SHEPARD, Consul to John Russell Young, April 7, 1884

Mr. Shepard to Mr. Young.

Sir: In my No. 90 I referred to the interference with transit passes inward by lekin officials at points distant from Hankow, by which foreign goods were deprived of the benefits intended to be secured by the passes, and were consequently subjected to an unjust taxation en route, thereby largely increasing the cost of foreign products, to be borne by the native consumer. The effect of such a course must be only prejudicial to trade, acting directly to prevent and curtail commerce in articles from foreign countries. Such is, moreover, an unquestionable violation of treaty provisions, as conceded by the tsung-li yamên in their letter to the Chinese ministers abroad, which unequivocally recognizes the fact that such certificates “cover goods from a treaty port to a place named in the certificate, exempting them from ail taxes en route.”

This matter, with other efforts to interfere with foreign trade inland, has been formerly reported to the legation, its importance has been recognized, and a willingness expressed to use all proper efforts to secure a reform of abuses. But at the outset the purpose was weakened and reformatory results prevented from the lack of positive proof of native irregularities. No doubt has ever been expressed of the truth of my allegations, but in the lack of collateral proof to sustain them definite action on the part of the legation was scarcely possible, and I was asked to watch for such proof. While perfectly assured of the facts, I have never until now been able to secure such positive evidence as cannot be denied by local officials and some subterfuge brought forward to evade the conclusion of their undeniable hostility to the introduction of foreign manufactures into the Empire. I now have indubitable proof of a gross violation of the authority and force of inland-transit passes, and, as in duty bound, transmit the facts and evidence for the attention of your excellency.

I have the honor to inclose to you no less than thirty-four passes, pasted and attached together in one mass, and in this form returned to J. N. Burnett, the American shipper of goods from this port. I do not claim that Burnett actually owned the goods, 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.

Inspection of the returned passes will show that they were stopped and taken up at Yochow, a tax-barrier near the mouth of the Tung Ting Lake. The officials there detain boats with foreign goods for an indefinite period, until a number of passes for the same destination are collected, and from that point onward to the end of the transit the goods are forwarded unaccompanied, and of course unprotected, by the passes that should be with each separate lot of merchandise. They are, therefore, exposed to lekin taxation at every subsequent barrier passed. I have made investigation of the contingent circumstances, to discover them as accurately as possible, and find the following to be the facts:

• The goods sent by the route in question are mostly, if not entirely, piece-goods of American and British manufacture.
• There are several long routes beyond the Tung Ting Lake over which transit goods are conveyed, some of them being land routes. One leads southwest to Kweichow, and the other to the southern part of Lzechuen. During the summer months, when the Yangtsze is in flood, the latter is closed for a time. My information is that on both routes there are several tax-barriers that the goods must pass, and as the transit certificates are separated from the goods at Yochow, it follows that they are unprotected for the entire distance beyond, and lekin taxes are most undoubtedly collected at every barrier, in accordance with Chinese custom in similar cases.
• The amount of such taxation I have been unable to learn, as it is of course kept concealed by the officials interested; but traders here admit that it exceeds the half duty originally paid for the transit pass to clear the goods.

The effect upon trade inland will be obvious, and it requires no argument to induce your excellency to take up a matter so important to American interests, and I leave it in your hands, confident of wise action.

In regard to tea passes, I may add, for your information, that, on the request of both Mr. Burnett and Mr. Jenkins, I have recently applied for the issue of them.

The answer of the taotai to the applications in both cases is that when the missing passes for previous years are returned those now asked for will be issued.

The inference is that none will be issued to the applicants till then, and as their return is impossible, the decision is in effect a refusal to issue at all.

I am, &c.,