FORBES, Chairman to Sir Thomas Francis Wade, K. C. B., Her Britannic Majesty’s Envoy Extraordinary and, October 22, 1879

Letter from the Shanghai Chamber of Commerce to the doyen of the diplomatic body at Peking on the subject of treaty revision.

Sir: As most of the representatives of foreign powers are now assembled at Peking? where it is understood that negotiations for treaty revisions are in active progress, I have the honor to submit, for the consideration of your excellency and your colleagues, a brief statement of the committee’s views on several of the important questions under discussion.

The opinions of this chamber on the subject of treaty revision were set forth at some length in a letter addressed by their London committee on November 12, 1877, to Lord Derby, then Her Hajesty’s principal secretary of state for foreign affairs. A copy of this document is inclosed herewith.

The committee, while adhering generally to the views expressed therein, ventures to avail itself of the present opportunity with special reference to the vexed questions of transit dues and inland taxation on imports. The difficulties which beset the treatment of these questions are fully appreciated by the chambers, but the committee is anxious to reiterate its conviction that foreign interests are more likely to be promoted by the maintenance and enforcement of present treaties than by any of the new stipulations which have been proposed of late years.

As a matter of fact the Chinese Government, while admitting the validity of the treaty tariff on imports and the exemption of foreign goods under transit passes from all other taxes, claims and exercises the right to tax such goods at discretion after they have reached their specified destination, and to tax foreign goods, not covered by transit passes, wherever they may be found.

The committee cannot do better than to refer to the letter of its London representatives to Lord Derby for a statement of the chamber’s reason for holding that the Chinese view is incompatible with the provisions of the British treaty of Tientsin. But there is an equally clear divergence from the stipulations of earlier and still subsisting treaties, which the committee think should not be lost sight of.

The American treaty, signed at Wanghia in 1844, provides (Article XIII) that “imported goods, on their resale or transit in any part of the empire, shall be subject to the imposition of no higher duty than they are accustomed to pay at the date of this treaty.”

Article XIII, of the Swedish treaty, signed at Canton in 1847, provides that “imported goods on their resale or transit in any part of the empire shall be subject to the imposition of no other duty than they are accustomed to pay at the date of this treaty.” The effect of these two articles seems to be—

• That the privilege attaches to “imported goods” irrespective of ownership.
• That the privilege extends not only over the transit of the goods, but to their resale in any part of the empire.
• That neither a higher duty nor any other duty can be levied on foreign goods than those which were customary when the treaties were signed, that is to say, nothing more and nothing less than the transit duties provided by the British treaty of Nanking. After the signature of the treaties of Tientsin, these transit dues were fixed by common agreement at one-half of the tariff import duty, but since the establishment of the transit pass system, the Chinese Government has only partially recognized the privileges as attaching to the goods and not to the owners.

Furthermore, so far from the protection extending to “resale in any part of the empire,” according to the treaties quoted, the very name of “transit pass” seems to have lent itself to the successful assertion of the principle that foreign goods are covered only during transit to a specified place, and that they are at the mercy of Chinese taxation afterwards. How trifling in fact must he the value of a transit pass to an owner of foreign goods in the interior appears conclusively from the customs returns, which show how small a proportion of imports is protected by such certificates.

I would also beg leave to refer to the fact that according to the earlier treaties the area within which foreign goods were free from inland taxation practically extended from the port of entry to the nearest barrier then existing. The committee feels that to restrict this area, as has been proposed, to that of the foreign settlement at each port would be to surrender a treaty right without adequate return, to admit a dangerous principle, and to open the way to endless complications.

Although the value of the lekin tax to the revenue of the empire is admitted on all sides, it is understood that the Peking government itself acknowledges that the tax is abnormal, more or less beyond its control, and one which it would not be sorry to see abolished. If this be so it maybe hoped at least that, in the revision of the treaties, nothing will be admitted by foreign powers which will, by recognition or otherwise, encourage the continuance of a tax to which its very authors object.

To conclude, the committee believes it is expressing the opinion of the whole mercantile community of Shanghai in stating that the present treaty provisions regarding transit dues and inland taxes are ample, if China will only carry them out without evasion, in spirit as well as in letter; what seems to be needed is only a clearer restatement of their terms, with a declaration by China that lekin, or any analogous tax on foreign goods, is wholly illegal. This point the committee begs most earnestly to urge as of the highest importance.

If such a declaration were made by imperial proclamation and enforced by competent tribunals, so that the humblest Chinese trader would feel himself protected against inland exaction on imported goods in his possession, the burden of the present tariff would weigh very lightly on foreign trade. But until the central government can give some more adequate guarantee than has hitherto been offered against irregular levies at provincial barriers, any advantages supposed to be secured by treaty through the optional or enforced payment of commutation dues at the port of entry must be to a great extent illusory.

I have, &c.,