M. von BRANDT to James Burrill Angell, July 10, 1881

Mr. von Brandt to Mr. Angell.

My Dear Colleague: I regret to have to inform you of the unfavorable turn which my negotiations with the Chinese ministers on the subject of transit passes outwards, &c, have taken at the conference which I had at the Yamên to-day with their excellencies Wang, Chmg Lien, Mao, Lin Shu, and Hsia.

The ministers began by stating that further reflection had shown them the necessity making some changes and additions in the rules now under discussion. Foreign duty-free goods shipped coastwise ought to pay coast-trade duty, and goods manufactured by foreigners from native produce bought at the port or brought down under transit pass ought to be exported within the term of six, resp. seven months mentioned in Rule I, Art. 5. To my objection to the first proposal, that all foreign imports could freely and without payment of coast-trade duty be transported from one oxen port to another, the ministers replied that trade rule 2 contained nothing on the subject, and that consequently foreign duty-free goods were subject to coast-trade duty exactly in the same manner as duty-free native produce and that, if imports having paid import duty were free from coast-trade duty, they were so on account of their having paid some other duty already.

Not thinking it worth my while seriously to discuss such a proposal I replied that if such were the views of the ministers I was quite willing to agree to a rule by which foreign or native goods having paid import or export duty were freed from coast-trade duty, while duty-free goods of foreign or Chinese origin would have to pay the coast-trade duty equal to 2½ per cent.

This for the moment effectually silenced the ministers on this point.

With regard to the second proposal, referring to the time within which goods manufactured at the port from native produce were to be exported, I informed the ministers that my colleagues and I had also felt the necessity of providing some rule on this subject, and that I was authorized by my colleagues to lay before them the inclosed proposal, which we hoped would meet their views, as, while giving sufficient facility for the exportation of manufactures made at the port, it protected effectually the customs against any attempt at fraud: regulations on this subject restrictive as to the time of exportation could, however, of course, be made only for such goods as had been manufactured at the ports from native produce brought there under transit pass, goods manufactured from produce bought at the port being subject to no such restriction.

This proposal gave rise to a good deal of discussion, the ministers objecting to the exemption from the restrictions of goods manufactured at the ports from produce brought there, and bringing forward several counter proposals, in which both classes of goods were subject to the same restrictions, consisting mostly in a limitation of the time within which they ought to be exported. In the course of this rather desultory conversation I was struck by a casual remark from the minister Hsia to the effect that foreigners could not be allowed to compete with Chinese in the trade in native produce. The remark not having been addressed directly to me, I did not feel called upon to take it up then and there, but it seemed to me to contain the keynote of the Yamên’s new objections.

Finally, after more than two hours’ discussion, in which no progress had been made, the ministers draughted the inclosed proposal, to which I replied that, while I was willing, though seeing very grave objections against any limitation of the time for exportation, to lay the part of the proposal referring to such a measure before my colleagues, I could not do so with any hope of success with the port applying the same restrictions to goods manufactured from produce bought at the port as to those made from produce brought there under transit pass. The Chinese Government had the right to exercise the strictest supervision over native produce brought from the interior under transit pass, such produce having been exempted from the payment of inland taxes, under the express condition that it was intended for export, this obligation only to be canceled in case of the payment of two and a half times the export duty, which payment was to compensate the Chinese authorities for the loss of the inland taxes. With regard, however, to goods bought at the port, the foreigner was at liberty to deal with them as he liked without any restriction as to time or use; he might export them, sell them to foreigners or natives, manufacture them, forward them for sale to the interior, or destroy them without any hinderance or supervision from the Chinese authorities, provided he paid, on exportation, the tariff export duty due on them in the state in which they were at the time of exportation, or, when transported inland, all native charges and duties.

To this the ministers replied that, by treaty, foreigners had the right to buy produce either in the interior or at the port for exportation only to some foreign country or some other treaty port, and that they were not allowed to put it to any other use nor sell it at the port unless they paid two and a half times the export duty to the government, to make good the loss of the export duty to which the Chinese Government was entitled on all produce bought by a foreigner, either at the port or brought there under transit pass; that Chinese having to pay taxes and duties on all commercial transactions amongst themselves within the ports, foreigners could not be allowed to compete with Chinese under more favorable terms; they would therefore have to pay the same taxes as Chinese if they wished to sell Chinese produce bought by them at the port.

The government, however, were willing to make a concession to foreigners by not insisting upon their treaty right as far as native produce in its natural state was concerned, but they must insist upon goods manufactured out of native produce bought at the port, being not disposed of at the port without having paid two and a half times the export duty.

Another hour having passed in useless attempts to prove to the ministers that the views put forward by them were not only contrary to treaty, but also to all sound principles of commerce, I finally declared that unless the ministers were prepared to accept the treatment of native produce, in its original state or manufactured, when bought at the port, the rules as laid down by me in the course of the conversation, I could but consider any further discussion as useless. The ministers agreed to this, adding that the imposition of the same restrictions on goods manufactured from produce bought at the port, as from produce brought there under transit pass was the last word of the Yamên.

Though I do not believe this to be the case, I cannot but consider any further discussion with the Yamên of the whole question as worse than useless, the general impression I have received from the two last conferences being that while the Yamên will not fail to stretch to the utmost every concession made to it by the foreign representatives, there seems to be very little chance indeed of seeing the foreign complaints done away with by a strict execution of the new rules agreed upon in their favor. The whole spirit in which the whole discussion during the two last conferences has been conducted by the Yamn has been one eminently unfair, distorting the stipulations of the existing treaties so as to make, them seem to uphold the most unjustifiable pretensions, and making use of every concession obtained from the foreign representatives in the course of these negotiations to base some new claim upon it. As an instance of this I may state that the first part of Rule III—2. “Whenever native produce, no matter whether arrived under transit pass or purchased at the port, is to be manufactured within the port, notice thereof shall previously be given to the custom-house”—was brought forward by the ministers as a proof that the foreign representatives themselves had recognized that the two kinds of goods ought to be treated alike. It is these proceedings which render any concessions to the Chinese so dangerous. For example, were the foreign representatives to agree to the treatment of goods bought at the port and manufactured there, as proposed by the Yamên, this concession would be claimed in after days, when the arrangement now before us was denounced, as implying the recognition on their part of the claim put forward by the Chinese that foreigners could buy native produce only for purposes of exportation.

I am unwilling to take the responsibility of recommending to my colleagues the acceptance, as a whole or in part, of the arrangement negotiated under their instructions and approval with the Tsung-li Yamên. Nothing, therefore, remains to me but to return to them the powers which they had confided to me, and to express to them my most sincere thanks for the forbearance which they have shown in the course of these very lengthy negotiations, and the support I have invariably received from them.

I avail myself, &c.,