HF350a C5F35 ASIA. '^ - THE TRANSIT DDES. 55 mifortimately received tlie name of " Transit Daes," is more in accord- ance with the spirit of the treaty than the contrary opinion is, no one, I think, will now feel disposed to seriously call in question ; and these lekin taxes, therefore, naturally present themselves for consideration, together with other arbitrary exactions on British commerce. In ^ reality, with the exception of the flagrant cases of goods covered by transit certificate being fleeced notwithstanding, which are mentioned by Mr. Bruce in his despatches, and by Mr. Wade ia his " Memo- randum," the chief complaint has not been merely that the road taxes are levied on goods during their passage through the country, but that our commerce has been oppressed when stationary or otherwise, by taxes under the name of lekin. If it were not for the lekin taxes levied on foreign goods through the instrumentality of the provincial governors, these mighty personages would scarcely have been heard of, and the question of transit dues would never have been mixed up with any supposed interference with their right. The fact of the privi- leges of the provinces being urged as a palliation for the collection of illegal transit dues generally, brings the former into immediate contact with the whole question ; but it has placed them also in a false position in the discussion ; and apart from the consideration that the illegal tax- ation has occurred within the jurisdiction of the provincial governors, they have no right to be brought into the case. When Mr. Bruce was discussing the terms of the Tientsin Treaty with Kweiliang and Hwashua, on 26th June, 1868, it is recorded, in the Memorandum of what occurred, that they desired the addition, at the close of the transit duty and tariff articles, of — " Those shall be referred for the consideration of the governors of the province concerned." The same document relates that Mr. Bruce would not accede to such a demand, and it was negatived. Mr. Bruce evidently perceived that the consent of the provincial governors had nothing to do with the arrangement which the British nation was making with the Emperor of China, and that by allowing the observance of the transit dues engagements to be dependent on the acquiescence of the provincial authorities, would be tantamount to giving them a voice in the government of the empire, which he well knew they did not possess. The experience of Mr. Bruce naturally led him to quite an opposite conclusion to any such theory of provincial independence, for throughout the whole of the previous negotiations, the mandarins had implored his forbearance, on the plea that they could do nothing without the Emperor's permission ; and the Commissioner Yah went even further than this in his letter to 56 PEOTINCIAL GOVEENOKS AND THE TRANSIT DUES. Lord Elgin of 14th December, 1857 (the purport of which was trans- lated by Mr. Wade), and stated, — " No officer of China whatever would " venture to do other than what is pleasing to the Emperor." Mr. Bruce in his letter to Lord J. Russell, 7th April, 1860, wrote on this point as follows: — " Suggestions of this kind are founded on a mis- " apprehension of the position and influence of the Chinese govern- " ment. There are no semi-independent Pashas, nor a feudal nobility " like that of Japan, in China — except in the district occupied by the " rebels, the will of the Emperor is supreme ; and were he to change " his exclusive and anti-foreign policy for a more liberal system, were " he to cease to regard increased intercourse with foreigners as an evil, " and were he to recommend them to the protection and hospitality of " the authorities and populations of the provinces, they would enjoy " in China the same security as the natives of the country itself." This gives a very clear standard of the relations between the sovereign of China and his representatives throughout the empire ; and, more- over, is in perfect accordance with the observed absolute dependence of all officials on the wish and orders of the Emperor. It is hard to see any reason for admitting the dual principal of authority which would be the consequent outcome of the provincial governors' theory. Although there is not a strict analogy between the deceased dual government of the Mikado and the Tycoon in Japan, and the imaginary dual authority of the Emperor and the provincial governors in China, the experience of the inadmissibility of the former shows that nothing approaching to similitude with the Japanese duplex system should be entertained, if we wish to treat with the Emperor of China on the footing of a sovereign power. As Sir Alcock observed in his letter to Prince Knng in January, 1867 — " Of what use, it may be asked, is a " treaty giving the right to trade on payment of certain fixed duties, if " the Emperor's officials in the provinces can at their pleasure increase " these without limit in the passage through the country of the staple " articles ?" The consequences of such a state of things would be brim full of peril to the recognition of the Eruperor's authority over the country called China, by foreign powers. If it were a matter of right that the provincial governments could act independently of Peking, it would be manifest that the Ta Tsing dynasty is not yet paramount in the eighteen provinces, and that the British Government has made a mistake in concluding a treaty with the Manchu Emperor, instead of making separate conventions with the petty sovereignties that hold sway on the PEOVINCIAL GOVEENOES AND THE TEANSIT DUES. 67 coast of CMna. It would be jast as well to warn the Peking Govern- ment against tte fatal effects on its own existence tliat are contingent on its allowing it to be supposed that it cannot command the provincial governors, nor exact implicit obedience from them. As Sir Rutherford wrote to Prince Kung, in January, 1867 — " To plead defects of system " as a bar to any prompt improvement in the observance of treaty "stipulations is to abdicate the sovereign right of an independent state " that they a/re so anxious to uphold, and to justify the intervention of " foreign powers as the only means of effectually protecting the interests " of their subjects." If there be any real difficulty in making the Imperial authority felt and obeyed, such difficulty must be overcome for the sake of its self-preservation. The Emperor has contracted with the British nation to perform certain things, and he is bound to carry out his obligations. If he is unable to perform these things, owing to some inherent or essential defect in his authority in the country over which he is supposed to rule, then, as it is clear he must have known also this self-insufficiency before he signed the treaty, it would follow that he deceived Lord Elgin, and was guilty of a grievous offence against the British nation, by misrepresenting himself to be what he really was not. This, of course, would not invalidate his engagements with the British Grovern- ment, but it would expose him to . receive such condign punishment as we might deem, right to inflict for his deceit in the transaction. If this were merely my own individual opinion, I should hesitate to lay any stress on it, but it rests on the authority of Sir Rutherford Aloock, who doubtless had well weighed the whole question both in China and in Japan. When the Tycoon of Japan declared his inability to protect British subjects from injuries. Sir Rutherford Alcock is reported to have said on that occasion, — " Well, in such case, it is plain that we "have made a mistake in recognising you to be the Emperor of this " country, and we must go settle matters with the Mikado at Osaka." Sir Rutherford, in 1867, expressed himself on this subject to Prince Kung in a somewhat similar fashion, — " It is not so clear that the " Chinese Grovernment cannot at once by a vigorous effort compel its " own officials to obey orders and avoid all violations of treaty provisions " regarding foreigners within their several jurisdictions. — Unless, indeed, " the Central Oovernment can do this, it ceases to exercise the highest " fuMctions of sovereignty, and loses all claim to respect and ohservanee "from foreign powers. It ceases, in fact, to be a goverivment in the true " sense of the term, in ceasing to perform the proper functions of one. To 58 PEOVINCIAL GOTERirOES AND THE TRANSIT DUES. " maintain order and inforce its commands, at least am.ongsfc those - " who hold their commissions from the crown, are both very essential " conditions of existence to a government ; and as regards the last of " these, failure mnst be fatal to its stability whenever foreign powers " are exposed to injury in consequence." The less we are told of the provincial governor theory, after this remarkable expression of international relations, the better will it be for all concerned ; and if, notwithstanding this, any one stiU clings to the false theory, and entertains any misgivings about the relations of the provincial governors to the Emperor, I commend to his attention the following remarkable passage from the Pehing Gazette of 13th December, 1874, in which the governor of Shantung, Ting Pao-chang, one of the most influential Chinamen in the empire, records the estimation he has of his own political relationship with the Emperor of China. — " Ting Pao-chang memorialises on his return from. Kweichow " to Shantung that, as it is five years since he was granted an audience, " he is possessed with a continual anxiety to gaze upon the countenance " of Heaven, as a dog oe a hoese longs foe the sight of his mastee, " and he entreats permission to visit Peking for this ojBB.ce." The Vermillion pencil merely replied to this abject self humiliation of the powerful viceroy. — " There is no need for him to come and have audience !" I submit that nothing further is needed to complete the picture of a provincial governor, as he exists in the political hierarchy of China ; and all the theories that may be invented to discolor the features of the humble subordinate can never obliterate his true character. The Chinese Grevernment have imagined that "the phantasm which they cast in the path of our required adjustment of the transit dues, and which has hitherto led some of us astray, would be of equal eflS.cacy in defeating our demands of satisfaction for a similar violation of international faith in the province of Tiinnan, with which we are all familiar. Happily the Chinese have been driven from their fallacious defences by which they tried to excuse their breach of faith in the last instance. It is a good angary that they will not be allowed to shelter themselves behind similar shadows in their attempts to oppress British commerce by illegal transit dues. MERCATOR.. 29th June, 1876. [ 59 ] THE LEKIN TAXES AI^D THE BEITISH TEEATIES. To the Editor of the " Noeth-China Daily News." Sir, Daring the Congress of Vienna, at one of those brilliant eomieraa- zioni through whose influence so much of the real work of the European political negotiations were accomplished, Lord Castlereagh is reported to have asked the Roman Cardinal, Brcole Consalvi, to tell him the secret of the great diplomatic successes which he had so recently achieved. His Eminence replied, that it all consisted of three words — " Oaleolate la resistenza " (calculate resistance), which he said he always carefully weighed previous to undertaking any affair. I venture to recall this incident, because it would really look as though some of the political wisdom of the acute Italian diplomatist had been wafted from Vienna across Europe and Asia, and had been unsparingly employed at Peking in all the endeavours made by the Foreign Ministers to negotiate successfully with the Chinese Govern- ment, and especially for obtaining the exemption of foreign merchandise from the lekin taxes; only instead of the Cardinal's aphorism being practically applied to "overcome the resistance," it seems to have been developed by theorising,- so that the result has been to "magnify the resistance," and to deter every one, in consequence of imaginary difficulties, from persevering in urging, the Chinese Government to discontinue what the merchants assert to be an unjust taxation on their commerce. If this is not exactly the true picture of , the situation, it is at all events its apparent aspect from an outside point of view ; for until the other day, it might have been said that a truce on the subject of lekin taxes has been declared, and that its consideration had been adjourned 60 THE LEKIN TAXES AND THE BEITISH TEEATIES. sine die by special agreement ; but tbe recent rnmonrs that the German Government were going to insist on the cessation of lekin taxation on foreign merchandise in the revision of its treaty with China, and the more substantial assurance contained on the "Yunnan outrage" blue book, that the whole subject is being firmly grasped by Sir Thomas Wade, with a view of bringing the Peking Government to its senses, offers an encouragement to expect approaching remedial measures for the wrongs we have so long suffered, and it may therefore not be considered inopportune at the present moment, to offer some observa- tions on the subject, in order to show that the merchants still feel unabated interest in its favourable solution, and to justify their having so perse veringly insisted it their reclamations against this unjust tax. It may possibly be remarked that the question of lekin taxes is naturally included in the general case of the transit duties already discussed, and stands or falls with the legality or otherwise of any excess in inland taxation on foreign merchandise over treaty rates. Under ordinary circumstances it would be indeed venturesome to ask any attention to separate observations on the subject of the lekin taxes, but it has been so distinctly laid down in the "Memorandum" on the revision of the Tientsin Treaty so often referred to, that " the lekin and "transit dues are, as far aa we are concerned, of a totally different " character, and that we may fight any augmentation of the latter by "treaty, but that the treaty will not help us against the lekin,'' tha,t such a serious assertion demands special attention. It is not with any desire to identify Sir Thomas Wade at the present day with his former statements that the above assertion it brought under notice, for there is every reason, judging from the last blue book, for believing that he has greatly modified his opinions on the lekin taxes, just as other public men have changed their views on political questions ; and were this " Memorandum " the only record of an appeal to the treaty against lekin being disallowed, there could be no advantage in examining the question in such separate light ; but as the Chinese Government and other persons still maintain, on the strength of the " Memorandum," that the lekin is different from the transit dues, and hence not included in the treaty ; the necessity arises for is being considered separately in order to refute such an assertion, even supposing that the lekin were excluded from the general issue of the transit dues question, I ask permission at the same time to state the case of the lekin grievance as described in of&cial documents, so that there may be no ground for imputing our complaints as imaginary. THE LEKIN TAXES AND THE BRITISH TEBATIES. 61 Sir Thomas Wade in his " MeTaorandum" wrote as follows : — "But "it is of the injary inflicted on their business by non-observance of "article XXVIII that the memorialists one and all complain; and " that the bnrden that has fallen on their trade is hard to bear, no one " will attempt to deny." — " The great weight pressing upon the import " trade of the British merchant is the weight of the lekin contribu- " tion." — " The import trade is not only Obipplid, bat at some points " Paralysed by the lekin." — " Undoubtedly the lekin hits onr own " trade hard ; and for more reasons than one we are justified in crying " out." There are other numerous evidences of the reality of the complaints on the injury done to foreign trade by lekin, set forth in the reports of the Chambers of Commerce, with which every one is familiar ; and the recent disclosures at Shanghai of the levy of these taxes on foreign merchandise within the Settlement, are not the least telling of them. It would be inexpedient, therefore, to accumulate further proof of what every one knows and admits to be true. Now the first impulse which comes to the mind on seeing this picture as drawn by Sir Thomas Wade, of foreign commerce lying crippled and paralysed in the sight of every one, surely is to exclaim — Is such a state of things in accordance with the spirit of the British Treaties, and how is it that such crying evil has been left unredressed for so many years ? Were Lord Elgin and other distinguished statesmen sent out to China to conclude treaties having for their special object to obtain increased facilities for commerce, and which, alas ! have only resulted in its quasi destruction ? What a contrast between such a supposed cataclysm of trade by treaty, and Lord Elgin's letter to Lord Clarendon, of 9th July, 1857, " If our disputes with " the Chinese Empire are to be amicably settled, the concessions which " we obtain must be so ample in substance, and so uncompromising in " form, as to put it out of the power of even that ingenious and "sophistical people to attribute to weakness or pusillanimity a modera- " tion prompted by humanity alone." Can it be supposed for an instant that Lord Elgin, with such fixed impressions, would or could have concluded a treaty by virtue of which the Chinese could jastify themselves for crippling and paralysing British trade in the way we are officially informed is the case by the lekin ? I merely lay stress at present on such a state of affairs being opposed to the spirit of the British treaties with China, because it is no small matter being able to point out that onr demands are in accordance with the spirit of our treaties, for it will go a long way to prove that the letter of the treaties is also on our side when we come to examine it. 62 THE LEKIN TAXES AND THE BRITISH TREATIES. Please observe that this appeal to the spirit of the treaties is not novel, or confined to the merchants alone. Sir T. Wade, in a note to his translation of a Chinese document sent to Lord Elgin by Mr. Consul Parkes, relative to Mr. Bruce's going to Peking by the Peiho instead of by the Pehfcang, wrote, " I feel satisfied that our object considered, " the fulfilment of the treaty, not in the letter, hut in the spirit, we should " make a mistake in approaching the capital otherwise than by its " recognised high way." So we have his support in relying on the spirit of the treaty for enlightening one special instance of its application. The Chinese Grovernment even appeal to the spirit of the treaty, and plead that it is a safe basis for judging affairs connected with it. In the Tsung-li yamen's circular despatch of 23rd March, 1872, it is stated, " This is not only the spirit, but the plain language "of the treaty;" and again in the same document, "As, however, in "accordance with the spirit of the treaty;" all of which clearly upholds the propriety of the course we are pursuing. To get, however, a full and clear light of what the spirit of the treaty consists, it will be necessary to go back again to Lord Elgin's time and see the circumstances of its negotiation. When His Lordship came to China in 1867, Mr. Bruce by Lord Elgin's desire addressed a letter on 28th July of that year, to H.B.M. Consuls the different port, " His Excellency wishes you therefore to put yourself in commnnica- " tion with the Chambers of Commerce and leading members of the "mercantile community, with a view of obtaining from them the " information on these and similar points of detail, which they are so " well qualified to give. His Excellency will receive with pleasure " any suggestions of a more general nature bearing on the important "subject of our commercial relations with China." Shortly after this letter was written, when answering an address presented to him by British Merchants at Hongkong, on 8th July, 1857, Lord Elgin stated, " I shall, therefore, at all times listen with attention and respect to " any representation which you may see fit to make to me on those " subjects." In consequence of this, the British Chamber of Commerce at Shanghai wrote to Lord Elgin on the 2nd October, 1857, as follows : — "Inland duties. — At present, and for some time past, considerable extra " duties have been levied in the interior on goods and produce in "transitu. The Chamber cannot complain of war taxes levied fw the " exigencies of state during a period of civil war, lut it is of opinion that " to cheah extortion as far as possible, the inland duties chargeable should " be specified in a new treaty." THE LEKIN TAXES AND THE BRITISH TEEATIBS. 63 There can be no exception taken to the fact here laid bare, that the Shanghai Chamber of Commerce at this early period directed Lord Elgin's attention to the lekin or war taxes ; and on the 18th November, 1857, Messrs. Jardine, Matheson & Co. and other merchants of Hongkong wrote as follows to His Lordship, in a similar strain : — " We allude to the power exercised by the Chinese authorities of " levying internal duties on merchandise while in transit from the port of " importation to the mart of consumption. It. was apparently intended " that this power should be restricted to a certain moderate percentage " of duty." .... So long as the system of inland duties exists, " it is obvious that nothing but the most scrupulous good faith can " protect trade from the violation of any scale that may be laid down " in treaty agreements with foreign powers. As this is more than can " be looked for at the hands of 'Chinese ofl&cials, it is for your Lordship, " rather than for us, to devise measwres which may render effectual any " stipulations hereafter entered into on the subject of inland transit duties. " If permitted to continue at all, they should be well defined, of uniform " application throughout the Empire, never leviable more than once." Here again the subject of inland taxation, of which the lekin was the worst, was prominently brought to Lord Elgin's notice. Fortunately Lord Elgin was made of very different stuff from Sir Rutherford Alcock, who after asking the opinions of merchants about the revision of the treaty, turned round on them, and wrote that he would take good care that Her Majesty's Grovernment should not be identified with them or their ideas ; and so on the 11th February, 1858, shortly after he had heard from the merchants as above, his Lordship adopted their statements without delay, and embodied them in the following phrases in a letter to the Senior Secretary of State, Peking. " Foreign " merchants complain that illegal transit duties are levied on the " merchandise which they import and export. For this evil, the " existing treaties furnish no adequate security." This prompt action on the part of Lord Elgin speaks for itself, with regard to his object in obtaining adequate security against inland taxation, including the lekin, which had been brought to his notice by the mercantile community. Lord Elgin's attention was farther directed to the subject by H. B. Majesty's Consuls, who entirely confirmed the merchants' views. Consul D. B. Eobertson, in a letter of 7th December, 1857, wrote, " It " is plain, therefore, that these transit duties require a strict revision, " and when once a fair scale is settled, they ought to be compounded for 64 THE LEKIN TAXES AND THE BRITISH TREATIES. " at a certain sum." In this letter, Mr. Robertson also advocated "the 8nsj)ension of the levying of duties on all cotton, woollen, and linen fabrics, and on metals, being imports, and the necessity that exists for opening the interior of China to foreigners." In another letter, of 19th January, 1858, Mr. Robertson adds, " Another cause of restriction to our import and indeed to onr export " trade also, is the arbitrary levy of dues that merchandise is subject to "in its transit through the interior." "... Unless foreign " imports and exports are entirdywithdrawn from the action of the inland " Custom-houses, and the octroi of the cities, and a fixed amownt " (if transit DUTIES ARE TO BE CHARGED AT All) paid at the maritime port, "it is almost a hopeless task to attempt to regulate them. Less than " that foreign merchants are permitted to go and reside in the interior, " or the freedom of transit for foreign merchandise, must leave the " question much as it is." He then alludes to the war taxes or lekin, as illustrating the question ; and he brings them to the notice of Lord Elgin by describing the provincial governors' exactions arising "/row " pressure owing to civil war and the difjiculty of finding means for the ' ' vast expense it entails. It matters but little what may be the cause, " the efiect is the same, viz., seriously to injure and cripple our trade, " for from admitting an arbitrary and fluctuating instead of a fixed and " certain levy of duties as contemplated by treaties, the result follows that " the cost price of our goods is raised so high that it does not pay the " Chinese merchants to take them to the interior, and this will be the " case so long as these harriers and local Custom-houses are allowed to levy " on foreign manufactures a difEerential duty." Mr. Consul Winchester in his memo . presented to Lord Elgin 24th Nov., 1867, observed to his Lordship, " There probably does exist an " indefeasible prescription against the imposition of inland duties on " legally entered imports, and yet why should not such goods pay their " fair contribution to the maintenance of the internal communications " of the country, the canals, bridges, roads, &c., which permeate China ? " Still as has been remarked, in most countries, a/nd it might be so " expressed in any future treaty udth China, the original duty paid at entry " at the port of import might be held to cover such charges." Now it will be observed that the chief grievances in our commercial relations with China, including the lekin taxes levied for war expenses by the mandarins, were brought to Lord Elgin's notice in there several documents. His Lordship had assured these who had thus, in response to his invitation, communicated their opinions to him, that he would THE LEKIN TAXES AND THE BEITISH TEBATIES. 65 receive them with attention and even with respect ; and by Lord Elgin's penetrating and comprehensive mind such representations can hardly have been unappreciated, and left unapplied in his dealing with the Chinese Government, except in such cases where he clearly told the merchants that he could not agree with them Lord Elgin, in fact, had' very little presented to him by the merchants which he could not include in his demands on the Emperor of China, and it will be observed that H. B. M. Consuls went much further in urging sweeping reforms than the mercantile body. In the present instance, Lord Elgin brought our particular grievance into prominence, by his letter to the Senior Secretary of State at Peking ; and, moreover, he gave an assurance of the interest he took in the matter in the reply he gave to the address presented to him by Messrs. Jardine, Matheson and Co., and others on 18th January, 1859, previous to his departure from Shanghai : — " The " promise and the performance is now before you. Various grievances " besides those which I have mentioned above, affecting British subjects " in their relations with the Chinese, or with other foreigners, have been " from time to time brought to my notice by gentlemen who have done " me the favor to write to me on such topics. Some of them may " probably be met by special arrangements with the Chinese Authorities. " Others are, I fear, inseparable from the working of the system of " exterritoriality which Christian nations have deemed it necessary for " the interests , and protection of their subjects to establish in China." It will be specially noticed that Lord Elgin only excladed from the effect of his arrangements, or in other words from the treaty, those cases with which the system of exterritoriality interfered. No one, it is to be presumed, will include the lekin in such a category, and it may therefore be safely urged that the complaints of the merchants and Consuls about lekin or war taxes had been redressed by Lord Elgin in his treaty with China. Notwithstanding all this historically truthful view of the transaction, we are still obstinately told that the treaties do not provide against lekin. It is remarkable that no explanation of this attempt to twist the treaty away has been offered by the Chinese, beyond the exploded indefensible " en route " and " specified place " theories, which have been quite recently offered in justification of their conduct. The previous and originary stages of the treaty all point out that the treaty should contain as its necessary completion, a proviso against the war taxes, which were and are weighing so heavily, on trade. The connexion between cause and effect enables us as clearly to look for the result 66 THE LEKIN TAXES AND THE BEITISB TREATIES. which, we maintain is to be found in the treaty, as the laws of gravitation and attraction enable us to account for the movements of matter ; and as far as unbiassed minds, are concerned, I think it may be assumed that the spirit of the treaty, judged from an antecedent point of view, exempted our commerce from lekin taxation of any sort. I venture here to call attention to a view of the treaty which was given in one of the mercantile memorials presented to Sir B.. Aloock in 1868, on the revision of the Tientsin Treaty : — " The treaty was not a " plan or proposal of the Chinese, in order to define certain limited " concessions to us, but an acknowledgment of our demands to get the " basis established of future communications between British subjects " and them — Although the treaty is a joint agreement, it is eminently " our work, and as such ought to bear our interpretation. — It repre- " sents our just claims and principles." — If it be clear, as I submit I have shown, that the British Government instructed Lord Elgin to demand a commutation of all " internal duties " in China, that the British Consuls and nierchants all concurred in bringing these arbi- trary war taxes to Lord Elgin's notice, and that Lord Elgin assured them that he had received their requests for relief with attention, and had made "special arrangements with the Chinese authorities" to meet these grievances — can there be any hesitation in maintaining in accordance with the above memorial that the treaty was framed in the spirit and vrith the intention of excluding the lekin, and that it can only be rightly interpreted in this sense ? I even venture so far as to state that the Chinese have no legal right to interpret the treaty beyond accepting our meaning of it. They had but little or nothing to say in its composition or wording, much less in expressing any reserved or peculiar meaning of their own. We really stand in regard to the Chinese in the instance of the treaty, much the same as a lawgiver stands with reference to his people. We drew up the treaty for the purpose of legalizing and carrying out the objects which Lord Elgin had so clearly before his mind, and it cannot mean anything else but that. The Chinese themselves authorise this view of the case. Kwei- liang and Hwashna in their letter to Lord Elgin of 23nd October, 1858, declared, " The treaty had to be signed at once without a moment's " delay. Deliberation was out of the question. The commissioners " had no alternative but to accept the conditions forced upon them." If the treaty had been unjust or vindictively oppressive, we might have some qualm of conscience in insisting on its observance, according to our interpretation ; but Lord Elgin, as has been already shown, declared THE LEKIN TAXES AND THE BRITISH TREATIES. 67 that China had not yielded anything by the treaty beyond -what other commercial nations freely accorded to each other, and we may safely receive snch testimony as settling the point that the treaty was not unjust, espeeially when it is remembered that the Chinese themselves have never raised the issue of its justness ; and as Mr. Consul D. B. Robertson remarked in his letter above referred to, that the spirit of the Nanking Treaty was " freedom of trade " and " light duties," so the same may be with equal justice said of the Treaty of Tientsin. In case, however, any scruples should be entertained of the validity of a treaty signed in the way that of Tientsia was assented to, I venture to give the authority on the subject as propounded in "Bluntschli" — Le droit international codifi6, page 237: — "It is " admitted that a state preserves its free will, even when it is forced, " by its weakness, or by necessity, to consent to a treaty which another " more powerful state dictates to it. It is held in international law " that a state is always free, and knows what it wills, provided only " that its representatives are free. If it were permissible to dispute " the validity of a treaty because one of the contracting states had not " its free will, and only signed it out of fear, or under menaces, the " conflicts between nations would never end, and peace would never be " assured." It is a principle of " common sense " as Sir R. PhUlimore expresses it, that treaties never can be construed so as to be nugatory ; and if we admit the legality of the lekin, the whole effect of the Tientsin Treaty, as far as regards commercial freedom, would be destroyed. It should be remembered that it is not the merchants alone who take this view of the case. Sir R. Alcock, as will be seen further on, during the whole time he was negotiating with the Chinese in 1868, for the revision of the Tientsin Treaty, invariably maintained that the lekin was a violation of the treaty ; and. Sir Thomas Wade in his letter to Prince Knng of 28th April, 1875, thus qualifies the lekin, " The " irregularity and arbitrariness of inland taxation whether in the form " of lekin or otherwise are concerned ; " and in his letter to the same, of 20fch October, 1876, writing on the lekin, he describes them as " certa^ taxes on trade which have been protested against as being " imposed in violation of the treaty." The merchants, therefore, find themselves in harmony with these two distinguished diplomatists in their discrimination of the real character of the lekin ; and after estabhshing on such authority that onr demands for the abolition of the lekin on f oi^eign merchandise are a corollary to the spirit of the treaty, 68 THE LEKIN TAXES AUD THE BEITISH TREATIES. it remains to be shown, so as to complete the arraignm.ent of the Chinese Government, that the letter of the treaty no less than the spirit is condemnatory of its conduct. It is a strange and even suspicions circumstance in this case, that the Chinese Government vraited eight years before they asserted that the lekin was not prohibited by treaty. Before 1868, whenever remonstrances were made against its being levied, the Chinese Govern- ment always sheltered itself under the plea of expediency ; and even as late as that year, the Chinese never got much beyond this. I shall presently make all this evident by the history of the discussions on lekin between the British Legation and the Tsung-li yamen up to the time when they asserted its non-prohibition by treaty. I purposely omit the correspondence between Sir F. Bruce and Prince Kung, in 1862-03, complaining of the injuries inflicted on British trade by this impost, during that early period of our sufferings. The whole question in 1868, turned on the words of the 28th article of the Tientsin Treaty — "shall exempt the goods from all'fvrther inland charges whatsoever," and their literal meaning. Sir E.. Alcock, on the 23rd December, 1867, wrote to Prince Kung asking for the appointment of a commis- sion for the revision of the late treaty, and opened the subject as follows : — " The treaty with Great Britain is essentially a treaty of " commerce and amity, and intended to promote these two objects " principally. But of what use it may be asked is a treaty giving the " right to trade on payment of certain fixed duties, if the Emperor's " officials in the provinces can at their pleasure increase these without " limit in the passage through the interior of the staple articles " constituting the trade ? Neither commerce nor amity can be main- " tained under such conditions Now, what is the greatest " of all grievances, which foreigners in China complain of ? Is it not " the local taxation on trade by the mandarins at the ports, and by the " provincial authorities throughout the interior, contra,ry in many cases " to their own law, and in violation of distinct treaty stipulations in "all, UNDER the head OP LEKIN TAXES, and transit • dues chiefly, but " under an indefinite variety of names and pretexts, exactions over and " above what by treaty they are entitled to levy. This was a plain statement of the case against the lekin as being a violation of the treaty, and then the letter proceeds to give the reason for it being so by citing the proviso, " The exemption of ■ all foreign goods " going into the interior from transit duty or inland tax of whatever kind " or denomination, in consideration of a duty once paid at the shipping "port" THE LEKIN TAXES AND THE BRITISH TREATIES. 69 And then he claims that — The lehin and loeal dues of all Icinds at the port must first be abolished, and security taken in the next place against their re-imposi- fiion in some other form, and indeed from all taxation inland. The Chinese consented to the commission on 19th January, 1868, as their reply to all this. — In commenting on the above letter, Sir R. Alcock wrote to Lord Stanley on 22nd January, 1868 : — " Nothing can be clearer as to right of exemption from further " charges, and nothing can be more certain than the persistent and " open violation of this stipulation first by duties levied at the ports " v/nder the head of leJcin taxes and town dues." On the 3rd March, 1868, the Commission held its first sitting, and the minutes record, " The question of the lekin wa/r tax was alluded " to, and Tsai stated that the yamen was perfectly aware that it was " injurious both to Chinese and British interests, and that as the war " in the south-east of China was now at an end, it had been the inten- " tion of the yamen to suggest that the tax should be abolished." There was no mention by the Chinese, it will be observed, that the lekin was justifiable by treaty, although by so doing they would have at once cut the ground from under the British Oom.missioners' feet, and terminated the discussion by overthrowing the assertion that it was a violation of the treaty. On the minutes of the meeting of the 21st April, 1868, there is a memo, of Mr. Hugh Frazer, stating " the " two abuses to the corrected are first the levy of the lehin taxes within *' the ports," and on 30th April a draft of proposals for remedying this was made to the Tsung-li yamen, " that no levy of taxes whatever be " permitted whether upon foreign goods or native produce forming " part of foreign trade within a radius of 30 li from the Custom House " at the treaty port." This feeble offer to compromise a matter which had just been stigmatised as a violation of the treaty, naturally was taken advantage of by the Chinese, and on the 5th June, the Tsung-li yamSn replied, with a refusal to entertain it, " The abolition of all taxes upon foreign " export and import trade within 30 li of Custom House, they refused to " supplement the system of transit passes already in force, declaring " that nothing better could be invented." This was very unsatisfactory, but it was the legitimate result of shifting from ihe politique deprincipe to a, politique de circonstance. So on the 14th January, 1868, Sir R. Alcock sent in another memo., reiterating that lekin was a violation of the treaty : — 70 THE LEKIN TAXES AND THE BRITISH TREATIES. " The levy 0/ leldn taxes on all foreign goods and trade indiscri- " minately at the ports, and the exactions and obstructions hitherto " experienced under the plea of levying transit dues in the interior, are "the two great grievances of the merchants. These have inflicted " more injury upon them than all abuses put together. " They a/re " both in manifest violation of the treaty Under the first " head no definite proposition for removing the hurden of the leJdn tam "seems yet to have been put forward or discussed." The Chinese had not yet broached the theory of the lekin being unprohibited by treaty, and their silence on the point is conclusive against any such pretext having a valid existence. Sir B. Alcock, after implicitly noticing this, continues, " The leMn taxes at present " levied are too grievous a source of injury to trade, and too manifestly " in flagrant violation of distinctly stipulated treaty rights to be allowed " to remain unreformed and unremoved." The Chinese never took the slightest notice of this rejoinder, and at the meeting of the conim.ission on the 19th June, 1868, when the question of lekin came up again, the minutes record that, " The Chinese demurred to the abolition of taxes " within a given radius, on the ground that if not at the ports it would " be impossible to levy the tax at all." On the 27th June, 1868, they alleged that the lehin tax was the principal source for raising means to pay their troops, and that its collection would be desisted from the time when the provinces were pacified. Upon this Sir R. Alcock compiled another " memorandum " for the use of the Commissioners, and one of the points in it was the refusal by Chinese to aboUsb the lekin taxes after exposing that the promised contingent cessation of these taxes was too uncertain and too distant to be satisfactory. Sir R. Alcock writes, " China, like most " other countries, by entering into commercial treaties with other states, " has in consideration of a fixed payment of maritime and transit " duties, foregone all further right of taxation on whatever can be " shown to constitute the foreign trade import or export. Otherwise, " of what use would be the provisions of the treaties so carefully fixing " and limiting the tariff rates, import, export and transit ? To say " that the Chinese Government has urgent need of funds is not a reason " that can he aooepted by a treaty power for a plain violation of so essential " aw article in all the treaties affecting the prosperity and very existence " of the trade. The lelein taxes consUtvte a violation of treaty rights." " It must be evident, therefore, to the Tsnng-li yamen, that if this " subject of the leldn taxes is brought forward, it is from the necessity THE LBKIN TAXES AND THE BKITISH TREATIES. 71 "iinder which he finds himself to oppose any direct violation of the treaty " provision in the levy of dnties.'' " This one question of an asstuned right of the Chinese Govern- " ment to tax foreign trade ad Kbitvm, at the ports, is one of principle, "and of sach vital importance to the interests of commerce, that a " British Minister can have no discretionary power in protesting " against ft as a violation of treaty." This was certainly an emphathic declaration of sound principles; and one deserving of better issue than it obtained. At the meeting of the Commission on 14th July, 1868, instructed by the memorandum of bis Minister, Mr. Frazer said, " There was one point which it was his " duty to press, the abolition of lelcin taxes, and local dues upon articles " of foreign commerce." Instead, however, of citing the Tientsin Treaty, the British Commissioner referred to the article of the Treaty of Nanking. The Chinese " acknowledged fully its obligations, and " their application to the point in question, but they hoped the British " Minister would not press them," and they made the former excuses for continuing the lekin, and reiterated the promises which, as already mentioned, had been deemed unsatisfactory. At the meeting of 16th July, 1868, " the Chinese were informed that Sir R. Aloock adhered to his decision about the lekin difficulty," and then the Chinamen replied " that the yamen cannot see that the collection of the lekin constitutes any breach of treaty ! ! !" This then was the last word on the Chinese side, and as' yet, beyond the decla- ration of Sir Thomas Wade, last year, to Prince Kung, not a word has been heard of the British Government ever repudiating the Chinese interpretation of the treaty. We all know that this episode in the history of the lekin terminated in a convention which fortunately was never ratified, or we might have had it glossed over by some future commission just the same as the Tientsin Treaty has been. The history of the discussion establishes nevertheless the fact that the lekin was shown to be in violation of the letter, of the treaty, and to the irre- pragable proofs of it brought forward by Sir R. Alcook no vindication of the lekin on treaty grounds was, or has been, ever attempted. It would be a perplexing question for the Chinese to answer, what viford or clause in any of the British treaties authorises the imposition of any inland tax whatever on foreign imports beyond the tariff rate? The prohibition to do so after paying the commutation tax is so general that it would require a very strong exceptional expression to militate against the clause—" shall exempt the goods from all further 72 THE LEKIN TAXES AND THE BEITISH TEEATIES. inlaiKj charges whatsoever." — The Chinese gratuitously maintain that this clause of the treaty does not prohibit the likin ; but such mode of reading the treaty, if admitted, would be disastrous to all obligations. There is no positive provision in the treaty for many things that are demanded as a right, just as the passports for Mr. Grosvenor for his journey to Yiinnan were exacted from the Chinese G-overnment. In all interpretation of treaties, according to Sir B.. Phillimore's International Law, vol. 2 chap. 8, " the principal rule is to follow the "ordinary and usual acceptation — the plain and obvious meaning of " the language employed. If the meaning be evident, and the conclu- " sion not absurd, you have no right to look beyond it, or beneath it, " to alter it or add to it by conjecture." — " WolfE observes, that to do "so is to remove all certainty from haman transactions. To affix a " particular sense founded on etymological or other reasons upon an " expression, in order to evade the obligation arising from the " customary meaning, is a fraudulent subterfuge, aggravating the guilt "of the fsedifragous party." — "In such cases as these the fraud is " flagrant, but the principle by which they are condemned applies to all " cases in which are attempt is made " To palter with us in a double sense, " To keep the word of promise to our ear " And break it to our hope." — Macbeth. With such a good case in our favor, I submit that we ought to memorialise the Home Government to take up the question of the lekin once more, to visit with reprobation all attempts made to justify it by new Customs regulations usurping the place of treaty rules, and to demand a full indemnity for the losses British commerce has suffered from this illegal taxation during the sixteen years that the Tientsin. Treaty has been violated. The amount of the lekin levied on British merchandise during that period must amount to nearly fifty millions sterling, and restitution of this immense plunder can be rightfully demanded. It may be accounted for either by payment of so much coin, or in so much mineral territory, or in the total remission of all import duties henceforth, or in any other way our Government may see fit to commute it. But whatever form the restitution takes, let us memorialise the British Government to insist on the Chinese disgorging their ill-gotten gains, and giving us a material guarantee for the proper observance of their obligations to us in the future. Let us hope that our Government will not be led astray by the fictions of Chinese poverty THE LXEIN TAXES AKD TE 73 ES AND THE BRITISH WEATIEJI. ' j. ^ '* <-;^ or Chinese power of resistance. Both the one and the other^an be no doubt of overcoming all their opposition i£ they are only handled firmly. The Chinese require to be taken as one takes a nettle by the hand. Grasp it firmly, and its sting is harmless. It has only been by dallying with the noxioas elements of the Mongol race that they have been able to hurt us. The situation in China has been greatly exag- gerated by recent questionable efforts to make China appear what she really is not. Lord Elgin had as good an opportunity as any one of judging the real position of China. It is China's boast that she does not change, and we may therefore justly measure her value to-day by Lord Elgin's description of her in 1858, " as the rags and rottenness of a waning civilisation." MERCATOR. 25th July, 1876. [ 74 J THE COMMUTATION OF THE TEANSIT DUES. To the Editor of the "Noeth-China DiiLT News." SlE, Tour readers will doubtless remember the essay of Plutarch, enquiring — Which of the two elements, fire or water, is the most useful. The question would have been equally or even more interesting, if it had been — Which of the two elements is the most injurious ? for it might have opened out several side topics, and laid down certain principles for guidance in analogous enquiries about the comparative advantages of other things ; and the observations of the Grreek philoso- pher on such a subject would have been most serviceable. All this has suggested itself with reference to a similar question as to the comparative detriment or benefit produced by the commutation of transit duties, which was established by Lord Elgin's treaty, and though the discussion of such a subject will naturally be of a far more prosaic character than the disquisition of the classical biographer, it may have a certain interest, inasmuch as it practically concerns our mercantile relations with China, and is, moreover, necessary to complete the exposition of the transit dues question which I have endeavoured to set forth. At first sight, the agreement between two States to commute any given duty on foreign merchandise for a certain sum, appears an equitable arrangement ; and so long as they mutually observe the same piinciples of truth and justice, there could be no fairer settlement of international fiscal questions ; but when one of the contracting parties merely ostensibly makes such a compact, and while promising to observe it, mentally resolves to break this agreement, and refuses when called upon to perform its obligations, there can be no doubt that the commutation adopted for solving the difficulty of fiscal duties not only leaves the difficulty unsolved, |)at through the deceit practised by the THE COMMTTTATION OP THE TRANSIT DtTBS. 75 tmfaithf ol State, and other causes, it produces a worse situation than what previously existed. Now this is precisely the case with the Chinese in their relations with us on this point. They assented to the commutation with the deliberate intention of ignoring it, and they have persisted in violating it ever since. This is no slight accusation to make against the Govern- ment of the Emperor of China, but there is the clearest evidence for the charge, and that too, furnished by the Chinese themselves in a Chinese despatch found at Canton, which came into Lord Elgin's possession, and which may be seen in the official record of his Lordship's special mission to China. This despatch considers the whole question of the Tientsin Treaty, and amongst other affairs it states : — " The Emperor " had been moved. The tariff is settled. All goods pay 5 per cent. *' ad valorem. This is proposed as import duty. If Barbarians go into '' the interior to sell merchandise, they are to pay 2^ per cent, as a " tranHt duty, mhetJier they pass eight barriers' or ten." This was in evident allusion to the commutation duty of 2\ per cent, settled by treaty in lien of "all further inland charges whatever," for the Chinese antipipated that foreigners would eagerly avail themselves of their right to go into the interior with their goods and pay the conditional commutatujn tax, hoping in its efficacy for keeping ofE other demands. Now what was the real intention of the Chinese Government in this portion of the treaty which was so prominently mentioned in the despatch ? Mr. Wade, who accompanied the translation of this letter with certain observations of his own, tells us, "According to the " writer of this letter, evidently an official who has aeeess to good informa- " tion, THE EmPEBOB DETEEMINED, the moment OTTE backs WEBB TUNBED, "to cancel the whole treaty extorted from him in June, 1858," including of course the stipulation for commuting the transit dues referred to by the native official ! A pretty specimen indeed of Chinese fidelity to treaty engagements, and one which shows that the commn- tation tax was doomed from its infancy to be unavailing save for filling the pockets of the Chinese authorities. This statement of the Chinese, official regarding the intention of his Sovereign, is quite borne out by conduct of the Commissioners who were sent by the Emperor to Shanghai about the tariff. Lord Elgin wrote about them, on 10th October, 1868: — "I have reason to suspect that the Commissioners " came here with some hope that they might make difficulties about " some concession, obtained under the treaty recently signed," Sir F. Bruce confirms the existenee of this perverse spirit of the Chinese, 76 THE COMMUTATION OF THB TRANSIT DUES. in his letter to Lord Malmesbury, of 13th July, 1859 :— " The Chinese " sent to negotiate had the intention of obtaining my assent to con- " ditions which would have deprived these clauses of their practical " efficacy ;" and again in his letter to Earl Russell, of 6th February, 1860, he wrote : — " The war party will strain every nerve to render "nugatory the stipulations destined to facilitate intercourse with this " country. We know that a port may be nominally open and may be " practically shut, and violent counsellors will, without difficulty, throw " such obstacles in the way of the operation of the clauses respecting transit " duties, as will either reduce this privileges to nothing, or will lead to " fresh differences in a short time." It is not, therefore, surprising to find that the commutation clause turned out to be practically useless, and that when the tax was paid it did not prevent the goods from being mulcted by further inland charges, the treaty illegality of which is fortunately beyond all doubt or question, for this point is established by Mr. Wade in his "memo- randum," by special animadversion on them in contradistinction to the lekin exactions, which at the date of the "Memorandum," Mr. Wade thought were not strictly prohibited by treaty. " Whenever a Chinese " authority has disregarded the " certificate " (of commutation duty " having been paid) presented, and I regret to say that of the latter " offence more particula/rly there are instances enough on record, and that " the claims of applicants for reimbursement of the dues levied in " excess, have been left, after much argument and correspondence, "unsatisfied." The point, therefore, of the Chinese disregard for this clause of the treaty, is clear enough ; but at the same time it must be observed that while the Chinese Government in practice denied the effectiveness of the commutation tax in protecting goods from further taxation, it maintained its efficacy in theory unflinchingly, so that it is difficult to explain the inconsistency of this conduct without adding hypocrisy as a controlling element in its actions. For instance. Prince Kung, in a letter to Sir F. Bruce, 21st September, 1861, wrote as follows : — " It " appears to the Prince, after an impartial study of the treaty, that the " case stands thus : — The foreign merchant carrying imports for sale " into the interior, provided he has for his imports a maritime certi- " ficate, or inland customs certificate, is exempt from further payment " of duties once he has paid the duty due at the first inland custom "office." Strange to say that Sir F. Bruce took quite the contrary view, and held that goods goiag inland uncommated for were liable to THE COMMUTATION OP THE TEANSIT DUES. 11 confiscation. In Ms despatch of 18th September, 1863, to Prince Kung, he wrote — " If a British subject takes goods into the interior " withont a certificate, he exposes his property to confiscation," and Mr. Wade in his ' ' Memorandum " expressed the same opinion. ' ' Imports, " again, being still foreign property, if passing inward withont certifi- " cates are liable to confiscation." Possibly the conclusion thus arrived at was founded on the treaty rule 7 : — " Any attempt to pass goods inwards or outwards otherwise " than in compliance with the rule here laid down, will render them " liable to confiscation ;" but a calm consideration of the real scope and meaning of this rule will show that it does not in the slightest sustain the theory which has been built upon it. The rule was only a regula- tion of the v/hodus operandi, in case the merchant desired to pay the comrrmtation duty, already established as optional ; and it provides that in that instance, if afterwards he deflects from the rule, and endeavours to " pass the goods" otherwise than by complying with the formalities laid down, his goods are liable to be confiscated. The rule makes no provision for the case where the merchant makes no application to " pass the goods." The only way to account for the divergence of views on the commutation question, is, the conflicting interpretation put upon the opUonal clause of the treaty, with reference to the tax, which reads as follows : — " But it shall be at the option of any British subject desiring " to convey imports from a port to an inland market, to clear his goods " of all transit duties by payment of a single charge." The Chinese Government has always maintained in theory that an option or choice really remained with the merchants, to pay the the commutation tax, or to pay the inland duties whatever they might be. This is clear, from Prince Knng's letter already mentioned. The British Minister at first coincided with the Chinese Govern- ment on this point, for Sir F. Bruce, on 30th October, 1861, wrote to Consul Medhurst with "Regulations of transit dues," as follows: "Transit dues. — It is at the option ,oi the British merchant to clear " foreign imports to an inland market either by payment of the different " charges demanded at the inland Custom Houses, cr by one payment " of a half tariff duty, as provided in Tariff Rule 7." This is all the more important, as Sir P. Bruce makes the option result from Rule 7, and not from Art. 28 of the treaty, although he afterwards changed his opinion on the main point of there being any 78 THE COMMTTTATION OP THE TBANSIT DUES. option at all secured by the treaty. On the 30tli April, 1862, Sir P. Brace again wrote to Mr. Consul Medhnrst : — " It was agreed that " foreigners shonld be allowed to carry goods under certificate to or " from the interior on payment of one fixed charge, which is certainty " stated to be obligatory on the parties ;" and on the 6th May, 1862, in a Circular addressed to H.B.M.'s Consuls in China, he finally declared that there was no option at all in the matter of paying the commutation tax. " In the first place, I may observe that by Article 7 of the Bnle^ " appended to the tariff, it is made obligatory on any British subject "wishing to pass goods into the interior that he should pay the half " duty and obtain a transit certificate for the same." The opinion of Sir P. Bruee on' this subject seems to have been formed by the constant mixing up imports with exports while considering the question of transit duties, and from applying the same mode of reasoning of both on certain points in which they sensibly differ ; and possibly had the affair been represented to Sir F. Bruce in its distinct double aspect, he would have dealt with the two classes of goods differently. The ' merchants all along took the prima facie meaning of the treaty with regard to imports ; and as early as August, 1861, the Shanghai Chamber of Commerce, in a letter it addressed to the British Secretary of Foreign Affairs, drew his Lordship's attention to the matter, and submitted that the payment of the commutation tax was by Art. 28 of the treaty to be at the option of British subjects, either by paying the duties at the inland native Custom-houses in accordance with the notification mentioned in Art. 28, or by commuting these duties with the payment of a single charge of 2f per cent, ad valorem on the goods. There certainly does seem to be a possibility that the intention of the framers of Bnle 7 was to make the payment of the commutation tax compulsory, though when considering the clear words of Article 28 it is difficult to reconcile the two documents in the obligatory sense ; and if it be contended for that Rule 7 favors this meaning of the optional clause, it must be admitted that it is expressed in very dubious phraseology. There is, moreover, this circumstance connected with it, viz., that the Chinese Government have constantly asserted that the payment of the commutation tax was quite optional, and as it would always have been more advantageous to the Chinese to get this tax paid at the port, inasmuch as they nearly always unjustly inflicted another tax on the goods notwithstanding the previous pay- ment, it is difficulty to assign any other reason beyond the force of the language of the treaty for such interpretation of it ; for the Chiuese THE COMMUTATION OF THE TEANSIT DUES. 79 had this other strong reason for interpreting the clause as obligatory, and not as optionally free. Practically, however, the discussion on the meaning of this portion of the treaty has been useless, as whichever way the clause has been interpreted it has not made the slightest difference in the extortions of the Chinese. The only question of importance is, I submit, in the Siupposition that the option of paying the commutation tax remains with the merchant as the Chinese Q-ovemment admit, and in the case that he elects not to pay it before he starts with his goods for the interior ; what amount of inland taxes in such case would the Chinese be allowed to levy according to treaty ? The Chinese Government has always held that uncommuted goods are liable to all local taxes what- soever, and I venture on the contrary to maintain that the goods, in this case, are only liable to the equivalent of what they would have had to pay as commutation tax at the port before starting. I beg to call attention to the fact that the optional clause is not only the outcome of the Tientsin negotiations, but the sequel and completion of the treaty of Hanking, and it is by the joint light of the two treaties that its mean- ing is to be read. The Nanking Treaty in the first place provided (however ineffectual might be the form) for a fixed inland duty on imports, and what had thus been imperfectly provided for at Nanking was efficaciously established by Art. 28 at Tientsin, with the additional right that this fixed inland duty might be either paid at the port or in the interior ; so that the fixed maximum rate according to the Nanking Treaty still in force — the amount of which was definitely declared at Tien- tsin, — ^is the tax upon which the option is to be exercised. If the optica were only between 2^ per cent, at the port, and 10 per cent, in the interior, it would be no option at all worth having, such as we dictated to the. Chinese, but a penal condition imposed by the Chinese on us, for not paying the 2| per cent. There is no medium between these two conclusions. The only remaining way, therefore^ of realising th« meaning of an option, which decidedly was intended to be an advantage to the foreign merchant, is to give it the natural meaning of a choice of equal taxation, leaving the preference of either to the merchant, according to which best suits him. Please remember that the treaty was our work, and expressed our wishes and secured our rights. It was not a charter of privileges meted out to us, or limiting our observance of them by a penalty for exercising one of the most principal, viz., the option of the modus of paying a duty, the reformation of which had been one of the causes of our war with China. The fact of the 80 THE COMMUTATION OP THE TRANSIT DUES. Tientsin Treaty not stating that the comnnitation tax was obligatory, is all in favor of this view, for the omission to do so shows that no worse status would be incurred by it not being obligatory. I submit that the legitimate conclusion of all this consideration of the commutation tax, is, to establish the treaty illegality of levying any inland taxes on goods over and above the 2f % " ad valorem," under any circumstances whatever, and that on this ground we should ask for an indemnity for the spoliation which the Chinese have been guilty of by acting otherwise. I have DOW to bring to a close the observations which I have ventured to offer to my fellow merchants, and to the public, on the subject of the transit dues. It will be noticed that no mention has been made in this correspondence, of transit duties on Chinese produce exported, and that the question has only been raised with regard to imports. I wish to observe that the reason for taking this course is, — the status of Chinese produce does not apparently affect foreign trade interests so directly as imports do, and it has so many points of contact with the vexed question of Chinese jurisdiction which would require a lengthy elucidation ; and it is governed to a great extent by the same principles of commutation for inland duties on imports which have been here made manifest, that a separate consideration of export produce might be dispensed with for the present. An opinion has been expressed by some persons that the Chinese Government might be allowed to freely tax the produce of their own soil, on condition of their freeing foreign imports altogether from taxation, and this point may one day come to be seriously discussed in any future revision of the treaty. On the other hand, it is unanimously felt that the chief object of all trade negotiations should be to entirely free our imports from taxation of every sort, and after the experience of the last sixteen years such an arrangement appears more necessary than ever to place our trade in a satisfactory position. It should not, however, be demanded as compensation for our acceding to taxation on exports, but as a set-off agaiust the unjust taxation laid on foreign goods since the Tientsin Treaty was signed, and for which we are entitled to indemnification. One of the chief purposes in these letters has been to assist in exposing the conduct of the Chinese Government, so as to prepare the way for such a claim. This claim will be no novelty to the Emperor, for it was distinctly intimated by Sir Ruther- ford Alcock in his letter to Prince Kung, in January, 1867, that an indemnity would be demanded for the losses to British trade caused by " the flagrant. and persistent disregard of all treaty rights and obligations THE COMMUTATTON OF THE TRANSIT DDES. €1 "by Chinese Autliorities." And in order to give some idea of 'the amount of money that would be demanded by the British Government from China, the same letter placed on record that in 1866, although the foreign trade with China, worth Tls. 300,000,000, paid Tls. 9,000,000 duties, there were three or four -times as muah a^ this amiount exacted uryustly in the interior. This would give about Nine millions pounds STEBLiNG IN ONE TEAR ! for which restitution has to be made. And be it observed that this question of indemnity is not a question raised and initiated by the naerchants as part of the " vigorous policy " which we are so gratuitously supposed to favor, but the calm and deliberate demand made by the British Legation at Peking, in one of the most temperate communications ever presented to the Chinese Government. Sir R. Alcock gives Prince Kung timely warning of what would eventually be done in this very serious matter. He wrote, " However " unwilling or reluctant Her Majesty's Government may feel to enforce " the claims of their subjects for losses' as incurred, they cannot be "ignored or their settlement indefinitely deferred. Such a day of " BECKONING MUST COME." Circumstances seem to point out that the propitious moment has arrived. I have also endeavoured to substantiate, by recent experience of our relations with China, the truthful description given to us by Sir D. B. Eiobertson, of this nation amongst whom he has had so mafly years of important official intercourse, and of whom, even seventeen years ago, he formed the following correct and spirited judgment, " The " Chinese are essentially Asiatics ; fraud, duplicity, and cunning are " never spared to gain the most trifling point, particularly in matters of " etiquette or negotiation." If it be objected that I might have been silent on such subjects, I venture to shelter myself with the example of Sir Frederick Bruce who, in his letter to Lord Malmesbury 13th July, 1859, wrote : — " It is " necessary to allude briefly to the maxims of China in regard to " intercourse with foreign nations, as they afford the key to what has "taken place." If there be one thing more than another which has been fatal to our amicable and just intercourse with China, it is the forgetfulness of the true character of the people with whom we are dealing, and the pernicious maxim that we are here only on sufferance, and only as a consequence of the condescension of the Emperor. The statesmen who terminated the last war with China, took a very different view of our statm and our rights in this country. Sir F. Bruce, for example, wrote 82 THE COMMUTATION OT THE TEANSIT DUES. that our relations witli Okina rested on peinciplhs, and I venture to terminate my correspondence, wHcli I respectf nlly offer to the indulgent consideration of those who will do me the favor to peruse it, with Sir F. Bruce's words, as a souvenir of the motives that have actuated me in writing on the tedious subject of transit dues : — " The Treaty of Tientsin " ASSEBTS PEiNCiPLES which are diametrically opposed to the traditional " pretensions of the Chinese G-overnment." MEROATOR. 4th August, 1876. \r^^ ^m fi\ '^% ',j!;<