Wason jfjS'^^ ^/ / ^ ^ /»>- c^ V ^ CORNELL UNIVERSITY LIBRARY THE WASON CHINESE COLLECTION Cornell University Library HJ 2970.C51 The system of taxation In China in the T 3 1924 021 465 657 STUDIES IN HISTORY, ECONOMICS AND PUBLIC LAW EDITED BY THE FACULTY OF POLITICAL SCIENCE OF COLUMBIA UNIVERSITY Volume LIX] [Number 2 Whole Number 143 THE SYSTEM OF TAXATION IN CHINA IN THE TSING DYNASTY, 164449U BY SHAO-KWAN CHEN, Ph.D. COLUMBIA UNIVERSITY LONGMANS, GREEN & CO., AGENTS London : P. S. King & Son 1914 ^Tolumtia Snibersitg FACULTY OF POLITICAL SCIENCE Nicholas Murray Butler, LL.D., President. Munroe Smith, LL.D., Professor ol Roman Law and Comparative Jurisprudence. F. J. Goodnow, LL.U., Professor of Admmistrative Law and Municipal Science. E. R. A. Seligman, LL.U , Profes- 5or of Political Economy and Finance. H. L. Osgood, L.L.D., Professor of History. Wm. A. Dunning, LL.U., Profesiior of History and Political Pliilosophy. J, B. Moore, LL.D., Professor of International Law. F. H. Giddings, LL.D., Professor of Sociology. J. B. Clark, LL.D., Professor of Political Economy. J. H. Robinson,Ph.D., Professor of History. W. M. Sloane, L.H.D., Professor of History. H. R. Seager, Ph.D., Professor of Political Economy. H. L. Moore, Ph.D., Professor of Political Economy. W. R. Shepherd, Ph.D., Professor of History. J. T. Shotwell, Ph.D., Professor of History. G. W. Botsford, Ph.D., Professor of History. V. G. Simkhovitch, Ph.D., Associate Professor of Economic History. E. T. Devine, LL.D., Professor of Social Economy. Henry Johnson, Ph.D., Professor of History. S- McC. Lindsay, LL.D., Professor of Social Legislation. C. A. Beard, Ph.D., Associate Professor of Politics. W. D. Guthrie, A.M., Professor of Constititional Law. H. R. Mussey, Ph.D., Associate Professor of Economics. C.H.Hayes, Ph.D., Assistant Professor of Plistory. A. A. Tenney, Ph.D., Assistant Professor of Sociology. E. E. Agger, Ph.D., Assistant Professor of Economics. E. M. Sait, Ph.D., Assistant Professor of Public Law. R. L. Schuyler, Ph.D., Assistant Professor of History. R. E. Chaddock, Ph D , Associate Professor of Statistics. X. R. Powell, Ph.D., Associate Professor of Constitutional Law. D. S. Muzzey, Ph.D., Associate Professor of History. W. C. Mitchell, Ph.D., Professor of Economics. SCHEME OF INSTRUCTION GROUP I. HISTORY AND POLITICAL PHILOSOPHY. Subject A. Ancient and Oriental History, fourteen courses. Subject B. Mediae- val History, nineteen courses. Subject C. Modem European History, twenty one courses. Subject D. American History, seventeen courses. Subject E. Hi.story of Thought and Culture, thirty-three courses. Courses in Church History given at the Union Seminary are open to the students of the School of Political Science. GROUP II. PUBLIC LAW AND COMPARATIVE JURISPRUDENCE. Subject A. Constitutional Law, eight courses. Subject B. International Law, four courses. Subject C. Administrative Law, seven courses. Subject D. 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Four University fellowships of $650 each, two or three Gilder fellowships of $650 — $800 each, the Schift fellowship of g6oo, the Curtis fellowship of $600, the Garth fellowship in Political Economy of {650, and University scholarships of 8150 each are awarded to applicants who give evi- dence of special fitness to pursue advanced studies. Several prizes of from J50 to J250 are awarded. The library contains over 500,000 volumes sund students have 3Cces.s to other great collections in the city. 2 THE SYSTEM OF TAXATION IN CHINA IN THE TSING DYNASTY, 16M-1911 Cornell University Library The original of this bool< is in the Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924021465657 STUDIES IN HISTORY, ECONOMICS AND PUBLIC LAW EDITED BY THE FACULTY OF POLITICAL SCIENCE OF COLUMBIA UNIVERSITY Volume LIX] [Number 2 Whole Number 143 THE SYSTEM OF TAXATION IN CHINA IN THE TSING DYNASTY, 16444911 SHAO-KWAN CHEN, Ph.D. Nm igark COLUMBIA UNIVERSITY LONGMANS, GREEN & CO., AGENTS London : P. S. King & Son 1914 C5\ Copyright, 1914 The Faculty of Political Science of Columbia University, New York a;otbe Memory of My Father MR. BING-CHANG CHEN WHO DIED IN 1913 WHEN I WAS STUDYING IN THE UNITED STATES PREFACE The several Chinese standard works on the institutions of the Tsing Dynasty, 1644-1911, give us simply historical descriptions of taxation and there seems to be room for a scientific treatise, not too detailed in historical facts of similar nature or in local variations of insignificance, de- signed for both Occidental and Oriental readers wishing a general survey of our taxation system as it survives to-day. The present work is an attempt to generalize logically the facts connected with taxation in the Tsing Dynasty and to interpret their causes and effects scientifically. It includes those taxes of considerable importance which are univer- sally imposed in all the provinces. It is not worth while to discuss those taxes which have not developed into the typi- cal systems of the Tsing Dynasty either due to their insig- nificant yield or due to the fact that they are merely pro- vincial special taxes which have been created during the last two decades of financial chaos, and subject only to the temporary regulations of the respective provinces. On the other hand, the discussion of the political organization is absolutely necessary to a clear conception of the system. Consequently, we have to treat the government of the Tsing Dynasty and its expenditures and revenues. In con- nection with this treatment, the same plan of generalization and interpretation is followed. As to the sources of information, the facts have been selected chiefly from the two standard works published by the government, vis.^ the Institutes of the Tsing Dynasty, and the Amendments of. the Institutes of the Tsing Dynasty. 149] 7 8 PREFACE [150 The facts have been chosen as carefully as possible and arranged systematically according to my plan. In the main, the work of generalization and interpretation is based upon personal knowledge and observation. In this way, it is hoped that the present work will fulfil the object of ren- dering service to the readers. But it must be frankly ad- mitted that this work is by no means satisfactory from the statistical standpoint, but this is because nobody can solve the mystery of the financial conditions in all the provinces of China owing to the inefficiency of the financial control.^ My chief obligations in connection with this book are to Professor E. R. A. Seligman, for the sincere inspiration and the valuable supervision of the whole work, and to Mr. R. M. Haig for his valuable review of the manuscript, his numerous suggestions and his reading of the proof. Shao^Kwan Chen. Columbia University, Masch 26, 1914. * Cf. infra, pp. 106-107. CONTENTS CHAPTER I The Chinese Government PAGE Forms of Government — The Emperor — The Council of State — The Department of Foreign Affairs— Departments of Internal Affairs — The Department of Finance — General Position and Powers of Heads of Departments — The Censorate — Less Important Depart- ments — Territorial Divisions of Government — Provincial Admin- istration—Local Administration — General Features of Govern-j| ment ' ii CHAPTER II Expenditures and Revenues Classification of Expenditures — Comparative Importance of Expen- ditures — Sources of Revenue — Appropriations — Transportation of Products — Balance of Expenditures and Revenues— General Fea- tures of Expenditure and Revenue 31 CHAPTER III Taxation of Land The Land System — The Land Policy— The Tax System— The Land Rent — The Exemption of Payment — Existing Rates — Adminis- trative Rules — General Features of the Land Tax 47 CHAPTER IV Taxation of Salt Production of Salt — Consumption of Salt — Distribution of Salt — Taxation of Salt — Smuggling of Salt — Administration of the Salt Monopoly — General Features of the Salt Monopoly 70 iSi] 9 lO CONTENTS [152 PACE CHAPTER V Taxation of Commodities The Regular Customs — The Likin Duty 93 Conclusion 106 \> Appendices 108 Bibliography 118 CHAPTER I The Chinese Government, 1644-1911 ^ Forms of Government Even though her great philosophers, like Confucius, Mencius and many others, advocated the theory of democ- racy, China, before 191 1, was a monarchy. Its most im- portant aspects may be described as follows : ( 1 ) The Chinese government was monarchic, hereditary and unlimited. It was monarchic and unlimited, because the Emperor, representing the state as well as the govern- ment, possessed both the sovereign and the governmental powers of the land. Furthermore, the hereditary principle was maintained not only by the right of inheritance but also as a means to the end of stable government. (2) The Chinese government was consolidated and cen- tralized. It was not divided into three independent depart- ments, as the legislature, the executive and the judiciary. The Emperor, in the exercise of his powers, found it neces- sary to create several departments to take charge of the legislation and supervision of laws and several judicial courts to administer justice. These offices, together with the Council of State, generally known as the Grand Coun- cil, constituted, as we shall see, the imperial government. ^ The reorganization of government in the period 1906-1911 is not considered for three reasons, (a) It did not affect the typical system of the Tsing Dynasty, (b) It was an unnecessary and unsystematic reform causing a confusion of powers rather than a better distri- bution of powers, (c) It bore no relation to the tax systems. IS3] II 12 THE SYSTEM OF TAXATION IN CHINA [154 Subordinate to it were the provincial governments, each with a governor ^ at its head. Owing to the fact that a highly centralized government was not suited to a state like China with vast territory and different economic conditions, numerous grants of powers had to be made to- the governors in order that they might adapt the execution of the laws to local conditions. But this does not mean that the Chinese government was decentralized. First of all, the governors were subject to the will of the Emperor. Secondly, the heads of the imperial governmental depart- ments made the laws which the governors were bound ta obey, unless they disregarded certain laws with the consent of the Emperor. Thirdly, the grand councillors, being the advisers of the Emperor, were more influential than any other high officials in the imperial and provincial govern- ments. In conclusion, China had a monarchic, hereditary, un- limited, consolidated and centralized government. Unfor- tunately, the political philosophies of Confucius and many other great writers were not carried out in early times, and China did not become a democratic state until the Revolu- tion of 191 1. With the exception of the Emperor, how- ever, the whole government rested upon a popular basis, because the candidates for lower offices were chosen by competitive examinations held in the national and provin- cial capitals, while^ the vacancies of higher offices were filled by those selected among the lower officials. It is true that only a minority of the subjects participated in the actual work of government. But every male subject had equal chance to pass the examinations in order to be admitted to the government. In case of failure in any one examination, he might take a series of examinations during his life. Al- 1 In this book, I identify the governor-general with the governor. For the reason of this, cf. infra, pp. 23-24. 155] ^^^ CHINESE GOVERNMENT 13 though the ideal government is one in which every member of the state has a share, a government such as the one which existed, in which every member might have a share, is far from undesirable. The Emperor As China was a monarchic state, the Emperor enjoyed the sovereign power. His powers were neither enumerated nor residual. He might be deprived of power only by a successful revolution. As long as he was in power, the governmental machinery was created and preserved by him, and all the ofificials thereof were responsible only to him. His orders were the laws of the country. By the word " order " is meant not merely his personal orders but also all the laws, drafted by his ministers with or without amendments by him, and promulgated by him in the form of an imperial order. In foreign relations, he represented the country. Treaties and other agreements were promul- gated by imperial orders as a part of the law of the land. Of course, he also had power to declare both offensive and defensive wars. The Council of State (i) The Inner Cabinet. The Inner Cabinet {Nai Ko) was the old Council of State. It had two Chinese and two Manchu ministers appointed by the Emperor through the nomination of the Inner Cabinet itself. In addition, there were two or four associate ministers, of which one- half were Chinese and the other half Manchus. They were selected from the heads of departments by the Emperor himself. Under these ministers there were different classes of secretaries. Their most important functions were: (a) The discussion of state affairs. (b) The promulgation of imperial orders. (c) The conduct of great ceremonials attended by the Emperor. 14 THE SYSTEM OF TAXATION IN CHINA [156 The Inner Cabinet lasted until the end of the Tsing Dynasty. But its great powers had been gradually trans- ferred to the Military Council. (2) The Military Council. The Military Council (Tsuen Tse Chu), known to the Western people as the Grand Council, was created by Emperor Yung Tsing, 1723- 1735, primarily for the discussion of military affairs. It was not an established office but simply a body of advisers of the Emperor. Its members were chosen from the min- isters of the Inner Cabinet and the heads of different de- partments, and called the Ministers of Military Affairs or Grand Councillors. The number was not fixed, varying from four to six. Being the advisers of the Emperor, they gradually encroached upon the power of the Inner Cabinet with respect to the civil affairs. They had a certain number of secretaries. Their chief powers and duties were as fol- lows: (a) The issue of decrees to announce the Emperor's acts, to approve or veto a memorial, to order an approved memorial to be adopted in the provinces and to order a gov- ernor's memorial to be considered by a department. (b) The issue of orders to give instructions to the Im- perial Ministers in the dependencies and to the governors in the provinces. (c) The discussion of state affairs. (d) The trial of the most important judicial cases when- ever ordered by the Emperor. (e) The investigation of military and financial affairs in time of war. (f) The nomination of cabinet ministers, heads of de- partments, governors, heads of provincial departments, cer- tain circuit governors, certain prefects, generals, lieuten- ant-generals, commissioners of examinations and superin- tendents of customs. 157] ^^^ CHINESE GOVERNMENT 15 The Department of Foreign Affairs Organization and functions. The Department of For- eign Affairs was created in 1861 under the name Tsung Li Ydmen. It was controlled by a number of princes, minis- ters and adjunct ministers. The various classes of de- partmental heads, whose number was not fixed, were se- lected by the Emperor himself, the princes from the various classes of princes, the ministers from the ministers of the Military Council (the Council of State) ,^ the adjunct min- isters from the ministers of the Inner Cabinet (the old Council of State) ' and the heads of the other departments. Their functions were to make all kinds of treaties and agreements involving the tariff, the regulation of inter- national commerce, the questions of territories, the settle- ment of relations between the non-Christians and Chris- tians and other kinds of intercourse. These functions were distributed among a general committee and five special committees which were made up by a certain number of Chinese and Manchu secretaries. The Departments of Internal Affairs Organization and functions. Among the departments which are not worthy of consideration so far as actual government is concerned, six were well developed, namely, the civil-service, financial, ceremonial, military, judicial and public works departments. All the different matters requir- ing attention from the government would fall tuider one of these six departments. Each department had two presi- dents, one being Chinese and the other Manchus, and four vice-presidents, two being Chinese and the other two Man- chus. It was found necessary to make a further division of work, and thus a certain number of bureaus were estab- 1 Cf. supra, p. 14. 2 Cf. supra, p. 13. 1 6 THE SYSTEM OF TAXATION IN CHINA [158 lished in each department. The distribution of business among the bureaus was made in accordance with its nature. But this method was not always followed, because the quan- tity of certain matters was too great to be transacted by a single bureau. In that case the work was divided accord- ing to geographical lines as well as according to the nature of the function. In other words, a function was generally discharged by several bureaus. Each bureau had three classes of secretaries, and each class consisted of a certain number of Chinese, Mongolians and Manchus. The Departmetitof. Finame(Hji)i;;Pu) Among the six departments of internal affairs as men- tioned above, the Department of Finance should be de- scribed more fully, because the administration of finance was one of the most important functions of the Chinese government. It framed and supervised the laws concern- ing territory and population. It had power to divide the country into administrative divisions,^ viz., provinces, pre- fectures and districts; to classify the population according to the permanent occupation and home ; to survey the land of the country; to equalize the burden of taxation and ser- vice; to appropriate the ordinary expenditures of the gov- ernment; and to adjust the amount of reserved grain. It had the following bureaus : \J (A) The Bureau of X'Mm^r- wan * audited the accounts of the l^a4_feS0;f Kiang-nan Provinces and the accounts of the government silk factories in the City of Nan-king and the City of Soo-chow in Kiang-su Province; and prepared the annual reports concerning the amount of the balance 1 Cf. infra, pp. 22-23. * Kiang-nan is the collective name of the two provinces, Kiang-su and An-hwei. 159] THE CHINESE GOVERNMENT 17 charge ^ of the land tax in certain provinces, and the de- ferred payment of the land tax in all the provinces. (B) The Bureau of Che-kiang audited the accounts of the lancytax of Che-kiang Province and the accounts of the goveTnment silk fa^ory in the City of Hang-chow in Che- kiang Province ; and prepared the annual reports concerning the number of population and the quantity of grain pro- duced in all the provinces. (C) The Bureau of Kiang-si audited the accounts of the land tax of Kiang-si Province; and prepared the reports of the inter-provincial support of military expenses. (D) The Bureau of Fn-kien audited (a) the accounts of duties on commodities carried in native vessels to Tien- tsin, Chi-li Province; (b) the accounts of the land tax of Fu-kien and Chi-li Provinces; and (c) the accounts of cer- tain unprescribed expenses drawn from the treasury of the Department of Finance. (E) The Bureau of Hu-kwang^ audited (a) the ac-- counts of the land tax of Hu-kwang Provinces; (b) the ac- counts of regular customs in Hu-peh Province; and (c) the accounts of local supplementary taxes on land, commodi- ties (i. e., regular customs duties), salt and tea in all the provinces. (F) The Bureau of Shan-tung had the following duties : (a) The auditing of the accounts of the land tax of Shang-tung, Feng-tien, Ki-rin and Hei-lung-kiang Pro- vinces. (b) The payment of bonus to the " Eight Banners " ^ military officers. 1 This is charged for the loss due to inaccurate weighing. ^ Hu-kwang is the collective name of the two provinces, Hu-peh and Hu-nan. 3 The Tartar soldiers are divided into eight corps, each having a colored banner, viz., pure yellow, mixed yellow, pure white, mixed white, pure red, mixed red, pure blue and mixed blue. The Chinese force has the green banner. l8 THE SYSTEM OF TAXATION IN CHINA [i6o (c) The control of salt and ginseng monopolies. (G) The Bureau of Shan-si audited the accounts of the land tax of Shan-si Province. (H) The Bureau of Ho-nan audited the accounts of the land tax of Ho-nan Province, and the military expenses of the City of Sahara in Mongolia; investigated any report designated by the Emperor; and urged the revision of pro- vincial reports on any sort of outlay not accepted by the Department of Finance. (I) The Bureau of Shen-si discharged three functions, namely, (a) The auditing of the accounts of the land tax of Shen-si, Kan-su and Chinese Turkestan Provinces. (b) The control of the tea monopoly. (c) The disbursement of the expenditures of the im- perial government. (J) The Bureau of Sze-chuen, in addition to its other minor duties, performed the following two functions : (a) The auditing of the accounts of the land tax and regular custom revenues of Sze-chuen Province. (b) The collection of reports on the condition of har- vest in all the provinces. (K) The Bureau of Kwang-tung audited the accounts of the land tax of Kwang-tung Province. (L) The Bureau of Kwang-si was entrusted with the following important business : (a) The auditing of the accounts of the land tax and regular customs duties of Kwang-si Province. (b) The regulation of mining. (c) The coinage. (M) The Bureau of Yun-nan had charge of the follow- ing affairs : (a) The auditing of the accounts of the land tax of Yun- nan Province. l6i] THE CHINESE GOVERNMENT 19 (b) The investigation of the report on the collection of mining royalty in Yun-nan Province. (c) The care of matters concerning the transportation of grain from certain provinces to Peking. (N) The Bureau of Kwei-chow audited the accounts of the land tax of Kwei-chow Province, and supervised the administration of both the regular and maritime customs throughout the country. In addition to thj;alx);v«,joiw4seDJi^UTi^»sJJiere.^(^^ viz., money, satin and sundry articles, under the control of four ministers appointed on the nomination of the department. (B) Four mints in Peking under the control of two vice-presidents of the department. (C) Thirteen granaries in Peking and Peh-tung-chow^ under the control of two high officials having the rank of a vice-president of a department. (D) The Committee of Appropriation.^ (E) The Committee of Cash Payment of the " Eight Banners " Soldiers. General Position and Powers of Heads of Departments The heads of every department were appointed and re- moved by the Emperor with or without the advice of the Council of State. They assumed joint responsibility to the Emperor only. They, however, might be impeached by any high official or censor who had power to present me- morials to the Throne. But an impeachment did not nec- essarily cause the removal of a departmental head, be- cause the Emperor might not approve the impeachment. Therefore, any head of a department remained in service ^ Peh-tung-chow is a river port near Peking. 2 Cf. infra, p. 34. 20 THE SYSTEM OF TAXATION IN CHINA [162 until removed for one of the following causes, viz., promo- tion, change, degradation or dismissal of office, death of parents, absence, or retirement. There follows a summary of the general powers of the heads of departments. (i) The participation in the conference on important matters ordered to be discussed by the nine departments.^ (2) The making and amendment of laws subject to the approval of the Emperor. (3) The supervision in the execution of laws. This means that the heads of departments had power to approve or disapprove the provincial reports concerning the exercise of functions. But they had no right to direct the governors how to execute the laws because they did not know the local conditions. (4) The nomination of certain subordinate officials, not nominated by the Department of Civil Service. (5) The removal of subordinate officials by impeach- ment through memorials presented to the Throne. Such impeachments were usually accepted by the Emperor. (6) The direction and supervision of the subordinate officials. The Censorate (i) Organization. The Censorate (Tu-Tsar Yuen) had at its head two chief censors (a Chinese and a Manchus) and four associate censors (two Chinese and two Manchus) who were appointed by the Emperor. Under them there were six groups of censors adopting the names of the six departments, viz., civil, financial, ceremonial, military, judi- cial and public works, and fifteen groups of censors taking 1 The nine departments include the six departments mentioned above, viz., the civil, financial, ceremonial, military, judicial and public works departments, and in addition the Censorate, the High Court and the Department for the Transmission of Memorials. 163] THE CHINESE GOVERNMENT 2 1 the names of the different provinces. Each group of cen- sors was composed of two Chinese and two Manchus. They were appointed among the candidates of censors who had been previously selected from the secretaries of var- ious departments. (2) Powers of the censors. The general duty of the chief censors and associate censors was to look after the faithful execution of the laws of the country and to pre- vent violation of law or neglect by any official, either im- perial or provincial. They were vested with freedom of speech. The departmental censors and provincial censors were supposed to assist the chief censors and associate cen- sors in the exercise of the general power of the Censorate. But they also had the right to communicate freely with the Emperor by means of memorials. When any censor did not satisfy the Emperor, he was ordered to return to his previous department without punishment. The Less Important Departments Besides the foregoing branches there were many other offices of which only the following need be mentioned : (i) The Department of Dependencies' Affairs {Li Fan Yuen) . (2) The Department of the Imperial Clan's Affairs (Tsung Yin Fu). (3) The Department of Palace Affairs {Nui Wu Feu). (4) The Department of Astronomy (Tsin Tien Tsan). (5) The Department of Imperial Doctors {Tai Yi Yuen). (6) The Department of Literary Men {Han Lin Yuen). (7) The Department of Heir Tutors {Tsien Shi Feu). (8) The Department of Imperial Worship Ceremonies ( Tai Shiang Tsi) . (9) The Department of Horse-Breeding {Tai Pu Tsi). 22 THE SYSTEM OF TAXATION IN CHINA [164 (10) The Department of Imperial Feasts (Kwang Lu Tsi). (11) The Department of Palace Ceremonies (Heng Lu Tsi). (12) The High Court {Ta Li Tsi). Territorial Divisions of Government Excluding Mongolia and Tibet, China was divided into twenty-two provinces (Sheng). In some cases, a province was governed by a governor-general {Tsung Tu), such as Chi-li and Sze-chuen. In other cases a province had a gov- ernor (ShUn Fu), for example, Shan-tung, Shan-si, and Ho-nan. In general, a more important province was under the immediate jurisdiction of a governor-general, while a less important province was governed by a governor with the nominal supervision of a governor-general. Under the governor-general or governor were the heads of the Ex- ecutive Department (Bu Tseng Shi), and the Judicial De- partment (An Tsar Shi) and a number of circuit gover- nors (Tao Tai). Each province was composed of a num- ber of prefectures (Fu) and direct districts (Chi Li Chow or Chi Li Ting),^ so-called because they were under the direct control of the Executive Department like the pre- fectures. The ruler of a prefecture was called a prefect (Tsi Fu), and that of a direct district, a superior magis- trate (Chi Li Chow Tsi Chow or Chi Li Ting Tung Tsi),^ and he was charged with the functions of a magistrate and the powers of a prefect. The lowest but most important units of administration were the districts (Shien),^ several of which made up a prefecture or a direct district. The ad- 1 Certain Chi Li Ting were not composed of a number of sub- ordinate districts as all the Chi Li Chow were. 2 Certain Chi Li Ting Tung Tsi had not the powers of a prefect as all the Chi Li Chow Tsi Chow had. See note i. 2 Some districts were called in Chinese Ting or Chow. 165] THE CHINESE GOVERNMENT 23 ministrator of a district was called a magistrate {Tsi Shien)^ All the above officials were known as the seal- holders {Tseng Yin Kwan), i. e., the chief officers or re- sponsible officers. Their respective subordinates were re- garded merely as assistant officers, and could not act with- out instructions. Provincial Administration (i) The governor-general or governor. The governor- general or governor was appointed by the Emperor. The governor-general also had the titles of the Chief Censor of the Censorate and the President of the Department of Mili- tary Service; and the governor, the titles of the Associate Censor of the Censorate and the Vice-President of the De- partment of Military Service. Both of them remained in ser- vice unless prevented by promotion, change, degradation or dismissal of office, retirement, death of parents or absence. The governor-general was different from the governor inas- much as that the former had the nominal power of super- vision over the government in the latter' s sphere of author- ity, besides the virtual powers of direction and supervision over the administration of his own immediate jurisdiction. Practically, however, each province had only one head, either a governor-general or a governor. The powers of the governor-general or governor may be fully stated as fol- lows: (A) The nomination of certain circuit governors, pre- fects, magistrates and military officers lower than the lieu- tenant-generals. (B) The removal, by means of impeachment, of any civil or military official appointed through the Council of State, the Department of Civil Service and the Department of Military Service as well as through his own nomination. 1 Some magistrates were called in Chinese Tung Tsi (the admin- istrator of a Ting) or Tsi Chow (the administrator of a Chow). Vi 24 THE SYSTEM OF TAXATION IN CHINA [166 (C) Such direction and supervision of the actions of all his subordinates as seemed desirable. (D) The furnishing of such supplementary ordinances as might be necessary to the execution of law, subject to the approval of the Emperor. (E) Remonstrances to laws or appointments. If the Emperor accepted the objection, the laws or appointments were ordered to be amended or changed by the departments. Otherwise the governor had to accept them. (F) The initiation of laws which were generally ordered to be discussed by the departments. (G) The execution of laws. (H) The administration of justice. (1) The command of the Chinese forces within the juris- diction. Armed with these powers, the governor-general or governor proceeded to discharge his executive and judi- cial functions through the Executive Department and the Judicial Department. (2) The Executive Department and the Judicial Depart- ment. The tenure and term of office of the head of each department were the same as those of the governor. Each head of department had the right to direct and supervise the actions of all his subordinates. It was through the divi- sion of functions according to their character that these two departments were distinguished from each other. In other words, the Executive Department discharged the executive functions, of which the most important is the financial ; and the Judicial Department had to try and to determine the cases of appeals and to give the final decisions of cases in- volving murder or robbery, removed from the districts. (3) The circuit governor was appointed on the nomina- tion of the governor or the Department of Civil Service, except in a very few cases when the Emperor made the ap- pointment After the expiration of a term of six, seven 167] THE CHINESE GOVERNMENT 25 or eight years ^ the circuit governor was usually pro- moted; otherwise he remained in service until he encoun- tered one of the following conditions : change, degradation, removal from office, retirement, death of parents or absence. He was charged with the general duty of preserving public order within his circuit composed of a number of pre- fectures and direct districts. In fulfilling his duty, he acted as a connecting link between the civil officials and the mili- tary officers. In other words, he was the man to judge when it was necessary to use arms for the suppression of riots, the execution of laws and the administration of jus- tice. He had power to direct and supervise the prefects and magistrates and to demand the help of the Chinese forces in his circuit. For governmental purposes he resided in the most important city in his circuit. Local Administration (i) The prefect. The tenure and term of ofiice of the ruler of a prefecture were similar to those of the circuit governor. He had no territory and population under his own immediate government.^ His powers were to try and to determine the cases of appeals, to review the cases origi- nally decided by the magistrates and to direct and supervise the actions of all his subordinates. (2) The superior magistrate. Each direct district was divided into several parts, one of which was under the im- mediate government of the superior magistrate himself, while the other parts, constituting the subordinate districts, were governed by a corresponding number of magistrates under his supervision. It was noticed that the tenure of 1 The duration of terra was different in different provinces. 2 The prefects of a few prefectures had immediate jurisdictions. In those cases the powers and duties of the prefects were like those of the superior magistrates. 26 THE SYSTEM OF TAXATION IN CHINA [i68 office and functions of the superior magistrate were like those of a magistrate, the term of office being six, seven or eight years. The former was distinguished from the latter only by the possession of the powers of a prefect. Number of Local Administrative Districts in the Different Provinces Province ' Districts Direct Districts Total Chi-li 144 II ISS Feng-tien 21 3 24 Ki-rin 7 2 9 Hei-lung-kiang 2 2 Shan-tung 105 2 107 Shan-si g8 10 108 Ho-nan 103 4 107 Kiang-su 67 4 71 An-hwei 55 S 60 Kiang-si 78 i 79 Fu-kien 64 2 66 Che-kiang 78 r 79 Hu-peh 67 I 68 Hu-nan 67 9 76 Shen-si 85 s go Kan-su 59 7 66 Turkestan 11 15 26 Sze-chuen 131 12 143 Kwang-tung 85 10 95 Kwang-si 66 5 71 Yun-nan 75 8 83 Kwei-chow 57 15 72 Total 1523 134 1657 1 The figures of Chi-li, Feng-tien, Ki-rin, Kwang-si and Kwei-chow include those administrative units under the immediate administration of the prefects themselves. These units were practically direct dis- tricts, and the prefects had exactly the same powers and duties of superior magistrates. Owing to thin population and restriction of cul- tivation, Manchuria (_Feng-tien, Ki-rin, Hei^lung-kiang) and Turkestan had not been organized as provinces until in late years, Turkestan in 1884 and Mandiuria in 1906. In 1902 nine districts were added to the original number in Turkestan ; in the period 1906-1907 nine districts, in Ki-rin ; and in the period 1904- 1908 thirty-five districts, in Hei-lung-kiang. 169] THE CHINESE GOVERNMENT 27 (3) The magistrate. The ruler of a subordinate district of a prefecture or a direct district was. called the magistrate. The magistrates of certain districts were appointed on the nomination of the governor, while in other districts they were selected by the Department of Civil Service. After the expiration of a term of ten years the magistrate was usually promoted ; otherwise he remained in service as long as one of the following conditions did not arise: change, degradation or dismissal from office, retirement, death of parents or absence. Under the direction and supervision of his superior officials, he discharged the following functions : (A) The execution of all the administrative laws. (B) The trial and decision of original cases. But the decisions involving the penalty of banishment for a limited time were subject to the approval of the prefect or superior magistrate ; and the cases of murder or robbery were entitled to a second trial by the prefect or superior magistrate and to the final decision of the head of the Judicial Department. Original cases involving robbery or murder committed in the immediate jurisdiction of a prefect or superior mag- istrate and decided by him, must be approved or retried by the circuit governor. General Features of Government In conclusion, we may summarize the important features of the Chinese Government as follows: (i) The authority of general powers. As the Emperor was the sovereign of the state, he was the final interpreter of the laws of the land. He settled the conflicts of opin- ions among his ministers whether they were the heads of departments, governors or others, because they were de- pendent for tenure upon him. In order to assist him in the exercise of his powers he had the Council of State. In any case which involved the councillors, he was obliged to de- cide without the advice of any other person. 28 THE SYSTEM OF TAXATION IN CHINA [170 (2) The legislative powers. Instead of vesting the legis- lative powers in a single organization known as the legisla- ture, the Emperor distributed them among several depart- ments according to the nature of their functions. The seven chief departments at Peking were really legislative departments although they were not shut out from all par- ticipation in the work of administration, e. g., foreign re- lations, appropriations of revenue, conduct of public cere- monials and examinations etc. In the main these depart- ments were concerned with making and interpreting laws. This may be illustrated step by step. In the first place, treaties concluded by the Department of Foreign Affairs were a part of the laws. In the second place, the nomina- tions by the Department of Civil Service and the Depart- ment of Military Service for official appointments and re- movals was merely an interpretation of the civil and military service laws made by the same. In the third place, the ex- ecutive functions of the Department of Finance, the De- partment of Military Service and the Department of Public Works were mainly connected with the control of finance. In the fourth place, the Department of Public Ceremonials and the Department of Military Service merely regulated the matters of public examinations of civil and military ser- vices, because the examinations were actually conducted by the Imperial Examiners, appointed by the Emperor. (3) The executive powers. The executive powers were distributed not according to functions but according to ter- ritories. Therefore, the provincial governments together form the executive branch of the central government. In each province, the governor was the chief executive. The detailed work of administration was performed by the Ex- ecutive Department, while the general powers of direction and supervision were delegated to the circuit governors. But the governor was not deprived of all participation in lyij THE CHINESE GOVERNMENT 29 the work of legislation and in the administration of justice, because he had not only the power to initiate laws, to object to them and to issue orders but he had also the power to control the Judicial Department of his province. (4) Participation of the localities in administration. The local officials known as the prefects, the superior magis- trates and the magistrates were regarded simply as agents of the central government. All the duties to be performed by the localities were fixed by the legislative branch of the central government (the chief department at Peking). Still there was a realm of action in which the local authorities possessed large discretion, and they look for their authority to the executive branch of the central government (the pro- vincial governments). Thus it is evident that the local au- thorities were subject to both the legislative and adminis- trative control. (5) Subordination of the judicial powers to the other authorities. The judicial powers, on the one hand, were subordinated to the executive, because they were exercised by the Judicial Department and the local authorities, subject to the supervision of the governor. On the other hand, they were subject to the legislature, because the Department of Judicial Affairs exerted the greatest influence over all judicial cases. (6) The control over the government. While the heads of departments at Peking and the governors in the provinces controlled the actions of their respective subordinate offi- cials, their actions were in turn controlled by the Emperor himself. Besides this, there were five other methods of control. First, the Censorate might hear complaint by any one person against any other person, no matter whether the parties involved were officials or not, and report the case to the Emperor. Secondly, any censor might impeach any official. Thirdly, any minister might impeach any other 30 THE SYSTEM OP TAXATION IN CHINA [172 minister. Fourthly, the Department of Civil Service might impeach any civil official according to the civil service laws. Fifthly, the Department of Military Service might impeach any military officer in accordance with the military service laws. Having received the case or impeachment, the Em- peror referred it to the proper authority, or appointed one or more ministers to investigate the matter in detail. (7) An attempt to secure efficient administration in the provinces. The Department of Civil Service had power to' consider the right of changing domicile.^ Such questions arose when an official applied for naturalization in his resi- dential province, which was not his ancestral province, or when he sought to reclaim his standing in his ancestral province after he had once become naturalized in his resi- dential province.^ These questions were numerous, because the law forbade a man to be an official of his native prov- ince. Undoubtedly this legal limitation had several advan- tages from the point of view of efficiency of administration in the provinces. First, when an official was a stranger in a community, the community, having no intimate relation with him, could exert less influence over his actions. Sec- ondly, the government was free tO' choose proper men to fill the official posts from the people of all the provinces ex- cept one, without incurring the danger of bad feelings among the local communities. Finally, the officials as- sumed responsibility to the government rather than to the different communities under their respective jurisdiction, if they desired to maintain their positions. ^ In China the domicile was determined by the domicile of one's ances- tors rather than by one's birthplace. 2 The qualifications of admission were the possession of certain kinds of real property, such as a house or a piece of land, and twenty years of residence by his grand-parents or parents. CHAPTER II Expenditures and Revenues Classification of Expenditures From a review of the government functions during the Tsing Dynasty, it appears that thej)ublic g^peji^tujxs of China may be classified as,'" " ( 1 ) Expenditures for military ourposes. (A) Regular pay of officers and men. (B) Additional pay of officers. (2) Expenditures for cisal_>d;^u!J«tra;Ji9H^ (A) Salaries of civil officials. (B) Additional allowances of civil officials. (3) Expenditures for the Emperor's fatjj^l]^ (A) Imperial tombs-t^Tmshmg. (B) New Year expenses of the Emperor's family. (C) Silk manufactures for the Emperor's use and public use. (4) Expenditures for c ommu nication. (5) Expenditures for the conservation ponds. (6) Expenditures forjocijl puji^osg^ (A) Public worship. (B) Public gifts and charities. (C) Public schools and scholarships. (D) Public examinations for the selection of com- petent men as candidates for public offices. (7) Expenditures for misceJlaneou^..jgjH'gpses<- 31 32 THE SYSTEM OF TAXATION IN CHINA [ly/^ Comparative Importance of Expenditures Among all classes of expenditures, the militarvexgendi;:^ \ t;3ares^stae4Jn.-theLfirst>jan^jJj^ause the existence oia sfate depends especially on peace. Without an army of sufficient strength, it is impossible to protect the weak members of a society against the encroachment of the strong, and to save the country from the foreign conquest. ■Next-caa^etiie ex- *> penditures of civil admi^isjj;adpq^,;sdiiqh is necessary for" the maintena!nce"oTintemal order in a civil society. The two items in the following table of expenditures, styled the additional allowances of civil and military officials, are due to the fact that the regular salaries did not suffice to meet the higher standard of living. Thji^Iy, the Emperor yi9& a ^ great consumeiu^f pjiblic revenues. The three items con-' strEuting the expraiditureOrfthe^Miperor's family are by no means exhaustive. They merely represent those sums paid out of the treasury of the Department of Finance and of the provincial treasuries. For two reasons, it is impos- sible to discover the amount of revenues wasted by the Em- peror. The Department of Palace Affairs, which was charged with the administration of the imperial finances, was not subject to the supervision of the Department of Finance. Moreover, a great many departments of civil administration were established primarily for the Emperor and their ex- penses cannot be isolated. _In^the_jayrtb^,^a^, thpC^gostal H stations' were ^e^taW^slied primaqly^r-^^njliljjFj^jiw^ f>l;her goy,eriiiTient.^erviQes~i^s]te^d^ foi^iMli^al^fjsqaJ^rp^er .^rposes. The object of the expenditures for the conser- ^ vatio£_ofrivjE^and_pQ4^>^as,^o,j^;^ agriculjm-al,,^d ag3ia§t_fli3od.j9r-4raught. Next follow tKe exp^ditures for V> SQciaLimspo^gs-^ich were composed of four elements. ^^ (a) Public worship. (b) Public gifts and charities, which included the pur- chase of boards bearing signs for identifying obedient sons, 175] EXPENDITURES AND REVENUES 33 unmarried widows, persons over one hundred years old, the gifts of five hundred sine rice and ten rolls of cloth to any woman giving birth to three sons at the same day, the expenses connected with care of widows, widowers, father- less or motherless children, criminals and the defective and helpless classes. (c) Public schools and scholarships for the support of poor students in the district schools. (d) Public examinations for the selection of competent men as candidates for public offices.^ According to the order of importance, the Department of Finance made the permanent appropriations for various functions. In addition there were extraordinary, uncer- tain or insignificant outlays. The Status of the Permanent Appropriations during the Nine- teenth Century Regular Pay of Military Officers and Men 14,862,9292 Additional Pay of Military Officers i,398,7SS Sundry Expenses in the Army 274,523 Regular Pay of Chinese and Manchu Troops in Peking .... 5,348,556 Regular Salaries of Civil Officials 1,908,086 Additional Allowance of Civil Officials 2,937,369 Salaries of Civil and Military Officials ' in Peking 196,988 Imperial Tomb's Furnishing 106,861 New Year Expenses of the Imperial Family Paid in Peking 180,000 Silk Manufactures 107,833 Postal Stations 2,147,961 Conservation of Rivers and Ponds 1,618,081 Public Worship 210,615 Public Gifts and Charities 217,420 Public Schools and Scholarships 197,749 Miscellaneous Expenses 4lSi957 Total 32,129,683 1 Cf. Y. S. Ho, Chinese Education from the Western Viewpoint (New York, 1913), pp. 34-41- - The figures are in taels. ^ Manchus are not included. 34 THE SYSTEM OF TAXATION IN CHINA [176 Sources of Public Revenues In modern countries the revenues expended for public purposes are often derived from a variety of sources. In consequence of economic conditions, China, up to the late years, was content with only one form of revenue, namely, taxation. The Department of Finance classified the sources ofreve- nues into five items, namely, land tax£s(FuJ; rents XTsoTfTroyaliiesiX^uy; duties (Shui) ; and tributes {Kung)} For the convenience of consideration, it seems better to adopt the following classification : <'''(i) Taxation of agricultural lands including^a_jtgs„^nd_ jents. (2) Taxation of salt (royalties] (3) Taxation of commodities (duties), including regu- customs duties and Ji-^m duties. Appropriations Having learned in the preceding sections the different classes of functions with their amounts of appropriated reve- nues and the various sources of revenues, it is now pos- sible to discuss the seasonal appropriations of revenues made by the Committee of Appropriation in the Department of Finance. The committee was authorized by the heads of the department to appropriate revenues for military pur- poses in the winter, and for all other purposes during the spring and autumn upon the basis of the provincial reports of the amount of collected revenues. These appropriations were necessary for two reasons. First, there were various uncertain elements of ordinary expenditures which could not be accurately estimated and provided for beforehand in ^ Tributes and other insignificant sources of royalties and duties are not worth consideration. 177] EXPENDITURES AND REVENUES 35 the permanent appropriations. * In the second place, the bal- ance of outlays and incomes in the different provinces might be favorable or unfavorable. In addition to the seasonal appropriations, which were general in character, there were special appropriations to meet the extraordinary expendi- tures whenever they occurred. Appropriations were made according to functions and provinces, because practically all district expenditures which can be embodied in the perma- nent appropriations were permitted to be deducted from the land tax. The collection of revenues provided to meet the appro- priations was controlled partly by central and partly by local ofiScials. First, the ^agdjaxwhich is levied in every prov- ince was drvidsd-ifl,t_ejt^vg4iarts. Onemrtwasded^ictedJi;^ themagigtrate ^ for the district expenditures and was called the reserveoTund, while the otherpartwhich was required to be sent to the Executive Department '^ in the provincial capi- tal was known as the transporting fund. ^U-J'^'th^'-soarKfiS.— o^_^eveny^S;,,§y£]33g_ga]t>{2yaltiev^2ar^^ andJ;eglJlaTJIaiSt9l^ls^^u^es jBceK^^ in-Qha.r.aG.ter^.aii4 were adromistergdby special ofSeej;;s under the supervision^ of m?^2vernor. THese revenues togelTier with the trans- porting funaol the land tax constituted the available re- sources for meeting both national and provincial appropria- tions. As soon as the appropriations had been approved by the Emperor, those provinces whose collected revenues ex- ceeded their expenditures were required to transport their surplus revenues to Peking or to provinces in less fortunate circumstances. With the development of banking, the gov- ernors often bought bills of exchange from the prominent Chinese bankers. ' Cf. supra, p. 33. 5 Cf. supra, p. 24. ^ Cf. infra, pp. 64-65. 36 THE SYSTEM OF TAXATION IN CHINA [178 The Amount of the Transporting Fund and the Reserved Fund in THE Several Provinces as Determined by Law The transporting fund in taeis of silver The reserved fund in iaels of silver Province Revenue from the regular tax Revenue from the compen- satory tax Revenue from the regular tax Revenue from the compen- satory tax Chi-li 1,708,521.486 20,318.646 31,956.780 2,772,630.023 2,645.503.655 2,747,240.229 2,231,264.000 1,220,310.000 1,781,607.770 1.037.992.952 2,121,750.774 961,768.653 936,647.098 1,341,361.752 214,494.580 541,501.823 864,211.117 330.845-518 147,000.033 65,864.800 211,856.256 3.293-195 228,638.666 272,846.752 244,109.554 113,231.000 113,998.200 86,651.970 13.379-707 83,584.128 71,262.860 74,935-740 66,451.728 10,535.940 44,696.557 126,259.512 12,153.603 47,641.914 5,044.100 672,622.111 9,148.082 144.136 328,171.084 312,540.853 232.944.854 291,025.478 250,419.000 208,547.445 198,762.640 239,796.926 98,403.313 94.975-866 278,122.936 71,441.899 100,166.861 161,075.170 91,207.457 46,771,297 28,930.200 Feng-tien Shan-tung Shan-si ' 45,941.962 86,200.748 36,272.329 24,114.852 55,370.000 4.864.483 10,731.109 10,922.769 9,497.586 170,760.000 29,902.163 54,900.000 32,684.796 14,440.751 Ho-nan * Kiang-su Kiang-si ' Che-kiang Hu-peh Sze-chuen Kwang-tung ' Kwang-si ' Yun-nan Kwei-chow Total 23.722.791-689 1.830.576-382 3,715,157.608 586,603.548 Transportation of Produce ( I ) The necessity of produce to the Peking Government. As we know, the land tax was paid both in money and in produce, viz.^ rice, wheat, beans etc. Whether the money 1 These five provinces had an additional sum of the reserved fund for the leap month whenever it occurred i. e., Shan-si had 12533.366 taels of the regular tax and .944 tael of the com- pensatory tax; Ho-nan, 15828.521 taels of the regular tax and .038 tael of the compensatory tax; Kiang-si, 7446.035 taels of the regular tax; Kwang-tung, 10493.378 taels of the regular tax; and Kwang-si, 5958.607 taels of the regular tax. These figures are found in The Amendments of the Institutes of the Tsing Dynasty, ch. clxix-clxx. lyg] EXPENDITURES AND REVENUES 37 revenues from the land tax of each province should be de- posited in the provincial treasury, or transported to Peking or elsewhere was determined by the appropriations of the Department of Finance. On the other hand, the office- holders and troops in the different provinces received a part of their pay out of the collected produce of their respective provinces, while those in Peking were entitled to get their respective partial payment in produce from certain great producing provinces. Thus Shan^tung, Ho-nan, Kiomg-su, Afir-hwei, Kiang-si, Hu-peh, Hu-nan and Che-kiang were required to send a part of the collected produce to Peking.^ The quantity to be supplied by each province was legally pre- scribed, and no deduction or commutation to money was permitted, unless upon extraordinary occasions, such as a bad harvest or a rebellion. An extra charge was demanded for the loss in weighing, shipping or storage. (2) Transportation and storage. In autumn of the year the magistrates collected the required quantity of rice and delivered it to the transporters in the respective harbors. This had to be done within a fixed period (within the winter in Shan-tung ; from the beginning of the twelfth month to the end of the second month of the following year in the provinces of the Yang-tze River; during the entire first month and half of the second in South Kiang-su and Che- kiang). In those districts which were remote from the har- bors, or did not produce the anticipated quantity of rice, the required quantity of rice was paid in silver according to a fixed rate of exchange, or according to the market price of the collecting month. The magistrates bought rice in the districts surrounding the harbors or trans- ferred the silver to the Department of Finance through the Executive Department. The available rice might 1 The produce was also used for other purposes than the support of public servants. ^8 THE SYSTEM OF TAXATION IN CHINA [i8o be transported by way of the Grain Canal, or Grand Canal as it is usually called by the foreigners, or by sea. Formerly, the public rice junks ^ sailing along the canal, started for Peh-tung-chow, the river port of Peking, in or before the second month of the year. In 1802 the rice of Soo-chow, Sung-kiang, and Tai-chong (Kiang-su Province) was allowed to be transported by sea via Shang- hai. In 1825 Emperor Tao Kwang proposed that sea trans- portation be universally adopted. In 1852, the rice paid by the southern part oi' Kiang-su and Che-Kiang began to be transported by sea, because the public rice junks were so crowded on the canal that many junks could not arrive at Peh-tung-chow before the freezing of the Peh-ho River in the winter. From 1853 to 1864, the rice was mostly paid in money due to the Tai-ping Rebellion of 1850-1864, and the public junks disappeared. In 1865, the canal trans- portation of rice paid by the provinces north of the Yang- tze River was renewed and private junks were hired to dis- place the public rice junks. Vessels carrying South Kiang-su and Che-kiang rice continued to leave Shanghai for Tientsin by sea in the second month of the year. In 1873, the sailing vessels were replaced by the steamships of the China Merchant's Steam Navigation Company in Shanghai, while the other southern provinces sometimes sent a part of their rice by sea in the following years. The transportation was accomplished through the aid of one transporter-in-chief," four provincial transporters ^ and many .military officers and men. The civil and military 1 The number of junks in 1812 was 6242. Each junk had the privilege of carrying goods equal in value to twenty per cent of the rice free of customs duties. 2 This official was equal in rank to a governor. 3 These officials were equal in rank to the circuit governors. They were the heads of the grain departments in North Kiang-su (including /4n-Aiwi)i South Kiang-su, Che-kiang and Shan-tung. l8l] EXPENDITURES AND REVENUES 39 transporters with their soldiers went to Peh-tung-chow and delivered the rice of their provinces to the granary keeper- in-chief. Then the rice and other produce were kept either in the granaries in Peking and Peh-tung-chow at the disposal of the Peking Government or in the granaries in Tsi-chow and Yi-chow for the garrisons of the imperial tombs. For the services of collection, transportation and storage, var- ious kinds of fees were demanded for the collectors, trans- porters and keepers. After 1901, the legal quantity of produce had been com- muted to money in order to save the extravagant cost of The Quantity of Rice Required to be Transported to Peking Rice due to the Rice due to the „ . , ^ . j. Province Peking Gran- Feh-tung-chow _ . „ =* ry ^ granaries ary Granary ^ Shan-tung. . . . 28,ooo,ooo.f!«c 9,560,000 jwc 37,560,000 «!!c Ho-nan 27,000,000 " 11,000,000 " 38,000,000 " Kiang-su 111,300,000 " 9,39S,ooo " 120,695,000 " An-hwei 38,700,000 " 20,045,000 " 58,745,000 " Kiang-si 40,000,000 " 17,000,000 " 57,000,000 " Che-Kiang . . . 60,000,000 " 3,000,000 " 63,000,000 " Hu-peh 12,294,271- " 12,294,271 " Hu-nan 12,705,728- '■ 12,705,728 " Total 330,000,000 " 70,000,000 " 400,000,000 " The Quantity of Wheat and White Rice Required to be Trans- ported to Peking Wheat due to Wheat due to the ■,,,., ^ j Province the Peking Peh-tun^-chow White rice due to r, ° f^ ' both granaries Granary Granary ° Shang-tung .. . 991,576 jmr 939,170 tojc Ho-nan 2,465,278 " 1,276,696 " Kiang-su ^ . . . 15,043,847 sine Che-Kiang 1 . . 6,620,000 " Total .... 3,456,854 " 2,215,866 " 21,663,847 " 1 The white rice paid in Kiang-su was really required from only four prefectures, viz., Soo-chow, Sung-kiang, Siang-chow and Tai-chong; and that paid in Che-kiang, from two prefectures, viz., Tsa-sing and Hu-chow. 40 THE SYSTEM OF TAXATION IN CHINA [182 canal transportation. Still in the first decade of the twen- tieth century one hundred million sine of rice from Kiang-su and Che-kiang were transported from Shanghai to Tientsin by steamers every year, because the cost of transportation was reasonable. Bean and Silver Substitutes FOR THE Required Rice Province. Quantity of black beans substituted for equal quantity of rice.' Quantity of white rice for which other rice might be substituted.* Quaiitity of rice for which silver was al- ways substituted.' Quantity of rice de- ducted from the original quantity as exemption since 1865. Quantity of rice substituted for lime.* Shan-tung sine 11.319,655 9,616,985 sine sine 7,000,000 7,000,000 10,649,269 sine sine 8,141.347 3,622,500 54,312,600 26,676,500 2,942,422 4,807,740 7.596.131 3,252,060 521,205 Xotal 20,936,640 11,763,847 36,018,665 80,989,100 7,750,162 ' In the first column, the quantity of black beans varied more or less directly with the quantity of rice in the Peking Granary. 2 In the second column, the quantity of white rice to be exchanged was fixed. 3 In the third column, the exchange rates between silver and rice were fixed according to the market prices in the provinces. * In the fifth column, the quantity of rice, being substituted .for a certain quantity of lime, was not deducted from the total quantity of rice or white rice as in case of the preceding columns ; but was, in turn, replaced by a payment in silver. The rate was fixed as follows: 1.2 tael of silver = 100 sine of rice. i83] EXPENDITURES AND REVENUES 41 Minimum and Maximum Rates 1 op the Extra Charge 2 on the Transported Rice Extra charge on every hun- Province dred sine of rice due to the Peking Granary Shan-tung <> 25 " Ho-nan " 25-28 Kiang-su * 25-40 An-hwei 30-40 Kiang-si 40 Che-kiang * 40 Hu-peh = 40 Hu-nan ^ 40 Extra charge on every hun- dred sine of rice to the Peh-tung-ckow Granary 17 17 22-30 25-30 40 40 Transportation Fees ' Province Shan-tung Ho-nan An-hwei Kiang-su (North) . Kiang-su (South) Che-kiang Kiang-si Hu-peh Hu-nan Payments vpith every hundred sine of rice due to the Peking Granary in silver .05 iael .05 .05 ■°5 .1 ■34 •03 21 sine 21 " 31 " 31 " 31 " 36 " 52 " 56 " 56 " Payments with every hun- dred sine of rice due to the Peh-tung-ehow Granary 2 sine 2 " 2 " 2 " ^:See The Amendments of the Institutes of the Tsing Dynasty, chs. cxciv-cxcvii. 2 For the extra charge, see supra, p. 37. 3 Shan-tung and Ho-nan paid to these granaries wheat and beans at the same rates of extra charge. * The rates of extra charge on every hundred sine of white rice were thirty sine in Kiang-su and forty sine in Che-kiang. ^ Hu-peh and Hu-nan had no rice due to the Peh-tung-chow Granary. 8 Figures are in sine per one hundred sine of the transported rice. '' This table does not include the collection fees which were deter- mined by the district magistrates. 42 THE SYSTEM OP TAXATION IN CHINA [184 Balance of Expenditures and Revenues The financial history of the Tsing Dynasty, 1644-1911, may be divided into two periods by the Chino- Japanese War, 1894-5. The former period, 1644-1893, may be called normal, because revenues were generally sufficient to meet expenditures in a systematic manner. Although ex- penditures grew larger during the last five decades of this period due to the Tai-ping Rebellion of 1850-1864, and the intercourse with foreign countries, yet they could be made up by new sources of revenues. For instance, the total reve- nues of 1887 were in excess of the total expenditures of the same year : Total revenues 78,SiS>2iS taels Total expenditures 67,448,649 Balance 11,066,566 " If we differentiate both the total revenues and the total expenditures into old and new, we have the following fig- ures: Old revenues from land, salt, regular customs 42,448,915 taels Old expenditures. Permanent appropriations 32,129,683 fa«/.f Temporary appropriations 8,733,791 " 40,863,474 " Balance 1,585,441 " New revenues from maritime customs and li^kin duty 36,066,300 taels New expenditures for new army and navy, cost of col- lecting new revenues and redemption of foreign debts 26,585,175 " Balance 9,481,125 " Then we pass to the latter period, 1894-1911, which is abnormal in the sense that the government of the Tsing Dynasty would have become bankrupt before the Revolu- 185] EXPENDITURES AND REVENUES 43 tion of 191 1 were it not for foreign loans.^ This condition was brought about by the Chino- Japanese War of 1894-5, the Boxer Disturbance of 1900 and the reforms of govern- ment, 1906-1911. Tlie growth of expenditures and reve- nues of this period may be learned from the first Chinese budget of 191 1. This budget was made in 19 10 by the De- partment of Finance based on the estimates of expenditures of the different yamens at Peking and the provinces, and on the average sum of annual incomes of 1908-9, as reported by the investigators, sent to the provinces by the Depart- ment of Finance in 1909, and by other authorities. Al- though its operation has been interfered with by the Revo- lution of 191 1, it furnishes the most reliable information concerning the financial condition on the eve of the Revo- kition. Public Revenues' fos 191 i Land Tax 48,101,346.273 taeis (a) Ordinary 46,312,355.022 taels (b) Incidental 1,936,656.421 " Salt Taxes 46,312,355.022 " Maritime Customs Duties 35,139,917.965 " iRegular Customs Duties 6,999,369.966 " (a) Ordinary 6,990,845.925 " (b) Incidental 8,524.041 " Miscellaneous Taxes 26,163,842.177 Li-kin Duty 43,187,907.099 Public Industries ' 46,600,899.753 Incidental Contributions 5,652,333.117 Miscellaneous Incomes 35,244,750.650 Internal Debt 3,560,000.000 Total 296,962,722.022 " 1 For the amount of foreign loans see H. B. Morse, The Trade and Administration of the Chinese Empire (New York, 1908). 2 Cf. infra, p. 44, note i. ' The public industries, excluding railways and telegraphs, are dif- ferent in different provinces. The most common one is the mint. 44 THE SYSTEM OF TAXATION IN CHINA [i86 Public Expenditures ^ for 1911 Foreign intercourse 3,544.732.977 taels Police administration 4,227,563.742 " Public ceremonies 792,127.940 " Financial administration 28,130,434.754 Palace and imperial household 6,144,877.170 " The Council of State and other departments 6,348,826.271 " Provincial administration 19,822,730.489 " National Assembly 2 786,666.666 " Public debt redemption and interest 56,413,576.498 " Public industries ^ 5,600,435.2x1 " Public education 3,375,474.756 " Army and its supplies 126,743,333.389 " Navy and its supplies 10,503,202.794 " Administration of justice 7,716,016.765 " Administration of agriculture, industry and commerce 2,040,003,373 " Public works 4,515,271.832 " Administration of railways and telegraphs 55,141,906.832 Government of dependencies 1,705,103.877 Total national expenditures 338,652,295.073 " Local expenditures 37,703,362.170 " Grand total 376,35S,6S7.Z43 " General Features of Expenditure and Revenue The most striking features of the period under considera- tion may be classified as follows : ( i ) the general character- istics throughout the Tsing Dynasty, 1644-1911; (2) the special characteristic of the earlier period, 1644-1893; and (3) the special characteristic of the later period, 1894- 191 1. The general characteristics consist of 'two points. One is the improper division of income among the different governmental agencies. For instance, at least one-third of 1 These tables of expenditures and revenues are abstracted from the original budget submitted by the Department of Finance, not from the final budget modified by the National Assembly. They represent the actual needs of the government rather than the final appropriations. 2 The National Assembly was created in 1910. ^ Cf. supra, p. 43, note 3. 187] EXPENDITURES AND REVENUES 45 the total income was spent for military purposes, while the total local expenditures or the reserved fund, as it was called, was small compared with the amount needed for local improvements. Another point is that the important forms of taxation remained unchanged during all these years. The special characteristic of the earlier period is the transportation of revenues, in the form of silver or product, due to the lack of development of commerce; and that of the later period is the development of numerous forms of incomes in the different provinces, termed the miscellaneous incomes, the most undesirable forms of which may be men- tioned as follows : (i) The so-called contribution. This was simply a euphonious term used for the receipts from the sale of public offices. A person might become a candidate for an office by contributing a certain sum of money. The highest office which could be bought in this way was the circuit governorship in the provinces and the office of a first-class secretary in the department at Peking. This source, yielding a gross return of 5,652,333.117 taels ac- cording to the budget of 191 1, was found in Peking and all the provinces subject to the control of the Department of Finance which issued the official diplomas. (2) The gambling tax. In Kwang-timg Province this tax was advanced in a lump sum by a company which had a monopoly of all the gambling houses in Canton, the capital of Kwang-tung. According to the budget of 191 1, this source yielded about 4,400,000 taels, form- ing one-eighth of ,the total amount of miscellaneous incomes of the country. As compared with the re- turns of the other important sources of revenues in the same province, it took a third place. The re- ceipts ran as follows: maritime customs duties, 6,103,610 taels; li-kin duty, 5,046,256 taels; gambling tax, 4,400,- 46 THE SYSTEM OF TAXATION IN CHINA [i88 ooo taels; salt monopoly, 2,417,597 taels; public industries, 2,372,986 taels; and land tax, 1,803,637 taels. (3) The lottery monopolies in Hu^peh, Kiang-su and other provinces. The Hu^peh lottery was a government monopoly, while the lotteries in Kiang-su and other pro- vinces were monopolized by private companies, each paying a franchise tax to the respective provincial governments. But the lottery of one province might be sold in any other province. The income from this source amounted to sev- eral million taels. CHAPTER III Taxation of Land ^ The Revolution of 1911 affected only slightly the gen- eral system of taxation in China and consequently the fol- lowing description of conditions as they existed during the Tsing Dynasty may be accepted as a substantially accurate account of the present situation. The land tax has been playing the most important role among all the sources of revenue. It owes its importance both to the economic condition and to the historical devel- opment. In order to describe the present system of taxing land, it is necessary to treat separately the land system, the land policy, the tax system, the land rent, the exemption of payment, the rates and the administrative rules. The Land System The agricultural lands of the whole country liable to pay a tax or rent consist of nine principal classes : (A) The People's Lands are those which are the private property of the people and subject to sale or purchase at their own will. (B) The Changed-name Lands are those which were owned by the absent nobles of the Ming Dynasty, 1368- 1644, and transferred with property rights to the people of the respective districts in which they are situated. (C) The Soldier-cultivated Lands are those given to the soldiers to be cultivated in vacation, i. e., in time when they are not called on for the periodical drilling, the capture of ' For the Chinese systems of measure and weight, see Appendix A. 189] 47 48 THE SYSTEM OF TAXATION IN CHINA [190 robbers and the transportation of grain to Peking and its vicinity. Since 1650, owing to the organization o£ regular forces in the different provinces, the farming soldiers are no longer actual soldiers except those engaged in transport- ing grain, and their lands are taxed by the civil authorities. (D) The Horse-breeding Lands are those which were originally enclosed for horse-breeding in Chi-li, Shan^si, Kan-su and certain cities in other provinces, but now in the hands of the people for cultivation. (E) The Weed-growing Lands are the marshes found in the maritime provinces, such as, Kiang-su, Kiang-si, Hu- peh and Hu-nan. (F) The Villa Lands are those whose rents, paid in product, flow into the treasury of the Department of Palace Affairs. They are situated in Chi-li and Feng-tien Pro- vinces. (G) The Banner Lands are those given to the soldiers to be cultivated for their own use. They are generally found in Moukden (Manchuria) and near Peking, and are not allowed to be sold or mortgaged. (H) The Public Lands are those held by the govern- ment. The different provinces use the revenues from these lands for different purposes. (I) The Education Lands are those whose incomes go to the provincial treasuries for educational expenses. The Land Policy Of the nine classes of cultivated lands, only the first was being cultivated by the owners themselves or their tenants at the beginning of the Tsing Dynasty, 1644-1911, when the other eight classes were public domains. As the Chinese land policy is to develop agriculture in the country, the government tries to put every tract of land available for agriculture into cultivation by a free disposal of lands to igi] TAXATION OF LAND ^g the people. As the result of this policy the area of public tillable lands put into cultivation was calculated in 1887 to be 186,495,407 mou. Practically all of these lands, cleared by virtue of imperial grants, were turned into private prop- erties by those who had cleared them. The total area of lands retained by the government and rented to the tenants in order to secure revenues for specific purposes is compar- atively small. The existing public cultivated lands are now known as the Villa Lands, the Education Lands, the Public Lands in general and the Banner Lands. Area of Cultivated Lands in 1887 Province Area^ of Lands in Mou. Chi-li 69,254,823 Feng-tien 26,554,229 Ki-rin 1,429,214 iShan-tung 125,931.405 Ho-nan 71,675,185 Shan-si 56,476,803 An-hwei 41,113,028 Kiang-su 1 10,825,370 Kiang-si 47,341,581 Fu-kien 13,400,056 Che-kiang 46,770,515 Hu-peh 117.322,955 Hu-nan 34,874.255 Shen-si 30.59i,330 Kan-su 16,775,160 Sze-chuen 46,415,898 Kwang-tung '34,730,825 Kwang-si 8,963,783 Turkestan 1 1,480,191 Total in the report of 1887 911,976,606 Yun-nan 2 in the report of 1853 9,319,360 Kvfei-chow " in the report of 1812 2,765,025 Grand total 924,060,991 ^ The Institutes of the Tsing Dynasty, 5th edition, (Shanghai, 1909), ch. xvii. 2 Yun-nan and Kwei-chow sent their latest reports in 1853 and 1812 respectively. 50 THE SYSTEM OP TAXATION IN CHINA [192 Area of Public and Private Cultivated Lands in 1887, showing the Result of the Land Policy Province Area of private land ^ Area of public land " Qii-li 2 68,332,031 mou 972,792 mou Feng-tien 5,239,889 " 21,314,340 " Ki-rin 1,429,214 " Shan-tung... 123,600,758 " 2,330,647 " Shan-si 47,9i8,53i " 8,558,272 " Ho-nan 62,766,216 " 8,908,969 " Kiang-su 65,757,338 " 45,068,032 " An-hwei 34,063,630 " 7.049.398 " Kiang-si 46,176,300 " 1,165,281 " Fu-kien 12,601,238 " 798,818 " Che-kiang 44,713,511 " 2,057,004 " Hu-peh^ 58,102,760 " 59,220,195 " Hu-nan2 31,304,200 " 3>57o,oS5 " Shen-si2 25,797,024 " 4,794,306 " Kan-su 9,196,385 " 7,578,775 " Sze-chuen 2 46,415,898 " Kwang-tung 34,193,764 " 537,o6i " Kwang-si2 8,963,783 " Turkestan* 11,480,191 " Total 726,572,470 " 185,404,136 " Yun-nan 3 8,394,238 " 925,122 " Kwei-chow '" . . 2,598,876 " 166,149 " Grand total .. 737,565,584 " 186,495,407 " ^ By " Private Land " is meant the People's Land while all the other classes are included in public land because of their origin. 2 It is often found in the provincial reports that the different classes of land are not separatfely calculated, there being a failure tO' dis- tinguish not only between various classes of public lands, but also be- tween the private and public lands, e. g., the area of private lands in Chi-li, Hu-peh and Sze-chuen includes the Soldier-cultivated lands; that in Hu-nan, the Changed-name Lands ; that in Kwang-si, the public lands; that in Shen-si, the Education Lands. 3 Yun-nan and Kwei-chow did not send their reports in 1887. The figures for the former are taken from the report of 1853, and those for the latter, from the report of 1812. * Turkestan's figure denotes the area of public lands in a few cities, while the whole territory is practically uncultivated. ' Thousands of mou of public cultivated lands are believed not to be 193] TAXATION OF LAND 51 Gradual Increase of Cultivated Lands showing the Result of the Land Policy ^ Year Area of Land 1661 549,357,600 mou 1685 607,843,000 1722 683,791,400 1766 741,449,500 1812 791,525,100 1833 742,000,000 1887 911,976,606 1 The figures are taken from Tang ,Shou Chien, Inquiry into the Institutions of China (Shanghai), bk. iii, ch. i. The Tax System (A) The Compound Land Tax. The compound land tax at present is composed of five elements : (a) The Regular Land Tax. (b) The Poll Tax. (c) The General Personal Service Money. (d) The Post Station Money. (e) The Compensatory Tax. (a) The Regular Land Tax. Since 594 B. C. the land has been taxed by mou (acreage), i. e., a tax has been levied on each mou of land. From 770 to the present time there has been no uniform rate proportional to the amotmt of gross produce. Owing to the fact that the old method of assessment was abandoned without the introduction of a new method, the rates to-day are fixed merely by tradition.^ The tax was originally paid in produce. Since 1436 it has been paid partly in silver and partly in produce. This change is not an attempt to approximate more closely the included in this table due either to no report or to the calculation with local standards of measure. Unfortunately, these are the only reliable figures. They are taken from the latest (5th) edition of The Institutes of the Tsing Dynasty, ch. xvii. 1 For the rates in force at present, cf. infra, pp. 56-64. ^2 THE SYSTEM OF TAXATION IN CHINA [194 tax-paying ability of the land-holder ; the amounts, collected year by year, have not increased or decreased so that each person contributes approximately the same as before. (b) The Poll Tax. The poll tax was levied during the early years of the Tsing Dynasty, 1644-1911, upon several classes of people, namely, the urban people, the country peo- ple, the rich people, the tenants and the immigrants from other localities. Each of these was further classified under three grades according to their ability to pay. The age of a person was also taken into consideration because an adult, i. e., sixteen years old, was regarded as having greater abil- ity than a child. A census was published every five years in order to correct the errors regarding population. This method of assessment was soon found impracticable, due to the lack of accurate reports of increasing members of the individual families. In 1713,. Emperor Kang-shi ordered that the census of 171 1 should be taken as a standard and the increased population be exempted from taxation. During the period 17 16-1793 the poll taxes of different provinces were amalgamated with the land taxes, except m Fenff-tien, twenty districts of Shan~si and the greater part of Kwei-chow. The poll tax was originally levied in I China on the assumption of an equal distribution of lands in a primitive society. With the increase of population, the scarcity of land and the unequal distribution of lands among the population, the poll tax has lost its value as a (test of ability to pay.^ Whereas land is the dominant source of wealth in an agricultural community, the only way for the Chinese government to make good the loss of revenue from the poll tax was to raise the rates of land taxes as she did in the process of amalgamation. Therefore, we may consider this modification of the tax system as an advance step towards the goal of ability to pay in taxation. 1 Tang Shou Chien, Inquiry into the Institutions of China, bk. iii, ch. iii, p. 3. ige^] TAXATION OF LAND 53 (c) The General Personal-Service Money. All kinds of public service were formerly done with forced labor. It was the duty of everybody to serve in this way without pay- ment. Later, money was paid instead of service, and with it voluntary laborers were employed. This commutation tax has been also amalgamated with the land tax in order to save the trouble of collection. (d) The Post-Station Money. Aside from the post- office, China has been providing her own means of com- munication known as the post stations established through- out the Empire especially for military and other public pur- poses. The service was formerly performed by the people. It is now paid for out of the public treasury, while the peo- ple are required to pay a tax known as the Post- Station Money which is collected with the land tax. (e) The Compensatory Tax. Besides the regular taxes and the commutation taxes, there is a compensatory tax which is so called because it was originally an illegal charge by the magistrates for the compensation of loss of silver from melting. At the beginning of the Tsing Dynasty, 1644-1911, the practice was strictly prohibited by the following laws : ^ (i) The Imperial Decree of 1644 announcing that the imposition of " melting loss " shall be punished as bribery. (2) The Law of 1665 permitting the people to com- plain of any sort of excessive charges before the courts. (3) The Law of 1678 holding liable the provincial high officials for the concealment of the guilt of subordinates levying the " melting loss ". But the practice could not be checked because the govern- ment did not provide adequate revenues for the districts, nor sufficient salaries for the magistrates, as it was said by ^ Wang Ching Yun, Essays on the Institutions of the Tsing Dynasty (Shanghai, 1901), ch. iii. 54 THE SYSTEM OF TAXATION IN CHINA [196 Emperor Kang Shi in a decree of 1709. This decree is a reply to Mr. Loo-yu, the governor of Ho-nan, saying, " It is impossible for any magistrate to support his family and to pay for the services rendered by his secretaries and ser- vants, without charging a single cash in excess. A magis- trate charging ten per cent in excess of the regular taxes may be considered as a good official. If he were not excused from impeachment, it seems to me, it would be irksome for you to inflict the same penalty on so many of your sub- ordinates." Then the rates of the compensatory taxes in the different provinces were ten per cent of the regu- lar taxes or less, i. e., one mace ^ per tael of regular taxes ; but the rates in Hti-nan were twenty per cent or thirty per cent. In 1722, the rates in Shen^si varied from twenty per cent to fifty per cent of the regu- lar taxes when the provincial treasury incurred a de- ficit. The governor asked Emperor Kang Shi's permis- sion to take the collected revenues from the compensatory tax out of the magistrates' pockets; but the Emperor re- fused, because he thought his permission would mean the confirmation pf the charge of the illegal tax. In 1724, the Governor of Shan-si requested the legalization of the com- pensatory tax to meet the deficit of that province. Emperor Yung-tsing granted this request on the condition that the compensatory tax should be abolished whenever the public revenues shall be found adequate. From that time on one province after another followed the precedence of Shan^si. This source of revenue is now appropriated for official salr aries and local purposes. The Land Rent As we have seen that the government nominally owns at present only four classes of public cultivated lands, we now 1 Ten maces are equal to one tael. igj] TAXATION OF LAND 55 come to discuss how the government deals with such lands. First, the Villa Lands are leased to the tenants who pay- rice to the Department of Palace Affairs as rent. In the second place, the Banner Lands are either given to the Tartar soldiers under the Eight Banners without any kind of payment, or leased to the Chinese tenants in order toi secure rents in money for some other soldiers who have no land. These two classes of lands, therefore, are not subject to the taxing power of the Department of Finance. Finally, the other two classes of public lands which are under the control of the Department of Finance are known as the Education Lands for educational expenses, and the Public Lands in general for other public purposes of the provinces. Rates of rents derived from these lands are fixed by law and are not accommodated to the fluctuation of economic rents. The privilege of the tenants is the exemption from payment of all other burdens, that is to say, the poll tax, the General Personal Service Money, the Post-Station Money and the Compensatory Tax. The Exemption of Payments The following classes of uncultivated land are exempt from the payment of taxes : (a) The Forbidden Lands are not open to cultivation, because their low productivity is supposed to yield less re- turn that the expense of cultivation. (b) The Scattered Lands are those scattered in small pieces. The exemption is subject to certain limitations, such as fertility, size or location, i. e., on mountain or near river bank. (c) The Exempt Lands are those which are used as sites for the buildings or are rented in order to augment the reve- nues for public worship, public education and public charity. (d) The Unmeasured Lands are occupied by various barbarous tribes in Sse-chuen, Yun-nan and Kan-su Pro- 56 THE SYSTEM OF TAXATION IN CHINA [198 vinces. In lieu of the land tax, each family of these tribes pays a poll tax. (e) The Hunting Lands are those used for hunting game in Manchuria. (f) The Nomadic Lands consist of Mongolia, Turkestan and other districts near to them, where the nomadic tribes wander from place to place in search of pasture or game. Existing Rates The rates of the regular land tax and the land rent vary to a greater or less extent in different provinces, or even in different places of the same province. They are also dif- ferent according to the various classes of land and the var- ious kinds of agricultural products. This differentiation is based upon suppositions as to the productivity of land and the density of population.^ There is no scientific measure of productivity by the modern method of valuation, nor accurate census of population. But it must be known that the determination of land fertility by the color of soil may be traced back from the Hsia Dynasty, 2205-1766 B. C., when the available lands were cultivated earlier or later according to their superiority of productive power and the number of immobile laborers already there. On the other hand, the compensatory taxes are levied in the different provinces at certain fixed rates per tael of the regular taxes. In some cases these rates are uniform throughout the whole province; while in others they are different, or exempt as determined by the customary practices in the different locali- ties. To prevent confusion there have been included, in the subjoined tables, only "the minimum and maximum rates in the different provinces, ignoring the variation ^ between these limits. ^ Tang .Shou Chien, Inquiry into the Institutions of China, bk. iii, ch. i, p. 2. ^ The Comprehensive Book of Taxation and Service of the Tsing Dynasty (Peking) contains the full text. 199] TAXATION OP LAND 57 Minimum and Maximum fRates of the Regular Tax on Each Mou OF THE People's Land Province. SUver. Rice. Beans. Wheat. tael sine sine sine Chi-li (.oo8l)-(.i3+) (I).(I0+) (.9008X4+) .... Feng-tien . . . (.0I).(.02+) (2.o8)-(7.5+) Ki-rin' (.0i)-(.O3) (2.2)-(6.6) .... .... Shan-tung . . . (.oo32)-(.i09i+) (.02)-(3.o6+) .... (.ooi)-(.43+) Shan-si (.O0iO7)-(.i+) (•«S)-(27+) Ho-nan (.OOI4)-(.227+) (.07).(2.2+) .... An-hwei ' . .. (.oisi-(.io6+) (.2I)-(7.I+) (.o8;-(.9i+) (.os)-{.o8+l Kiang-si ' . .. (.ooi336)-(.n7oi3) (.i4)-( 10.7205+) .... Fu-kien (.oi69)-(.i625+) (.oi09)-(2.47+) .... Che-kiang^ .. (.oi503)-(.2S5+) (.003)-(i9+) .... .... Hu-peh'.... (.2S4S)-(2.974i+) (.ooo6)-(29.i4o8+) .... Hu-nan' (.20238).( 1.8404+) (.02G9)-(I4.69+) Shen-si» .... (i.os9).(2.773+) (.oi)-(io.i6+) .... Kiang-su ' . .. (.oo9).(.i4ii+) (i.47)-(i9.26+) Included in rice. (.0O02)-(.O3+) Kan-su (.ooo2)-(.i5044-) (.03)-(8.ii+) Sze-chuen • ■ . (.ooii;9)-(.o849i+) .... Kwang-tung. (.008l)-(.2232+) (.6sV(2.29+) .... Kwang-si (.0204)-(.2I22+) (3-7)-(S-35+) Yun-nan (.0O5S)-(.O465+) (i.94)-(i5+) Kwei-chow . . (.oi;.(.6s+) (.Sooi)-(45+) I.O — 1 In Ki-rin the required rice may be paid in silver, the exchange rate being 100 sine rice = i tael silver. 2 In Kiang-su, An-hwei, Kiang-si and Che-kiang, there are two sorts of the People's Land, — the low land, called ' Tien' (field) and the high land, called 'Ti' (ground) — spaying different rates of tax. The figures in the table indicate the rates on each mou of low land. The rates on each mou of high land are as follows : Kiang-su .009-.3303 tael silver, .73-41.69 sine rice and bean, .001-.08 sine wheat; An-hwei, .0089-.63 tael silver, .79-5.9 sine rice, .08-.22 sine wheat; Kiang-si, .0000S4-.211128 tael silver, .052-5.128 sine rice; Che-kiang, .0Q24-.2132 tael silver, .008-19.35 sine rice. * In Hu-peh, Hu-nan and Shen-si only rice is required to be paid. If the payment of silver is preferred, the rates in the " silver " column of this table are the exchange rates for every 100 sine of rice. 58 THE SYSTEM OF TAXATION IN CHINA [200 Minimum and Maximum Rates of the IRegular Tax on Each Mou OF THE Soldier-cultivated Land Province Class' Silver Rice' Chi-li» A A B A B A A A B A( ) A(2) A(3) A(4) A A B A B A A B A B A A A .00072-.0793 (ae/ .01-065 .01-.OS38 .0023-.014 " .014 .0016-.108 .009-1411 " .01-.06 .0179-2.7229 " .502975-.548384 " .2 " .04166 .090047-. 114245 " .00572-.149 " .3-i!3i66' .0019-.1043 " .56 .002-.098 " .001 2- .006 " .012S-.3 .0125-.02 " .0081-.2232 " .0141-.234 .897-9.072 sine 1.08-10.9 " Shan-tung Shan-tung Shan-si Kiang-su * An-hwei An-hwei Kiang-si ' Kiang-si ' Kiang-si ' Kiang-si * Che-kiang 1.47-19.26 " 1.8-8.6 .3-25.41 3-959-27-3 7.973-22.803 " 15-75-24 1.5-9.96 1.2-18 .38-20 1-12.5 1.5-30 5-6 4.187 27.27 " 1.929-80 " 8.88 5.92-8.18 5-35-37-33 Hu-peh' Hu-nan' Hu-nan' Kan-su ' Sze-chuen Sze-chuen ' Kwang-tung Yun-nan Kwei-chow '" ^ Class A is under the administration of civil officials and class B, of military officers. 2 The word " rice " indicates rice itself or together with other minor cereals. 3^ Chi-li also pays .438 to 3.6 sine beans and .0192 to .0417 tael straw per mou. * Kiang-su also pays .002 to .03 sine wheat per mou. 5 In Kiang-si, class A(i) indicates low land; class A (2), high land; class A(3), fractional land'; and class A(4), ai substitute for the non- existence of the Soldier-cultivated Land in Pu-kien. Only rice is re- quired from dass' A(i), and class A (2). If the silver payment is pre- ferred, the figures under the "silver" column are the exchange rates for every 100 sine of rice. 8 In Hu-peh, only rice is required from class B. If the payer pre- 2oiJ TAXATION OF LAND 55 Minimum and Maximum Rates of the Regular Tax on Each Mou OF THE ChANGED-NAME LaND Province Silver Rice ^ Chi-li 0053 - .1173 tael sine Shan-tung2 .01 -.3007 " 1.8 Shan-si .005 - .14 " .07 - 20 " Ho-nan .011 -.129 " Hu-peh 3 466 " 449 - 6.31 " Hu-nan3 3735 - -9244 " -5-12 " Shen-si 0069 - .0751 " 4.3s - 14.8 " Kan-su * .0048 - .0171 " .22 - 142 " fers to pay silver, every 100 sine of rice is considered as equivalent to the figure under the " silver " column. ' In Hu-nan class A pays both silver and rice which may be changed to silver (100 sine rice ^.1774 — 1.6531 tael silver), while class B pays only rice, the exchange rate of 100 sine rice being included in the ■' silver " column. 8 In Kan-su, class B pays .058 tael straw in addition to rice. ' In Sze-ehuen, beans are paid together ■with rice andi the figure under the "'rice" column indicates the amount of both. ^0 Kwei-chow pays 30 sine beans and 23.33 — 3I-I4 ^i^^ wheat per mou besides the payment of silver and rice. 1 The word " rice " indicates rice and other minor cereals. 2 In Shan-tung wheat is required. The rate is .32 sine per mou. ' In Hu-peh and Hu-nan only rice is required to be paid. If the silver payment is preferred, the rates in the " silver " column of this table are the exchange rates for every 100 sine of rice. * In Kan-su straw is required. The rate is .oi-.og2 tael per mou. 6o THE SYSTEM OP TAXATION IN CHINA [202 Minimum and Maximum Rates op the iRegui^r Tax or the Land Rent on Each Mou of the Special Classes of Lands (a) Chi-li Class '^ Silver The Mulberry Land .00168 tael The Foliage Crop Land .05 - .7251 " The Weed-growing Land ^ 01 - .06 " The .Sand Deposit Land .029 - .2565 " The Education Land ^ 01 - .2678 " (b) Manchuria Province Qass* Silver Produce Feng- tien.... The Re-opened Land^ 01-.03 /a;/.. 4.3 -10 sine bean* Feng-tien The Illegally-cultivated Land '. . .48 " 2.65 " rice Ki-rin The Discovered Land ' 08 " .442 " rice ' 1 Chi-li has eight kinds of lands excluding the Banner Land and the Villa Land which are not under the administration of the magistrates. The rates of the three general classes are found in the foregoing tables. Cf. supra, pp. 57-59. 2 This class is used as salt fields. 8 The Education Land pays 6 sine of wheat, corn and rice per mou besides silver. * In addition to these classes both Feng-tien and Ki-rin have the People's Land mentioned above. Cf. supra, p. 57. s The Re-opened Land is that first enclosed as the Banner Land and then re-opened to the cultivation of the common people. ' Of the amount of beans, a half is paid in kind and the other half, in silver, the exchange rate being 100 sine beans = .6 tael silver. ' The Illegally-cultivated Land is that cultivated by the people with- out the property right conferred by the government. * The Discovered Land is that illegally cultivated by the people who evade the tax until discovered. ' The rice is paid in silver. The exchange rate is : 100 sine rice = I tael silver. 203] TAXATION OF LAND 51 (c) Shan-tung Class 1 Silver The Education Land .009 - .3 tael The Stove Land ^ 0265 - .0441 " The Changed-name Land under the military post ^ 00107 - .1 " (d) Kiang-su Class ' Silver Rice and Beans Wheat The Hilly Land ^ The Weed-growing Land ^ \ .009-.140S iae/ 34-16.52 sine 01-.03 sine The Swamp Land J The City Ground^ 1 The Granary Ground* l-.057-.1024 " 5.05-12.63 " .....01-.02 " The House Ground ' J (e) An-hwei Class ' Silver Rice Wheat The Pond or Water Land * .019 - .044 tael .47 - .78 sine .01 - .02 sine The Grass Hill " .083 The Mulberry Land '" 032 " 1 Shang-tung has six classes land. The three general classes are mentioned above. Cf. supra, pp. S7-S9- 2 The Stove Land also pays .01 - .41 sine wheat and 1.8-2.84 sin£ rice per mou. ^ The former ,rates of this class were .006-.12 tael. * Kiang-su has four classes of lands. The two general classes appear above. Cf. supra, pp. 57-58. ' This class is used as salt fields. ' This class is taxed according to the number of buildings. But it is not a tax on buildings or house tax. ' An-hwei has five classes of lands. We have given the two general classes above. Cf. supra, pp. 57-58. ' The tax on this class is estimated by mou. The figures indicate the rate per mou. ° This class yielding grass pays taxes according to the length of the land. The figure represnts the rate per H. Li is a Chinese standard measure of length, equivalent to 576 metres in the Metric System. "• The tax on this class is computed according to the weight of the finished goods (silk) of its produce (mulberry). Each tael of silk pays the above-mentioned sum, i. e., .032 tael. 62 THE SYSTEM OF TAXATION IN CHINA [204 (f) Kiang-si Class' Silver Rice The Hilly Land .000005 - .06276 tael .017 -.1418 sine .000054 -.270677 " .113-6.837 " The Pond or Water Land. (g) Fu-kien Class ' Silver The Silver Payment Public Land ' .0087 - 4175 tael The Education Land .0643 - .6995 " Class (h) Che-kiang Silver The Hilly Land .00005 The Weed-growing Land .0004 - The Pond or Watery Land .0002- The Lake-region Land .0307 The Mulberry Land' 0019 - The Tea Land ' 0015 The Stove Land .0161 - - .1963 tael ■073 .1245 "^ .0056 " .1414 " (i) Kan-su Class ° Silver The land under the military chiefs of the barbarous tribes ' .075 tael The Fan tribes' land ' The Animal-breeding Land 006 " Rice .006 - 5.37 sine ■OS - 7-5 .0007- i.6i •095 .001 .07 ■37 - 3-7 Cereals 2.425 sine ■4-3 " 1 Kiang-si has four classes of lands, the two general classes having been given above. Cf. supra, pp. 57-58. ' Fu-kien has only one general class of land as given above. Cf. supra, p. 57. ' This class consists of those lands left to the public by escheat or by absence of property owners. The payment is made with silver only. * There are two general classes of lands in Che-kiang. Cf. supra, vp- 57-58. ° The rates on mulberry and tea are applied to each tree irrespective of the area of land. ^ The three general classes of lands in Kan-su are mentioned abov-e. Cf. supra, pp. S7-59^ ' The barbarous tribes are governed by their own military chiefs, and their land, administered by them. * This class nominally under the magistrates pays as the land tax .0215 - .03 tael straw together with the cereals per mou. In addition to this, each family pays a poll tax amounting to .3 tael silver and 10-25 •J'«<^ cereals. 205] TAXATION OF LAND 63 (j) Hu-nan, Sze-chuen, Kwang-tung and Yun-nan Provincs Class ' Silver Hu-nan The Mao tribes' land 0015-.03679 iaei Sze-chuen The land under the military chiefs of the barbarous tribes 0034-.0231 " Kwang-tung .... The sewages ' 04503 " Kwangtung The pools' 394 " Yun-nan The Horse Stable land ' 02-.03 " Yun-nan The Yi tribes' land I sine cereals (k) Kwang-si Class ^ Silver The Public Land The Yao tribes' Land The Tung tribes' Land 009 - .0223 tael The Lang tribes' Land 009 " The Education Land .009 " ■Class (1) Kwei-chow Silver The land under the military chiefs of the barbarous tribes 008 - .1 tael The Public Land The Education Land « 1-4 The Rent Land .03 - .1 " The Hilly Land ' .0136 - .05 " The Worship Land » i The Famine-relief Land ' Rice 6.42 - 20.77 ^^^c 3 - 5.3s 3-74 -5-35 " 4.28 24.84 Rice .722- IS sine 25 -SO " 20-40 " 14.9 -SO " 1 The general classes of lands in these provinces may be found above. Cf. supra, pp. 57-S9. 2 The sewages or pools are taxed according to their number. The figure is the rate of tax on each' one of them. *The Horse- Stable Land was originally used for horse stables and later thrown' open to cultivation. * Kwang-si has only one general class, the People's Land, as men- tioned above. Cf. supra, p. 57. ^ Kwei-chow has two general classes of lands, see supra, pp. 71-74. » This class also pays 20 - 110.78 sine rice per mou. ' This class also pays 10 sine wheat per mou. ^ This class also pays 10 sim: beans per mou. ' This class also pays 4.13 - 125.12 sine rice per mou. ^ 64 THE SYSTEM OF TAXATION IN CHINA [206 Minimum and Maximum Rates of the Compensatory Tax added to PER Tael of Silver of the Regular Tax Province Minimum Rate Maximum Rate Uniform Rate Chi-li 1 .15 tael Feng-tien ^ .1 tael Shan-tung -14 " Shan-si ^ i tael .13 " Ho-nan i " -iS " Kiang-su -OS " .1 " An-hwei .075 " .1 " Kiang-si .1 " Fu-kieni .1 " Che-kiang -04 " .09 " Hu-peh .11 " Hu-nan .1 " Shen-sii .IS " Kan-sui .15 " Sze-chuen .15 " Kwang-tung 1 .169 " Kwang-si-i .08 " .105 " Yun-nan 1 .2 " Kwei-chow ^ i " -iS " Administrative Rules The administrative rules of the land tax are very com- plex. They may be described under three headings as fol- lows: (a) The Collector. The magistrate of a district is the only responsible collector within his jurisdiction. He may be recorded, promoted, degraded, or dismissed according to the amount of the tax assigned to his district which he succeeds in collecting. The general rule ^ is that a magis- trate is recorded when he has collected the whole sum of one year, and promoted to a higher rank when he has done the same for three consecutive years. On the other hand, 1 In Ki-rin and these ten provinces the compensatory tax is partly paid with rice. But it is too insignificant to be mentioned here. 2 See The Amendments of the Institutes, of the Tsing Dynasty (Shanghai, 1909), cb. cbp(iii. 207] TAXATION OF LAND 65 he is punished by postponing his promotion and forfeiting his annual salary, for a deferred payment of less than ten per cent of the assigned amount; by degrading him to one, two, three or four grades below his original rank, without removal from service, according to whether the deferred payment is ten per cent, twenty per cent, thirty per cent, or forty per cent; or by dismissing him from office for a deferred payment of fifty per cent or more. His super- visory officials "^ assume the joint responsibility and are sub- ject to similar treatment. He, however, may recover his office by remitting the deferred payment while he remains in service by permission or while awaiting his successor. For this purpose, there are numerous limitations concern- ing the amount of deferred payment and the date of pay- ment. No recovery is allowed, if a magistrate fails to pay to the public treasury forty per cent of the as- signed tax for the three years from the date of his impeachment. In the case of deficit,^ which is not due to the deferred payment of the people but due to the fraud, waste, or deferred payment of the magistrate himself, he is fined by the confiscation of his property with or without other punishments. His supervisory officials share his fine for the joint responsibility or bear it for the concealment of his deficit. (b) Method of Collection.^' The system of " single whip",* began to be established in 1581 and has been widely extended under the Tsing Dynasty, 1644-1911. This system requires the different elements of the compound ^ Cf. supra, ch. i, p. 25. 2 Cf. The Amendments of the Institutes of the Tsing Dynasty, ch. clxxv. 3 The existing method was adopted in 1728. * By this phrase, we mean that all kinds of imposition are simplified into a single item. 66 THE SYSTEM OF TAXATION IN CHINA [208 land tax, laid on each person, to be added together, and the amount to be collected in ten instalments. The amount of the tax, laid on each person, is estimated according to the quantity and class of his lands as entered in the " Surveyors' Book ". Before the beginning of every semi-annual col- lection, the magistrate provides ten detachable receipts, each with two duplicates, for each taxpayer. One of the two duplicates of each receipt is kept by the magistrate, and the other given to a policeman who informs the taxpayer, but does not collect the tax. Having been informed once or many times, the taxpayer is expected to put his tax in the "collecting box" of the district ydmen; and when he has done so, he is entitled to a receipt. The process is re- peated until ten instalments have been paid. Every ten days the magistrate opens the box, counts the total amount, and reports it to his supervisory officials. The money col- lected in this manner has been wrapped up by the individual taxpayer; and if it is found less than the required amount, it is returned to the original payer and an entire repay- ment is demanded rather than a supplementary sum. This is done in order to prevent the fraud of exacting an illegal charge, however small. At the end of each semi- annual collection, the magistrate sends to the Executive Department a report and the entire collected revenue ex- cept a certain sum allowed to be deducted for the district expenditures. (c) Periods of Collection. The tax is collected in two periods of the year. This system was established in 780 by Yang Yen, a prime minister in the Tang Dynasty, 618- 907, and is known as the "two taxes", or the "summer and autumn taxes ". It has the same object as the " single whip " system, being the most important reform in the taxation system from Yang Yen's time to the present day. The summer tax is now collected from the second to the 209] TAXATION OF LAND 67 fifth month; and the autumn tax, from the eighth to the eleventh month. These periods are universal to all except five provinces. The periods of Kwang-tung are from the seventh to the eighth month of a year, and from the twelfth to the first month of the next year. Yun-nan and Kwei- chow are permitted to collect taxes from the ninth to the twelfth month of a year and from the first to the third month of the next year, while Shen-si and Sse-ch'uen have their own periods in the year, namely, from the second to the seventh month and from the eighth to the twelfth month. These changes of periods are due to the differences of climate necessary for the staple products of those pro- vinces. (d) The Auditing of Accounts. With the exception of a sum reserved for local purposes, the collected revenues are transported to the provincial treasury immediately after the close of each collecting period. At the end of a year, the circuit governor and the prefect are ordered to audit the accounts of their subordinate magistrates, such as the reserved fund, the transporting fund, the collected fund and the amount of deferred payment, and to report the re- sult of investigation to the governor. Next year two copies of the provincial accounts of these items are sent to Pdking, one to the Department of Finance to be audited, and the other to the Emperor. These reports must reach Peking before the fourth, fifth or sixth month according to the dis- tance of the respective provinces from Peking. General Features of the Land Tax The general features of the land tax which are worthy of observation are : ( I ) The considerable amount contributed by this source to the annual revenues. Before the creation of the mari- time customs duties and the li^kin duties in the middle of 68 . THE SYSTEM OF TAXATION IN CHINA [210 the nineteenth century, when the amount of the annual revenues was less than five million taelSj the land tax formed two-thirds or more of the whole, while in the last few years before the Chino- Japanese War, 1894, it supplied about three-eighths of the total annual return of about eighty million taels.^ In recent years it has constituted one- fourth of the annual tax revenue of a little over twO' hun- dred million taels.^ (2) This important part of the revenue is inelastic. For centuries, the amount apportioned has not been changed, and to do so would be extremely difficult. Nevertheless, this method has the advantage of securing a total fixed sum. (3) The land tax is levied on the land without allow- ances for indebtedness. (4) As the land tax has existed for centuries, the process of capitalization has proceeded to the point where the greater part of the burden has been eliminated. The persons who have lost by its establishment are not the same as those who own the lands at present. For the same reason, the question of equality and that of certainty are not of par- ticular moment. (5) Although the greater part of the land tax has been capitalized, yet there are some few uncertain elements which cannot be included in the calculations. Prominent among such elements is the depreciation of copper coins. As the tax is collected in terms of silver which is always scarce, the taxpayer must pay more copper coins for the same weight of silver owing to the depreciation. This means in effect an additional tax. This new element is 1 During the 19th century the legal amount of land tax is over 31,000,000 iaels. Annual variations are not great. == According to the budget of 191 1, the land tax revenue is 48,101,346 taels. 21 1 J TAXATION OF LAND 69 borne by the immediate taxpayer, so far as any portion of pure economic rent is held by him, when the action of com- petition is not found in full force, otherwise the burden is passed to the landlord. For this reason, the taxpayer always prefers to pay produce,^ and the object of commuting produce to silver is hardly attained. Nevertheless, the method of commutation is now carried out in an irksome manner, because the magistrate is required to sell the produce on his own account, and to pay the required amount of silver to the government. It is evident that the magis- trate suffers for the people. But the shrewd magistrates often escape the requirement or compensate themselves in other ways. One of the most important causes of discon- tent in recent years is the practice, indulged in by many governors, of coining as many copper coins as possible and circulating them in the whole country for the purpose of securing seigniorage. (6) The cost of collection is very low, because the ad- ministration is vested in the district magistrates. More- over, the method of collection is rather convenient. '' It will be recalled that a part of the land tax may be paid in produce or silver, but the other part must be paid in silver. CHAPTER IV Taxation of Salt ^ Production of Salt (i) General considerations. Salt is one of the most valuable products of China. It may be classified into three kinds, namely, sea salt, lake salt, and well salt. The first is produced in Feng-tien, Chi-li, Shan^tung, Kicmg-su, Che- kiang, Fu-kien and Kwang-tung Provinces; the second, in Shan-si, Shen^si and Kan-su Provinces; and the third, in Sze-chuen and Yun-nan Provinces. There are three methods of production, known as "field- drying ", " board-drying " and " pan-drying." The field- drying means that the salt water on the fields is allowed to become dry on exposure to the sun, as in Feng-tien, Chi-li, Shofir-tung, Fu-kien, Kwang-tung, Shan-si, Shen-si, Kan-su and that part of Kiang-su north of the Hwai River. The board-drying means to let the salt water evaporate on the boards exposed to the sun. This is used in Che-kiang and that part of Kiang-su which lies south of the Hwai River. The pan-drying means to heat the salt water in pans with fire, as in Sse-chuen, Yun-nan, Che-kiang and that part of Kiang-su, south of the Hwai River. The quality of the salts so produced differs greatly. The field-dried salt is the best and is most in demand. Of the other two, the pan-dried salt is better than the board-dried salt. Some of the Sse-chuen salt, but not all, is exceedingly 1 For the Chinese systems of measure and weight, cf. appendix A. 70 [212 213] TAXATION OP SALT 71 white and pure, while the lake salt in Shan-si, Shen-si and Kan-su generally has a green color and an unpleasant taste. The cost of production varies with the production methods. The field-dried salt is the cheapest. One catty of salt costs less than one-tenth of one cent in time of plenty, like May and June. Even in other months of the year, one catty of salt is sold for not more than three-tenths of one cent. The cost of both the pan-dried salt and the board- dried salt is higher. It varies from four-tenths or five- tenths of one cent to one cent for one catty. The best of the Sze-chuen salt (pan-dried) costs even more than one cent for one catty. The average cost for one catty of salt, however, is less than, five-tenths of one cent because more than half of the total annual product is made up of field- dried salt. (2) The quantity of product. The quantity of product is fixed by law on the assumption that each person consumes .3 tael of salt every day. Owing to the lack of reliable sta- tistics of population, the legal determination of the quan- tity of salt is entirely arbitrary.^ The latest report (1911) of the Department of Finance on the quantity of product in recent years gives the following information : (a) Manchuria. There are eight salt fields in Feng-tien Province. The total annual output is 700,000 shi, each of which is equal to 600 catties in weight. Hei-lung-kiang Province, having a salt lake, produces about 7,000,000 catties of lake salt. (b) Chilli. This province has eight salt fields, called Tsang-lo or Long weed. They annually produce about 800,000 packages. Each package weighs 450 or 460 catties. (c) Shan-tung. Seven salt fields are found in Shan-tung Province. Three of them produce i ,068,000 packages every * Cf. infra, p. 72. 72 THE SYSTEM OF TAXATION IN CHINA [214 year, each package being equal to 390 catties. The quan- tity of production of the other four fields is unknown, be- cause those fields are not subject to the government regu- lations. (d) Shan^si. This province has a great salt lake, near which are situated three salt fields which are collectively called Ho-tung or River's '■ East. During the last five years, the annual product exceeded 6,cx30 ming. Each ining is equal to 120 yin, and each yin is composed of 250 catties. Therefore 6,000 ming are equal to (6,000 X 120 X 250) or 180,000,000 catties. (e) Kiang-su. In Kiang-su Province there are twenty- three salt fields, of which twenty are situated on the south bank of the Hwai River, and three, on the north of it. The annual product of the South Hwai fields is 508,385 yin, each of which contains 600 catties, and that of the North Hwai fields is 502,540 yin, each having 400 catties. (f) Che-kiang. The Che-kiang salt fields are those situ- ated on the east and the west banks of the Che-kiang River. There are thirty-two in all, of which twenty-five are found in the Che-kiang Province, and the remainder in the Kiang-su Province. The quantity of production is uncer- tain. (g) pK^kien. Fu-kien Province has thirteen salt fields which turned out 244,000,000 catties in 1887. The increase of consumption shows the growth of production, although there is no information about the annual product of the last twenty-five years. (h) Kwang-tung. We find twenty salt fields ^ in this province with an annual product of 1,628,914 packages, each containing 205 catties. In recent years two new fields 1 The word "' river " means the Yellow River. 2 In addition to these, Kwang-tung has one field for storage only. 215] TAXATION OF SALT n have been developed, but the quantity of their products has not yet been ascertained. (i) Sze-chuen. This province has 100,814 salt wells. The annual product of these wells is unknown. (j) Yun-nan. Among the twenty- four salt wells in Yurir-nan Province, the Black Well and the White Well produce over half of the annual output which is less than 40,000,000 catties. The Legal Production of Salt 1 Province '' Sze-chuen Kiang-su < Chi-li Manchuria Shan-tung Kwang-tung Che-kiang Shan-si Fu-kien Yun-nan ' Kan-su ' Legally fixed number of introductory certificates (576.158) (360,000) 662,497 600,000 654,920 814,509 425.155 635,760 534.414 Number of catties per certificate (600) (400) 600 640 320 240 400 (average) 250 (100I (600) Total Number of catties produced in the year 345,688,800 144,000,000 397,498,200 384,000,000 209.574.400 195,482,100 170,062,000 158,940,000 Forms of Business Enterprise in Salt Production The production of salt is an inherited occupation; and the producers, constituting a special class of the society, known as the Stove Men,* may be dependent undertakers. ^This table is prepared on the basis of an ofBcial report in 1911 by the Department of Finance. " Mongolia annually consumes about 40,000,000 catties of salt. ^ In Sze-chuen, Yun-nan and Kan-su, the quantity is not counted by certificates. Cf. infra, p. 76. * This name is derived from the process of manufacturing salt with stoves. 74 THE SYSTEM OF TAXATION IN CHINA [216 small independent enterprisers or merely laborers accord- ing to the method by which capital is provided. These methods may be summarized as follows : (a) The field monopolists/ In Kiang-su, Shan^si and Sze-chtien Provnices, where this type is used, the salt fields together with the necessary equipment are owned by the capitalists, known as the monopolistic field mer- chants, or, in short, the field monopolists. The relation of the producers, i. e., the Stove Men, to their respective field monopolists are like that of the tenants to their landlords. The Stove Men in this case produce the salt independently, but they are dependent on the field monopolists for a market, the law requiring that the salt be sold only to them. The government, the monopolistic distributors ^ or other purchasers must buy salt from the field monopolists at the fields. Therefore, the producers of this type may be de- scribed as dependent undertakers. (b) The monopolistic distributors. This is a combina- tion of the field monopoly and the monopoly of distribution, or in other words, the monopolistic distributors are at the same time the field monopolists. The monopolistic dis- tributors are related to the producers (Stove Men) in like manner as the field monopolists. But instead of selling the salt at the fields, they distribute it themselves. This type is found in Che-kiang Province. (c) The independent enterprisers. In this case the pro- ducers (Stove Men) provide and own the necessary means of production. Their product is directly sold to the mon- opolistic distributors or other buyers. This type prevails in Feng-tien, Fii-kien and Yun^nan Provinces. ' The monopolists .in Sze-chuen where weM salt is produced are called the Well Monopolists. The type of enterprise is the same. ^ Cf. infra, p. 77. 217] TAXATION OF SALT 75 (d) The mixed type. The Kwang-tung Province adopts the third type. In recent years, the second type has been introduced to certain places. The third type prevails in Chir-li Province, but the producers (Stove Men) may bor- row capital from the monopolistic distributors through the mediation of the salt administrators on the condition that their product shall be sold to the creditors. Capital is de- rived in Shan-tung Province from five sources, namely, the Bureau of Transportation in the case of government trans- portation, the monopolistic distributors as enterprisers, the monopolistic distributors as creditors, the partnerships of the producers and the individual producers. In the first two cases the producers are merely wage-earners, while, in the other cases, they are independent enterprisers. Consuinption of. Salt As we have seen, the supply of salt is legally limited in order to secure profits as public revenues. If the salt is not properly distributed, the consumers in some places would enjoy cheap salt at the expense of the consumers of other places, and the profits from salt would be small. In order to fulfil both the social and the fiscal purposes, a plan known as the division of markets {Yin Ti) is devised. According to this plan, the country is divided into a number of salt-consuming territories ^ corresponding to the num- ber of salt-producing provinces.^ As the salt of each salt- producing province is forbidden to be sold in any salt-con^ suming territories except that legally assigned as its market. The assignment of salt-consuming territories is determined by the following three conditions : ( i ) the number of con- 1 Each salt-consuming territory consists of a number of districts under the control of several provinces. 2 The salt-producing provinces are at the same time parts of the salt- consuming territories, because they have consumers too. 76 THE SYSTEM OF TAXATION IN CHINA [218 sumers in the territories; (2) the productive power of the salt-producing provinces; and (3) the facilities of commu- nication between the salt-producing provinces and the salt- consuming territories. The assignment having been made, each district of the salt-consuming territories is expected to demand a certain quantity of salt. To meet the demand, a district may be supplied by several monopolistic distributors or several dis^ tricts constitute the market of a single monopolistic dis- tributor. The subdivision of markets within a territory is subject to change from time to time to bring it into accord with the amount of invested capital of the different monopo- listic distributors. But the subdivision of markets is some- times not followed in certain salt-consuming territories or parts of the salt-consuming territories which are open to the free competition of the common distributors. The Feng-tien salt is supplied to the three provinces of Manchuria, viz., Feng-tien, Ki-rin and Hei-lung-kiang, and a part of Mongolia adjacent to them. The consuming ter- ritories of the other kinds of salt may be found in Ap- pendix B. The Total Annual Consumption of Salt at Present ^ Kind of Salt Number of catties Sze-chuen 550,860,000 Kiang-su 489,688,800 Chi-li 397,498,200 Manchuria 384,000,000 Shan-tung 209,574,400 Kwang-tung 195,482,100 Che-kiang 170,062,000 Shan-si 158,940,000 Fu-kien 77,200,000 Yun-nan 51,230,000 ■ Kan-su 2,258,100 Total 2,686,793,600 ''■Report of the Department of Finance, 191 1. Cf. supra, p. 73. 219] TAXATION OF SALT yj Distribution of Salt By the phrase " the distribution of salt ", is meant the manner in which salt is bought at tjie fields and transported to the chief cities of the salt-consuming territories, ready to be sold to the retail traders. Here are three chief methods of distribution. (i) The private monopoly. According to this method, Yin Piao, literally translated " introductory certificates ", are issued by the Department of Finance to confer on the holders the exclusive right to buy salt at certain or all fields in a certain salt-producing province, and to trans- port the same product to its consuming territory for sale. The sale of product may be carried on by their own shops or by other retailers. This method is further differentiated into two types according as the introductory certificates of a certain salt-producing province are held by a holding part- nership which is a combination of several partnerships, or a number of separate partnerships or individuals. When the right of distribution is monopolized by a holding part- nership, the subdivision of markets within the consuming territory is arranged by the partnerships, otherwise it is determined according to the number of certificates. These monopolistic distributors, whether they are partnerships or individuals, may hold their privileges so long as they pay their royalties according to the agreements, and fulfil any further requirements laid down by the government. (2) The public monopoly. In the salt-consuming terri- tory where this method is adopted, the introductory certifi- cates are held by the Bureau of Transportation.^ The work done by the public salt monopoly may be divided into two types. One type consists of the purchase of salt, its trans- portation and the retail trade. The other type does not in- clude the retail trade. 1 Cf. infra, p. 84. 78 THE SYSTEM OF TAXATION IN CHINA [220 (3) The competitive trade. Whenever the whole or a part of a certain salt-consuming territory is open to free competition owing to lack of applications for the monopoly, a special certificate called Piao is issued to confer the hold- ers with right to buy and'lell salt. This method has two characteristics which distinguish it from the private or pub- lic monopoly, vis., that any person may apply for one or more certificates and that wherever the method prevails, there is no division of markets. From the fiscal point of view, the government always ; tries to adopt the method of private monopoly, if possible, I because the monopolistic distributors pay or promise to pay ; in advance a fixed amount of revenue proportional to the i number of introductory certificates issued to them, irre- i spective of the amoiuit of sale. By this means, the govem- i ment may raise revenues without the investment of public i funds as capital and the assumption of business risk. But 'j sometimes no capitalist applies for the monopoly and somer (times the monopolistic distributors surrender their rights, \ owing to the presence of one or more of the following con- i ditions which make the monopoly unprofitable : (A) The decrease of demand for government salt. This may be caused by the heavy burden of taxation, the competi- tion of smuggled salt or economic depression. (B) The difficulty of land transportation. Where there are nO' railways the cost of distribution sometimes lessens the monopoly profits. (C) The situation of some districts near the salt fields. This offers a good opportunity to the smugglers. (D) The absence of commercial devdopment. Of these four conditions, the first three are met either by the public monopoly or by the competitive trade, while only the public monopoly is resorted to as the remedy of the fourth condi- tion. 221] TAXATION OF SALT 79 The methods of distribution in use at present are given in the following table: Classification of salt by its Methods of distribution producing provinces . f Private monopoly Feng-tien -J^ public monopoly Chi-li Private monopoly J Private monopoly Shan-tung -^ Competitive trade „, . I Competitive trade S''^"-^' \ Public monopoly „. ( Private monopoly ^'^"g-^'^ i Competitive trade Che-kiang Private monopoly _ . . / Competitive trade ^^■^^^^ 1 Public monopoly Kvfang-tung Private monopoly „ , f Public monopoly S^e-d^^e^ t Competitive trade Yun-nan Competitive trade Taxation of Salt Kuan Tsi, a prime minister of the State of Tsi,^ in the Eastern Chou Dynasty, 770-249 B. C, thought that the natural resources of a country should be owned by the state, and created the government monopolies of salt, iron, timber and other minerals as the only source of public reve- nue, because he disapproved taxation as a means of raising public revenues on the following grounds:^ (A) because the productive capital of a country would be lessened by taxation; (B) because any kind of private properties sub- ject to taxation would depreciate in value; and (C) because taxation cannot be disguised. As these monopolies yielded adequate revenues the State of Tsi became the richest and most powerful of all the rival states. Consequently, the salt monopoly continues to be one of the most important sources of public revenue. Salt is now taxed in five ways. First, the stove tax is a tax 1 This state corresponds to the Province of Shan-tung. - See Works of Kuan Tsi. So THE SYSTEM OF TAXATION IN CHINA [222 on land used for salt production. Secondly, the certificate royalty is a tax on the finished product, justified on the ground that the state is the owner of the raw product (salt water). The royalty is levied according to the number of certificates, each of which represents a certain quantity of finished product. Wherever the imposition of a certificate royalty is not adaptable, a lump-sum royalty is substituted. Thirdly, there are various kinds of receipts such as fees from different sorts of public services, rents of public store- houses and other properties, interest on loans of public money, income from surplus salt, profit from money ex- change, fines, etc., etc., which are described by the Depart- ment of Finance as miscellaneous revenues. ''Fourthly, the " dropping to ground " ^ duty is a sort of excise duty levied by a salt-consuming province on the salt of a producing province. Such a duty is imposed on the Kwang-tung salt by Kwang-si, and on the Sse-chuen salt and the Kicmg-su salt by Kwei-chow. This is permitted in order to compen- sate these two poor provinces which have very few sources of revenue.^ Finally, there is an additional price for special purposes. The foregoing forms of taxation are considered the regular taxes. They are supplemented by the exaction of provincial governments. For instance, most- of the provinces treat salt as any other commodity, and lay a li-kin duty ^ on it. Moreover, a compulsory contribution is sometimes paid once and for all by the body of monopolistic distributors in some provinces when the governors are called on to support the imperial government, while, in I other provinces, different sorts of special tax are levied for ! different purposes, e. g., public education, orphan asylums, poor relief, etc. The rates of these taxes differ from prov- 1 By the phrase '" dropping to ground " is meant the place of con- sumption. 2 See infra, pp. 103-105. 223] TAXATION OF SALT gl ince to province. Mr. Chang Chien ^ estimates the real burden of each catty of salt in the following figures : Classification of Salt by its producing provinces Composite Rates of the Various Taxes Kiang-su over .033 tael silver Kwang-tung .024 - .025 tael silver Yun-nan " .033 tael silver Chi-li .02 " Shan-si .017 - .018 tael silver Sze-chuen " " " Che-kiang .015 - .016 " Shang-tung " " " Fu-kien under .01 " Manchuria " " " Average 018 tael or $.027 silver. Smuggling of Salt As we have seen, the distribution of salt is legally re- stricted, competition is allowed only in Shen-si, northwest- ern Kan-su and the frontier districts of North Chi-li and North Shan-si where the Mongolian salt is consumed. But illegal competition is found practically everywhere. Such is (a) the competition between private salt and govern- ment salt; (b) the competition between different salt-pro- ducing provinces whose distributors try to sell their salt beyond their respective consuming territories; and (c) the competition between different monopolistic distributors in ^ Mr. Chang Chien, novir about 70 years of age, is one of China's most learned scholars as well as one of its greatest practical men. He never accepted an appointment from the Manchu government. He devoted his time to industry, commerce, education and various social activities, and has become the most influential and popular man in South China. He is a native of Kiang-su, the greatest salt- producing province, and is the greatest living authority on the salt industry. President Yuen Shi Kai, who holds him in the greatest re- spect, has appointed him President of the Department of Agriculture, Industries and Commerce. Mr. Chang has accepted this post. 82 THE SYSTEM OP TAXATION IN CHINA {^224. the same province who try to sell salt beyond their as- signed markets. Any competitor other than the monopolist of a certain market is regarded as a smuggler^ of that market, and his salt, as smuggled goods. Therefore, a smuggler may be a tax-evader or a monopolist, sometimes even government salt being regarded as smuggled goods. The smugglers take advantage of the following condi- tions: (i) the contact of markets with one another; (2) the evasion of taxation; (3) the different tax rates in the different provinces; (4) the difference in the cost of pro- duction in the different provinces ; ( 5 ) the difference in the cost of transportation ; (6) the pressure of the field monopo- lists on the producers (Stove Men), i. e., low stove price; ^ (7) the pressure of the monopolistic distributors on the consumers, i. e., high market price; ^ (8) the pressure of the monopolistic distributors on the field monopolists, i. e., low buying price; (9) the secret reduction of tax rates on the part of some administrators in the hope of making up the legal amount of revenue by permitting the producers to make large sales at low rates when difficulty is experienced in selling the proper amounts at the legal rates; (10) the dishonesty of the administrators and detectives ; and (11) the inefficiency of the administrators. So long as one or more of these conditions exist, it is impossible for the gov- ernment to check the smuggling of salt even by inflicting heavy penalties on the smugglers.* 1 Any poor person over sixty or under fifteen years old has the right to buy and sell not more than forty catties every day without being treated as a smuggler. 2 Cf. infra, pp. 87-88. 3 Ibid. * According to the Penal Code of the Tsing Dynasty, no penalty can be inflicted on a person unless the person himself and his salt are both taken as the evidence of smuggling. 225] TAXATION OF SALT 83 Administration of the Salt Monopoly (i) The administrators. At the beginning of the Tsing Dynasty, commissioners were annually appointed by the Emperor to all the salt-producing provinces except Sze- chuen and Yun-nan. All the administrative officials con- nected with the salt monopoly were under the direction and supervision of their respective commissioners, leaving those in Sze-chuen, Yun-nan and Kwei-chow to be con- trolled by their own governors. Somewhat later it was found that the commissioner in a province was neither so efficient in controling administrative officials nor so familiar with the local conditions as the governor and that it was difficult for the commissioner to discharge his duties satis- factorily. During the period 1660- 1860 the governors superseded the commissioners one after another as the supervisors of the salt monopoly. The changes came in 1660 (Kwang-tung) , 1723 (Pii-kien), 1778 (Shan-si), 1821 {Che-kiang, Shen-si, Kan-su), 1837 {Kiang-su, Shan- tung), and i860 (Chi-li). Under the governor is the Presi- dent of the Salt Department. The latter is the active administrator controling a number of salt administra- tors and the district magistrates who participate the ad- ministration of the salt monopoly. The salt administrators who are specially appointed for this function, consist of two classes, the departmental secretaries and the field (or well) administrators. The departmental secretaries help the president to discharge his duties, while the field adminis- trators enforce the regulations governing the production and sale of salt at the fields and collect all the taxes on salt. In addition to these two classes, the salt departments of a few provinces, like Kiang-Su, have one or more vice-presi- dents and a few inspectors. Each vice-president takes charge of a number of fields in the province and the duty of the inspectors is to see whether the actual quantity of salt 84 THE SYSTEM OF TAXATION IN CHINA [226 passing by their bureau, situated near the fields, corresponds to the amount of purchase as written in the " bill of draw- ing salt ".^ On the other hand, the district magistrates are responsible for the amount of sale assigned to their re- spective districts, and for the capture of smugglers. As the President of the Executive Department, the circuit gover- nors, the prefects and the superior magistrates are the superior officials of the magistrates, they assume joint re- sponsibility with respect to the duties of the magistrates. It is evident that the governor and practically all of the officials under the Executive Department and the Salt De- partment of a province are directly or jointly responsible for the administration of the salt monopoly. For a deficit of the legally fixed amount of revenue, they are subject to forfeiture of salary, degradation, removal from office or confiscation of property, the penalty varying according to the amount and term of deferred payment, as well as the direct or joint responsibility which the different ranks of officials assume. Again, the officials may be promoted or recorded for promotion, whenever they are able, by an in- crease of demand for salt, to secure more than the legally fixed amount of revenue. (2) The administrative machinery of public monopoly. Whenever the public monopoly of distribution prevails, two types of bureau are especially established, besides the gov- ernment storehouses. The first is called the Bureau of Transportation, and the second, the Bureau of Wholesale. The bureaus of transportation, of which there may be one or two in a province, are established in a salt-producing province. The bureaus of wholesale are established in the principal cities of the consuming provinces. Both types of bureau generally have a few branches. Candidates for cir- 1 Cf. infra, pp. 85-86. 227] TAXATION OF SALT 85 cuit governorships are appointed by tlie governor of a salt- producing province to be the presidents of these head bu- reaus, while candidates of district magistrates are appointed presidents of branch bureaus. As their ranks are almost or exactly equal, the presidents of the Salt Department, the Bureau of Transportation and the Bureau of Wholesale are unwilling to be subject to one another. As a result there is no co-operation and the management of public monopoly is generally inefificient. When the Bureau of Wholesale is not required to sell its salt to the merchants, the magistrates are its selling agents. So each magistrate has to carry a certain quantity of salt to his district, and to open a few govern- ment salt shops. (3) The regulation of transportation. In those prov- inces where the private monopoly of distribution is adopted, two schemes are devised to prevent smuggling. One is to inspect the amount of purchase near the fields, and another, to prescribe the waterways of transportation. For these purposes, " introductory certificates ", " bills of drawing salt " and " waterway tickets " are provided. The intro- ductory certificates issued by the Department of Finance, were formerly brought by the commissioners to the prov- inces. Since 1748 the governor of each salt-producing province has sent an official tO' Peking to apply for the re- quired number of certificates for his province. On each certificate the following articles are written : (a) The certificate represents the quantity of salt thereon stated. (b) Salt carried with an old certificate is considered as smuggled goods. (c) Salt carried without the certificate is considered as smuggled goods. (d) Any one who counterfeits the certificate is put to death. 86 THE SYSTEM OF TAXATION IN CHINA [228 (e) Any merchant who' keeps the certificates over ten days after the sale of salt is beaten forty blows. (f) The name of an assigned market. The certificates are distributed among the monopolistic distributors by the President of the Salt Department in a province. Then the distributor may take his certificate (or certificates) to the inspector whose duty it is to clip the cer- tificate at one corner and to hand it to the President of the Salt Department for stamping seal. The latter, then, issues a bill of drawing salt to the distributor. This bill is written that a certain quantity of salt may be bought by Mr. So-and-so at a certain field during a certain period. The quantity of salt bought with this bill must be inspected by an inspector of the Bureau of Inspection near the field. This bill, together with the inspector's report, having been submitted to the President of the Salt Department for ap- proval, is kept in the bureau, while the introductory cer- tificate is returned to the distributor. Whenever the salt is ready to be transported to an assigned market, a waterway ticket is given to the distributor permitting the salt to be carried tmmolested from place to place, provided that it is carried by the prescribed waterway and to the destination, as written on the ticket. But the waterway ticket and the introductory certificate are subject to examination by the district magistrates on the voyage, and must be returned to the Salt Department through the magistrate of the con- suming district within ten days after the salt has been sold. If either of these documents were not carried with the salt, or any article of the regulations stated on them were vio- lated, the salt would be seized as smuggled salt. The method of competitive trade may be illustrated by the practice in the North Hwai fields of Kiang-su Province. In each field there is a government shop, at which any person is allowed to buy salt. When the salt is being carried 229] TAXATION OP SALT %y through the exit of the field, the carrier must pay to the Bureau of Taxation there the required amount of tax on the quantity of salt he has bought. In return for the pay- ment, a certificate stating the carrier's name and native place, the quantity of salt, and the name of the consuming district is given to the carrier. He is allowed to sell the salt in another district with the permission of the magis- trate of the district which he first intends to supply. But he is forbidden to sell the salt beyond the territory which adopts the method of competitive trade, and to carry it without the certificate. The certificate must be returned, after the sale, to the Salt Department through the magis- trate of the consuming district. (4) The regulation of price.. There are two kinds of legal price, namely, the stove price and the market price.^ The stove price is the purchasing price from the producers known as the stove men. It is fixed according to the cost of production and the quality of the product. The cost of production in the dififerent provinces depends chiefly on the cost of living of the stove men, and the method of produc- tion. Secondly, the market price is the selling price to the retail traders. This is based on the purchasing price, the cost of management and transportation and the taxes. In gen- eral, the farther the market is from the salt fields, the more its consumers must pay for the salt. Theoretically, the ob- ject of legalizing these prices is tO' protect, on the one hand, the producers against the field monopolists and the monopo- listic distributors and, on the other hand, the consumers against the monopolistic distributors. In practice, however, the terms are favorable to the monopolists. But the regu- lation has not been renewed since the reign of Emperor Tao 1 The term " market price " is used parallel with " stove price " to indicate the legal price of salt put in market instead of the economic price determined by the laws of supply and demand. 88 THE SYSTEM OF TAXATION IN CHINA [230 Kwang, 1821-1850. Therefore, for more than a half-cen- tury, the producers and the consumers have been entirely at the mercy of the monopolists. General Features of the Salt Monopoly The foregoing discussion should be supplemented by some general considerations. Especially worthy of notice is the relation of the monopoly to the public welfare, the defects of the taxation system, and the present status of the monopoly. (i) The pressure of the monopolistic distributors upon the actual producers (Stove Men) is of three kinds. The first is that the purchasing price is fixed by the administra- tors at the expense of the actual producers. Then extra large tubs or baskets are used, when the price is fixed in terms of a tub or basket. The third method is to raise the value of money. Where the fields are monopolized by the field monopolists who are subject to the pressure of the monopolistic distributors too, the actual producers suffer both directly from the field monopolists and indirectly from the monopolistic distributors. The actual producers can- not escape the pressure, because they are compelled by law to continue their pursuit and because they are not acquainted with the agricultural arts or with other pursuits. (2) The pressure upon the consumers is as great as that upon the actual producers. Take the Kiang-su salt for ex- ample. As means of transportation are very good within the consuming territory of this salt, the price should be low. On the contrary, the retail price is from sixteen to twenty times the cost of production (the purchasing price from the actual producers) . According to Mr. Chang Chien's ^ record which appeared in the Eastern Times, Shanghai, 1 Cf. supra, p. 81, note i. 231] TAXATION OF SALT gg January 4th, 1913, the retail price of this salt is thirty cash ^ in the producing districts ; fifty to sixty cash in the farther districts in Kiang-su Province; over one hundred cash in Arir-hwei Province; over one hundred and ten cash in Kiang-si Province; and over one hundred and twenty cash in Hu-peh Province. At first, the pressure falls on the con- sumers by raising the cost of living. Ultimately, the pres- sure must also be felt by the landlords and the enterprisers. But as the rise of wages is always slower than the increase of salt price, the laborers suffer the most, though the in- evitable effect of dear salt is the retardation of the progress of the whole community. (3) The treatment of tax-evaders is very unjust. The poor people who smuggle salt are sentenced to imprisonment or death. But the administrators, the monopolists, and the carriers have a right to evade taxation without punishment. For instance, the monopolists of the South Hwcd fields in Kiang-su Province in practice sell over seven hundred catties of salt for each six hundred catty certificate. In the second place, each vessel or wagon always carries a certain quantity of untaxed salt, known as the " extra salt ". The administrators en route often take a certain quantity of the " extra salt " called the " merit salt " without paying the price. (4) The salt monopoly is very productive. It yields almost one-fourth of the annual tax revenue.^ But the pos- sibility of increasing the productivity of the tax is very slight. For, to increase the rate, keeping the production quota at the same figure, would be to induce more smug- 1 The legal rate of exchange is that one thousand cash is equal to one tael of silver. But the market rate of exchange fluctuates greatly at different times and places. 2 According to the budget of 191 1, the amount is about 46,312,355 taels. go THE SYSTEM OF TAXATION IN CHINA [232 gling. On the other hand, it is impossible to increase the production quota, for the additional salt could not be dis- posed of because of the competition of the smugglers. The administration of the monopoly is uneconomical; in 1909 and 19 10 it consumed about twelve per cent of the average annual return. Further, the tax rates are different in dif- ferent provinces and at different times ; and so this form of taxation is very unjust and uncertain. In the last place, the lack of uniformity in the process of collection and the varieties of supplementary charges in the different provinces make the system very bad. \Mr. Chang Chien ^ says, " I cannot see into the complications, though I have investi- gated these intricate methods of \:ollection for twenty years. But it seems to me that such local practices are not worthy of existence." 1 (5) The method of large-scale production has never been adopted in any salt-producing province. Everywhere salt is produced by the actual producers (stove men) using primitive methods. The so-called field monopolists are in- terested only in securing a share of the monopoly profit of the monopolistic distributors and dO' nothing toward the improvement of production methods. The lack of modem methods is responsible for the high cost of production such as that found particularly in the South Hwai fields in Kiang-su Province, the bad quality of salt as in Shcm~si, Shen-si or Kan-su Provinces and the decentralization of fields as in Fu^kien Province. A still more important effect of the present system is the inability of the government to control the smugglers whose existence strikes at the very heart of the whole system. (6) The assignment of a particular salt-consuming terri- tory to a particular salt-producing province inevitably raises 1 Cf. supra, p. 81, note i. 233J TAXATION OP SALT 91 two intricate problems. First, the equilibrium of demand and supply of the different salts cannot be preserved. For instance, the salt of the South Hwcd fields in Kicmg-su Province has a demand greater than the supply, while there is an oversupply of salt of the North Hwai fields in the same province. Assuming the absence of smuggling, the consumers must decrease consumption and pay higher prices in the former case, while the monopolists who look for maximum profits would prefer to waste the surplus products rather than to sell all their products toO' cheaply in the latter case. In both cases the waste is due to the legal re- striction of markets. Fortunately, the problem is solved by the smugglers^_/^ the second place, the demand and supply in partiodrar places cannot be adjusted even under the protection of private monopoly. Two extreme cases may be cited. The protected markets in a territory which is situated far from any salt field, and where the means of transportation is very difficult, have never been sup^ plied by the monopolistic distributors. On the other hand, those markets within a short distance from any salt field are oversupplied due to the competition of smug- gled salt. In both cases the government is obliged to take up the work of distribution. Thus the monopolistic distributors are induced to supply only those places which are neither too far from, nor too near to the salt fields, and where the means of transportation are fairly convenient. In a few years the salt fields will be easily accessible to all sec- tions of the country, for the resources of salt are well dis- tributed by nature and railway development is rapidly pro- ceeding. Of course, railway rates will have to be properly adjusted. Under these new economic conditions, the monopolistic distributors will be subjected to severe compe- tition, which they may not be able to survive. But this does not mean that the salt monopoly is doomed. A combined g2 THE SYSTEM OF TAXATION IN CHINA [234 monopoly of both production and distribution might be very successful and might prove to be a highly desirable institu- tion in a transition period in the industrial devdopment of China. CHAPTER V Taxation of Commodities The Regular Customs (i) General considerations. The customs duty is a genera] excise tax on merchandise. It finds its origin as far back as the Western Chou Dynasty (i 12-771 B. C.) It was originally levied not for a fiscal, but for a regu- lative purpose, vis., in order to check the progress of commerce in favor of agriculture. This is because both | economists and statesmen at the time thought that agricul- ture was more fundamental and important than other pur- suits. But, at the beginning of the Western Han Dynasty (206 B. C.-6 A. D.), it was realized that, in spite of the tax, commerce had progressed. Nevertheless the customs duty was retained, so that, for centuries, the revenue pur- pose has been primary. At present, custom-houses have been established on the seaboard, on rivers, inland water-ways, land routes and land frontiers. They are called the Regu- lar Customs in order to distinguish them from the Mari- time Customs. The jurisdictions of the two systems some- times seem to conflict. Thus commodities carried by sailing ships are taxed by the Regular Customs, while commodities carried by steamers pay their duties to the Maritime Cus- toms. Formerly, there were thirty-four customs-houses (branches not included) under the control of the Depart- ment of Finance. Besides these, a number of customs- houses which was formerly under the control of the Depart- 23s] 93 94 THE SYSTEM OF TAXATION IN CHINA [236 ment of Public Works has been turned over to the Depart- ment of Finance in recent years. At present, there are about twenty-seven important customs-houses as given in the subjoined table. Location of Custom Houses Name Location Tsung-wen Gate Peking Newchwang Feng-tien Province Tientsin Chi-li " Chin-wang-tao " " Kalgan Che-foo Shan-tung " Kiao-chow " " Lin-ching Kwei-hwa-ching Shan-si " Sha-fu-kou Shanghai Kiang-su " Hwai-an Yang-chow " " Feng-yang An-hwei " Wuhu Kiukiang Kiang-si " Gung Foo-chow Fu-kien " Hang-chow Che-kiang " Wen-chow Han-yang Hu-peh " Wu-chang " " King-choy " " Sun-chow Hu-nan " •Chungking Sze-chuen " Canton Kwang-tung " Tai-ping Kwang-si " (2) Subjects of taxation. Almost all of the regular cus- toms levy duties on merchandise which is classified into four classes, namely, clothes, food-stuffs, articles of com- mon use and sundry goods. rThis does not include the tax- ation, as laid by certain customs, on carts, cattle, brokers, 237] TAXATION OF COMMODITIES 95 conveyance of real estate, oil shops, wine shops, salt, bam- boo, timber and teaj Most of the customs on the seaboard or on inland waterways also levy port dues (Chuan Liao) on junks. At some customs, the following exemptions are made: (A) In the case of junks. (a) Junks carrying government rice or other pro- ducts. (b) Junks carrying rice, bought for famine relief' and soldiers' pay (exempt only in Kiang-su Province) . (c) Junks carrying rice or wheat (at certain cus- toms) . (d) Fishing boats sailing along the sea coast. (e) Small boats less than five feet wide. (B) In the case of goods. (a) Copper, lead, tin and other articles bought for government use. (b) Rice and other cereals bought for famine relief. (c) Rice and other commodities going out of Peking through the Tsung-wen Gate. (d) Rice or wheat (at certain customs). (e) Rice for local consumption, passing by the Yang- chow customs, Kiang-su Province. (f) Pearls and precious metals passing by the Caiv- ton Customs. (g) Food products and other articles necessary for the use of sailors on any vessel. (h) Any article borne by a person over his (or her) shoulder or on his (or her) back, (i) A certain quantity of native produce of North China, brought southward in the government rice junks. ^6 THE SYSTEM OF TAXATION IN CHINA [238 (j) Tribute from the nobles and lamas of Monoglia, Thibet, etc. (k) Imperial presents to the nobles and lamas of Mongolia, Thibet, etc. (3) Rates and revenues. The rates on both junks and merchandise are specific. In the case of junks, the number of masts, the number of stores or the width of the junks is taken as the basis of rate-making. At a given customs, rates vary not only as the different classes of junks, but also' as the different size of the same class. Furthermore, junks of the same class and of uniform size pay different amounts of port dues at different customs. In the case of merchan- dise the determination of the rate is based on four condi- tions, namely, the place of production, the degree of utility, its market price, and the distance of transportation. These are taken into consideration for the following reasons : ( i ) the quality of an article differs with the different places of production; (2) the utility of an article is more or less adapted to the habits of the consumers in different places ; and (3) the cost of transportation is directly proportional to the distance^ It is evident that a higher rate should be charged on an article of better quality, more adaptable to the habits of con- sumers in a certain locality, paying cheaper cost of trans- portation. With this end in mind, rates are calculated on different units — weight, length, piece, roll, sheet, suit, pair, volume, head, basket, jar, etc. — according to the nature of goods subject to taxation. At some customs, a lump sum is levied according to the quantity of goods, measured either by the volume of the junk or by the size of the cart as the case may be. The rates as such are fixed by the Department of Finance and are subject to change from time to time by the department. In addition to the regular duty, a sup- 239] TAXATION OF COMMODITIES 97 plementary duty of ten per cent of the regular one is levied by almost all of the customs under the name of meltage fee,^ transportation fee,^ and others. The amount of revenues drawn from the different cus- toms is composed of two parts, the regular revenues and the surplus revenues. Both parts are fixed by law. The whole of the regular revenues and at least sixty per cent of the surplus revenues must be paid to the Department of Finance. It is required that deficits shall be made up by the administrators out of their private purses as a penalty for their inefficient administration. But if there is any surplus, the total sum collected must be sent to the treasury of the Department of Finance. (4) Mode of levying duties on goods. The first step taken by the customs officials in levying duties is to post the existing rates of dutiable goods on the boards erected at the markets, and to request the local authorities to print the same rates in pamphlets for the use of shopkeepers. As soon as any merchant hands in a report of his goods, the customs officials must examine the goods and calculate the amount of duty. The merchant has the right to put the money into the " collection box " himself without any re- straint or interference by any customs inspector or watch- man. One shopkeeper is not allowed to pay tax for others, except at the Tsung-wen Gate of Peking, when the goods arrive earlier than the owner. In return for his payment, the merchant is entitled to a red receipt, of which a duplicate is sent to the Department of Finance for investigation. This receipt is clipped at its corner, and stamped on its face with a written time and date of passing, when it is ex- hibited as the right to pass the customs lines. Duty-paid 1 This fee is charged for the loss of silver in melting. 2 This fee is charged because the collected revenues must be trans- ported. q8 the system of taxation in china [240 goods are allowed to pass twice a day. It is further required that produce from certain localities pay duties at particular customs-houses. For example, any merchant carrying oxen, sheep or goats, camels, horses, or skins overland from Kiata, Ku-lon, etc. (Mongolia), to the interior must pay duties at Chan-tsia-kou rather than at Kur-pei-kou. Secondly, any person carrying goods, along the Yang-tze River, from North Kiang-su or Afirhwei Provinces to the City of Soo-chow (South Kiang-su Province) or the City of Hang-chow (Che-kiang Province) must pay duties at the Wu-siie Customs,^ instead of any customs on the seaboard. Thirdly, produce from Fu-kien, Che-kicmg, Feng-tien, and Shan-tung Provinces, transported along the seacoast to Shanghai is taxed by the Shanghai Customs. Fourthly, produce carried from Fn^kien, Kwang-tung or Kiang-si Provinces to the City of Soo-chow or the City of Sung- kiang ( South Kiang-su Province) , by the Che-kiang River, is taxed at the P^i-jw'Customs,'^ while that from the latter cities to the former provinces, at the Che-hai or the Pei-sin Customs. Whenever any attempt to conceal the goods, or to make an incorrect report or to escape payment by taking another route is found, it is treated as an act of evasion. Such an act is punished by a confiscation of half the quan- tity of goods and a punishment of the merchant according to the civil code, unless the amount of duty evaded is very insignificant (only a few taels) , when an additional duty of from two to five times the regular duty is imposed as a fine. (5) The administration of the regular customs.^ Every customs, together with its branches, is superintended by an official, called the Superintendent of Customs. The super- intendent may be ^ Cf. infra, p. 99. 2 Since igoi many regular customs are under the control of the Inspector General of the Maritime Customs. 241 J TAXATION OF COMMODITIES 99 (A) An Imperial High Commissioner of Customs, as the Superintendent of the Tsung-wen Gate (Peking), that of the Left-Wing (Peking), or that of the Right-Wing (Peking). (B) A Manchu general, as the Superintendent of the Foo-chow Customs. (C) An Imperial Commissioner of Silk-manufactures, as the Superintendent of the Si-sin Customs (Nav^king), that of the Wu-sUe Customs (Chin-kiang) , or that of the Pei^sin Customs {Hang-chow). (D) A Commissioner of Customs, appointed by the Em- peror upon the nomination of the Department of Fin- ance, as the Superintendent of the Hwai-an Customs (Hwai-an),^ that of the Canton Customs, that of the Tien- tsin Customs, that of the TsaiAr-liang-ting Customs {Tung- chow) f that of the Chang-tsior-kou Customs {Kalgan) , or that of the Sha-f-w-kou Customs (a boundary town between Shan^si and Mongolia). (E) A Circuit governor (or lower local authority), as the superintendents of all the customs, except those men- tioned above, and the Pei-hai Customs^' (superintended by the Superintendent of the Canton Customs). The chief duties discharged by the superintendent are as follows : (A) To collect the duties mentioned in the preceding section. (B) To keep an " entry book ", a " collection account " and a " total receipt account ". An entry book is a book in which the merchants enter their goods themselves. A col- lection account is a record of payments from goods as en- 1 Hwai-an is a prefecture in Kiang-su Brovance. 2 Tung-chow is a river port of Peking. * A port on the Canton River. lOO THE SYSTEM OP TAXATION IN CHINA [242 tered in the entry book. Duplicate copies of the collection account and the total receipt account are kept in the customs and in the superintendent's residence. (C) To deliver the collected revenues to the Department of Finance once every season (at some customs), or once every half-year (at other customs), or once a year (at still other customs). (D) To prohibit the trade of the following contraband goods : gambling instruments, salt, tea, opium, saltpetre, cast iron and other munitions of war. (E) To issue licenses to junks trading along the sea- coast or with foreign countries, and to cancel the same upon the return of the junks. (F) To restrict the exportation of rice, raw silk, satin and cast iron necessary for home use. With respect to rice and cast iron, each junk is allowed to carry an iron pan for cooking rice, an iron axe and a necessary amount of rice corresponding to the number of sailors. Of silk, satin or coarse raw silk, each vessel may carry a cer- tain quantity according to its destination to use in exchange for foreign goods ; the exportation of fine raw silk is abso- lutely prohibited. The maximum quantity to be carried an- nually by each vessel is as follows : (a) From Kiang-su or Che-kiang Provinces to Japan, 3,960 catties (33 rolls) satin, for 1 ,200 catties or less of which may be substituted coarse raw silk, (b) From Fii-kien or Kwang-tung Provinces tO' Annan 300 catties coarse raw silk, (c) From Che-kiang Province to the Straits Settlements, 2,000 catties coarse raw silk, (d) From Kwang-tung Province to Sweden, 10,000 catties coarse raw silk, (e) From Fu-kien Province to any place abroad, 2,000 catties coarse raw silk. (G) To prevent unlawful acts of the inspectors or watch- men. For these duties, especially the first three, the superin- 243] TAXATION OF COMMODITIES loi tendent is responsible to the Department of Finance. There- fore, the entry books and accounts of every customs must be submitted to the department to be audited once a year. If the superintendent is a commissioner whose term is one year, he must return to the department with the " entry books " and accounts within a fixed period, after the expiration of his term, the time being arranged according to the distance of the customs from Peking. If the superintendent is a local authority, the " entry books " and accounts must be submitted through the governor or governor-general, once a year, although his term is not limited to one year. If the " entry book " or the " red receipt duplicates " are not sent to the department at the right time, the superintendent is fined a half-year's salary. If any merchant is excluded from the right to enter his goods in the " entry books " himself, or to receive a red receipt, the superintendent is fined one year's salary. In the case of a deficit in the revenues the superintendent is punished by a forfeiture of one year's sal- ary, if the deficit is less than five per cent of the legal amount; by degradation to lower and lower rank suc- cessively, if over five per cent, ten per cent, twenty per cent, thirty per cent, or forty per cent; and by dismissal if over fifty per cent. To cover the cost of collection he is per- mitted to retain the supplementary duty or, if a supple- mentary duty is not levied, to deduct ten per cent out of the surplus revenues. (6) General features of the regular customs duties. The most interesting feature is the fee system. According to the report of the Investigation Committee sent by the De- partment of Finance in 1906 to investigate the actual admin- istration of the regular customs, the rates of fees are greater than the rate of the regular duty in all the customs. For example, three or four taels of fees are added to every one tael of duty in the Hwai-an Customs (Kicmg-su Province), I02 THE SYSTEM OF TAXATION IN CHINA [244 the Feng-ycmg Customs and the Wu-hu Customs {An-hwei Province) ; and the amount of fees charged by the Hwair-an Customs on timber is ten-fold the amount of duty. As the total sum of fees and duty is sometimes too great to be borne, the corrupt administrators often reduce the regular duty in order to get the sufficient amount of fees for their own account. This necessarily involves five grave defects, namely, unproductiveness 'owing to the secret reduction of duty ; various losses due to interference with trade ; and in- justice, uncertainty and inconvenience because of the dis- crimination involved in the bargain between the administra- tors and the merchants. Another corrupt practice is the over-supply of clerks and servants. Each customs has two or three thousands of these persons. They are simply para- sites receiving very low wages and trying to take advantage of the merchants. In regard to the regular duty, four points are worthy of mention. First, it should be more produc- tive, as it yields only 6,990,845.925 taels according to the budget of 191 1. Secondly, it checks the development of in- ternal commerce, because commodities carried by the sailing ships — and most of the internal commerce is conducted in this manner — are subject to the repeated taxation of sev- eral successive customs. Goods carried by steamers pay duty to the maritime customs once and for all. Thirdly, the burden on those goods carried by sailing ships is by no means equal. This is due partly to the difference of trade routes and partly to the lack of uniformity regarding to; the articles taxed. On the one hand, some goods pass more and the others fewer customs. On the other hand, some customs restrict themselves to a levy of either port dues or customs duties, while the others collect both of them. Further, the taxation of food-stufifs as well as articles of enjoyment and the difference of tax rates and regula- tions oppress the people with different degrees of severity. 245] TAXATION OF COMMODITIES 103 Finally, the pre-determination of the annual return leads to the concealment of revenue. This is done in three ways. One way is to report less than the collected amount in order to save the remainder to remit as part of the defi- ciency amount required to be paid to the Department of Finance. Another way is to create a sinking fund for a year of deficit. The third is to keep the surplus revenue for provincial purposes, lest the Department of Finance should know the growth of revenue, and increase the fixed amount. The L-hkin Duty ^ (i) General considerations. The Tai^ping Rebellion broke out in 1850; and from that time one city after an- other fell into the hands of the rebels. Owing to the fall of Nanking and Soo-chow, the two most important cities in Kiang-su Province, in 1853, the government could not levy the land tax in Kiang-su, the most productive of the provinces. The only source of revenue available for mili- tary expenses was the customs duties collected by the Im- perial Maritime Customs at Shanghai. This drove the au- thorities to devise new forms of taxation. Mr. Lay Yi Hien, then leading a military force in the Prefecture of Yang- chow, Kiang-su Province, introduced the " li-kin contri- bution " with a collection bureau at Siii-nU Tsin, a com- mercial town of Yang-chow; and a collection bureau was soon established at Shanghai. The so-called " li-kin con- tribution " is a contribution of one-thousandth of one tael of silver charged as a transit duty on the value of goods. The government thought that this compulsory contribu- tion, or duty, would yield a reliable income; and, in 1854, instructed the governor of Kiang-su to apply it to the whole ^ The general features of this duty are similar to those of the regular <:ustoms duties. I04 THE SYSTEM OP TAXATION IN CHINA [246 province, if possible. During the period 1854-1874, it was adopted by the eighteen provinces of China Proper, and Feng-tien and Ki-rin in Manchuria. (2) Rate and revenue. As we have seen that the li-kin duty means a compulsory contribution of one-thousandth of one tael of silver, charged as a transit duty on the value of goods, it may be called, in other words, an ad-valorem duty of one-tenth of one per cent. But, in practice, the imperial government has never enforced this legal rate because of the necessity for greater revenue than it pro- duced to defray military expenses during the Rebellion and to carry out local improvements afterward. Rates are different from province to province and from time to time. Nor are they uniform in regard to different classes of goods, which are classified, for taxation purposes, into merchandise in general, salt, tea, opium and other staple produce. According to the Institutes of the Tsing Dynasty, the legal rates in the different provinces are one per cent, two per cent, five per cent or nine per cent. But they vary widely in practice. Furthermore, the burden of this tax cannot be measured by the rate alone on a given class of goods, in a given province, at a given time; in addition the number of li^kin stations or barriers en route, which varies with place and time, must be taken into consideration. With respect to revenues, there are no legal amounts to be delivered to the Department of Finance. But this does not exclude it from the right to get a share of revenue by a negotiation with the governors. In order to avoid the great demand and possible interference of the department, the governors keep secret the actual amounts of collected revenues to meet the growing expenditures of their re- spective provinces. Therefore, the amount of collected revenue reported to the Department of Finance is recog- nized by almost every well-informed Chinese to be false. 247] TAXATION OF COMMODITIES 105 (3) The administration. Since the li^kin duty was created for military expenses during the Tai-ping Rebel- lion, it was subject to the absolute control of the gover- nors who were in command of government forces as well as in charge of war revenues. The practice still exists, be- cause the tax has remained after the rebellion as a local rate levied for the purposes of local improvements. For administrative purposes, each province establishes a, chief collection bureau at its capital, a number of branch bureaus at the principal cities, and a number of stations. These stations are situated not far apart, along the different trade routes within the province for taxation and inspection purposes. The administrators are selected by the governor from the candidates for circuit governor, prefect, magis- trate, etc. An administrator is recorded as efficient or in- efficient by comparing the amount of collected revenue. He is not allowed to report a less amount than what he has collected, or to report paid-up duty as deferred payment. Whenever he does either of these things, he is punished for fraud on revenue by removing him from office and rank, and by compelling him to make up the deficit, no matter whether the sum is large or small. But he may deduct ten per cent from the collected revenue as the cost of collection. CONCLUSION Regarded from a theoretical standpoint, the Chinese government is centralized, the several governors being simply the agents of the Emperor. In fact, however, the administration is decentralized, because the governors within their respective provinces are almost independent in the exercise of their powers. For the sake of efficiency and economy, the administration of finance naturally falls in the hands of the governors. As each governor is re- sponsible to the Emperor for his province, he tries his best to develop its financial productiveness by using all the reve- nues at his disposal. From the individual point of view, the governor is loyal to the Emperor. From the national point of view, however, he can be blamed for the neglect of his neighbors. In order to prevent such provincial an- tagonism, the power of financial control is vested in the legislative departments, especially the Department of Fin- ance. Unfortunately, this check has two undesirable effects. One of these is the scrambling of revenues. Thus deficient provincial governments eagerly request the sup- port of the Department of Finance, which, in turn, must depend entirely upon the aid furnished by the richer pro- vincial governments. Sometimes other departments also ask for support from the richer provinces. In all cases, the success in securing additional revenue depends entirely upon the personal influence of the heads of the different departments. Secondly, there is a concealment of revenues which arises from the fact that the governors of the richer provinces are unwilling to share their revenues with the io6 [248 249] CONCLUSION 107 Department of Finance. Such concealment is possible be- cause the department is ignorant of the local conditions. Therefore, the department's powers of appropriation and supervision are merely nominal. If we desire tO' solve the financial problem, we are first confronted with the question of centralizing the administrative powers. But such a question of reorganization will not be solved tmtil the full development of the means of communication. The development of railways will have an enormous in- fluence upon the tax system. As we have seen, the monop- oly in the distribution of salt owes its existence to the diffi- culty of transportation. Furthermore, the change of trade routes due to the development of railways greatly affects the productivity of the inland regular customs. A new plan of levying the excise tax, better adjusted to the new eco- nomic conditions, must soon be devised. Finally, the rail- ways will alter land values, to which the land tax must be ad- justed in the future. A general re-assessment will, there fore, be necessary. Thus it is evident that the political or- ganization and the taxation system now in force in China are fit to survive only so long as backward conditions con- tinue. But it must be remembered that such conditions still exist in most sections of China and that they will be slow to disappear. Radical changes will, therefore, come much more slowly than some may expect. APPENDIX A The units of measure and weight of the Chinese system, used in this work, may be expressed in terms of those of the metric system as follows : One mou is equal to 6tbtu ares. ^ One sznc is equal to ItIwt litres. One caity is equal to 596iinnr grammes. One iael is equal to 27tutis grammes. io8 [250 APPENDIX B The Consuming Territory i of the Chi-li Salt Number of Number of Names and location of the prefecttures prefectures in direct districts and direct districts with or without the province in the province the Chi-li salt Province With With Total ' Chi-li salt Total' Chi-li salt Names ' Location Chi-li*.. II 9 ID 6 Cheng-ta Fu (without) Chao-yang Fu North of the Great Wall (( it ti (without) Tsi-feng Chow f( *t tt (without) Chang - t«a - kau tt (( tt Ting (without) Tu-shi-kau Ting ft tt tt (without) Ta-lun-nor Ting tt tt tt (without) Ho-nan * 9 S s 2 Chang-ta Fu (with) Wei-fay Fu (with) Hwai-ching Fu (with) Kai-feng Fu (with) Chen-chow Fu (with) Sha Chow (with) North of the Yellow River (( (1 it tt t( tt Eastern Ho-nan tt tt a (t Chen Chow It it (with) 1 For markets of different salt-producing provitices see Amendments of the Institutes of the Tsing Dynasty, chaps, ccxxi-ccxxix. 2 The total number of prefectures and direct districts in this and the following tables is taken from Geography of the Chinese Empire (Shanghai, igii), by Professor Tu Chi of the Imperial University of Peking. 2 When the names of places without the Chi-li salt are given it is 251] 109 no APPENDIX B [252 The Consuming Territory of the Shan-tung Salt Province Number of prefectures in the prov- ince Number of direct dis- tricts in the province Names and location of the prefectures and direct districts with the Shan- tung salt ' Total With Shan- tung salt Total With Shan- tung salt Names '' Location Shan-tung. Ho-nan . • ■ Kiang-su'. 10 9 8 10 I I 3 5 3 3 Shang-tung Province (with) Kwei-ta Fu (with) Shu-chow Fu (with) Northeastern cor- ner of Ho-nan Northwestern cor- ner of Kiang-su understood that the other places are supplied with this salt, and vice versa. *■ All places outlying north of the Great Wall are supplied with the Mongolian salt. s Siang-ching, a subordinate district of Shu Chow is not the con- sumer of the Chi-li salt. Wu-yang, a subordinate district of Nan-yang Fu in southwestern Ho-nan is supplied with the Chi-li salt. ^ Su-chow, a subordinate district of Feng-yang Fu, in An-hwei Pro- vince is near to Shu-chow Fu and supplied with the Shan-tung salt. 2 When the names of places with the Shan-tung salt are given, it is understood that the other places are not supplied with this salt. ' Three of the eight subordinate districts in Shii-chow Fu are not supplied with the Shan-tung salt. 253] APPENDIX B III The Consuming Territory of the Shan-si Salt Number of Number of Names and location of the prefectures prefectures in direct districts and direct districts with or the province in the provmce without the Shan-si salt ProTince With With Total Shan-si salt Total Shan-si salt Names ' Location Shan-si' 9 7 10 10 Ta-tung Fu (without) Shau-ping Fu (without) Surrounded by the Great Wall Shen-si . 7 3 5 3 Si-an Fu (with) Chien Chow (with) Pin Chow (with) Tung-an Fu (with) Shing-an Fu (with) Siang Chow (with) Middle part of Shen-si it (t .< « tt tc Southern frontier of Shen-si Southeastern corner of Shen-si Ho-nan' 9 2 S 2 Ho-nan Fu (with) Shen Chow (with) Yu Chow (with) Nan-yang Fu (with) South of the Yellow River & western part of Ho-nan tt tt « tt '^ When the names of places without the Shan-si salt are given, it is understood that the other places are supplied with this salt, and vice versa. 2 According to the Institutes of the Tsing Dynasty, Ta-tung Fu and Shau-ping Fu are markets of the Shan-si salt. * Siang-ching, a subordinate district of Shii. Chow in Ho-nan Province is supplied with the Shan-si salt. Cf. supra, p. no, note S. 112 APPENDIX B [254 The Consuming Territory of the Shen-si or Ka.n-su Salt Number of pre- dumber of direct Names and location of the prefec- fectures in the districts in the tures and direct districts, with province province the Shen-si or Kan-su salt Province With Shen-si or With Shen-si or Total Kan-su salt Total Kan-su salt Names ' Location Shen-si = 7 2 (Shen-si) I (Kan-su) 5 l(Shensi) Han-chung Fu. (Shen-si) Yen-an Fu (Shen-si) Lu Chow (Shen-si) Fung-tsiang Fu. (Kan-su) Southwestern cor- ner of Shen-si Middle section of northern corner of Shen-si Northern corner of Shen-si Western corner of Shen-si Kan-su » 8 S (Kan-su) 6 2 (Kan-su) Ping-liang Fu*. (Kan-su) Ching-YangFu* (Kan-su) Ning-sha Fu* . . (Kan-su) Lan-chow Fuf . (Kan-su) Gung-changFuf (Kan-su) Chin Chow t •• (Kan-su) Tsia Chow f . • • (Kan-su) Eastern corner of Kan-su <( tt Northern corner of Kan-su Northwestern part of the interior of Kan-su Southern part of Kan-su t< tt Southern corner of Kan-su 1 Those places in Shen-si and Kan-su, whose names are not given here are supplied with the Mongolian salt. 2 The Shen-si salt is derived from the Large Piebald-Horse Lake in Ting-hien Hsien, a subordinate district of Yen-an Fu. Ching-tsien Hsien, a district northeast of Yen-an Fu also takes' the Shen-si salt. ' There are two kinds of salt in Kan-su, one being lake salt from the Small Piebald-Horse Lake in Ling-chow, a subordinate district of Ning-sha Fu, another being well salt from salt wells in' Chang Hsien (now a part of Lung-si Hsien) and Si-ho Hsien, which are subordinate districts of Gung-chang Fu. Those places marked with (*) are supplied with lake salt, while the others indicated' by (t), with well salt. 255] APPENDIX B The Consuming Territory of the Kiang-su Salt "3 Number of prefectures in the province Number of direct districts in the province Names and location of the prefectures with or without the Kiang-su salt Province With With Total Kiang-su salt Total Kiang-su salt Names ' Location Kiang-su ' 8 4 3 2 Kiang-ning Fu (with) Hwaian Fu (with) Yang-chow Fu (with) Tung Chow (with) Hai Chow (with) Shu-chow Fu (with) Southwestern Kiang-su North of the Yang-tze River it tt An-hwei .. 8 7 S 4 Hwei-chow Fu Southeastern frontier of (without) An-hwei Kwang-ta Chow Eastern frontier of An-hwei (without) Hn-peh'.. lo 9 I I Sze-nan Fu (without) Southwestern corner of Hu-peh Hu-nan . . . 9 9 4 2 Pin Chow ( without) Kwei-yangChow (without) Southeastern frontier of Hu-nan Kiang-si .. 13 lO I Kwang-sin Fu (without) Nan -an Fu (without) Gung-chow Fu (without) Ning-tu Chow (without) Northeastern corner of Kiang-si Southern Kiang-si tt it tt tt Ho-nan • • • 9 9 5 I Yu-ning Fu (with) Kwang Chow (with) Southern frontier of Ho-nan Southeastern corner of Ho-nan Kwei-chow. 12 4 I Tung-yin Fu (with) Sze-chow Fu (with) Chin-yuen Fu (with) i Li ping Fu (with) Eastern frontier of Kwei-chow tt tt tt tt tt tt ' When the names of places with the Kiang-au salt are given, it is 1 14 APPENDIX B [256 The Consuming Territory of the Che-kiang Salt Number of pre- fectures in the province Number of di- rect districts in the province Names and locations of the prefec- tures and direct districts with the Che-kiang salt Province Total With Che- kiang salt Total With Che- kiang salt Names Location Che-kiang. Kiang-su . . II 8 II 4 3 I Che-kiang Province Soo-chow Fu Sung-kiang Fu . . . Shiang-chow Fu. . - Chin-kiang Fu . . . . Tai-chwang Chow. South of the Yang-tze River <( It tt n U t( ct tt An-hwei .. Kiang-si • ■ 8 13 I I 5 I I Hwei-chow Fu . . . Kwang-ta Chow . . Kwang-sin Fu South corner of An-hwei East corner of An-hwei Northeastern corner of Kiang-si understood that the other places are not the markets of this salt, and vice versa. 2 Shii-chow Fu represents only three of its subordinate districts, namely, Pi-chow, Su-chien and Tsui-ning. Cf. supra, p. no, note 3. " Hoc-feng chow and Chang-lau-hsien, two districts near to Sze-nan Fu are not the Kiang-su salt markets. 257] APPENDIX B The Consuming Teeeiiory of the Sze-chuen Salt "S Number of Number of Names and location of the prefectures prefectures in direct districts and direct districts with or without the province in the province the Sze-chuen salt Province With With Total Sze- chuen salt Total Sze- chuen salt Names ' Location Sze-chuen . 12 12 8 8 Sze-chuen Province (with) Hu-peh^. 10 I I Sze-nan Fu (with) Southwestern cor- ner of Hu-peh Yun-nan* . 14 2 3 Tung-chuen Fu (with) Chao-tung Fu (with) Northeastern cor- ner of Yun-nan u It Kwei-chow 12 8 I I Tung-yin Fu (without) Sze-chow Fu (without) Chin-yuen Fu (without) Li-pin gFu (without) Eastern frontier of Kwei-chow (( (( (( It 1 When the names of places with the Sze-chuen salt are given, it is understood that the other places have not this salt, and vice versa. ^ Hoc-feng-chow and Chang-lau-hsien, two districts near to Sze-nan Fu are also supplied with the Sze-chuen salt. ' Tsien-yih-chow, Nan-ning-hsien and Ping-yi-hsien, three districts south of Tung-chuen Fu are also supplied with the Sze-chuen salt. Il6 APPENDIX B [258 The Consuming Territory of the Kwang-tung Salt Province Kwang-tung. Kwang-si Kiang-si . Fu-kien . Hu-nan . Yun-nan Number of prefectures in the province Total With Kwang- tung salt 9 9 II II 13 2 9 I 9 14 2 Number of direct districts in the province Total With Kwang- tung salt Names and location of prefectures and direct districts with the Kwang- tung salt Names ' Location Kwang-tung Province Kwang-si Province Nan-an Fu Southern Kiang-si Gung-chow Fu . . (( It Ning-tu Chow . . . (1 (( Ting-chow Fu Western frontier of Fu-kien Pin Chow Southeastern fron- tier of Hu-nan Kwei-yang Chow 11 (( Kwang-nan Fu . . Southeastern cor- ner of Yun-nan Kai-hwaFu (( (1 1 Ku-chow-ting, a subordinate district of Limping Fu, eastern frontier of Kwei-chow Province is also supplied with Kwang-tung salt. 259] APPENDIX B 117 The Consuming Terwtory of the Fu-kien or Yun-nan Salt Number of pre- Number of direct Names and location of prefectures fectures in the districts in the and direct districts without the province province Fu-kien or Yun-nan salt Province With Fu-kien or With Fu-kien or Total Yun-nan salt Total Yun-nan salt Names Location Fu-kien. 9 8 2 2 Ting-chow Fu f Western frontier (Fu-kien) (Fu-kien) (Fu-kien) of Fu-kien Yun-nan 14 10 ^ 3 Kwang-nan Fu f Southeastern cor- (Yun-nan) (Yun-nan) (Yun-nan) Kai-hwa Fu f (Yun-nan) Tung-chuen Fu* (Yun-nan) Chao-tung Fu * (Yun-nan) ner of Yun-nan « tt Northeastern cor- ner of Yun-nan it tt 1 Those prefectures marked with (f) are the Kwang-tung salt markets. Those indicated by (*), together with three neighbor dis- tricts, are supplied with the Sze-chuen salt. Cf. supra, p. 115, note 3. A LIST OF SELECTED REFERENCES IN CHINESE Institutes of the Tsing Dynasty (Shanghai; Sth ed., 1909) — Called, in Chinese, Ta Tsing Hui Tien and edited by a board of editors ap- pointed by the government. Amendments of the Institutes of the Tsing Dynasty (Shanghai; Sth ed., 1909) — ^Called, in Chinese, Ta Tsing Hui Tien Shih Li and edited by a board of editors appointed by the government. Inquiry into the Institutions of China (Shanghai, several editions) — The most complete history of institutions of the different dynasties, being called, in Chinese, Wen Hsien Tung Kao or San Tung Kao. Essays on the Institutions of the Tsing Dynasty (Shanghai, 1901) — Comprises a number of essays written by Mr. Wang Ching-Yun, sometime president of the Department of Public Works. This work is called, in Chinese, Shi Chao Tsi Tseng. Works of Kuan Tsi (Shanghai, several editions) ^Published as a special treatise or as a part of the works of Chinese philosophers. Governmental System of the Chou Dynasty, 1122-249 B. C. (Shanghai) — ^Serves as a model of the governmental system in the different djTiasties, being called, in Chinese, Chou Kuan or Chou Li. Memorials in the Reign of Emperor Kwang Shu, 187S-1908. Memorials in the Reign of Emperor Shiian Tung, 1909-1911. 118 [a6o in m& mtvi 0f l^jetxr <^0rli The University includes the following : Columbia College, founded in 1754, and Barnard College, founded in 1889, offering to men and women, respectively, programmes of study which may be begun either in September or February and which lead normally in from three to four years to the degrees of Bachelor of Arts and Bachelor of Science. The programme of study in Columbia College makes it possible for a well qualified student to satisfy the requirements for both the bachelor's degree in arts or science and a professional degree in law, medicine, technology or education in six, five and a half or five years as the case may be. 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