No. 45.
Mr. Young
to Mr. Frelinghuysen.
Legation of
the United States,
Peking, June 18, 1884.
(Received August 4.)
No. 462.]Sir: I have the honor to submit herewith, for the
consideration of the Department, a copy of a dispatch received from Mr.
Consul Shepard, at Hankow, and a copy of my response.
[Page 97]
Mr. Shepard calls my attention to the refusal of Chinese officials in the
interior to recognize transit passes; to attempts made by them to levy lekin
and other taxes upon goods covered by transit passes; he points out the
injurious effect of such action upon our trade, and asks for the energetic
intervention of the legation.
The subject thus brought up, by no means for the first time in the history of
this legation, is one of grave importance, and, as Mr. Shepard has been
informed, will have serious attention.
But in my reply I have felt obliged to express a divergence of opinion upon
one point raised in Mr. Shepard’s dispatch, and it is to that point alone
that at the moment I beg to ask the attention of the Department.
With his dispatch were forwarded no less than thirty-four transit passes
issued to Mr. J. M. Burnett, an American citizen, and rejected by Chinese
officials in the interior. In reference to these Mr. Shepard remarks:
I do no claim that Mr. Burnett actually owned the goods (covered by
these thirty-four passes,) for he undoubtedly acts
for native traders, as I have explained in a former
communication. But that should make no difference in the treatment
of passes inward, since no distinction is made between natives and
foreigners in the protection the certificates warrant.
Upon this point I have replied to Mr. Shepard that, in my opinion, we cannot
ignore the fact, if such a fact is known, that American merchants are acting
for Chinese principals, and are not themselves the bona
fide owners of the merchandise covered and protected by transit
passes taken out by them and I have pointed out that, in the constantly
recurring discussion of the transit-pass system between the Government of
China and foreign representatives, the former has always insisted and the
latter admitted that under the treaties transit certificates can only be
used legitimately by foreigners to cover and protect foreign owned merchandise.
The entire transit-pass system is a creation of the treaties between China
and foreign powers. It was devised, not for the advantage of Chinese
merchants, but for the benefit of foreign exporters and importers, by the
substitution of a fixed internal tariff in place of the uncertainties and
irregularities of the Chinese interior and local systems of taxation. That
commerce would be largely benefited by the extension of the transit-pass
system to Chinese merchants is no doubt true, but that is a question between
the Government of China and its subjects, with which we cannot interfere. We
certainly ought not to allow our people to connive with subjects of this
Empire in seeking by surreptitious means to secure advantages to which they
are not legitimately entitled.
The responsibility for the failure of the transit-pass system to produce the
good results expected of it cannot, I fear, be laid wholly upon the Chinese.
It is, on the one hand, true that local Chinese officials ignore and
repudiate transit passes, and thus violate the express provisions of treaty;
but it is not less true, on the other hand, that at several of the ports are
foreigners, merchants so called, but with neither capital nor connection,
who lend or sell their names to native firms in the use of transit passes,
thereby enabling the latter to evade the laws of the Empire. Hankow, as a
port, has long been notorious for this form of abuse of the transit-pass
system, and by Mr. Shepard’s declaration it appears that Mr. Burnett has
been doing this sort of work for Chinese merchants.
The whole system sadly needs revision and readjustment, but it is too much to
expect that the Government of China will take efficient measures
[Page 98]
to put an end to the violations of
the treaties by its local officers in this direction until it has a
practical assurance that foreign powers will no longer permit abuses of the
privilege by their people.
In this view the question raised as to the right of American citizens to
allow themselves to be used as figure-heads or men of straw by Chinese
merchants, in taking out transit passes, becomes of very serious importance,
and upon it I beg to receive the instructions of the Department.
I have, &c.,
[Inclosure 1 in No. 462.]
Mr. Shepard to Mr.
Young.
Sir: In my No. 90 I referred to the
interference with transit passes inward by lekin officials at points
distant from Hankow, by which foreign goods were deprived of the
benefits intended to be secured by the passes, and were consequently
subjected to an unjust taxation en route, thereby
largely increasing the cost of foreign products, to be borne by the
native consumer. The effect of such a course must be only prejudicial to
trade, acting directly to prevent and curtail commerce in articles from
foreign countries. Such is, moreover, an unquestionable violation of
treaty provisions, as conceded by the tsung-li yamên in their letter to
the Chinese ministers abroad, which unequivocally recognizes the fact
that such certificates “cover goods from a treaty port to a place named
in the certificate, exempting them from ail taxes en
route.”
This matter, with other efforts to interfere with foreign trade inland,
has been formerly reported to the legation, its importance has been
recognized, and a willingness expressed to use all proper efforts to
secure a reform of abuses. But at the outset the purpose was weakened
and reformatory results prevented from the lack of positive proof of
native irregularities. No doubt has ever been expressed of the truth of
my allegations, but in the lack of collateral proof to sustain them
definite action on the part of the legation was scarcely possible, and I
was asked to watch for such proof. While perfectly assured of the facts,
I have never until now been able to secure such positive evidence as
cannot be denied by local officials and some subterfuge brought forward
to evade the conclusion of their undeniable hostility to the
introduction of foreign manufactures into the Empire. I now have
indubitable proof of a gross violation of the authority and force of
inland-transit passes, and, as in duty bound, transmit the facts and
evidence for the attention of your excellency.
I have the honor to inclose to you no less than thirty-four passes,
pasted and attached together in one mass, and in this form returned to
J. N. Burnett, the American shipper of goods from this port. I do not
claim that Burnett actually owned the goods, for he undoubtedly acts for
native traders, as I have explained in a former communication. But that
should make no difference in the treatment of passes inward, since no
distinction is made between natives and foreigners in the protection the
certificates warrant.
Inspection of the returned passes will show that they were stopped and
taken up at Yochow, a tax-barrier near the mouth of the Tung Ting Lake.
The officials there detain boats with foreign goods for an indefinite
period, until a number of passes for the same destination are collected,
and from that point onward to the end of the transit the goods are
forwarded unaccompanied, and of course unprotected, by the passes that
should be with each separate lot of merchandise. They are, therefore,
exposed to lekin taxation at every subsequent barrier passed. I have
made investigation of the contingent circumstances, to discover them as
accurately as possible, and find the following to be the facts:
- 1.
- The goods sent by the route in question are mostly, if not
entirely, piece-goods of American and British
manufacture.
- 2.
- There are several long routes beyond the Tung Ting Lake over
which transit goods are conveyed, some of them being land
routes. One leads southwest to Kweichow, and the other to the
southern part of Lzechuen. During the summer months, when the
Yangtsze is in flood, the latter is closed for a time. My
information is that on both routes there are several
tax-barriers that the goods must pass, and as the transit
certificates are separated from the goods at Yochow, it follows
that they are unprotected for the entire distance beyond, and
lekin taxes are most undoubtedly collected at every barrier, in
accordance with Chinese custom in similar cases.
- 3.
- The amount of such taxation I have been unable to learn, as it
is of course kept concealed by the officials interested; but
traders here admit that it exceeds the half duty originally paid
for the transit pass to clear the goods.
The effect upon trade inland will be obvious, and it requires no argument
to induce your excellency to take up a matter so important to American
interests, and I leave it in your hands, confident of wise action.
In regard to tea passes, I may add, for your information, that, on the
request of both Mr. Burnett and Mr. Jenkins, I have recently applied for
the issue of them.
The answer of the taotai to the applications in both cases is that when
the missing passes for previous years are returned those now asked for
will be issued.
The inference is that none will be issued to the applicants till then,
and as their return is impossible, the decision is in effect a refusal
to issue at all.
I am, &c.,
[Inclosure 2 in No. 462.]
Mr. Young to Mr.
Shepard.
Sir: I have had the honor to receive your
dispatch No. 95. The subject to which it refers will have careful
consideration.
I may say, however, that I do not share your opinion that we can ignore
the fact, if such a fact is known, that American merchants are acting
for Chinese principals and are not themselves the bona
fide owners of the merchandise covered and protected by transit
passes.
While it is true, as you say, that the tsung-li yamên, in its circular to
Chinese ministers abroad, did recognize the fact that transit
certificates “cover goods from a treaty port to a place named in the.
certificate, exempting them from all taxes en
route,” it is also true that the circular referred to maintains
with equal plainness that under the treaties such certificates can only
be used legitimately by foreigners to cover and protect foreign-owned merchandise.
This interpretation of the treaties has always been stoutly maintained by
China, and, so far as I am-aware, has never been disputed by any foreign
Government. A notable case may be found in the files of your own office,
being that in which Mr. A. Jenkins claimed damages against the Chinese
Government for the detention of goods under transit pass in 1874–‘75,
and in which this legation declined to press his claim for damages,
because the burden of evidence went to show that he was not the owner of
the goods in question, but was acting for Chinese principals.
I shall have occasion to address you further upon this important question
at an early moment.
I am, &c.,
