Rutherford Alcock to A. Vlangaly, Envoy Extraordinary and, August 5, 1868

D.

Mon cher Collègue et Doyen: It will be in your recollection that in November last I placed in the hands of the foreign representatives in Peking, a memorandum on the present condition of the Chinese empire and its internal administration in connection with a revision of treaties. My object in taking this step, as I stated, was by a free exchange of opinions to arrive at a mutual understanding on the important question of a revision of treaties. Although no written communication was received from any of my colleagues on the subject, I was led to conclude, from what passed in conversation, that there was a very general opinion of the impolicy, in the present state of the empire, and during the minority, of seeking any such modifications of existing treaties as would necessitate fundamental or sweeping changes in the government and administration, to give them effect.

Entirely in accord with what I believed to be the general sense of my colleagues, I presented, in the following month, (December,) a note to the Foreign Office, referring to the approaching period fixed by the treaty of Tientsin for a revision, if demanded on either side, of the commercial rules and tariff, and suggested that a mixed commission should be appointed, to sit at Peking and make a preliminary inquiry into various alleged abuses, and failure in giving effect to treaties, and to consider the best means of removing such grounds of complaint, if found to exist, and affording, in compensation for loss and damage already sustained by the foreign trade, increased facilities for its extension.

The Foreign Office assented to my proposition, and for the last six months a mixed commission, consisting on the British side of Mr. Fraser, the senior secretary of the legation, and on the other part of two Chinese secretaries and Mr. Hart, inspector general of customs, has been sitting.

I caused a full exposition to be laid before the commission of all the grievances detailed in the printed memorials of the merchants, with which you are acquainted, and submitted various propositions calculated, in my opinion, to remove prevailing abuses and restrictions on trade, hitherto preventing its development, in violation of the spirit if not in all cases of the letter of treaties. The result has been a declaration on the part of the Foreign Office of its willingness to accede to many of the proposals made, to some unconditionally, to others subject to certain modifications in the tariff and trade regulations.

I have hitherto kept you, our Doyen, and my colleagues generally, informed of the steps I was taking, and the object I proposed to accomplish through the commission, and this with the utmost frankness: first, because any idea of obtaining exclusive advantages for British trade or interests was precluded by the favored-nation clause in all the treaties, and therefore there could be nothing to conceal; and second, because any good obtained for Great Britain must be for the common benefit of all, and consequently whatever might be done must in the end be acquiesced in by every other treaty power before any changes or modifications could be carried into effect.

The labors of the commission having now taken a definite shape, I am enabled, in further development of these views, to communicate the result, and invite the co-operation of my colleagues by the expression of their opinion as to the acceptability of such measures as are proposed for the purpose of giving fuller effect to existing treaties and increased facilities for trade.

I may premise, by way of explanation, that the greatest burdens and restrictions upon trade, and those the most loudly complained of by the several mercantile communities in China as a violation of treaty stipulations, were all connected with the li kin taxes at the ports and other localities, and the mode of collecting the transit dues. And it was precisely under these two heads that the greatest difficulties have been experienced in arriving at any satisfactory settlement.

Under both these divisions there was, in practice, a wholly irresponsible and arbitrary power of taxation exercised by the provincial authorities, which rendered perfectly valueless all limitation of tariff rates. At the ports, the moment that foreign goods passed into Chinese hands they were liable to a perfectly unlimited and varying taxation. In the interior the same evil was perpetuated, and transit certificates did not suffice to cover foreign goods in their passage to places of consumption, even in foreign hands; and in Chinese hands they were at the mercy of the taxing authorities. The same applies to tea and silk on their way to the treaty ports. Under such a régime, the tariff rates fixed by treaty ceased to be any protection, and the whole object of their stipulation was defeated. Duties to any amount might be levied at the caprice or according to the wants of the provincial authorities, even to a prohibitive extent. And they have in effect constituted so heavy a burden as in many branches of trade to have inflicted the most serious injury, and proved to be all but prohibitive.

After long discussion, it has been admitted that treaty rights were violated by such proceedings, and that foreign trade, whether in imports or exports, by payment of the fixed transit dues of two and one-half per cent., could be certificated to any part of the interior, even though in Chinese hands.

On the other hand, the Chinese officers insist on the unceded right of the territorial sovereign to tax all goods, whether foreign or native produce not so certificated, when circulating in the interior, to such extent as the wants of the state may render necessary. But they have admitted that this should be done under imperial and responsible authority, and with communication to the foreign representatives, if not by public decree, so that these could have the means of judging of the incidence of such taxes, and ascertain that it did not fall disproportionately on foreign trade.

To give effect to these views, they propose that all imports should pay the transit dues on landing, at the maritime customs, receiving a transit pass certificating such goods free of all charges whatever to any portion of the interior, while in transitu, and before passing into consumption, abolishing by imperial decree all li kin and other taxes of whatever denomination, at the ports on foreign goods.

As regards the staples of the export trade, these can also be certificated for the ports and relieved from all further duties, provided that, if not shipped to a foreign country but to another port in China, they are then subjected to the same taxation as native produce in native hands. The inclosed draught of a note which the Foreign Office propose to write, if this should be agreed upon, will give the details of these measures.

It will be observed that the only possible objection to a payment of a transit due on all imports—that none ought rightly to be levied on goods sold at the ports—however true in theory, is of no weight when the right to levy that or five times as much, under another name, whether as an octroi or a li kin tax, the moment they pass into Chinese hands, is asserted and exercised. It is in the interest of the goods sold sur place even, to exempt them by a payment of two and one-half per cent. from uncertain and unlimited taxation, as they will be more salable and fetch a better price by reason of such exemption.

The inclosed memorandum concludes with a proposition to revise the whole tariff, with a view to equalize the rate on all articles to five per cent., excepting tea and silk, on which, in a former note, the Foreign Office had proposed that the duty should be doubled. This would not constitute a very heavy duty, judged by European rates of taxation, and it might well be compensated by the reduction of duty on many other articles which the proposed equalization would effect; although it is probable that such an increase would be very unpopular among the merchants, who, as a general rule, want everything reduced, and are never willing to listen to any reasons justifying an increase, though as a part of a general measure eminently calculated to benefit them.

These are the points affecting the tariff and taxation of trade. In various other directions they have expressed their willingness to make unconditional concessions, with the view of facilitating trade both in the interior and on the coast. These may be summed up thus:

1. The framing of a code and rules of precedure for mixed courts.

2. The establishment of bonded warehouses.

3. The payment of drawbacks in specie, if within the current quarter, and their receipt in payment of duties for three years.

4. To regularize payment of duties by fixing the value of sycee at each port.

5. To provide for steam requirements, by allowing foreign machinery and assistance in working coal mines.

6. To free dock materials from duty, and to admit all household goods and personal effects, not for sale, also free.

7. To issue an edict declaring the right to trade and temporary residence throughout the interior.

8. To authorize inland navigation by foreign vessels (not steamers) for the transport of foreign goods.

9. To assist the expansion of steam traffic on the Yangtsze river, by the addition of certain landing stages for shipment and landing of goods and passengers at certain places other than the ports already opened, viz: at Ta-tung, Ngan-King, and Wu-hu.

10. To open the port of Wan-chan between Ningpo and Fuhchaw, and also possibly others if desired.

They refuse to admit foreign salt, to allow steam navigation of inland waters, and right of domicile in the interior, unless as regards the latter. Treaty powers are prepared to renounce, in regard to such residents, the exterritorial privileges. These are the only three propositions discussed to which a negative has been given.

From this brief summary of facilities offered and advantages or concessions obtainable, I think, with the aid of the inclosed note, you and my colleagues will be enabled to form a clear opinion as to the policy of acquiescing in the arrangements now proposed, and as I desire, very much in the common interest, to learn with as little delay as possible how far your views and those of my colleagues generally are in accordance with my own, I think it proper, frankly and plainly, to put you in possession of these.

The British government is alone entitled, at the present time, to demand any revision, the date fixed for such demand on the part of other powers being more remote. I do not think, however, it is in the interest of any foreign power to press for any fundamental changes now; nor is her Majesty’s government, even by treaty, entitled to demand anything beyond a revision of the trade regulations and tariff. Within those limits the Foreign Office has, I think, offered with good will to grant nearly all that could for the present either be wisely asked by foreign powers or safely granted by the Emperor of China. If more were even to he extorted by pressure, I do not think it would practically he in the power of the Chinese government to give it effect.

I believe that the arrangement contemplated for the abolition of the li kin taxes, and the protection of all produce, foreign and native, in transit, (inland or coastwise,) if carried out in good faith, (and such I believe to he the intention and wish of the officials here,) will he an immense gain to all foreign trade, and effectually remove the greatest drawbacks and grievances under which it has labored since the last treaties were signed.

I believe that the other measures enumerated, from 1 to 10, include all that are most essential and immediately practicable for the improvement of our relations and the development of trade. With these convictions I am prepared to recommend their acceptance by her Majesty’s government, leaving it open for further consideration whether any revision of the tariff, subject to the condition of an increased tax on tea and silk, shall be declined or accepted. And so, in like manner, as to the opening of more ports on the coast, about the advantage of which there is great doubt among the merchants themselves, and some conflict of opinion.

Of course, to give such action on my part practical effect it is necessary that her Majesty’s government should also be advised how far my colleagues, the representatives of the other treaty powers, are disposed to adopt the same views, and make a similar recommendation to their respective governments; and it is with this object that I now write to you as our Doyen, and beg you to be good enough to enter into communication on the subject with the other members of the corps diplomatique in Peking.

I avail myself, &c.,