the goods themselves, irrespective of the persons by whom they might, after payment of the commutation dues, be owned.
• With this exception, however, the clause in the treaty of 1858, seemed all that was required; and the merchants in China desire nothing better than that its clear intentions should be fulfilled.
• They have, however, for years past been met by a variety of ingenious arguments tending to show that, owing to the peculiar fiscal system of China, the principle of a single payment in commutation of all inland dues could not be carried out.
• But this argument is receiving a practical answer by the gradual extension of the very practice so long pronounced impossible, as is shown in the letter from the Shanghai chamber; and whatever force may previously have attached to it, it at least became clear, in 1869, that it was not one which the Chinese Government were themselves disposed to advance, seeing that in connection with Sir Rutherford Al-cock’s convention of that year they voluntarily proposed a single payment commutation for all inland dues, but with the important modification that it was to be compulsory instead of being optional, as provided by the treaty of Tientsin.
• This suggestion was opposed by the China merchants when Sir Rutherford Alcock’s convention was under consideration, because it was clearly discerned that its effect would have been merely to add 50 per cent, to the import duty with no better guarantee than before against surcharges in the interior.
• All that appears in reality to have been wanted was to give a new impetus to the old treaty provisions; to do away with the personal bearing of the exemption, which, as it was provided for in the “transit duty commutation clause,” had the appearance, on the surface, of an invidious race distinction, and finally to get rid of any remnants of obscurity in the meaning of the agreement.
• What has now been done, however, seems rather to tend in the opposite direction. New elements of obscurity have been introduced, and if twenty years have been spent wrangling over the comparitavely simple wording of the Tientsin treaty, it is to be feared that no person now living will see the end of the controversies which will rage over the indefinite arrangement set forth in the Chefoo convention.
• The subject appears to have been complicated by the introduction, in connection with it, of a collateral question regarding a special tax, known in China by the name of lekin, and, in contravention of the principle that the payment of the commuted transit dues should exempt British goods from all further inland taxation, lekin is now for the first time recognized in a treaty by a kind of sidewind.
• This “lekin” is a tax which has been most complained of as having been levied in violation of treaty stipulations. It is raised in all kinds of ways, according to the caprice of the different provincial authorities, and has been burdensome to trade as much on account of its uncertainty as its magnitude.
• The Shanghai Chamber of Commerce submit that this tax is practically either an additional import duty, in which case its levy on British goods is in contravention of the treaty, or it is an inland duty, and as such commutable by a single payment.
• Assuming that by the true meaning of the Chefoo convention lekin is included with the other commutable inland duties, the intention of the new provisions would appear to be to exempt the area of the foreign settlements at the different ports absolutely from its collection.
• On the surface this seems to be not only innocent hut advantageous to the foreigner. But if this were really all that is intended, it would scarcely have been worth while making this solemn engagement about the matter. It can hardly, however, be doubted that the stipulation has, in the minds of the Chinese Government and its advisers, a far more important bearing. By an obvious inference, the specific exemption of the area of the foreign settlements from the levy of this tax implies full authority to levy it on the other side of the boundary.
• The effect, therefore, of the proposed provision would to be impose this tax with all the authority of a special treaty at every open port in China. The small patches of ground in the occupation of foreign merchants would be exempt, but the Chinese towns would not escape; so that goods designed for consumption in the immediate district could only be freed from the tax by the payment of the extra half duty as commutation dues, if, indeed, the Chinese officials, whose rapacity is notorious, would not find means to levy the lekin after all even when the commuted rate had been paid. The result of this would be to reintroduce the nationality question in a most objectionable shape and lay the foundation for endless disputes.
• There can, however, be no doubt that an additional tax levied at the port is, whatever it may be called, neither more nor less than an additional import duty, which is precisely what the Chinese negotiators intend that it shall be, and precisely what the interests of our commerce render it incumbent on the merchants to oppose.
• It is, in fact, the attempt made in the Alcock convention of 1869 (see paragraph 28) in a new shape. Sir Rutherford Alcock was plainly asked to allow 50 per cent, to be added to the import duty, on the bare promise of the goods being thenceforth franked all over the empire in accordance with clause 28 of the Tientsin treaty, the very thing which had been declared impossible. Sir Thomas Wade is asked to allow the Chinese to levy any amount of taxation they like upon foreign goods the moment they leave the limits of the settlement, or say within half a mile of the wharf at which they are imported. Assume the amount thus levied to be the half-tariff duty, and we have Sir Rutherford Alcock’s rejected agreement, minus the promise quantum valeat, that the goods should not be further taxed in the interior.
• The only arrangement compatible with the spirit of the existing treaty would appear to be that sketched out by the Shanghai Chamber of Commerce on page six of their letter, namely, that imported goods should, on payment of the import duty, be freed from further taxation while within the limits of the port, which can be easily defined according to the actual topographical divisions; and that goods upon which the commuted transit due has been paid should be “exempted from all further inland charges whatsoever,” as provided by clause 28 of the Tientsin treaty.
• The prosperity of English trade requires that the imposts upon it shall not only be kept within reasonable limits, but also that the machinery for their collection be simplified by all feasible means, as it might be possible even to paralyze the trade by complicated regulations for freeing it from taxation.
• It would, therefore, appear far better to revert to the clear and simple provisions of the Tientsin treaty, and insist upon their being carried out without evasion.
• While we adhere to the letter of our engagements and hold the Chinese to theirs, all goes well; but when we encumber these simple stipulations with complicated rules and qualifications, checks and counter-checks, we are but too apt to miss the point we aim at while involved in the mazes of endless discussion.
• It would be impossible to estimate the loss which the manufacturing and other interests in this country suffer every year through the trade being hampered by the subtleties of chicanery resorted to in China. We have a treaty, plain and simple. All that we have to do is to insist upon its fulfillment, and there can be no doubt, whatever plausible arguments may be advanced, that the Chinese have no valid excuse for failing to carry out its provisions in their spirit as well as in their letter.
• The question of inland opium duties has been introduced into the convention apparently with very little show of reason, seeing that the Chinese Government besides receiving an import duty are at liberty to tax opium as much as they please after it has left the hands of the original importer.
• They now, however, wish to make the foreign importer and the foreign customhouse responsible for the due collection of an important portion of the inland imposts, the design in this evidently being the same as that above indicated with regard to manufactured goods and other imports, to increase the import duty under false pretenses. If it be thought proper to help the Chinese to levy additional, duties upon opium, or upon any other goods, by means of the foreign customs and within the foreign settlements, it should be done in a straightforward manner, that is, by simply increasing the import duty at present collected.
• But for the English Government to make itself even indirectly answerable for the collection from Chinese of an impost of indefinite amount, varying at each port according to the caprice or the necessities of local authorities who are not even specified, would surely be to introduce a most inconvenient precedent to say the least.
• The Shanghai chamber also venture to express a hope that the present opportunity may still be availed of to obtain a few minor concessions from China which would be of great practical benefit to trade.
• One of these is bonded warehouses. The principle was conceded in the Alcock convention, but, as already noticed, in exchange for increased duties which it was felt the trade generally could not bear. It needs no argument to support this request, and at the ports chiefly interested ample conveniences already exist for giving effect to this reasonable accommodation to commerce.
• The unsatisfactory state of the currency in China probably inflicts a greater tax on trade, both foreign and native, than even the irregular imposts of the Mandarins; and it would be a great advantage if an opportunity could be taken to urge the Chinese Government to establish a mint for coining dollars, with adequate guarantees for the maintenance of the standard adopted.
• Upon the conservancy of the rivers, especially the Wangpoo, we have the honor to address a separate letter to your lordship inclosing one received from the Shanghai chamber. It would probably not be difficult to induce the Chinese to move in this matter, and the admirable manner in which they have accomplished the task of lighting the coast proves that they are fully capable of performing such duties when they are once brought to feel that they are incumbent upon them.
• In conclusion, we trust we may be permitted to say that, though objecting to specific parts of the Chefoo convention, the Shanghai Chamber of Commerce fully recognize the zeal and talent displayed by his excellency Sir Thomas Wade in furthering our trading interests in China. They cannot, however, but be conscious of the extremely difficult circumstances under which he negotiated, not only on account of the grave international question which he endeavored to settle simultaneously with the commercial portion of the convention, but also from the oblique form in which the representatives of the Chinese Government thought it advisable alone to deal with the comparatively simple question of the inland duties.

We have, &c.,