letter. I think that they are essential, and that they would assure in a greater or less degree the execution of the commercial spirit of the treaties.

As to the memorandum of the yamun, of which you have obligingly transmitted me a copy, I shall have but two remarks to make, and those of slight importance. In article 7, instead of leaving as a temporary deposit a sum equivalent to the transit duties, that, according to what is done in other cases, the merchant may execute a bond to the required amount; and further on, the delay of three months indicated for the confiscation of the deposit made at the barrier or at the custom-house seems to me insufficient.

Deign to accept, upon this occasion, my dear colleague, the assurances of my high consideration. A. VLANGALY.

His Excellency Sir RUTHERFORD ALCOCK, K. C. B.,

Envoy Extraordinary and Minister Plenipotentiary of her Britannic Majesty.

I.

LING-KWANG-SZ', September 10, 1868. MONSIEUR LE MINISTRE AND CHER DOYEN: The Prussian minister, in his reply to my former communication respecting the negotiations in which I am engaged with the Foreign Office, in anticipation of a revision of the commercial articles and tariff of the treaty of Tientsin, expressed a regret that he had no cognizance of the three memoranda to which the ministers made reference in the note I forwarded to you for the information of my colleagues. I beg, therefore, to inclose the memoranda in question for communication to the foreign representatives.

I have sent a collective reply to them, with a separate memorandum on the general revision of the tariff, stating my reasons for concluding the present time to be inopportune, and proposing to defer all further consideration of the subject. In my general reply I have availed myself of the frank expression of opinion of my colleagues as to the proposed modifications in the commercial rules, &c., to point out to the prince and ministers the unanimous feeling of regret and dissatisfaction at the restrictions attached to navigation of the inland waters, residence in the interior, and the working of mines; these otherwise large concessions being deprived of much of their value by limitations calculated to render them practically useless. This joint remonstrance may possibly induce the yamun to reconsider the subject, and in some degree modify their views as the expediency of a less restrictive policy. In any case I feel assured that you and colleagues will approve of my having communicated our common sentiments on the subject.

The Baron de Rehfues will see that I entirely concur with him in deprecating at this moment any general readjustment of the tariff, and have never contemplated proposing it. As to the right of revision reserved by the French and Prussian treaties at later periods, I do not conceive that any concurrence in the partial revision which may follow, of the British treaty, can be rightly construed as prejudicing their independent action when their respective periods for revision may arrive. But my colleagues will take such steps, of course, as they may deem expedient to prevent misapprehension in such a matter. I have only sought their co-operation because any changes, either in the commercial rules or tariff of one treaty, react on all; and in some cases, as in the proposed compulsory payment of the transit due of two and one-half per cent. upon all imports of foreign goods, and their collection by the maritime customs in the manner of other tariff duties, can only be carried out as a general measure and by common consent. And as the object is to strike at the root of all irresponsible powers of taxation upon foreign trade, and to take from the local authorities all pretext for levying the likin or any other tax upon foreign trade, such transit duty once paid, and thus remove the greatest grievance of the merchant, and the worst obstruction to the extension of trade, in the interior, I conceive this would be cheaply purchased even by an addition of two and one-half per cent. to the import duties.

Such, however, is not the effect of the proposed arrangement; for as much the greater part of foreign imports are sold to proceed into the interior, they necessarily have to pay the two and one-half per cent. transit due, or to run the gauntlet of a hundred barriers with unlimited powers of exaction and taxation. Even for the small fraction sold for consumption at the ports, the foreign merchant has everything to gain, if by payment of the transit due of two and one-half per cent. he can secure their exemption from the li kin and other local taxes which have been persistently imposed upon the native purchasers even within the limits of the port to a large extent.

You and some of my other colleagues have expressed great doubts as to the efficacy of any arrangements to put down these illegal and wholly uncontrolled taxes. Nor can any one feel perfectly assured of the result until tested by experience. Yet it is much to have obtained a distinct renunciation of the right, hitherto obstinately main

tained, of taxing all trade within the Chinese territories for state purposes, and a declaration that under no circumstances can any overcharge beyond the tariff be levied on foreign trade in exports or imports, without imperial authority and the previous sanction of the foreign representatives. Whatever difficulty may be experienced at first in giving practical effect to these fundamental principles, their publication by imperial edict will strike at the root of the present abuse of taxing power in the hands of irresponsible and provincial authorities; and I cannot doubt be productive of far greater benefit to trade than many more imposing-looking concessions-than any rights of residence of foreigners, or their navigation in the interior, or working of mines-for which, in my opinion, neither foreign merchants nor the Chinese people are yet prepared, in their ignorance of each other's language and the unsettled state of the country, to turn to much present advantage.

I avail myself of the present opportunity to assure your excellency of my highest consideration and respect. R. ALCOCK.

Note for communication to the Tsungli-Yamun on the several memoranda addressed by the ministers during the past month to the British representative on the revision of the tariff and commercial rules of the treaty of Tientsin.

The several memoranda lately received from the yamun have been carefully consid ered, and the undersigned British minister has only deferred his reply to give time for communication with the representatives of foreign powers, whose opinion as to the expediency and sufficiency of the modifications proposed it was desirable to obtain before any final step was taken in matters affecting the commercial interests of all. The general result of the labors of the commission, together with the propositions or the yamun conveyed in these memoranda, having now been made known to all the representatives in Peking, and their views upon the subject communicated to the British minister, he is at liberty, with the advantage of such knowledge, to deal definitely, as he trusts, with all the various questions which have been under examination and discussion by the mixed commission during the past six months.

In response to the replies of the yamun, in which they acknowledge the friendly spirit in which the propositions of the British minister were originally conceived, he desires to assure the prince and ministers that nothing is to be gained by negotiation for the exclusive advantage of either nation to the prejudice of the other. For British trade to flourish in China, it is necessary that the Chinese interest shall flourish too, and the nation derive benefit from its extension. In measures to be adopted to this end, it is clear that the interests of both must be consulted, and a principle of reciprocity recognized in all things. On no other basis can any permanent relations of amity and commerce be established. With these convictions, the yamun may rest assured that no propositions will be made by the British minister at variance with them, or discussed, except in a spirit of fairness, with a desire for mutual accord and a reciprocity of benefits.

The undersigned cannot conclude these preliminary remarks without acknowledging the ready response made by the prince and ministers to all his suggestions, and the good-will they have so constantly shown in the consideration of all the questions brought to their notice through the commission. Several of these affected great financial interests, and, indeed, nearly concerned the whole fiscal administration of the provinces, demanding, therefore, both patience and temper for their adequate treatment. They have been discussed without acrimony or a sign of irritation on either side; and if the result has not been a perfect accord in all things, which could hardly be expected, it has led to a mutual agreement as to the practicability of a great many much-needed measures, and a better understanding as to the desirableness of others in the way of change and improvement, for which the fitting time has probably not yet arrived.

The object of the commission was to examine into the chief causes of complaint set forth in the numerous memorials of mercantile bodies at the ports; and to consider by what means these could best be removed, and remedies provided. It was easy to ascertain from them what were the principal grievances, and how their remedies were to be sought, for the unanimity of the memorialists on both heads was conclusive.

The treaty of Tientsin had for its main object the protection and development of trade in China, not along the coasts or at certain ports merely, but throughout the whole country. The merchants point out that three conditions are essential to this end, which were provided for by treaty stipulations:

1. That there should be a fixed tariff of duties agreed upon by the respective gov

ernments, and that no local or provincial taxes in excess of the tariff should be levied on foreign trade without the sanction of foreign representatives.

2. That liberty should be given to traverse the country in all directions for the purposes of trade, and freedom, under license and consular control, to merchants to reside in the interior wherever centers of production or consumption might make the establishment of depots necessary, and their presence essential to the successful prosecution of the trade.

3. That means of communication and transport between these different points and the coast should be adequate for the requirements of trade, without which no large and profitable inland commerce is possible; and if those already existing in the country be insufficient, that liberty should be enjoyed to increase the facilities for both. It is unnecessary to enter into an agreement to show that there is nothing specified under these three heads which is not either expressly stipulated for, or directly implied, in the several articles defining commercial privileges, and in strict accord with the whole context, as well as the spirit and object of the treaty. The close examination which the subject has received during the past months has led to a general agreement in principle, leaving only a discussion as to the means of carrying out these stipulations compatible with the present state of the country. The bona fide admission of English goods, if it is to be more than a mere nominal privilege, carries with it whatever may be essential to its full enjoyment, without stipulating what are the means necessary to this end; for it is sufficient to show that any particular facility is essential to the fruition of the primary right, to establish a derivative right on the basis of the first.

Under the second and third heads, therefore, the only question is, can the requirements of trade be adequately met in the interior without a right of residence and the possession of depots, and without improved means of transport and communication? If not, then the limits and conditions under which it can be carried into effect remain to be considered. It is here only that any material difference of opinion has arisen, and still to a certain extent exists. The yamun proposes that the right of residence should be limited to a temporary sojourn in boats or inns; and the right of inland navigation for transport of goods to vessels propelled by sails or oars. The merchants, who know best what their trade requires, demand the faculty of acquiring land and houses in like manner as at the ports, and railroads, telegraphic lines, and steam-vessels for means of transport and communication.

Between these two schemes for advancing trade and giving effect to treaty rights there is a wide interval. If the merchants, in demanding the right of living in the interior on their own property, and railroads, telegraphs, and steamers for communication, do so with little reference to the state of the country, or what may be practical or expedient in the interest of all parties, the yamun, in the opinion of the representatives generally, stops short of what may reasonably be required and safely conceded.

It is conceived that, with exterritorial rights existing, and in the present unprepared state of the country, with no common language to serve as a medium of communication between the races, rights of real property and domicile in the interior can neither be equitably demanded nor safely conceded." But storage for their goods and the consequent faculty for renting houses and godowns at certain points is essential, together with such rights of residence as the interests engaged may indicate within specified limits.

If the yamun has deliberately decided that the time for themselves creating railroads and telegraphs, or safely permitting foreigners to introduce them, has not yet arrived, without contesting such an opinion, in which the representatives do not certainly all concur, still a limited application of steam should be conceded as essential. They would be willing in the first instance to see this confined to the employment, under license and custom-house regulations, of a small number of tug-boats on the great lakes, as the Poyang, or a small class of cargo-boats propelled by steam to be solely used for carrying goods in which foreigners had a bona fide interest, so as to avoid injurious competition with native traffic and means of transportation.

Considering how small a portion of the whole inland trade of China the foreigners' share can be, it is impossible that a privilege so carefully restricted could materially interfere with the native interests, or their means of existence. Nor, considering the small size of the proposed steamboats, and the strict control under which they could be placed, is there reason to anticipate danger to life or property from their use on the lakes. This would not give any undue advantage to foreigners over natives-first, because it is open to all natives to employ the same means; and looking to the large amount of Chinese capital already invested in steam companies, and the free use by native merchants of steamers in their coasting trade, it is not probable they will be slow in availing themselves of whatever improvements foreigners may introduce; secondly, because, even if they did not, any advantage gained by foreigners in better means of transport would not compensate for their disadvantages in being compelled to hire houses and storage from natives, instead of having their own. They will be called upon, too, to pay more than a Chinese trader would be asked for the same accom

modation; and as foreigners, will also be in a thousand ways at a disadvantage with the natives.

In both these directions, the undersigned is bound, therefore, to urge upon the yamun some further concession than has yet been made. This is in accordance with very strong opinions expressed by his colleagues of their insufficiency. Without some less timid advance in the way indicated, grave dissatisfaction will be felt with the present arrangements, both by the merchants and by foreign governments, however satisfactory and liberal may be the measures proposed under other heads. In that case, nothing as regards those other powers could be considered as definitively settled, even if the undersigned were disposed for the present to trust in the certainty of progress from small beginnings.

In this matter, and in the working of mines alone, is there any strong feeling that the revision now proposed will be nugatory and incomplete if carried out as at present contemplated by the yamun? It is felt that to give foreigners a right to assist in working mines and use their own machinery, but still deny them houses and workshops, or any copy or leasehold interest in them, will most likely fail in its object. If foreigners be not allowed freely to enter into arrangements for renting or leasing from the proprietors such mines as are worth working, neither capital nor the best skill will be available. The power to purchase proprietary rights is not absolutely necessary for successful working, but the permission to erect workhouses and other accommodations is indispensable. If foreigners are to engage at all in developing the boundless mineral resources of China, now lost to its government and people for want of engineering knowledge and machinery, it is certain that these further facilities can be deferred for only a short time, and would better be granted at once than withheld until natives and foreigners are driven to combine together in evading regulations only calculated to impede the development of all mining operations.

The right to the permanent residence of foreigners in the interior has been so fully conceded to one class-the missionaries-with liberty to acquire both lands and houses, that it seems inconsistent and invidious to deny a modified privilege of the same kind to merchants, who, besides being under consular control, furnish, in the interests they would have at stake, security for good conduct. The sixth article of the French treaty stipulates "that it is permitted to French missionaries to rent and purchase land in all the provinces, and to erect buildings thereon at pleasure;" and what is permitted to the French missionaries is equally so to all other missionaries; why, then, should a similar right be denied to the merchants? Of the two classes, it is impossible to doubt that the latter are least likely to give trouble to the authorities, or create popular disturbance, as experience tends to prove.

These questions have been dealt with first, because they are those upon which alone there is any serious divergence of opinion between the Foreign Office and the foreign representatives generally; and in the hope that the prince and ministers will once more take the several points here urged into their consideration, and remove the sole remaining obstacles to a good mutual understanding on matters of so much importance. With regard to the levy of li kin and other taxes in excess of the transit dues fixed by treaty, the proposed arraugements hold out such hopes of the removal of these longstanding abuses, that the foreign representatives are disposed to see in them a practical solution to the difficulty wbich the persistent exactions of the local authorities have created. This has hitherto constituted the greatest of the merchants' grievances; it has limited their trade to a small circle around the ports, and dwarfing it even there by onerous and uncertain charges.

Necessary as means of improved transport and access to the interior may be to any large development of trade, they are of secondary importance compared with impediments caused by a perfectly irresponsible power of local taxation. On the effectual removal of this source of injury, therefore, depends all improvement. The abolition of li kin dues on foreign trade has become the essential condition of progress; and the necessity of devising a remedy was too imperative to allow either side to hesitate in dealing with the difficulties which beset it. Even yet the undersigned finds his colleagues to be not fully assured that the measure proposed will be effective to the end, and deem some additional guarantee against failure desirable, and security for the additional losses such a result would entail on the merchants.

The measures now proposed, if faithfully carried out, seem adequate to the end. The principle is distinctly recognized that special taxes of any kind, if touching for eign goods, must be previously arranged with the foreign representatives at Pekin, and published for general information; and consequently that no extra taxation shall be levied by local officials and without imperial authority. All irresponsible and local taxation is thus put an end to. It is acknowledged that all foreign imports, opium excepted, should circulate free on paying the import and transit dues fixed by the tariff'; and this privilege to extend to the goods even when transferred to Chinese hands. It is further agreed that all Chinese produce shall be allowed to get to foreign markets after paying 24 per cent. transit duty and the tariff export dues; and also that every

kind of native produce may be traded in by foreign merchants on the same footing as

natives.

To bring about these advantages to the foreigner, without injuring the Chinese revenue, it is proposed that the transit due of 24 per cent. shall be levied on all foreign imports at the time of landing, in like manner as the import duty and by the maritime customs; and that such imports shall thereafter be exempt from all further taxation, no matter in whose hands they may be found, thus terminating all further discussion about their liability to li kin taxes, which at many ports have far exceeded both kinds of duties put together.

In order to secure that native dealers in native produce shall not be placed in a worse condition than foreigners, but both be placed on the same footing, it is proposed that a further deposit of 24 per cent., in addition of the transit due of that amount, shall be lodged at the last barrier before arriving at the port, as an equivalent for the various inland taxes it would otherwise have escaped under the transit certificate obtainable only by foreigners. In the event of its being sent to a foreign port within three months, the deposit is to be refunded.

To give effect to these principles, an edict has been draughted for publication, by which all local officials will be made fully acquainted with the foreigner's rights in respect to the transit paper; and in the event of any attempt at obstruction or surcharge, it is provided that an appeal shall lie to the nearest customs under the foreign inspectorate; and an officer shall be deputed to make inquiry on the spot, and compensate the foreign merchant for any proved loss or injury.

Such is the general outline of the system now proposed for the due execution of the treaty clauses providing exemption from extra taxation under the transit certificate. Is there sufficient security for the due observance of these rules by the provincial officials of all classes? This seems to be the only question in the minds of the foreign representatives; and it is suggested that nothing is really certain but the addition of 24 per cent. to the import duties. This will be vigorously exacted and paid, but whether the equivalent exemption from all further taxation will be obtained must be held to be more or less doubtful until further experience can prove the efficacy of the new order, seeing that in the past these same provincial authorities have shown the most persistent disregard of treaty stipulations where foreign trade was concerned, inflicting fosses on the merchants by exactions, surcharges, and delays, to an amount difficult to calculate. The yamun has expressed its willingness in all such cases to make adequate compensation upon proof of the violation of these rights; but in the great majority of cases proof is difficult to produce, partly from the lapse of time, and partly from the imperfect knowledge of the language and the impossibility of producing documentary or other conclusive evidence. Under such circumstances it would seem reasonable that, during the first year at least, all amounts collected under the new arrangement as transit or barrier dues should be carried to a separate account by the maritime customs, and held in reserve, to meet any claims for compensation in cases of loss or prejudice sustained by failure of execution; and in lieu of depositing the amount of the extra 24 per cent. the equivalent for charges due on native produce not going to foreign ports, a bond would for many reasons be preferable and equally secure, as it would avoid locking up the merchant's money for a liability which might never arise, and preclude all questions about relative rates of exchange on payment or reimbursement. Some provision must be made under this head at the port of Ninchwang of an exceptional nature, where compulsory payment of the transit due cannot be enforced, seeing that there are no inland taxes on native trade in Manchuria, (as the consul there informs the undersigned;) and to exact it would consequently put the foreigner at a disadvantage with the native dealer, contrary to the principle of placing them on an equal footing.

As to increased facilities of access to points on the coast and the river Yangtsze, the yamun proposes to establish three landing-places, with custom-house stations for the landing and shipping of goods on the river; and to open Wanchau in place of Kungchau in Hainan. It seems desirable to add at least two more to these landing and shipping stations on the Yangtsze, one at Kwachau or elsewhere on the northern bank opposite to Chinkiang, if there be a point within the same jurisdiction, and another at Hu-kan near the mouth of the Poyang lake, to prevent much inconvenience and loss of time in dragging cargo-boats with tea 18 miles against steam, which often causes a delay of many days, whereas, if a station were opened a steamer could load there at once instead of Kin-kiang.

The opening of new ports on the coast seems to be more in the interest of the Chinese revenue than of the foreign merchants. Except for Wanchau, none of the memorials have expressed a desire to have more ports; and some of them give a strong opinion that, without advantage to trade, a large addition would be made to the expenses of the merchants, if they are called upon or driven by competition to create more establishments.

Nevertheless, a free access to the coast generally, without concessions or building of settlements, would undoubtedly be an advantage to both countries. To China it would