George F. Seward to George F. Seward, January 30, 1880

No. 149. Mr. Seward to Mr. Evarts.

Sir: I beg leave to hand to you, herewith, the response of the foreign office to the joint note in regard to trade grievances, which was addressed to Prince Kung in November last. The note is not free from a certain assumption of independence, and it is disfigured by one or two extreme expressions. It adheres rigidly to the positions taken up by the foreign office in the circular letter addressed to their ministers abroad in 1878. It ends, however, with a plain declaration of willingness to discuss with the foreign representatives measures for the removal of grievances.

The several foreign representatives will meet to discuss the Yamên’s note in a few days. In the mean time I refrain from further comments upon it.

I have, &c.,

Categorical replies of the Yamên to the several foreign grievances.

• Treaties allow foreigners of the various nationalities at the several ports to lease land; the land so leased, however, to such foreigners continues to be Chinese territory. Foreign merchants have heretofore sometimes sold foreign goods within the limits of the port, and before they have passed to the interior, to Chinese. The owner is thus a Chinese, and the goods are upon Chinese soil. China temporarily levies lekin for military purposes, which is a matter within her own control. As it is already agreed that foreign imports shall not pay lekin within the limits of the foreign concessions, this point, since such dues are not collected, need not be discussed.
• The regulations of trade at the ports provide that foreign imports taken to the interior, if not protected by a transit certificate from the customs, shall pay charges and lekin at each station and barrier passed. Thus imports taken into the interior, on which the transit duty has not been paid and a certificate taken out, should pay the barrier dues and lekin and no other duties are added to them.
• According to the treaties, transit certificates must he issued to merchants taking foreign produce inland upon application and payment of transit dues. As passes are of a sudden being applied for for points for which passes have not heretofore been taken out, the local authorities, with the intention of preventing wrong-doing, have consulted as to regulations with the several foreign officials. This certainly is in accord with treaty stipulations, and is neither a refusal to issue passes, nor an enforcement of unnecessary rules.
• Merchants taking foreign merchandise into the interior covered by a certificate of the payment of the transit dues, are to produce this certificate for examination at the barriers as evidence. But it has occurred at certain points that the tax officers have refused to respect this certificate when placed before them. This fact having been brought to the notice of this Yamên it must instruct the high authorities concerned to examine into the matter and take action.
• By the treaties merchants taking imports covered by transit passes, shall produce the passes for inspection and counterseal at each barrier en route. Excepting cases of passes concealed or false entries in which all goods covered by them are confiscated, in case, at barriers or other stations, the officials demand other than the legal levies, or make pretexts for seizures, this office upon representation will instruct the high officials concerned to inquire and take action.
• The trade regulations appended to the treaties provide that merchants who may take imports inland shall inform the customs as to the point to which the goods are to be taken and pay the transit dues. The customs will issue a transit certificate, which shall be produced for inspection at all stations en route, and no matter whether taken to points near or remote no further dues shall be levied. Thus the transit certificate is limited in its application to the point, whether near or remote, for which the merchant reported. On arrival at the point named the certificate becomes of no value.
• By treaty, merchants of any nationality are allowed to lease premises and erect warehouses at the several ports for their convenience in the storage of merchandise. His excellency the British minister notified his people that they would not be allowed to establish warehouses in the interior, thus providing against abuses. By treaty, merchants are allowed to hire boats for the transport of merchandise. The Yangtse regulations also provide that foreign merchants may employ boats in inland waters for the transport of goods. All of which are facilities for the benefit of foreign trade. The transport and storage of merchandise must of course be conducted in accordance with the treaties.
• In the several provinces, and excepting the foreign customs, the customs stations have had their fixed points of establishment. But the lekin stations are in each province, under the control of a high official, who takes the circumstances into consideration and from time to time increases or diminishes the levies. For the past few years there have been reductions, but no increase. There certainly has never been an establishment of additional lekin stations without the orders of this high official in any province.
• The tariff of the foreign customs is provided for in the treaties. The tariff of the Chinese customs is recorded in the regulations of the board of revenue, printed and published long since. But as the lekin is established for the necessities of the military, it has not been provided for by law, and there has been no necessity for its being decreed uniformly in the several provinces.
• Foreign merchants taking imports inland should be provided with a transit certificate, and foreign merchants going inland to purchase native produce should have a transit pass. Merchandise not protected by these papers, since, at each barrier and station it pays the dues and lekin, ought to have a receipt setting forth the amounts of dues and lekin paid, and at what points and to what officers. Should any officer without reason refuse to give such receipts, this Yamên must of course, upon proper representation, instruct the high officer concerned to take the proper action in the premises.
• Merchandise covered by transit pass, having paid the proper dues, ought of course not to be subject at the several stations and lekin barriers to further levies in violation of law. Where such cases occur the offense of the deputy concerned should be inquired into and clearly established by the high official of the province, and he should be punished according to the laws of China.
• Levies exacted in violation of law upon goods passing the customs and covered by transit certificates ought to be returned to the owners. But it would not be proper to accept the simple statement of the merchant concerned. The case should be investigated by the high officer in the given province, and action taken upon the development of the actual facts. Occasionally a case will be contested and much time be consumed in its adjustment.
• See No. III.
• In all the producing districts in the several provinces of China there is a tax upon the productions, called the “miscellaneous tax.” This tax is paid by the producers to the officers appointed to collect it for remittance, no matter whether merchants do or do not purchase the produce concerned. This tax has been collected in each province for more than two hundred years, and has no connection with the customs or transit dues, or with lekin. This tax exists in all the producing districts of China and is not, limited to silk.
• The trade regulations for the treaty ports provide that in the case of native produce purchased by foreign merchants at the ports, the inland owner having paid the inland taxes, and the Chinese merchant having paid the various customs dues and lekin taxes, the foreign merchant need not pay the transit dues. But it must be fully determined that the produce purchased by the foreign merchant is the identical produce which has paid the customs dues and lekin taxes.
• By the treaties, foreign merchants taking out transit passes in order to bring out native produce from the interior should pay the transit dues and export duty. But native goods bought at the ports, putting aside the export duty, the rules allow that, the native owner having paid the inland customs-dues and lekin tax, the foreign merchant need not pay the transit dues. But where the produce in question has been altered in any way, it cannot be held to be the produce originally purchased; cannot be held to have paid the inland dues and lekin; nor exempted from the transit dues.
• The trade regulations appended to the treaties stipulate that articles intended for the personal use of foreigners shall be exempt from import and export duty. If duties are wrongly levied at the customs upon this class of merchandise it is because it has not been already stated that the articles concerned were for personal use, or because it is suspected that they are intended for sale. Orders ought to be given to examine into the business clearly, and take proper action.
• The rules of trade at the several ports provide that foreign merchants taking native produce into other ports shall pay the export and half import duty. Thereafter, upon transport of the goods into the interior, whether in the hands of Chinese or foreign merchants, they shall pay the inland customs dues and lekin. Thus native produce taken inland from a second port must, according to the rules, in addition to export and transit dues, pay the inland customs dues and lekin, but no other taxes.
• The treaties state clearly that a bank shall receive on behalf of the superintendent of customs the customs revenues, whether in bullion or dollars, taking into consideration the market rate of the dollar in sycee, and making suitable allowances. The bullion received by the customs is in the treasury taël of fine silver. But the price of dollars as compared with bullion differs at different times and places. The superintendents of customs should be instructed in the receipt of duties to take the treasury taël of pure silver as the standard.
• The treaties provide that, at the several ports, buoys, light-ships, light-houses, and beacons shall be provided from the tonnage dues. Heretofore the expenditures for these works have been provided from the tonnage dues upon foreign bottoms; but now the tonnage dues received from the vessels of the China Merchants’ Steamship Company are also applied to the purposes indicated above.