Enforcement of penalties.•

CHINKIANG.

While payment is being enforced by the consul according to law, no new transitpasses to be issued, and all passes already taken to be canceled.

PAKHOI.

So long as such penalties remain unpaid no new transit-passes to be issued, and all passes already taken to be canceled.

The last rule is especially significant. While in the rules issued in 1877 the consu is at least to be applied to to enforce the payment of the bond, he is quietly but completely set aside in those of 1878; the Chinese authorities trusting to their refusal of granting new transit-passes to enforce obedience to their regulations.

It will be seen from the above how very desirable it is to put an end to the arbitrary proceedings of the Chinese authorities, and to have the rules now in force at some ports so remodeled as to suit the convenience of trade and the stipulations of the treaties, while at the same time protecting the fiscal interests of the Chinese Govern

ment.

The necessity of doing this without delay suggests the idea of proposing to the Chinese Government the adoption of a temporary set of rules to be in force on trial while the negotiations on the question of inland taxation continue, such rules being based as much as possible on the rules in force at Chinkiang and comprising those questions of coast trade duty to be levied on produce, duty free, carried coastwise, and of goods brought or manufactured in the open ports.

His colleagues having in principle agreed to such a proposal, Mr. von Brandt has the honor to submit to them inclosed a set of rules drawn up in accordance with the above-mentioned views.

Peking, April 22, 1880.

[Inclosure No. 2 in No. 673.]

PROVISIONAL RULES.

I.

For the issue and surrender of transit-passes (outwards).

RULE I. All outward transit-passes which have been issued before the- 1880, and which shall not have been availed of for the purchase of produce and exchanged for a transit certificate before the 31st day of December, 1880, will be forthwith canceled by the superintendent of customs, and the corresponding transit certificates recalled, and all goods which the holders of such canceled passes may attempt to bring down under them will be confiscated.

Similarly, all transit-passes issued subsequently to the—, 1880, and not used within one year from the date of issue, will be canceled at the expiration of such year. RULE II. Henceforward all transit-passes which may not have been availed of for the purchase of produce as above within one year from the above time will be forthwith canceled by the superintendent of customs, and the corresponding transit certificate recalled, and all goods which the holders of such canceled passes may attempt to bring down under them will be confiscated.

In any cases of loss of a transit-pass by theft or otherwise, the merchant to whom it was issued must report the loss at once to the customs of the port, that the pass may be canceled and the corresponding transit certificate recalled.

In case of unlawful use of such cancelled transit-pass after its loss has been reported, the original holder shall not be held responsible.

RULE III. Produce purchased under transit-pass must arrive at the barrier nearest the port within six months (one year for Tientsin) from the date of the exchange of the transit-pass for a transit certificate; in default of so doing the goods will be liable to confiscation.

Should, however, produce be detained en route, either by the action of barrier or other officials, by force majeure, or by unforeseen accident, such as floods, rebels, or the like, and be unable in consequence to arrive within the time allowed, the circumstance of such detention must be reported at once to the authorities on the spot, and to the superintendent of customs at the port, who will grant such an extension of time as the circumstances of the case may require. The goods meanwhile will not be liable to confiscation, unless they fail to arrive at the port within the extended time allowed.

RULE IV. On the arrival of the produce at the barrier nearest the port, an application

giving the full particulars of the packages and their contents must be sent in to the commissioner of customs, who will issue a permit to allow the goods declared to pass the next barrier. The produce on arriving at the port must be brought direct to the customs officer for examination and payment of transit dues, which being done, the goods may be stored in the merchants' godown.

Any merchant failing to comply with this rule the goods will be liable to confisca tion.

RULE V. Produce brought from the interior under transit-pass must be exported to a foreign port or to another treaty port for reshipment to a foreign port within six months from the date of its arrival at the port, except goods for the northern ports, for which the customs authorities will grant the necessary extension of time. If the produce be not exported within the said period, the merchant shall pay to the customs a sum equal to two and a half times the export duty, and be released from the obligation to export. When the produce is shipped to another treaty port for subsequent reshipment to a foreign country, the merchant must produce a certificate from the customs at the other port to the effect that the goods have been shipped to a foreign country within twelve months of their arrival in that port, or in default, in addition to forfeiting the half duty deposited, he shall pay to the customs a sum equal to an additional export duty, and be released from the obligation to export.

RULE VI. A merchant desiring to repack prior to shipment the native produce which he has brought down under transit-pass, must first make application to the customs, who, having verified the identity of the goods, will issue a "permit to repack," and will depute an officer to re pair to the godown and superintend the repacking.

Any unauthorized repacking of goods, or willful alteration of their contents by the substitution or addition of other goods, will render them liable to confiscation.

RULE VII. In cases of alleged damage and deterioration in intrinsic value sustained by goods while at the port, the customs, on the application of the merchant, will depute an officer to examine the goods and appraise the actual amount of damage sustained. A deduction in the amount of export duty payable will be made in proportion to the ascertained damage: and should the merchant desire to be released from his obligations to export such damaged goods, his obligation will be canceled on his paying to the customs a sum equal to two and a half times the diminished export duty.

RULE VIII. Should a merchant be about to give up his business and leave the port, he may return through his consul for immediate cancellation all transit-passes which have been taken out by him and not yet used. Should there be at the time of his closing business any goods which have been already bought in the interior under transit-pass or passes taken out by him, but which have not yet arrived at the port, or which are awaiting shipment to a foreign country, at this or another treaty port, the person to whom such goods or the disposition thereof may be transferred will be held responsible for the observance of these rules.

RULE IX. In the event of its becoming necessary under these passes to recover from a merchant a fine, the Chinese customs authorities shall be at liberty either to seize the goods or to exact a bond for the amount claimed. In case the goods are of a perishable nature a bond shall always be taken.

In all cases of fine or confiscation arising under these rules the same procedure will be followed which is laid down in the rules for joint investigation in cases of confiscation and fine by the customs authorities of 1868.

If a fine awarded remains unpaid, no new transit-passes will be issued to the merchant, and all passes already taken out by him may be canceled by the superintend ent, and the corresponding transit certificates recalled.

II.

For the shipment coastwise of duty-free native produce.

RULE. Duty-free native produce carried coastwise pays no export duty at the port of shipment; and at the port of entry, coast-trade duty, the amount of which is declared to be 24 per cent. ad valorem.

III.

For the exportation of goods bought or manufactured in the port.

RULE I. Produce bought at the port pays on exportation no other duty than the export duty.

As bought at the port, all produce is to be considered not brought by a foreigner under transit pass from the interior.

RULE II. Goods manufactured at the port from native produce brought from the interior under transit-passes, or otherwise, shall pay no other duty on exportation than

the export duty. To be amended, if necessary, by the following addition, plus the difference, if any, between the transit duty paid on the raw material and the transit duty which would have had to be paid had the produce been brought from the interior in its manufactured form.

All the rules under heads I-III to be provisional ones, and to remain in force until the 31st of December, 1851. Should, however, no objections be raised against them, they may remain in force from year to year unless having been denounced by one of the contracting parties before the 1st of July of the preceding year.

SIR: I have the honor to hand to you herewith a letter which I am addressing to the doyen of the diplomatic body, transmitting a memorandum of my remarks in presenting to the ministers of the foreign office the questions regarding the currency raised by my colleagues and myself, and showing the responses made by them.

I have also to hand to you a copy of my letter to the prince.
I have, &c.,

GEORGE F. SEWARD.

[Inclosure 1 in No. 681.]

Mr. Seward to Sir T. Wade.

APRIL 30, 1880.

DEAR SIR AND COLLEAGUE: I beg leave to hand to you herewith a memorandum showing my procedure in placing before the ministers of the Tsung-li Yamên, at your request and that of my colleagues, the facts and considerations in regard to the condition of the Chinese currency affecting the payment of customs dues and duties to which we have felt ourselves warranted in calling their attention.

This memorandum will be translated into Chinese and forwarded to the Yamên, with Mr. von Brandt's printed paper and my own, in case you and our colleagues generally find it to be in accordance with our views and agreement.

I am, &c.,

GEORGE F. SEWARD.

[Inclosure 2 in No. 681.]

Mr. Seward to Prince Kung.

PEKING, May 11, 1880.

YOUR IMPERIAL HIGHNESS:

I had the honor to wait on the ministers of the Yamên, on the 29th instant, as a delegate of the diplomatic body, to lay before them certain facts and considerations in regard to the Chinese currency, which my colleagues and myself agree in believing have a prejudicial effect on trade, in order to secure such a reform as will secure to our countrypeople reasonable certainty and accuracy in their payments of customs dues and duties, and I have now to hand to your Imperial Highness a memorandum which I have prepared, setting forth in brief my remarks and the responses of the ministers.

This memorandum has been submitted to my colleagues, and meets their approval. I beg leave to hand to your Imperial Highness also two memoranda in English, regarding the Chinese currency, prepared respectively by His Excellency Mr. von

Brandt, the minister of Germany, and myself. My colleagues and I believe that they may assist the ministers to reach an understanding of our views upon this important subject. I should remark, however, that they were not prepared for the Yamen, but for our own use and the elucidation of the questions involved.

I seize this opportunity, &c.,

GEORGE F. SEWARD.

Memorandum of an interview on Thursday, the 29th of April, 1880, between Mr. Seward, United States Minister, and the Tsung-li Yamén, in regard to the currency matter.

Present, the Ministers Tung, Hwang, and Chung-lin.

Mr. Seward said that he had come to the Yamên in pursuance of an arrangement made by Sir Thomas Wade, doyen of the diplomatic body, and the ministers to place before them, on behalf of the diplomatic body, certain facts and considerations regarding the payment of customs duties and dues consequent upon the peculiar nature of the Chinese currency, and that he esteemed himself fortunate in meeting for the purpose the ministers who were present, because undoubtedly they are specially acquainted with the subject, one of them being the president of the board of revenue, and the others having been officially connected with the customs at the ports of Hankow and Canton.

Mr. Seward then said in substance:

1st. That their excellencies are aware that the governments of all western nations have established mints and put out coins which are used as money and form the standard of values.

2d. That China has not seen fit to coin the precious metals and that they are passed by weight.

3d. That a great deal of difficulty is met by foreigners in consequence of a state of things so unfamiliar to them and by reason of the fact that each locality appears to have a special scale, and that the fineness of the silver in circulation varies with the locality and even at the given locality.

4th. That the subject has been found one of so much importance that it has been made a matter of negotiation between China and foreign powers. The leading stipulations are as follows: American treaty of 1844, Article XII; American treaty of 1858, Article XXII; French treaty of 1844, Article XIX; French treaty of 1858, Article XXXI; British treaty of 1858, Article XXXIX; German treaty of 1861, Article XXII; Danish treaty of 1863, Suppl. Rule 9.

5th. That it appears from these stipulations.

(a) That the standard scale provided for is that issued by the board of revenue to the Canton customs. (British treaty.)

(b) That the values of foreign coins may be arranged with the customs at the several ports. (German treaty.)

(e) That the rate of the day may be claimed. (American treaty.)

(d) That one system may be claimed for all the ports. (Danish treaty.)

6th. That the foreign representatives are of opinion that it is desirable to make one system for all the ports.

7th. That to this end they propose that the Yamên shall name the standard tael of China and take steps to have its exact equivalent by foreign scales, and the purity of the silver used in passing it, determined by persons competent to do such work.

8th. That the values of the taels used at the several ports and of foreign coins relatively to the standards be ascertained in the same way.

9th. That all customs dues and duties be received according to the results so arrived at.

10th. That it appears not only from the thirty-ninth article of the British treaty of 1858, that the board of treasury scale (Kuping) is the one which should be considered the standard for the payment of customs dues and duties, but also from the Yamên's letters of April 9, 1877, and January 19, 1880. It is stated in the former, "All payments to and from the provinces are made in Kuping taels of pure silver," and in the latter, "The superintendent of customs should be instructed in the receipt of duties to take the treasury tael of pure silver as the standard."

11th. That the foreign representatives while accepting these declarations as satisfactory so far as they go, desire to say that their object is not to raise questions as to the value of this or that tael or the merit of this or that tael with a view to lessen the burden of duty payments. They are entirely desirous that the customs shall receive all that is justly due. And their object is to so regularize payments, that certainty and accuracy may be reached.

12th. That what precedes may be illustrated and the importance of the subject demonstrated by an examination of the following facts:

(a) That while the Yamên has declared that customs dues should be paid in Kuping

taels, collections are in fact made or assumed to be made after what is called the Haikwan scale.

(b) That this scale is assumed to be about 14 per cent. higher than the Kuping scale.

(e) That it is not consistent with the Kuping scale, as will be seen from the following table:

(d) That, in comparing local taels and foreign coins with Haikwan taels, it is assumed that the Haikwan standard calls for pure silver, just as the Kuping standard does, while as a matter of fact there is no perfectly pure silver in circulation. It is believed that the best is alloyed from 1 to 2 per cent.

(e) That the assays of foreign coin do not give the actual purity. The native assayists at Canton have declared that the American trade dollar is 881.1 fine, the Hang Ping dollar 894.1, the Japanese dollar 895.7, while as a matter of fact each is 900 fine. (f) That the best information available indicates that the Haikwan tael is worth 103.40 taels of the Tientsin Hang Ping (local) tael, and that duties were paid at that rate until lately by the Russians. Foreigners now pay at the rate of 105. Chinese importing at the foreign customs pay at the rate of 108, and when at the native customs, 118.

(g) That at Newchwang foreigners pay at the rate of 108, and natives at the native customs 112.

(h) That at Chefoo foreigners pay at the rate of 104.40, and natives at the foreign customs 106.40. The Taotai of Chefoo stated on the 10th of July, 1877, that the Chefoo tael is 2 per cent. less only than the Kuping tael. According to this, it should be about 34 per cent. less than the Haikwan.

(i) That without going further the facts stated indicate the need of a reform in the passing of bullion and coins in the payment of customs dues and duties.

13th. It is not the business of the foreign representatives to meddle with the internal administraton of China. They have reason to believe, however, that the excess paid by them over and above the Kuping standard does not accrue to the benefit of the government, but to the customs banker, and that an unreasonable charge for the examination of bullion, including remelting, would amount to a moiety only of the excess now paid.

14th. That this statement is submitted in the earnest hope that it will receive due attention. An immediate answer is not required. Mr. Seward will wait on the ministers again after a few weeks in order to discuss the subject further.

The ministers having heard the foregoing statement, amplified as appeared necessary in the course of his remarks, responded that they would take the business into consideration, and would be pleased to see Mr. Seward again at a later date.

15th. Mr. Seward then asked the origin of the Haikwan tael, and was answered that it had been in use a long time, but why it was introduced was not made clear. 16th. Mr. Seward then asked whether the Kuping scale has been constant for a long period, and whether the weights of this scale are sent out by the board of revenue to the provinces, and are known in the provinces. He understood the ministers to answer that the scale has been constant for a long period-several hundred yearsand that weights prepared by the board of works are sent by the board of revenue to each provincial treasurer's office.

17th. Mr. Seward then asked whether the ministers consider the so-called pure silver of the Kuping standard absolutely without alloy, and understood them to say that it is not absolutely pure, but of a degree of fineness which justifies them in calling it pure.

18th. Mr. Seward then asked what the expense of remelting silver amounted to, and understood the ministers to say about 20 tael cents on 100 taels.

19th. Mr. Seward then remarked that the multiplication of standards is of itself confusing, and that he hoped that the ruling standard, which is properly the scale of the Imperial Government, would be adhered to in place of the Haikwan scale.

Mr. Seward then thanked the ministers for their courtesy and attention, and withdrew. GEORGE F. SEWARD.

PEKING, April 30, 1880.