John Russell Young to Frelinghuysen, June 18, 1884

No. 45. Mr. Young to Mr. Frelinghuysen.

Sir: I have the honor to submit herewith, for the consideration of the Department, a copy of a dispatch received from Mr. Consul Shepard, at Hankow, and a copy of my response.

Mr. Shepard calls my attention to the refusal of Chinese officials in the interior to recognize transit passes; to attempts made by them to levy lekin and other taxes upon goods covered by transit passes; he points out the injurious effect of such action upon our trade, and asks for the energetic intervention of the legation.

The subject thus brought up, by no means for the first time in the history of this legation, is one of grave importance, and, as Mr. Shepard has been informed, will have serious attention.

But in my reply I have felt obliged to express a divergence of opinion upon one point raised in Mr. Shepard’s dispatch, and it is to that point alone that at the moment I beg to ask the attention of the Department.

With his dispatch were forwarded no less than thirty-four transit passes issued to Mr. J. M. Burnett, an American citizen, and rejected by Chinese officials in the interior. In reference to these Mr. Shepard remarks:

I do no claim that Mr. Burnett actually owned the goods (covered by these thirty-four passes,) for he undoubtedly acts for native traders, as I have explained in a former communication. But that should make no difference in the treatment of passes inward, since no distinction is made between natives and foreigners in the protection the certificates warrant.

Upon this point I have replied to Mr. Shepard that, in my opinion, we cannot ignore the fact, if such a fact is known, that American merchants are acting for Chinese principals, and are not themselves the bona fide owners of the merchandise covered and protected by transit passes taken out by them and I have pointed out that, in the constantly recurring discussion of the transit-pass system between the Government of China and foreign representatives, the former has always insisted and the latter admitted that under the treaties transit certificates can only be used legitimately by foreigners to cover and protect foreign owned merchandise.

The entire transit-pass system is a creation of the treaties between China and foreign powers. It was devised, not for the advantage of Chinese merchants, but for the benefit of foreign exporters and importers, by the substitution of a fixed internal tariff in place of the uncertainties and irregularities of the Chinese interior and local systems of taxation. That commerce would be largely benefited by the extension of the transit-pass system to Chinese merchants is no doubt true, but that is a question between the Government of China and its subjects, with which we cannot interfere. We certainly ought not to allow our people to connive with subjects of this Empire in seeking by surreptitious means to secure advantages to which they are not legitimately entitled.

The responsibility for the failure of the transit-pass system to produce the good results expected of it cannot, I fear, be laid wholly upon the Chinese. It is, on the one hand, true that local Chinese officials ignore and repudiate transit passes, and thus violate the express provisions of treaty; but it is not less true, on the other hand, that at several of the ports are foreigners, merchants so called, but with neither capital nor connection, who lend or sell their names to native firms in the use of transit passes, thereby enabling the latter to evade the laws of the Empire. Hankow, as a port, has long been notorious for this form of abuse of the transit-pass system, and by Mr. Shepard’s declaration it appears that Mr. Burnett has been doing this sort of work for Chinese merchants.

The whole system sadly needs revision and readjustment, but it is too much to expect that the Government of China will take efficient measures to put an end to the violations of the treaties by its local officers in this direction until it has a practical assurance that foreign powers will no longer permit abuses of the privilege by their people.

In this view the question raised as to the right of American citizens to allow themselves to be used as figure-heads or men of straw by Chinese merchants, in taking out transit passes, becomes of very serious importance, and upon it I beg to receive the instructions of the Department.

I have, &c.,